Sec Servizi, a consortium of Italian banks that provides operational and technology services to financial institutions, has selected Accenture (NYSE: ACN) to develop and implement a new risk calculation engine to help its clients and members assess the probability of loan defaults.
Such assessments are required under international capital adequacy rules. The solution will be based upon technology provided by SAS, the leader in business analytics software and service.
Probability of default (PD) is a measure of the likelihood that a borrower will be unable to make necessary scheduled repayments on a loan. Banks calculate PD for each customer based upon multiple factors - including the borrower's credit history and assets and the nature of the bank's investments and other factors. The calculation helps determine the amount of regulatory and economic capital a bank must set aside, according to published international banking capital adequacy standards, known as Basel II.
"Our new PD solution will help our clients and members improve their risk assessment capability and more rapidly and cost-effectively comply with current and future Basel Committee requirements," said Luciano Dalla Riva, General Director of SEC SERVIZI. "With new analytic technologies, our customers will be able to create more sophisticated risk management models and translate complex and sparse data into easily accessible risk indicators. Accenture's deep global expertise in risk management, analytics and Basel II implementation programs combined with SAS' leading-edge analytics solutions makes the two companies ideal business partners for SEC SERVIZI."
"The recent economic crisis and the worsening of credit quality highlighted the importance of a proper risk management organization", said Andrea Dalla Vedova, a senior executive in Accenture's Financial Services operating group. "High performing banks have come away understanding the new role that risk management must play to maintain a strong balance sheet and maintain the confidence of depositors, regulators, shareholders and other lending institutions. In order to better measure credit risk exposure, banks must adopt increasingly sophisticated predictive analytics tools and models. This new PD Engingine, developed with SAS, can help SEC SERVIZI clients and members understand customer risk profiles and more effectively measure credit risk under Basel standards."
SAS Credit Scoring for Banking, which combines a robust scoring engine, flexible modeling environment, and a comprehensive banking industry data model to support improved improved risk assessment and adherence to regulatory requirements, will serve as the basis for the new PD engine.
"Through SEC SERVIZI, small and medium banks can now have the opportunity to use SAS software for addressing financial crisis concerns and helping with regulatory compliance," said Marco Icardi, General Manager of SAS Institute S.r.l. in Italy. "This relationship empowers banks to be more competitive - both today and in the future, as new reforms, like Basel III, emerge."