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Industry

Using cognitive technologies to help banks manage risky credit portfolios post COVID-19

 

CHALLENGE

The world over, government-announced COVID-19 relief packages are helping businesses of all sizes to tide over financial stress. By providing funding to meet short-term requirements, these programs have ensured that businesses that were healthy prior to the crisis do not go bankrupt due to exogenous events. However, many of these businesses will continue to remain fragile even after the economic activity recovers. Banks must therefore enhance their monitoring mechanisms to proactively detect signs of stress and maintain the health of their portfolios.

TCS SOLUTION

TCS offers a range of solutions and services in the credit monitoring space. Our Credit Monitoring and Control Suite comprises a set of cognitive models for monitoring the health and stability of businesses of various sizes. At the credit origination and underwriting stages, these models guide underwriters to stipulate appropriate covenants based on borrower and deal characteristics and the bank’s credit policies. In the servicing stage, the models run advanced early warning signal models to proactively detect signs of stress and advise bankers to initiate steps to mitigate the stress. The solution improves covenant monitoring by automating the tracking process and making it periodic, thereby  driving compliance to credit stipulations. These solution components provide a framework to develop bank-specific models and automation for credit monitoring and control.

BENEFITS

TCS’ Credit Monitoring and Control Suite helps:

  • Enhance underwriting through effective covenants specification based on larger knowledge base
  • Preempt credit default by proactively identifying signs of stress
  • Increase rigor of credit monitoring, enabling early stress detection and interventions
  • Reduce cost and effort for credit monitoring
  • Minimize errors due to elimination of manual credit monitoring processes

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