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Learn how Accenture helped a large Italian bank significantly reduce risk cost and improve operational efficiency through the cost synergies of process simplification.
This Italian bank is one of the largest European banking groups in the country. The bank serves nearly three million customers and employs more than 10,000 people.
The bank needed to devise a better a better way to manage risk and credit recovery in order to maintain its market position in the wake of the economic downturn.
Italy was crippled by the four-year economic downturn from 2007 to 2011, following on the heels of the global subprime and sovereign debt crisis. Italy's GDP dropped 7 percent below its 2007 pre-crisis level. For the bank, the economic downturn resulted in:
Drawing on the group’s still-enviable market position, the bank’s executives took aim at three goals:
Significantly reduce risk costs
Improve operational efficiency through cost synergies obtained by process simplification and a review of the organizational model
Address audit findings related to operational and credit risks
The bank asked Accenture for assistance, having confidence in the two companies’ existing relationship and historical collaborations around several improvement projects. Accenture offered strong credit skills and a deep understanding of the group’s operational environment.
Accenture helped the bank adopt a new credit risk management vision and culture based on three traits:
To achieve the vision, Accenture and the bank developed a new end-to-end credit risk surveillance model with simplified processes—from the first anomaly, to the management and monitoring of irregular customers. Accenture provided project and change-management capabilities across related projects, bringing structure and a pragmatic approach to engage the bank’s people and achieve expected benefits.
Identified 60 credit anomaly indicators that define the synthetic risk ratio and comprise a color-coded early-warning system for each customer segment
Conducted periodic back-testing analysis for synthetic credit risk ratio, fine-tuning and enhancing the early warning engine
Documented 50 corrective management actions for addressing and reducing exposure from risky customers
Defined new organizational structures and skills for credit monitoring roles
Benchmarked credit account overdrafts and credit risk monitoring models and processes, capturing relevant risk insights for the new risk operating model
Created monitoring tools and reports to more effectively facilitate credit authorizations
Helped roll-out the new credit model and process through a structured change-management plan with pilot and “Big Bang” phases
Helped the bank develop training modules and sessions customized for each role involved in the process, including two e-learning modules for the bank’s intranet
Working in close collaboration, Accenture and the bank devised a better way to manage risk and credit recovery. With the new approach, the bank:
Is positioned to save some $16 million in credit costs and gain $20 million in operational efficiency, despite the tough economy
Accelerated handling of approximately 90 percent of its risky positions to within five days
Improved the operational management control framework, with the addition of 11 controls on the credit risk process
Closed 23 regulatory and operational gaps identified in its recent internal audit
Enabled their leaders to make lending and overdraft management decisions quickly, based on the credit risk synthetic ratio
Sharpened their focus on relevant current account overdrafts at the relationship manager level, leaving low-risk transactions to be evaluated automatically, facilitating a 45 percent reduction of current account overdrafts per year and commercial time savings for the relationship manager
Shifted their view from “vertical” (on each single anomaly) to “horizontal” (on the customer overall)
The bank will be able to intercept potential defaults early, focus on the relevant clients in both lending and credit management activities and speed-up high-risk position management. This will help the group better handle challenging economic conditions in the future.
With a "right time for right risk" philosophy enabled by a stronger credit risk portfolio management process, the bank is now better positioned to remain a European leader.
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