AXA Bank reduces risk with SAS® and improves its portfolio management
Risk is an important parameter that must be considered with granting credit. It is also an issue recently addressed by Basel II regulations. While many other banks have viewed these rules as a constraint, Belgium-based AXA Bank understood from the start that these new regulations could also generate business opportunities. With the help of SAS Credit Risk Management, AXA Bank has greatly improved its risk management and optimized its workflow.
Credit-related decisions at AXA Bank are now more decentralized. And the bank has a much better overall knowledge of its customers and portfolios. AXA Bank has also gained new efficiencies when making credit-related decisions. Equipped with powerful reporting and analysis tools, the bank has increased the number of decentralized credit decisions, while optimizing the administrative workflow linked to credit demands.
Turning Basel II constraints into opportunities
Using SAS Credit Risk Management, AXA Bank can accurately evaluate the risk of potential credit losses and calculate the equity necessary to cover that risk. Better still, the application integrates credit scoring and credit portfolio management features. This integration means that the potential impact of new credits on the bank's overall position can be simulated. Moreover, with the Web-based SAS reports, management now has a more powerful analysis tool at its disposal. For customers that meet standard conditions, intermediaries can make credit decisions themselves, thus reducing administrative costs within the bank and speeding up customer service.
Predicting market evolutions
The SAS solution even contains stress-testing features that are extremely valuable in assessing credit risk at AXA Bank. "We need to continuously anticipate the impact of certain market events on our risk position," explains Colpin. "AXA Bank develops macroeconomic scenarios to simulate such events as a rise in the unemployment rate or a drop in real estate capital. This puts us in a position to better assess the impact of economic trends."
SAS chosen after careful analysis
"The selection procedure clearly pointed to SAS as the preferred supplier," recalls Colpin. "In addition to meeting the stated criteria, the SAS software featured an easy interface build-up. We were also impressed by the performances of the SAS tool in terms of ETL capabilities, modeling, back testing and stress testing. What really decided it for us was the fact that SAS consultants were the most current on all of the latest topics and emerging concerns in terms of credit and risk management. This knowledge meant we were immediately working along the same lines."/p>
Easily adaptable reports
The Basel II regulations have also enabled AXA Bank to implement new tools for business follow-up. These tools include updated and better-documented workflow processes, improved data reliability and more innovative marketing. In addition, the system enables the industrialization of models and scoring grids, which means the bank is totally independent to develop its own data models.
Benefits for both business and users
With the introduction of the Basel II regulations, risk is now managed during the entire life cycle, not just at the acquisition stage. The expected default is calculated per credit and aggregated in pools. AXA Bank personnel can now continuously monitor risk evolution. SAS underpins this improved risk management by supplying monthly statistical reports that highlight these evolutions. In doing so, SAS has helped AXA Bank achieve a much greater knowledge of both individual customers and global portfolios. All in all, it is an entirely creditable performance for everyone concerned.
AXA Bank – Growing with its customers
The results illustrated in this article are specific to the particular situations, business models, data input, and computing environments described herein. Each SAS customer’s experience is unique based on business and technical variables and all statements must be considered non-typical. Actual savings, results, and performance characteristics will vary depending on individual customer configurations and conditions. SAS does not guarantee or represent that every customer will achieve similar results. The only warranties for SAS products and services are those that are set forth in the express warranty statements in the written agreement for such products and services. Nothing herein should be construed as constituting an additional warranty. Customers have shared their successes with SAS as part of an agreed-upon contractual exchange or project success summarization following a successful implementation of SAS software. Brand and product names are trademarks of their respective companies.
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Turn Basel II constraints into opportunities, accurately evaluate the risk of potential credit losses and calculate the equity necessary to cover that risk
SAS Credit Risk Management optimizes workflow and provides better overall knowledge of customers and portfolios
“ We wanted to make these necessary investments as profitable as possible by also generating information more rapidly to benefit the customer and the business. Hence the need for an efficient data analysis tool to help us turn Basel II constraints into opportunities. ”
Manager of Basel II and IAS/IFRS Credit Retail Issues