Prometheus

Banking Sector

We are experts in providing credit management solutions across the credit life-cycle

Principa have worked with a variety of banks within South Africa and throughout the African continent to help improve their credit management across the credit life-cycle.

Principa offers a variety of products and services to help banks overcome the challenges of credit risk management. This ranges from analytics, to advisory and software. Principa offers the following solutions:

A key focus for banks since 2016 (the regulations had to be adopted by 1 January 2018) has been the institution of a new standard in bad debt provision calculation – IFRS9. Principa has worked with banks across a wide range of products (from term loans, asset finance, to SME and commercial) to help build, review and manage their monthly IFRS9 calculations. Frequently Principa are called upon to offer Audit support or introduce economic models into the calculation.

Banks are required to calculate regulatory capital as determined through the provisions in the Basel Accords. Internal ratings based (IRB) models incorporating probability of default (PDs), loss given default (LGDs), exposure at default (EADs), and credit conversion factors (CCFs) are produced and combined together to determine the risk weighted asset (RWA). There are multiple approaches to calculate the RWA dependent from a standardised approach to a full IRB approach. Principa has helped multiple banks in both the development of the models and the deployment of the models into Principa’s decision engine DecisionSmart.
Account management strategies fuel the profits on many revolving products (for banks that is mainly credit cards). There are different account management decision areas that banks utilise to best manage namely:
There are various options when it comes to building strategies on these decision areas. Expert strategies allow for best practice segmentation built without data. Customised strategies utilise data to determine optimal decision keys and segmentation breaks. Champion/challenger allows to run multiple strategies in parallel where accounts are randomly allocated one of the strategies; the strategies are monitored and every 12 months a new champion strategy is crowned. Optimisation strategies utilises mathematical optimisation techniques to determine, for example, optimal credit limit offers or over-limit authorisation amounts in order to increase profitability and reduce risk.  Principa have been offering all of these services for over twenty years.

SmartSuite

Principa’s SmartSuite incorporates a range of software that assists banks manage customers from origination through account management and collections. Systems include the following:
All banks have a significant requirement to build and deploy models throughout the bank – this includes financial models and scorecards across the credit lifecycle. For over twenty years Principa has been working with banks around the world building and validating scorecards. We offer traditional scorecards and more recently we have witnessed banks incorporating machine learning models into the credit risk assessment process which we build too. Our rigorous build process and documentation will ensure our models pass even stringent bank governance requirements.

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