Expertise in providing credit management solutions across the credit life-cycle
Principa offers a variety of specialised products and services to the Banking sector.
Solutions include a wide range of analytical and financial modelling services, credit risk consulting and end to end credit risk software that will address all areas of the customer lifecycle. Our solutions have been widely deployed to commercial banks in the Middle East, Africa and Asia.
Principa offers the following solutions:
A key focus for banks since 2016 has been the institution of a new standard in bad debt provision calculation – IFRS9 (these regulations had to be adopted by 1 January 2018). 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. We are frequently called upon to provide audit support or introduce economic models into the calculation. More information on Principa’s IFRS9 offerings are detailed here.
Banks are required to calculate regulatory capital in terms of the regulations set out 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). Different approaches can be applied to calculate the RWA, ranging from a standardised approach to a full IRB approach. Principa has successfully assisted multiple banks in both the development and the deployment of the models into Principa’s decision engine, DecisionSmart.
Account management strategies fuel the profits on many revolving products (for banks this would mainly be credit cards). Banks utilise a variety of account management decision areas to best manage accounts namely:
When it comes to building strategies on these decision areas there are various options available.
- Expert strategies allow for best practice segmentation built without data.
- Customised strategies utilise data to determine optimal decision keys and segmentation breaks.
- Champion/challenger option allows for the run of multiple strategies in parallel where accounts are randomly allocated one of the strategies. The strategies are monitored and a new champion strategy is crowned every 12 months.
- Optimisation strategies utilise 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 has provided account management strategy design solutions to customers for more than twenty years, offering all of the above services.
Principa’s SmartSuite incorporates a range of software that assists banks to manage customers from Originations through Account Management and Collections. Systems offered include the following:
All banks have a significant requirement to build and deploy models throughout the bank – these include financial models and scorecards across the credit life-cycle.
For over twenty years Principa has been assisting banks around the world in building and validating scorecards. We offer traditional scorecards and, as we have witnessed banks starting to incorporate machine learning models into the credit risk assessment process, our offering now also includes the building of these models. Our rigorous build process and documentation will ensure our models pass stringent bank governance requirements.