Industry

Banking & Financial Institutions
Corporate Banking

Company Profile

  • Top 5 European Bank

Situation and Objectives

  • Due to persisting low interest rates in the market and consequent pressures on margins, the client launched an initiative to redefine its capital allocation strategy.
  • The objective was to focus the lending activity primarily on the client’s relationships that could guarantee adequate growth in risk-adjusted profitability for the years to come.
  • A key constraint to the successful implementation of the initiative was related to data availability and analytics which limited management’s transparency around the client’s revenue potential and risks.

Approach

  • Simon-Kucher mapped all data sources within the bank and created an extensive database by matching clients’ demographic information, historical relationship data, transactional data and market information on industries’ growth patterns.
  • In close collaboration with the bank, Simon-Kucher developed a number of key performance indicators to provide top management with analytical information on each client relationship.
  • Finally, Simon-Kucher together with top management created a tailored allocation strategy for each client.

Strategic Capital Allocation

Results

  • The most important benefit the bank obtained was the analytical infrastructure to conduct customized asset allocation analysis, achieved by enhancing data transparency and training internal resources on advanced analytics.
  • The bank was able to increase the time-to-market of its asset allocation decisions, making it faster than competitors to identify the clients with the highest profitability potential.

Impact

  • More advanced commercial planning process
  • Revenues increased by 0.5% even if asset volumes and risk provisions remained constant (several millions of € increased revenues)

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