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International Credit Risk Forum 2010: The power of data in the new market dynamics

Carlos Alonso
Experian Panorama Editor
Experian
http://es.linkedin.com/in/carlosalonso

 

 

Experian’s 10th International Credit Risk Forum took place at the end of November 2010 in Istanbul, Turkey. This event is one of the top annual meeting points for credit risk and fraud professionals. We caught up with David Groom, Managing Director of Experian Decision Analytics EMEA, to discuss the Forum.

David Groom, Managing Director of Experian Decision Analytics EMEA

Hello, David. How was this year’s International Credit Risk Forum?

The event had its most successful year so far, with 183 credit risk and fraud professionals from 99 companies attending the Forum. Attendees came from almost 40 different countries and we see a lot of people coming back year after year. The Forum has become a key meeting point for industry leaders.

What role does data play for credit risk departments?

The changes that the markets have been facing in the past few years, and even more so in the last few months, have meant that credit risk management and fraud prevention has to adapt at a very fast pace. All the strategies aimed to successfully adapt to the new realities of the market have to come from a data-based approach. That was why we chose “The Power of Data for the New Market Dynamics” as the lead topic for the event.

What are the more important take-aways from this event?

There are a few key points that, in my opinion, could summarize not only the presentations, but also the conversations we had in the hallways and between sessions:

  • The economic situation will continue to be uncertain.
  • Risk management is not only a matter of compliance, but is actually a profit lever that can be used by the financial institutions to be more competitive.
  • Firms are investing heavily in automation as a group or global function, but they are also establishing central departments to have a global reach in risk management.
  • There is a need to benchmark the effect of the investment and measure the effects of strategies, data modeling, and new automated systems.

But the key sentence that can summarize the whole event is that this is not about only compliance - it’s about competitiveness and survival.

Credit Risk Forum in Istanbul

The two-day event had an agenda where keynotes by industry leaders, from companies like BNP Paribas, UniCredit or HSBC, were combined with break-out sessions focused on topics like collections, fraud and optimization. The second day also featured case studies by major international operators. Videos of the sessions will be posted online soon, but in the meantime this is a brief summary of what was discussed in the Forum:

Using data to overcome global challenges

The keynotes for the first day focused on the usage of data and analytics to optimize risk management. Gürsel Kubilay, President and CEO of the Turkish Credit Bureau, Kredi Kayıt Bürosu, opened the event presenting their experience and the role that sharing credit data plays for the healthy development of the economy. A better and deeper knowledge helps the financial market to overcome risk and helps the growth of economy as more people and business gets access to credit.

Gillian Key-Vice, Head of Government Affairs in Experian, also has extensive knowledge on positive data sharing and the impact it can have on lending practice since first implementing a system of this kind in 1994. In her keynote, she addressed the growing trend on positive data sharing in the European Union.

The current economic and financial situation was not absent from the Forum. William Thomson, Director of Economics at Experian, detailed the credit risk implications of global economic challenges, especially the prospects for growth in developed economies over coming years

For Calin Stanciu, Chief Risk Officer in UniCredit, the crisis is an opportunity to reorganize the business model around a customer centric approach, aligning as well the tools and process decisions across all the organization.

Risk management is a necessary structure for a lending organization, but superior risk management can be a key competitive advantage in a mature market. That was the key point of the presentation by Felipe Brandão, Head of Retail Risk of HSBC in Brazil.

Innovation in risk and fraud management: a path to efficiency

The second day of the International Credit Risk Forum was focused on case studies that showcased innovation and modernization in their approach to fraud and risk management. Zsolt Jaczko, VP, Head of Methodology and Validation in Raiffeisen Bank International, explained how a regulatory compliance project (to meet Basel II regulations), turned into a driver for innovation and improvement of risk management capabilities.

Another interesting case study showed how Sberbank, the largest and oldest bank of the Russian Federation, has been developing a modernization program for the past two years, with the help of the Experian Decision Analytics team. The objective was to implement and develop a modern credit risk infrastructure, which is now processing and automatically decisioning a considerable portion of Sberbanks loan portfolios. The efficiency and cost savings of the bank has shown immediate benefits. Vadim Kulik, Head of the Risk Department, explained the objectives of this huge project, its main milestones and achievements.

  • Dates and location for the 2011 Credit Risk Forum will be announced early next summer. Meanwhile, you will soon be able to see all the videos from this past edition here.

Any thoughts?

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