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Business Banker By

Business Banker By. Crédit International & Financier Experts Conseils Inc. International Credit & Financial Consultants Inc. Needs & opportunities. SME risk control Approval Monitoring Early warning signals Basel II regulations BRR FRR Database PD, LGD and EL

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Business Banker By

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  1. Business BankerBy Crédit International & Financier Experts Conseils Inc. International Credit & Financial Consultants Inc.

  2. Needs & opportunities • SME risk control • Approval • Monitoring • Early warning signals • Basel II regulations • BRR • FRR • Database PD, LGD and EL • Making SME loans profitable • Standardization • Reduce operation cost • Decrease loan origination processing time • Improve efficiency for monitoring.

  3. Existing Products Business Banker: • Integration • Easy to customize to the bank’s needs • User friendly • Rating and scoring • Database building: BRR, FRR, PD, LGD, EAD & EL • Basel II compliance & adopting best practice.

  4. Current situation • Multiple systems glued together by manual and paper processes: • Client profile • Credit setup • Risk and ratios • Securities preparation • Monitoring payment • Loan systems • No link to PD, LGD, EL.

  5. How can Business Banker help? Risk control • Create efficient work flows by adopting ergonomics and risk management best practices • Digitize entire credit underwriting process and risk management process, enabling data mining • Include Monitoring and Early Warning Signal systems

  6. How can Business Banker help? Business Banker incorporates Basel II requirements: • BRR and FRR • Include industry, related parties, group exposure, financial documentation • Facility risk : Term structure, types of loans, security, legal documentation • Database building for PD, LGD, EAD and EL

  7. How can Business Banker help? • Business Banker standardizes credit risk management in order to reduce cost and increase data reliability: • Integrates all elements of credit risk management : • Client profile, • Credit facilities, • Analysis of risk and profitability, • BRR and FRR • Application forms, • BRR monitoring, covenants and Early warning signals • FRR monitoring • Reporting system • Data collection (PD, LGD, EAD, EL)

  8. How can Business Banker help? • Automatic Credit Request Preparation And Document (Security, Letter, etc.) • Saves 50% -75% of time, reduce delays and ensures data integrity and increase SME portfolio more profitable.

  9. Building Business Banker in stages • First stage • Optimize Bank’s work flows using ergonomics and best practices • Customize Business Banker to digitize the optimized processes • Second stage • Work with the Bank to design a borrower rating system that is both rigorous in risk analysis and pro business growth • Third stage • Work with the Bank to “data mine” historical loss data • Use statistical methods to determine required provisions and proper risk pricing

  10. CIF Risk Rating System • CIF has successfully implemented this rating system in Asia, North Africa, West Africa and Caribbean region. • Two pronged approach – BRR and FRR • Separates borrower risk from facility risk as recommend by international best practices • Classifies credit more distinctly. • Enables more relevant pricing. • Creates more effective monitoring and early warning system. • Enables feedback into the whole processes by identifys failures and success. • Creates a data-base.

  11. Benefits • Upgrades risk management processes. • Reduction in bad debt/bankruptcy/claims/fraud • Increase in approval rates or market share in areas such as secured loans, where low delinquency presents expansion opportunities. • Increased profitability.

  12. Benefits • Increased operational efficiency (e.g., to better manage workflow in an adjudication environment) • Cost savings or faster turnaround through automation of adjudication using Business Banker. • Better predictive power compared to individual judgment.

  13. IT is very important but costly • Banks have invested large amounts of money on costly systems. 20% of budgeted overhead is usually IT. • Inefficient: The result is multiple systems glued together by manual and paper processes: • Client profile • Credit setup • Risk and ratios • Securities preparation and or monitoring • Compliance monitoring • Loan systems

  14. IT is very important but costly • This has resulted in expensive, inefficient systems that do not completely fill the needs. • In a more normalized business environment the advantages are greater than the cost of the IT system. Even with high costs and inefficiency, investment is considered mandatory and pays for itself.

