Banking

Key Analysis Challenges Facing the Banking Industry

  • Risk Management
  • Performance in Retail Banking: Profitability by product, customer and channel
Risk Management

The Challenge
The need to develop aggregated risk reporting to inform and support board and executive-level decision-making in global banking groups has never been greater. The traditional approach to risk reporting has been highly fragmented. This makes it difficult to identify emerging portfolio trends across the group and provide the board, regulators and ratings agencies with a clear top-down view of Credit Risk, Market Risk, Operational Risk and their constituents.

Banks are typically addressing the need to transform their risk reporting through long-term change programmes involving new technology platforms. Meanwhile, there is often an urgent need for an immediate solution that integrates data from current sources to enable top-down interactive analyses of the key areas of risk to which the bank is exposed.

The Metapraxis Risk Management Dashboard

  • Broad data integration: the bespoke dashboard provides a comprehensive top-down view of risk across the bank and its individual divisions, which is continuously updated as the data changes.
  • Highly visual: risk information is presented using charts, diagrams, maps and other interactive visual analyses which facilitate exploration, assimilation and drill-down.
  • Ease of access and reporting: the dashboard provides a one-stop shop for key risk information for senior executives and risk managers and enables automatic production of board risk reports and other documents.

 

The Benefits
This approach provides board members, executives and risk managers with rapid answers to questions including:

  • What are the major risks across the group and where are they concentrated?
  • Are there limits in excess or close to capacity?
  • How much of the risk appetite is currently utilised?
  • Are there exceptions requiring explanation?
  • How has the risk profile changed?

This enables a greater understanding and assurance about the control of risk at group level and the effects of portfolio trends on the group’s risk profile.

Performance

Profitability by product, customer and channel

Retail banks operate in an increasingly competitive environment within the saturated markets of the developed world. Technology innovations have allowed new entrants to emerge with a significantly lower cost structure than long-established operators. The Internet has enabled consumers to make rapid and direct comparisons between the services provided by different banks.

Achieving underlying performance improvements, both to grow revenues and control costs, is a key factor in driving profitable growth in this environment. Retail banks need to focus much more closely on tracking and predicting the drivers of revenues, profitability and cash to ensure that early corrective actions can be identified and put into effect.

Meaningful analyses, with an emphasis on trends and diagnostics and a focus on forward-looking indicators, help banks manage the future in a difficult market.Key questions that might be addressed include:

Key questions that might be addressed include:

  • Which factors attract and keep customers? How can we sustain and improve performance in these areas?
  • In what products and areas are we gaining or losing market share against our key competitors?
  • Which products, customers and channels are our profit drivers? Which product and market segments offer the biggest or most profitable opportunities?
  • What are the most effective measurement and incentive frameworks to stimulate sales of profitable products?

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