Summary
A global investment bank headquartered in Japan struggled to keep up with regulatory requirements and MRAs. Some causes of this issue were decentralized manual risk reporting and knowledge management issues. The Japanese bank asked Evalueserve to build a series of microservices to help them with risk reporting and get back on track with regulations. Our microservices architecture reduced human error, ensured data governance and control, and made data and reports consistent and consolidated across business lines. By automating the investment bank’s risk reporting, we accelerated the time to value.
The Challenge
The client struggled to meet regulatory requirements due to their decentralized risk data. They had data in multiple locations, from various banking platforms and booking systems to individually owned Excel sheets. Their decentralized data governance caused problems for many teams, from financial risk reporting to portfolio risk. New data would often get lost as well, as the bank had internal knowledge management issues. They asked Evalueserve to centralize their risk data and make it more usable by creating a variety of related microservices around it.
The investment bank also had internal knowledge management issues. For example, in the event of a global food shortage, the investment bank would want to know the various exposure the countries they operate within have to that particular situation. However, with no single source of truth, they resorted to back-and-forth emails with country heads and the like. Once the country heads provided the data, it still needed to be manually collated into an Excel sheet. That process can take a few days, by which point a global situation could have already drastically changed.
The Japanese investment bank knew it needed to fundamentally change its approach to risk reporting. They needed a partner who could assess their data architecture, implement technology, and centralize their risk data. Their future partner needed an understanding of the risk landscape and broader regulatory requirements. Risk reporting requires deep knowledge of relevant data sets (existing infrastructure) and the latest regulatory requirements, making it crucial for any vendor to have deep domain knowledge of risk.
Our Solution
Evalueserve built microservices to manage risk data in real-time and automate risk reporting. Our approach was to connect various data sources through APIs rather than attempt to host all the datasets on a single platform. The client implemented our microservices across several domains, both on top of existing products and as stand-alone applications.
Evalueserve started by helping the bank improve its limit management product. Our limit management automations:
- Allow the bank to easily manage Tier 1 (economic loss), Tier 2 (industry limits), and Tier 3 limits.
- Enable them to change, activate, or deactivate limits with a multi-level, workflow-based approval process.
- Provide automated breach and warning monitoring and automated limit utilization calculation.
- Supply audit trails for each step in the workflow for governance and control.
- Initiated a process for remediation and a temporary limit increase in the case of a breach.
- Comply with FR 2590 SCCL, SR 11-10, and BCBS 239 standards.
After seeing the success of the limit management automations, the investment bank asked Evalueserve to create several other applications.
One such application is the Capital Consolidation and Adjustment Platform (CCAP), which is a centralized, strategic counterparty credit risk reporting platform that reports on all of the bank’s product classes and business entities on a global level. The CCAP uses much of the same data sources as the limit management app.
The CCAP:
- Aggregates data from internal systems with market data from sources such as Moody’s Analytics, Bloomberg, and Markit. The CCP supports all data source types, including systems, databases, file streams, etc.
- Delivers centralized database architecture with an integrated risk calculation engine.
- Standardized reporting across different business lines.
- Guarantees consistency of the reports between business lines.
- Offers unique capabilities such as visualization (through leveraging third-party platforms such as Tableau), versioning, live drill down, and full transparency and control with regards to data lineage.
- Produces a wide range of reports, including FRY15 and FRY9c.
We also built a comprehensive credit reporting system, which features intuitive Tableau reports, heat maps, maturity profiles, and information on the exposure of particular business lines. Other microservices helped with securitization deal management and stress testing.
Business Impact
The Japanese bank immediately felt the impact of our microservices. These adaptive, responsive, company-wide systems made them better prepared for exposure events and urgent regulatory requests. Our automations reduced human error, ensured data governance and control, and made data and reports consistent and consolidated across business lines. Thanks to our work on risk reporting, the investment bank has a thoroughly modern monitoring risk system that requires less of their time for more accurate and streamlined reporting.