How One Bank Transformed its Deal Origination and Portfolio Management with DealPoint

Client A, a large bank, had managed its portfolio centrally for a long time.  But the bank realized the strategy was ineffective and cost-prohibitive when the market becomes illiquid (such as during the recent financial crisis). Client A decided to manage risk sensitivity by ensuring that loans entered the portfolio at par value upon origination.

Client A was using multiple spreadsheets to help price loans, which discouraged pricing consistency across the business.  The client required a modern, future-proof solution that was scalable, easy to use and centralized to fit the bank’s needs.

The Bank’s Market, Size, and Complex Needs Required a Tailored Pricing Solution

The client’s geographic diversity and size added complexity and challenges to achieving consistency, one of the key objectives in the strategic initiative.

Client A has relationship managers across the world, operates in multiple jurisdictions, and conducts business in different languages.  The bank had to transform its models, data and systems to be able to:

    • Automate relationship-level forecasts for complex client groups with many products
    • Measure risk and return for all products, not just loans
    • Produce consistent actual vs. forecasted performance measures
    • Deliver powerful analytics with features tailored to different user groups’ needs
    • Integrate with existing systems to enable single sign-on via a central intranet system

The Deep Expertise of Brilliance and DealPoint’s Flexibility Won

Client A is very invested in portfolio management.  They needed a partner with deep expertise in risk-based pricing technology to help the bank realize its strategic initiative.  After lengthy research into building versus buying a solution, speaking to other Brilliance clients, and taking workshops with Brilliance, they selected DealPoint.  The Brilliance Financial Technology solution won because of our flexible solution and ability to accommodate their requirements.

Phase 1:  Automated Pricing Platform for the First Business Unit

Brilliance replaced the client’s various pricing spreadsheets with DealPoint Digital Pricing, an intranet-based end-to-end deal optimization platform.  Client A implemented two return-on-risk metrics as its key performance measures.

All of the division’s credit, non-credit, and ancillary products were included, to allow the bank to perform holistic customer relationship forecasts for its existing and new business.

DealPoint was also integrated with Client A’s in-house employee directory to enable access control by user. The integration gave different users access to different data and functionality based on the user’s location and role.  For example, a relationship manager (RM) in one location has access to a different set of customers than an RM located in a different time zone. In addition, relationship managers see more simplified input fields than portfolio managers.

DealPoint rolled out to thousands of relationship and portfolio managers within one business unit that had personnel located in geographically disparate areas. For the first time, these users were able to view relationship-level forecasts of their existing business, eliminating the need to manually key in existing business in the pricing process.  In addition, the users gained the ability to amend or remove existing business and/or add new business. They could also dynamically recalculate relationship forecasts to assess the impact of their deals.

Phase 2:  DealPoint Expansion, Approval Workflow, and New Analytics

Brilliance expanded the existing DealPoint solution to include an additional business unit with many more users. At the same time, Brilliance delivered two key enhancements to the system:

    1. An automated price/deal approval workflow system
    2. Management information capability

These two features enabled Client A to monitor the deal approval status and risk/return characteristics of its new business on a forward-looking basis.  Plus, they could aggregate the data by country, region, or globally.  This new information empowered decision makers with information to adjust the ease or difficulty of pricing approvals. It encouraged more origination in product, customer and industry segments where risk/return trends were improving, and it discouraged origination in segments with deteriorating risk/return trends.

Phase 3:  Mobile Access and New Performance Tracking

Brilliance expanded DealPoint to include a third business unit, adding thousands more users from Client A. In this phase, Brilliance added three key enhancements. First, Brilliance delivered a mobile-ready version of DealPoint, enabling users to access the features of DealPoint via a tablet or mobile device at or outside the office.  (This feature is now standard in the next generation of DealPoint.)

Second, Brilliance added an additional performance measure that Client A elected to introduce and track against the previous two measures.  Finally, Brilliance added an ancillary revenue-tracking feature to enable the bank to track promises made by originators when proposing new transactions.  This feature empowered management to track staff performance against targets and encourage behaviors that increased profitability.  (This feature is also now a standard part of the next generation of DealPoint.)

Margin Increase and Increased Focus on Customer Profitability

Now that a number of Client A’s business units are all using DealPoint, the bank, for the first time, has access to comprehensive data about its lending business across many different regions.  The bank plans to keep extending its management information capabilities to establish market benchmarks and continue to drive overall margin increase.

With the increased importance of stress testing, Client A also plans to deliver stressed what-if analyses to the relationship managers to raise awareness of how stressed scenarios impact their overall customer profitability.