Data Drives Good Credit Risk Management

Credit Risk Management

Data is a key pillar of good credit risk management, backed by near-real-time analysis and quality data systems. Without the right data, enterprises can’t ensure a comprehensive review of credit risk exposure, limiting their ability to maintain and oversee the timely payment and credit limits of subscribers. 

But data goes beyond just an understanding of the current position in today’s landscape. It’s also fundamental to reducing exposure to evolving bad credit and limiting the potential losses to rapidly changing circumstances. 

Neural Technologies’ own Credit Risk Management product provides a robust, scalable credit risk management solution for operators. That solution is based on the transformative power of quality data to optimize credit risk management, supported by comprehensive subscriber profiling and appropriate digital integration of external events to create a truly complete solution for the modern business ecosystem.

Digital data drives good decisions

The modern operational landscape is dynamic and constantly evolving. New technologies have the potential to disrupt both markets, opportunities, and operations. Geopolitical volatility can rapidly shift both financial markets and dynamics. These disruptions are framed by the persistent and lingering effects of the COVID-19 pandemic.

These challenges reflect a remarkably uneasy landscape for credit risk modeling and credit risk analysis. The ground under our feet is no longer stable, meaning good credit risk decisions must be based on an adaptive and data-driven approach. It’s critical too that the data is gathered and analyzed in a timely manner—with the landscape shifting so quickly, out of date insight is a potentially costly trap for enterprises. 

Combine these conditions with the current debt landscape, with global debt reaching USD226tril in 2020 and personal households accounting for an estimated 60% of that burden, and you begin to see why timely, accessible, actionable data is so critical to effective operations in credit risk management.

Accessibility gained even greater focus during the pandemic, with a focus on accessible digital workflows a key priority for many industries. Research undertaken by SP Global in the finance industry indicates 75% of credit risk management professionals in financial services were working on digitalization efforts even prior to COVID-19 to better improve workflows, with 70% of them noting that the pandemic accelerated these efforts.

What this period also demonstrates is the huge importance of having the right data at your fingertips. Around half (51%) of firms explored in the SP Global research were looking to combine alternative sources with traditional data to ensure the resilience of their credit risk management workflows. 

The ability to integrate a wide range of data sources is critical for modern credit risk management, and an integral part of our own credit risk management solution. When considering the changing landscape, the ability to integrate a wide range of data sources is fundamental to adapting to shifting operational conditions. Half of the respondents in the SP Global survey were looking to update models to better estimate probabilities of default, loss given default, and recoveries.

Neural Technologies’ own solution offers a versatile and highly automated tool with clear KPI dashboards and sophisticated data mining capabilities, delivering quick and effective resolutions. This solution goes beyond simple prediction of defaults by providing active management for an enterprise’s overall exposure to bad debt. 

Our Credit Risk Management product also allows customers to monitor any data element in enterprise systems such as usage, payment activity, call destination, payment type, and other features, backed by automated monitoring that offers analysis of change, and adapts to build understanding of high-risk customer behavior over time.

Engaging our Credit Risk Management solution at a major private sector Asian bank provided a platform to significantly decrease exposure to bad debt. We worked with the operator to provide a holistic credit risk solution for this large bank which operated over 5,000 branches in more than 2,500 cities. Our Credit Risk Management solution, backed by adaptive credit limits and supported through further application risk functionality, delivered an estimated USD56,000 of additional monthly recovery of bad debts. 

Neural Technologies’ Credit Risk Management solution also helped a major European communication service provider (CSP) reduce its exposure to bad debt, upgrading from traditional monitoring of individual customer entities to benefit from our own highly automated solution. Consolidating and streamlining fraud and credit functions not only reduced the enterprise’s debt vulnerability, but also allowed the CSP to better protect customers from unintended increase in usage that could lead to unsustainable bills.

We know from our extensive experience that enterprises from telecommunications to insurance are faced with the need to embrace a fit-for-purpose and data-driven solution that meets the challenges of today’s operating environment.

Adaptive, scalable solutions

Agility is a word often overused in the modern business world, but the reality is that agility is a key differentiating factor in effective credit risk management today. 

We can see from the disruption in today’s landscape how quickly operational conditions can shift. COVID-19 accelerated personal and business debt. Geopolitical tensions in Eastern Europe are radically changing how and where some enterprises can operate. The climate crisis continues to deliver dynamic and far-reaching impacts to economies and societies. Static solutions are simply no longer fit for purpose.

Neural Technologies Credit Risk Management product offers customer-centric risk management that is fully configurable to your own business needs. That means flexible data integration, behavioral modeling, link analysis, robotic process automation-powered workflows, rules, neural analytical models, segmentation and special lists. In-house control allows you to update your credit risk modeling as and when you need it, eliminating any costly or time-consuming vendor intervention and allowing you to make decisions based on current market conditions.

Risk models built on our advanced machine learning algorithms offer automated solutions that can respond based on clear frameworks and thresholds, providing a responsive approach for low-risk interventions. That includes early warning through automated credit exposure monitoring that leverages comprehensive risk attributes from both structured and unstructured data. This is backed by early detection alarms for potential exposure risks, and adaptable exposure limits for each customer that provide a truly flexible solution for credit risk management.

Digital transformation will continue to accelerate the quantity of data that credit risk analysts are exposed to in coming years. The critical need is to embrace a solution that enables quality decision making within that landscape. Neural Technologies Credit Risk Management product can bridge that divide and help turn challenging credit risk analysis into an effective credit risk management workflow. 

Discover Neural Technologies’ scalable and adaptive Credit Risk Management solution

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