Cognos, now part of IBM, has unveiled new analytic software designed to provide retail banks with access to accurate, timely and transparent credit risk information across their loan portfolios. The company says that while risk management is a key component of most banks, in many cases, critical risk information is siloed and locked up in disparate data sources, making it difficult for banks to gain a 360 degree view of enterprise risk information in order to properly forecast risk exposure and monitor the day-to-day performance of current loan portfolios.
IBM Cognos 8 Banking Risk Performance – Credit Risk is a packaged business intelligence (BI) application designed to give bank executives and risk managers an immediate, up-to-date and comprehensive view of their credit portfolio across products, geographies and business units. Built on an open, services-oriented architecture platform, Cognos says the new solution plugs into an organisation’s existing technology environment, letting users easily tap into their credit risk data housed in financial, core lending and other administrative systems to gain an accurate, up-to-date understanding of loan performance and its current and long-term effect on profitability.
“Credit risk management in the banking industry has become increasingly complex due to financial deregulation, weakness in the economy, financial product complexity and the recent and unprecedented turmoil in the financial services industry,” said Craig Focardi, research area director for TowerGroup. “In addition to strengthening credit risk policies and processes, it has become a business imperative for banks to invest in systems and analytic applications that can harness their disparate risk data, and provide the ability to assess risk scenarios in real time to ensure ongoing alignment with policy and achieve profitability goals.”
Leveraging the IBM Banking Data Warehouse, or the bank’s existing credit risk warehouse, the new analytics application offers users pre-built dashboards and packaged reports that can provide instant visibility into five key analytic areas, namely; Originations – to assess the volume and characteristics of new loan originations, such as credit scores and loan-to-value calculations across the portfolio; Front-end Performance – to better gauge delinquencies, 2+ delinquencies, delinquency roll-rates, and vintage information; Back-end Performance – to quantify gross and net charge-offs, repossessions, foreclosures, and bankruptcies; Financial Oversight and Profitability – to measure risk-adjusted return on capital (RAROC), net interest margin, and forecast vs. actual comparisons for metrics including receivables, delinquencies, and charge-offs and Basel II – to facilitate compliance reporting on key Basel II metrics such as Probability of Default, Loss Given Default, Expected Loss, Exposure at Default, and Capital Ratios
“To the extent that an institution has a good understanding of its risks and exposures, it can be proactive in managing its loan portfolios,” said Serge Couture, senior manager of business intelligence at Laurentian Bank of Canada. “By investing in systems, analytical tools, and sophisticated modeling techniques, retail banks can gain much needed context around their data – whether at a high-level portfolio ceiling view or a more detailed transaction-level analysis – to make the right decisions to protect themselves."
IBM Cognos 8 Banking Risk Performance – Credit Risk will be available in mid-December, either direct from Cognos or its network of resellers worldwide.
