CRE Finance in transition: Why banks should focus on digital use of funds
New capital and risk requirements are increasing the valuation pressure on CRE projects.
The requirements for banks in the area of commercial real estate (CRE) finance have become much stricter in recent years. In addition to growing pressure on margins, increasing ESG requirements and comprehensive reporting obligations, Basel IV regulation in particular is fundamentally changing the rules of the game for banks.
Basel IV increases the pressure
The new requirements for capital adequacy and risk assessment pose considerable challenges for lenders. Commercial real estate financing projects must be assessed and monitored much more precisely - not only with regard to traditional financial ratios, but also taking ESG criteria and project-specific risks into account.
Volatile markets exacerbate the risk
At the same time, the real estate market is operating in an increasingly volatile environment. Rising construction costs, delivery bottlenecks, volatile interest rates and geopolitical uncertainties increase the complexity of project management. Banks bear an ever greater responsibility for the transparent, compliant and efficient use of funds.
Excel was yesterday - the future is digital
Traditional control mechanisms, manual reports or Excel-based lists are no longer sufficient in this environment. In order to meet the increased requirements, more and more banks are turning to digital solutions for controlling the use of funds and cash outflow planning.
Digital platforms such as PROBIS Banks enable standardized, audit-proof and end-to-end control of project costs, construction progress and ESG criteria - in real time and across all parties involved.
Transparency, security and efficiency for CRE financing
Banks benefit from the digital control of the use of funds:
- Real-time transparency on the use of external funds
- Standardized workflows for approvals and verifications
- Early risk detection through digital data analysis
- Automated reports for internal and regulatory requirements
- Seamless integration into existing IT systems
Especially in combination with ESG reporting and global project structures, the digital use of funds becomes a decisive lever for secure, compliant and efficient lending in the CRE sector.
Find out more about how PROBIS Banks supports financial institutions in the digital use of funds - contact us.
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