SUMMARY
The client, a major banking group offering a broad range of credit facilities to its corporate and institutional clients as well as its retail clients. These facilities include bilateral and syndicated loans in the form of term or revolving facilities in addition to bonds, letter of guarantees and other types of facilities. Since the Bank was producing all of its Credit Risk related reports manually, they required assistance in report process automation.
CUSTOMER GOALS
The Bank regularly produces credit-risk related reports for various of its governance forums (e.g., Board of Directors, Authorised Management, Risk Committee). A significant proportion of the data used to produce these reports is not available in the core system, but is instead stored in multiple manually maintained excel files. Additionally, the production of the mentioned reports is entirely manual, extremely time-consuming, and entails a high operational risk.
The objective was to simplify operations and enhance data integrity by creating a centralised credit risk database and automating the reporting process. As part of this objective, the Bank directed Avantage Reply to (1) review and understand the reporting process and associated reports, (2) develop and enrich a dedicated credit risk database that allows for data historisation and can be used as input for the production of the credit risk reports and (3) develop and implement a tool that automates the credit risk reporting and also offers further analysis capabilities of the credit risk reports.
CHALLENGES
One of the biggest challenges the Avantage Reply team faced was the extensive amount of manual input the client was doing on an ad-hoc basis in Excel-based files, which could lead to amendments being lost from one reporting period to another. Another challenge was the imperfect allocation of collateral to the associated credit lines.
SOLUTION
●The team built an "exceptions file" to be used as an internal file to streamline and centralise all the manipulations performed on the data. This file will serve as an override before the final production of the reports, allowing the team, based on their expert judgment, to make the necessary manual adjustments in bulk while keeping a record of the changes.
● The solution tool was developed to link the collateral file to the bank's credit loan portfolio. Based on the regulatory requirements and best practices for collateral allocation, the tool was able to generate a loan portfolio in which the collateral is perfectly allocated (in terms of type and value) to the correct type of credit