As economic uncertainty persists, with pandemic-era excess savings largely exhausted, interest rates remaining elevated relative to historical norms and portions of the commercial real estate market continuing to experience stress, many banks are facing heightened delinquency and credit-risk pressures. Credit card and auto loan delinquency rates have climbed materially from post-pandemic lows, while certain commercial real estate segments remain under pressure.
For many institutions, this is creating a multifaceted operational, accounting and risk-management challenge that directly affects financial reporting, reserve adequacy and executive decision-making. Finance and risk leaders are increasingly responsible for ensuring their organizations are prepared for a more complex credit environment.
CFOs and CROs must now ask whether their loan accounting systems, reserving processes and internal controls are built to manage what's next.
Shared Visibility, Better Decisions
Historically, delinquency management was often viewed primarily as a risk function responsibility. Today, rising credit stress has implications that extend across finance, accounting, reserving, capital planning and regulatory reporting. As a result, CFOs and CROs increasingly require a shared view of portfolio performance and emerging credit risk.
The effectiveness of reserve models, financial reporting processes and strategic decision-making depends on consistent, timely and trusted information. During periods of credit volatility, disconnects between risk and finance functions become significantly more visible.
The Pressure Is Mounting
Federal Reserve and Federal Reserve Bank of New York data show delinquency rates across several consumer lending categories have risen meaningfully from post-pandemic lows, while portions of the commercial credit market continue to face elevated stress. Credit card and auto loan delinquency rates have reached levels not seen since the Great Financial Crisis, and certain segments of commercial real estate remain under pressure from higher interest rates, refinancing risk and changing property fundamentals.
This environment is creating mounting pressure on finance, accounting and risk teams to manage greater credit volatility while maintaining transparency, control and regulatory compliance.
1. Accounting Complexity
Delinquencies force a re-evaluation of cash flow expectations and increase the need for immediate and granular updates to amortized cost, impairment and nonaccrual accounting. The divergence between GAAP-based accounting and operational views of performance becomes even more stark during times of stress:
As delinquency volumes increase, these activities can place meaningful pressure on close processes, increase dependence on manual controls and reduce confidence in reported results. The operational burden often grows at precisely the moment executives require faster and more accurate information.
2. Allowance and Reserving Challenges
A surge in delinquencies triggers higher provisioning needs under CECL, with economic forecasts and scenario modeling taking center stage. But many banks still rely on disconnected models, outdated data pipelines and fragmented tools across finance and risk making:
The challenge extends beyond model accuracy. Institutions must also demonstrate governance, transparency and repeatability in reserve calculations. As auditors and regulators intensify scrutiny, the ability to explain reserve movements becomes as important as the reserve estimate itself.
3. Controls and Process Weaknesses
Rising exceptions expose hidden fragility in loan accounting and reserving workflows:
In short, the finance and risk backbone of many institutions wasn’t built for this level of complexity.
A Purpose-Built Solution: SS&C EVOLV
It is critical to evaluate whether existing finance and risk infrastructure is equipped to support increasing complexity. This is where purpose-built banking platforms, such as SS&C EVOLV, can provide significant value.
EVOLV is a domain-aware, bank-specific platform designed for automated loan accounting, reserving and subledger management in a single tool for easy and consistent management across operations.
Key capabilities include:
EVOLV is specifically designed to support the accounting, reserving and risk management requirements of banking institutions, helping reduce customization effort while supporting compliance, auditability and operational efficiency.
What You Can Do Today
Rising delinquencies are more than a credit challenge—they are a test of an institution's finance, accounting and risk infrastructure. Organizations that can automate complex processes, strengthen governance and gain earlier visibility into portfolio performance will be better positioned to respond to changing economic conditions with confidence.
Periods of heightened credit uncertainty make clarity, automation and strong controls more than simply operational advantages—they are strategic necessities.
Questions to Consider
If the answer to any of these questions is “no” or “not yet,” it’s time to modernize.
The institutions that navigate rising credit volatility most effectively will not necessarily be those with the lowest delinquency rates. They will be the institutions with the greatest visibility, strongest controls and highest confidence in the information guiding decisions.
To learn more about how SS&C EVOLV can help automate GAAP loan accounting, strengthen your reserving process and give you real-time visibility into rising delinquencies, explore our landing page or contact us.