• Consumer banking “portfolio management” in assets and liabilities management
• Asset management and investment evaluation
• SME, setup and business modeling

The following is one of our flagship programs “Consumer Assets Portfolio Management”, shared in details to show our standard level of SME expertise …

PROGRAM OUTLINE:

Proactive Approach for building & Marketing Diversified Profitable Consumer Assets business with an integrated Early Warning Signs & Effective Market penetration and healthy share build up, along with insightful Risk-based pricing approach…

Ultimately, the program (mix of workshops and working sessions with teams in actual work environment – in an advisory role or coaching and development / training sessions), prepares the organization towards establishing an on-going, dynamic and information-based ‘Policy Development’ environment with the involvement of all key stakeholders – front-end, middle office and back-end.

Overview

This program covers the range of concerns and activities related to consumer portfolios (SMEs, Cards, Mortgage, Auto, personal, credit lines, ODs…), particularly during and after periods of financial distress.

The program proceeds from a discussion of the basic causes of business and financial success and failure, through long term, sustainable profitability dynamics, diversification, recognition of early warning signs, to the development and execution of market relevant plan of response.

It deals in depth with various threats and key issues in this process, as well as detailing methodologies for building sustainable healthy market share, relevant segmentation schemes, competitor’s-based Unique Value Propositions, and risk-based pricing techniques, while predicting default and measuring recovery & collection effectiveness.

It also covers the use of proper recovery & collection MIS; historical write-offs mapping; predictive modeling set up; bucket movement & management processes, as tools to help in forecasting the average level of credit losses a portfolio can reasonably expect to experience over its full life cycle.

Additional Critical dimensions – By request

The Expected Losses (EL) part, as a product of a probability of default (PD), describes the likelihood that an obligor will default as a loss-given-default (LGD) parameter, help defining the ‘value at risk’ (VAR) in a particular running portfolio, hence complying with Basel framework requirements for capital adequacy, and safeguards banks assets and shareholders equity on the long term.

This model is a portfolio invariant, i.e. primarily working on the grounds that capital required for any given loan (in SME and Retail) should only depend on the risk of that loan (or its sub-segment) and must not depend on the portfolio it belongs to. This characteristic has been deemed vital in order to make this adopted new framework applicable to a wider range of countries, markets and institutions…

The model also elaborates on the obvious maturity adjustments required in consumer environment, as opposed to the traditional corporate portfolio expertise & applies the maturity ladder approach to the relatively newly-established Retail Portfolios within the GCC and MENA region.

Benefiting Parties

The program is the basis of an integrated four-part series of workshops and on-site working sessions, involving;

• Business / segment development management,
• Brand / product management,
• Front line,
• Back end application processing centers,
• Credit Policy management, Fraud units,
• Verification, Compliance, Collection and recovery,
• IT, MIS, analytics, customer targeting and acquisition (including lead management process),
• Customer retention process,
• Audit and risk management,

Hence, help consumer business culture change and build up of an effective and integrated consumer Assets portfolio management processes.

Learning Objectives and Applications

Upon completion, all partners will be able to:

• Understand the value of ‘portfolio management’ approach and its impact On credit quality and efficient ‘knowledge-base’ healthy market share building.
• Recognize any deterioration of activities or credit quality early enough for efficient policy review and development of corrective actions that are standard and should be agreeable between risk, audit, and business teams
• Build organizational structures that will signal any decline, across all fronts in a timely manner to enable building efficient response mechanism through standard reporting, MIS and efficient dashboards that can be used by all fronts – with obvious conflict of interests in mind!
• Create an effective plan of action to address competitors’ moves and avoid troubled situations, while maximize profitability
• Create an effective approval process with standard decline/reject and counter offer matrix and guidelines.
• Develop modeling to measure effectiveness of key processes; example verification process, weighing its value in avoiding risk vs. its cost and complexity of execution with the dissonance and irritation of relationship with top employers!!... How to build effective strategies to overcome the issue…
• Develop on-going reporting systems and management dash-boards to deal with market problems and react as they arise, ensuring the preparation of the different teams involved in the process and the organization to move towards establishing dynamic policy formulation and review process, locally oriented, yet represent best practices in the business, benchmarking international practices of top performing institutions in most developed economies, adopted to the local environment…

There are 15 Modules recommended in this course:

• Introduction to consumer credit business environment
• Managing Risk in the Credit Cycle context
• Account Acquisition & consumer life-cycle profiling techniques
• Preliminary analysis concept
• Basic Financial analysis in consumer lending
• Decision strategies
• Decline, denial and counter offer policy techniques
• Installment Lending (including Cards, line of credits and ODs)
• Advanced Home Equity Lending
• Account Maintenance and management
• Collection and recovery evolving techniques
• The art of making the policy and integrating all organizational fronts, while managing the overlapping conflict of interest
• Portfolio Profitability dynamics – overall & by product
• Portfolio Management Techniques
• Managing consumer risk and complying to basell 2 & 3

This will leave 2 specific modules managed by request, due to the fact that they are not commonly applied within ME & GCC market…

• Credit scoring and behavior scoring (2 modules) are included by request, since most of the banks within the region apply processing, approval, and policy guidelines based on the traditional method of “judgmental approach”, and credit scoring is mostly not considered on the very short term.

Nevertheless, we usually include a ‘snap shot’ on key elements within the ‘portfolio maintenance and management’ module, covering the core of all of the above, just to ensure alignment and completeness of the concepts.

This program is designed in 3 categories of technical expertise and depth (basic, intermediate and advanced), and each category can be further customized, according to the background of the participants, the advancement of the process in the organization at the time, and the overall objectives of each individual organization.