PRACTICAL STEPS FOR BANKS TO TRANSFORM THEIR APPROACH TO RISK MANAGEMENT
Emerging technologies are transforming every aspect of financial services, and COVID-19 has only accelerated banks’ implementation of their digitalisation ambitions. From the way customers complete transactions, to how banks make decisions, digital tools are bringing greater speed, efficiency and transparency to many aspects of the financial workflow.
A survey of 300 financial services professionals we conducted in partnership with Longitude in January and February 2021 found that many banks are lagging in their adoption of digital solutions for risk management. This is limiting their ability to forecast future trends and improve decision making across their business. Additionally, we also conducted in-depth interviews with four senior banking executives, to understand the experiences in their respective organisations and vision for risk management.
More positively, our research revealed that a group of banks (20 percent of the total sample) have a more mature approach to risk management. We named these banks ‘risk management leaders’, and their investments are paying off, with a focus on automating risk modelling (either completely or to a great extent). They are adopting all of the following tools to at least some extent: integrated balance sheet management, a scenario-based risk analytics platform, modelling-as-a-service, an enterprise-wide data analytics platform, and real-time risk management.
Why should banks be looking to transform their approach to risk management?
Currently, only one in 10 banks surveyed strongly agree that their approach to risk modelling is a competitive advantage. Yet over half (52 percent) say COVID-19 has accelerated their plans to modernise the risk modelling lifecycle. The data reveals that the impact of the COVID-19 pandemic is the number one factor influencing banks’ approach to risk modelling, making it even more influential than regulatory requirements.
Oct-Dec 2021 Issue
SAS Institute