  15. Origins of Business Banker • Hired to develop a fully integrated solution for SME lending by Royal Bank of Canada . • The end product is Business Banker. • 45,000 Man-Hours spanning 3 years, capturing best practice methods and processes went into the development of Business Banker. 

  16. CRM Client Profile Loan Facilities Document Risk Traditional Loan Origination Risk Instant Access of information, Integration Loan Origination Compliance Business Banker

  17. Business Banker Automation Prepares Documents Client Profile Credit & Facilities Risk analysis & profitability Set-up Covenants & EWS Creates Reports Data Collection (PD, EAD & LGD) Automatic Credit Request Preparation And Document (Security, Letter, etc.) Save 50% -75%of Time and Reduces Delays. Increases Efficiency and Ensures Data Integrity

  18. Multiple SIC Code Link Owner Info Client Profile

  19. Set Up Facilities

  20. Analyze Financial and Risk Cash (financial) calculation

  21. Borrower Risk Rating (BRR) BRR: Automatically Calculated based on CIF CAMP model : Cash, Administration, Market and Production. Other models can be implemented

  22. Facility Risk rating (FRR) Following collateral set up, FRR is automatically calculated. It is specific to each credit facility

  23. Probability of default (PD) Business Banker adjusts monthly the PD based on data-base. This ensures accuracy of the probability of default for every BRR.

  24. Loss Given Default (LGD) Business Banker adjusts monthly the LGD based on data-base. This ensures accuracy of the Loss Given Default for every FRR

  25. Expected Losses (EL) Based on PD and LGD, Business Banker provides with a matrices overview of Expected Losses. By clicking on any figure of EL, PD, LGD, BRR and FRR we will obtain the portfolio details for each EL, PD, LGD, BRR and FRR.

  26. Automatic Credit Prep Multi-lingual Capability Automatic Changes Highlighted Account officer comments, risk analysis, risk identification and mitigating factors.

  27. Automatic Compliance Monitoring Step 3 Input Other Non-financial Step 1 Receive Document and data Step 2 Input Financial Automatic Breach and Early Warning Systems Detection Instant Information Access

  28. Events (instant access)

  29. Pricing Models • Business Banker Enterprise System • 50 Users Accounts • High Performance and High Availability • Upfront Payment • Business Banker Discovery System • 10 Users Accounts • Entry Level System • Scalable to Enterprise System • Upfront Payment

  30. Pricing Models • Business Banker Service Level Agreement • 50 Users Accounts • Fault Tolerant Environment • Power, Hardware, Software Applications and Support Staff • Monthly Payment

  31. Why Business Banker • One integrated information system • Reduce operation cost and increase data reliability and accuracy • Decreases loan origination processing time • Improved marketing (more time to sell, less time to process) • Improves borrower information & early warning system and allows efficient credit rating analysis • Reduce bad debt and loan losses, increase profits

  32. Why Business Banker • Local support and customization • Responsive to localization needs • Responsive service • Backed by leaders in processes engineering, application development and implementation • We can go beyond the software and help you on the business side and infrastructure side

  33. Presentation Layer (ASP, VB Script, Java Script, XML/XSLT) Business Layer (C++, VB, XML, COM+) DatabaseLayer (MS SQL 2000, Oracle, DB2) Security* (SSL, PKI) Middleware* (Host Integration Server, BIZTalk, MQ Series) Architecture

  34. Business Banker System Details • Application : • ASP, VB Script, Java Script, XML/XSLT, C++, VB, XML, COM+ • Hardware : • Production System – 2 HP ProLiant ML350 G4p Servers • Backup System - 2 HP ProLiant ML350 G4p Servers • WAS Server: • Microsoft IIS • Database: • Microsoft SQL Server 2005 • VPN: • Microsoft ISA Server

  35. Conclusions Information Technology: • Market requirement- Prepare for regulatory • Unknown future regulatory environment • The potential for major changes in banking in The Philippines • Profitable-pays for itself • Reduces potential defaults • Increases staff efficiency-reduces number of staff • Growth efficiency • Allows for more SME loans [revenues] using assets • Reduces time consuming messes

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