Early Warning System Development

Project Essence

The development and implementation of an effective Early Warning System (EWS) was a solution to our client’s need to decrease the ratio of non-performing loans in the bank’s portfolio.

The pandemic outbreak showed that risks can be of different origins and various natures. Coronavirus has become a stress-test for many industries, including banking. And consequently, our client was affected as well. Bad and overdue credits have become a scourge, especially in the corporate banking sector.

That is why our client – the Top-10 Bank from Central Europe, whose history dates back to the 1990s – has prioritized non-performing loans prevention rather than dealing with the issues they cause later.

Screenshots of the solution

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The Challenge

The Bank’s management has always concentrated on digitization and automation of processes and workflows in their business. Even though some IT solutions for loan origination workflow have already been implemented in the Bank, they could not realize their full potential due to several constraints:

the complicated architecture of existing solutions
IT solutions were based on different platforms
lack of flexibility of implemented software
weak interconnection of existing microservices for different departments
ineffective customer’s data exchange between Bank’s departments.

This is the first time our team worked with this Bank. But our deep expertise, substantial experience in the development and implementation of financial IT solutions for banks, and close attention to technical requirements won us the contract against our competitors. Moreover, our solution strictly corresponds to the precise needs of the Bank.

The technical requirements for potential vendors included the following major tasks:

provide convenient data access to all specialists involved,
simplify and tune the existing software solutions for Key Risk Indicators (KRIs) monitoring,
integrate IT-solutions for different departments into a single network,
provide flexibility and simplicity of KRIs configuration and adjustment,
use open-source technologies for software development.

Understanding the fact that effective work greatly depends on smart and digital tools, the Bank decided to interconnect and automate the digital solutions implemented for different departments previously.

Moreover, the client requested we use Open Source technologies to reduce the cost of ownership and get a faster Return on Investment (ROI).

Quick and timely data access is a pledge of positive and successful reaction to changing situations. Who acts fastest wins the battle. Realizing this fact, the Bank staked its trust in interactivity and performance.

The Solution

EWS Implementation

Our business analyst team set up a series of meetings with the Bank’s representatives to fully understand the requirements.

After a thorough analysis, our experts proposed the implementation of EWS to provide effective monitoring of the Bank’s corporate customers. The software solution would allow the Bank to:

avoid loan portfolio deterioration
automate loan portfolio monitoring process
generate reports on the current state of the Bank’s loan portfolio
automate the procedure of KRI signals processing
improve the quality and speed of response to KRI signals at early stages
analyze the Bank’s customers’ financial situation quickly and efficiently
improve workload distribution among different Bank departments
optimize the Bank’s specialists workload

The Key Points of the Project

As a result of a series of strategy sessions with the Bank, our team selected a few improvement areas and designed the overall software solution implementation approach.

The final list of the project milestones looked as follows:

improve Bank’s client profile development
key risk indicators profile implementation
security notification profile development
on-line and off-line monitoring systems implementation
implementation of credit data analysis systems
tunable reporting system development
internal audit system implementation

The Challenges of Integration

The major issue was that the Bank had already been using several software solutions. But they were not integrated and worked independently. This caused the desynchronization of data exchange, requiring our IT specialists to adapt their approach to account for various modules and microservices based on different platforms.

Integration with Windows Active Directory

Our technical team had to work on the Bank’s premises and with their security and IT departments’ specialists. Together, we implemented changes and instantaneously checked their workability.

Integration of the Information Security System notifications with the Bank’s external systems.

Due to the lack of access to Information Security System of the Bank, our technical experts had to involve authorized Bank’s specialists to check new software functionality.

Integration with Bank’s Enterprise Service Bus (ESB).

As the ESB itself and computer software in the Bank were not new and stable, our team had to adapt them to our contemporary technologies, tune and streamline robust connections between them.

Integration with notifications sending server.

The solution we offered is fully compatible with all known platforms. But the Bank’s computer software was not so advanced. That’s why our specialists had to manually rewrite some program code of our software to integrate with outdated systems.

The Challenges of EWS Implementation

In the course of EWS development, our team successfully solved a few problems that the Bank’s management considered crucial. Our IT specialists have done the following work:

EWS integration into the current Bank systems and microservices via Enterprise Service Bus SonicESB using JMS-protocol.
Implementation of automated Offline monitoring of customers’ data from internal databases.
Implementation of online customers’ data monitoring.
Implementation of administrator accounts to ensure the set-up of the user interface (UI), behavior patterns, role models, decision making, and data security event monitoring.
EWS integration into the Bank’s electronic document security system.
Notification system implementation.
Implementation of online information updates via WebSocket protocol.
Implementation of a decision-making module for customers’ KRIs analysis and determination of their risk status on the basis of BRMS Corticon.

Stress test results have shown that the implemented system successfully copes with the requirements. In 90% of cases, the delay time does not exceed 3 seconds. In addition, cases of memory leaks are not detected during the tests.

10%

Revenue increase

3 sec.

The delay time in 90% of cases

Memory leaks during the tests