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A system for reducing the risks at every stage of credit portfolio management

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Credit4Cast

Опытные внедрения:

Credit4Cast - Forecsys Scoring Solution
 

Purpose

Today’s economic realities have defined new tendencies for the retail credit market. Banks must pay special attention to the quality of their credit portfolio since increased revenue from issuing loans will depend directly on effective risk management.

Credit4Cast (Forecsys Scoring Solution) is a technologically sophisticated and highly intelligent solution will lowers the risks at all stages of credit management (see pic.1) without taking away from the portfolio’s revenue.

Рис.1. Использование Credit4Cast на разных этапах управления кредитом
Pic. 1. Using Credit4Cast at various stages of credit management.

Product Description

The Credit4Cast solution was develop using advanced technical data analysis carried out by the Scientific School of Academic Y. I Zhuravlev (Computing Centre of RAS) and innovative ideas produced by Forecsys. Credit4Cast is a fully automated process for the loading, processing and constructing of rating models, which reduces costs and frees specialists from performing routine tasks, allowing them to concentrate on those special circumstances in which you cannot rely on automatic forecasts.

Key advantages of Credit4Cast:

  • a complex solution for credit ratings: application scoring, behavioral scoring и collection scoring;
  • development and implementation of rating models for several areas;
  • creation of a reliable scoring model using situational and macroeconomic indicators;
  • use of advanced logical algorithms for the settings of the rating models;
  • effective construction of rating models with minimal data storage;
  • easy-to-use interface which allows you to choose between specific models and their interpretability;
  • quick integration with existing IT systems.

This unique combination of advanced developments in Russian science and IT has allowed Forecsys to create one of the best credit rating solutions. Highly effective, simple to use and easy to implement, the Credit4Cast system is a reliable base for any bank’s credit risk management system.

Functional Possibilities

Application Scoring technology is designed to evaluate the credit status of a potential borrower. It examines his requests for credit and any decisions taken to issue credit.

Credit4Cast allows your bank to do the following:

  • to drastically reduce the number of loan defaults and expirations;
  • to drastically reduce the number of reliable potential borrowers refused loans;
  • to formulate the best loan conditions;
  • to speed up the procedure and lower the operations costs spent on evaluating a client’s credit status;
  • to widen your credit portfolio while still maintaining a reliable policy regarding credit risks (the number of loan defaults, the profitability of your portfolio);
  • to drastically reduce the risk of fraud.

Behavioural Scoring is designed to monitor the risk of default among clients at certain periods during the loan in order to take preventative measures against this risk.

Credit4Cast will allow your bank to do the following:

  • to evaluate the risk of insolvency and loan default for every credit portfolio;
  • to drastically reduce the number of loan defaults and expirations at the same time as carrying out pre-emptive measures to ensure customer loyalty;

Collection Scoring is designed to enable effective management of bank charges for loans.

Credit4Cast will allow your bank to do the following:

  • to drastically reduce the operational losses incurred by bank charges;
  • to choose the best strategy for applying sanctions.

Credit4Cast solution consists of five main functional modules:

  • Project manager. This module restricts the right of access to a limited number of system users.
  • Data preparation module. Data is loaded onto this module from external hard drives and local data sources. Performance indicators are used to make a formula for a client’s basic characteristics and there is also a preliminary evaluation of information value and selection of ideal characteristics.
  • Data analysis module. This module is a means of carrying out visual data analysis.
  • Model construction module. This module can be used to create forecasting models which use various training algorithms.
  • Accounting module. Monitoring the quality of work done by the forecasting models and changes to the integral indicators for the overall credit portfolio.

Case Study: Petrocommerce Bank: Decision support system for credit management.

The Forecsys rating system is used by Petrocommerce Bank for analysis management of credit risks and automatic calculation of a borrower’s credit rating for various areas of the retail credit market, beginning from 2005. Over the last seven years, the share of overdue loans among the Bank’s customers has reduced significantly from 5.2% to 1.1%. However, the portfolio of credit issued by Petrocommerce Bank to their customers has increased six-fold.

Awards

The Forecsys credit rating system was designated one of the three best technologies of the year in the «Upravleniye Finansami» nominations for the CNews AWARDS 2007.

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