The bank was losing billions of Rands annually due to credit default. Rather than reactive risk management, the bank needed to move to a proactive approach, leveraging data to surface insight around default risk. The challenge was compounded by the fact that customer information was stored disparately across multiple systems.

A solution to consolidate data and create transparency to accurately – and quickly – identify distress was required. The bank asked BSG to design an early warning financial distress trigger to identify customers in distress and notify the relevant banker, thus enabling proactive action to be taken to avoid losses.

Financial distress is classified as the likelihood of a customer meeting financial obligations, and ranges from stable operation through mild distress to severe distress. This is a fluid concept and differs from customer to customer. Successful early identification of distress patterns could save millions of Rands per customer within the CIB space. 

This financial distress early warning tool has enabled the bank to identify risk early and take proactive action to assist customers in restructuring their debt. It provides customers with a greater opportunity to succeed, while reducing the monetary impact for the bank, decreasing reputational risk, and ensuring the bank is able to offer its customers greater value than its competitors.

It is in the bank’s best interest to prevent customers defaulting, as this loss is not only monetary but there is also the knock-on effect of job losses in the bank’s customers. At a time when many businesses are operating under increased constraints, the ability to proactively manage customer portfolios in this way, provides the bank with a significant advantage. At BSG, we believe in working with our clients to create solutions that enable a better future for their customers.