OTP Bank Serbia enhances risk modeling with predictive analytics

Published on 25-Jun-2013

"With help from IBM and Valicon, we have built a standardized, robust and sophisticated solution for our local risk modeling requirements – helping us eliminate weeks of manual work for our analysts and provide timely and accurate information to our decision-makers in a cost-effective way." - Cetko Okiljevic, Head of Placement Monitoring and Controlling Department, OTP Bank Serbia

Customer:
OTP Bank Serbia

Industry:
Banking

Deployment country:
Serbia

Solution:
BA - Business Analytics, Business Integration, Business Performance Transformation, BA - Risk Analytics, BA - Predictive Analytics, Transforming Business

IBM Business Partner:
Valicon

Overview

Founded in 2007, OTP Bank Serbia offers retail and corporate banking to customers across the country via a network of branches and ATMs, as well as an online banking service known as OTPdirekt. It employs 700 people. The bank is a member of the OTP Group, which has subsidiaries in nine European countries and employs 30,000 people.

Business need:
As the importance of risk management increases and requirements from financial regulators become more complex, how can banks find more accurate and cost-effective ways to model risk?

Solution:
OTP Bank Serbia adopted a risk modeling solution based on predictive analytics software from IBM, which generates credit risk scorecards automatically and eliminates spreadsheet-based processes.

Benefits:
Automates risk modeling processes, allowing analysts to focus on adding value in other areas. Enables more sophisticated and accurate modeling. Delivers insight to the bank’s decision-makers faster.

Case Study

The economic climate can change quickly, and banks need to stay a step ahead to protect the interests of their customers and shareholders. The need to assess risks, make contingency plans, and meet increasingly tough regulatory standards means that risk management is becoming an increasingly central concern.

The challenge for banks is to ensure that their risk models are sophisticated enough to serve as an accurate guide for action, without becoming too complex to manage and maintain cost-effectively. By adopting IBM® SPSS® Modeler software, OTP Bank Serbia found an ideal solution.

Business background
Founded in 2007, OTP Bank Serbia offers retail and corporate banking to customers across the country via a network of branches and ATMs, as well as an online banking service known as OTPdirekt. It employs 700 people. The bank is a member of the OTP Group, which has subsidiaries in nine European countries and employs 30,000 people.

Cetko Okiljevic, Head of Placement Monitoring and Controlling Department at OTP Bank Serbia, comments: “The current trend in the banking industry is to use more advanced and sophisticated analytical and statistical tools for the assessment of risk. Within the OTP Group, we had already seen our head office in Hungary derive significant benefits from implementing IBM SPSS Modeler for risk management, so we wanted to find out whether it could do the same for our local risk modeling requirements.”

Replacing spreadsheet-based processes
OTP Bank Serbia had been relying on spreadsheet-based risk modeling processes, which had required considerable investment of time and resources. Data had to be extracted from the company’s central databases and then manipulated manually by the bank’s analysts, which introduced the risk of human error. It also meant that the analysts were spending much of their time on low-level data processing work, rather than focusing on their core role of providing valuable insight to the bank’s decision-makers.

“With the IBM solution, we have a single, standardized process for risk modeling, which is much more efficient,” says Okiljevic. “It is integrated directly with our databases, which means that we can access the data we need to analyze much faster and more easily. We can also drill down to a much more detailed level of data, which means we can do more sophisticated types of analysis and risk modeling than were possible in the past.”

Building a partnership
To implement the new solution, OTP Bank worked with Valicon Serbia, an IBM Business Partner that has deep expertise in IBM SPSS software and more than 20 years of experience in helping customers across the Balkan region to harness analytics technologies. With Valicon’s help, the software was implemented within three days, and the whole project was completed in 15 days.

“Valicon did an excellent job with the consultancy and implementation services, and we were able to re-use and adapt some of the risk models that our Hungarian parent company had already developed, which helped to accelerate the project,” says Okiljevic. “Now we have a solution that meets all of our needs, while also conforming with the OTP Group’s corporate standards.”

Streamlining credit risk modeling
Currently, the SPSS solution provides scorecards that help the bank assess credit risk and decide whether to offer loans and other products to each of its customers. In the future, it may also be extended to other applications.

Okiljevic concludes: “With help from IBM and Valicon, we have built a standardized, robust and sophisticated solution for our local risk modeling requirements – helping us eliminate weeks of manual work for our analysts and provide timely and accurate information to our decision-makers in a cost-effective way.”

About Valicon
Valicon is a marketing consulting and research company that focuses on southeastern Europe. It specializes in small markets and offers its clients custom solutions. Advanced methodologies and deep insights into clients’ industries help to distinguish Valicon’s service from the competition. The company’s success comes from its good relations with clients, regional partners, employees and local communities.

To learn more about services and solutions from Valicon, please visit www.valicon.net

About IBM Business Analytics
IBM Business Analytics software delivers data-driven insights that help organizations work smarter and outperform their peers. This comprehensive portfolio includes solutions for business intelligence, predictive analytics and decision management, performance management, and risk management.

Business Analytics solutions enable companies to identify and visualize trends and patterns in areas, such as customer analytics, that can have a profound effect on business performance. They can compare scenarios, anticipate potential threats and opportunities, better plan, budget and forecast resources, balance risks against expected returns and work to meet regulatory requirements. By making analytics widely available, organizations can align tactical and strategic decision-making to achieve business goals.

For more information
For further information please visit ibm.com/business-analytics

Products and services used

IBM products and services that were used in this case study.

Software:
SPSS Modeler

Legal Information

© Copyright IBM Corporation 2013. IBM Corporation, Software Group, Route 100, Somers, NY 10589. Produced in the United States of America. June 2013. IBM, the IBM logo, ibm.com and SPSS are trademarks of International Business Machines Corp., registered in many jurisdictions worldwide. Other product and service names might be trademarks of IBM or other companies. A current list of IBM trademarks is available on the web at: www.ibm.com/legal/copytrade.shtml. IBM and Valicon are separate companies and each is responsible for its own products. Neither IBM nor Valicon makes any warranties, express or implied, concerning the other’s products. This document is current as of the initial date of publication and may be changed by IBM at any time. Not all offerings are available in every country in which IBM operates. The client examples cited are presented for illustrative purposes only. Actual performance results may vary depending on specific configurations and operating conditions. THE INFORMATION IN THIS DOCUMENT IS PROVIDED “AS IS” WITHOUT ANY WARRANTY, EXPRESS OR IMPLIED, INCLUDING WITHOUT ANY WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND ANY WARRANTY OR CONDITION OF NON-INFRINGEMENT. IBM products are warranted according to the terms and conditions of the agreements under which they are provided. The client is responsible for ensuring compliance with laws and regulations applicable to it. IBM does not provide legal advice or represent or warrant that its services or products will ensure that the client is in compliance with any law or regulation.