In a banking environment transformed in particular by increasingly complex and demanding regulations, it is vital for Senior Management to rely on reliable and effective corporate functions, in order to support development and strategy and control the smooth running of operations.
These corporate functions (Finance, Risk and Marketing) must therefore rethink how they function and enhance their operational efficiency, in particular by improving the quality of their data, reducing processing times and costs and integrating and making best use of the regulatory constraints imposed on them and the possibilities offered by new technology (Big Data, open banking, machine learning, etc.).
The sophistication of the banking industry and the strengthening of regulations have increased the role of Risk Departments. Given the evolution of risk measurement methods, the use of models has become a necessity for the assessment of both financial and extra-financial risks. These methodological changes have led to the emergence of certain modelling standards. Although most models focus on credit risk (loan portfolio segmentation, client transfer, securitisation, stress test, RWA modelling, etc.), the taxonomy of the domains covered by the modelling is varied. One of the challenges for Risk Departments is to assess the contribution of the internal rating systems well beyond the calculation of parameters, to provide key information for the Bank’s regulatory steering, operational risk monitoring and business steering, in particular through improved lending capacity and increased profitability control. Convergence of the Risk and Financial Departments is now a major challenge in this respect.
In addition to their role as guarantors of financial statements, regulatory reporting and the quality of financial data in the broadest sense, Finance Departments must help control expenditure and support multiple divestment, merger and acquisition operations and projects. A multitude of tasks, therefore, in an environment where compliance and the level of internal control further complicate things. At the same time, Finance Departments are engaged in extensive regulatory and accounting projects (IFRS9, BCS239, etc.) which still need to be finalised, while preparing future reforms in order to cope with constraints under the best conditions (CRR2, NPL, etc.).
The Marketing Departments operate in an equally complex environment. Changes in consumer behaviour and an increase in the flow of consumer data have prompted a resegmentation of the market and increased spending. Marketing Departments therefore feel the need to equip themselves with tools to enable them to better calibrate their investments and ensure that their allocations are consistent with market share and the growth targets.
Ares & Co supports corporate functional departments in carrying out their transformation, in particular via: