NPL Italy 2022: A review by John Macdonald
Recognyte, 12th of July 2022

Last week the Non-Performing Loans (NPL) Italy event in Milan, returned for the first time since the pandemic, and there was a lot to discuss. The conference provided a platform for experts in the industry to discuss current trends, ongoing issues and predictions for the next twelve months.

The Italian Job

As more industries adapt to the use of technology, Italy is seen as an extremely significant emerging market for Recognyte. It is one of the largest NPL markets in Europe both in its size and is far deeper in terms of the number of outstanding loans and the quality of those loans compared to any other European market.

There has been a marked improvement in Italy since the credit crisis, at its peak in 2013 and, with encouragement from the Bank of Italy, we are now seeing only 5% of the loans default. Alongside this, there is an emergence of a secondary market where we are seeing loans that were previously taken off a balance sheet come back into market.

In comparison to either the UK or the US, the levels of default are very different. It would be fair to say that Italy was relatively slow to react in taking action against loans that were non performing. Typically, the UK and US move a lot faster, however, the Italian market has made steady steps in its recovery. A question that had to be considered, is what will happen post-pandemic? Governments have put a vast amount of liquidity into the market while providing support for consumers and small businesses. Some of these loan transactions will likely start to underperform and the bigger question to think about is what effect this will have in two or three years from now.

Adoption of technology

The banking and financial sector has historically recognised the importance of adopting technology but reacted slowly. There were various conversations about which technologies will assist in sales and recoveries going forward, how online platforms can improve the management and commercialisation of assets and, of course, looking at ways to maximise data.

Unsurprisingly, Machine Learning and Artificial Intelligence both held their stance on the platform. However, a key sentiment echoed throughout the conference was not how technology will progress but how the attitudes of people using it will evolve.

It seems there is a human element that either fears or is reluctant to accept the use of technology within the industry. For technology to be fully adopted, an entire company will need to be on board. It is no longer just a specialist department that has to interact with it, but a team effort to work together to make it a success.

The attitudes to adopting various platforms combined with the best use of data will be key to successful technology deployment. What we know to be critical is that the data must give instant value from the outset while providing reliable information to the right people at the right time.

Looking ahead

As an increased number of portfolios are entering the Italian region, one strategy to differentiate is setting out a clear mandate and process for due diligence. The adoption of technology will provide the tools to do so.

See our next major Global NPL 2022 summit taking place on 5-6 of October (see info) in London.

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