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 The strategic focus of the Group is on the personal financial services market in Ireland, which has been experiencing high levels of growth driven by a strong economy and favourable demographics. With a customer base of over one million, the principal products of the Group are life and pensions, savings, investments, residential mortgages and auto finance, for which the Group uses a multi-channel distribution strategy.
The Group realised that the New Capital Accord (Basel II) would provide substantial benefits for its operation. With Basel II’s emphasis on ‘risk related’ regulatory capital, permanent tsb, with a relatively low risk customer profile and by adopting the IRB Approach, could potentially expect to see this reflected in a reduction in required regulatory capital. The Group also realised that by adopting a more sophisticated approach, that it could also enhance the risk and credit management infrastructure and thus get operational benefits and achieve compliance at the same time.
permanent tsb selected the Basel II Decision Analytics solution from Experian, which is integrated into the customer management tool, Probe SM for Retail Banking. Probe SM provides the capability, through the use of the latest generation of decision rules engine, to deliver strategies to manage all aspects of the relationship with a customer. In addition to its customer management capabilities, it incorporates standard processes designed to manage Basel II regulatory capital computations and assist with use test requirements. By adopting the Experian solution, the Group recognised that, as well as achieving Basel II compliance, it could also implement a best practice customer level behavioural scoring tool that could be used to drive customer focussed strategies throughout its businesses.
"By adopting the Experian solution, the Group recognised that, as well as achieving Basel II compliance, it could also implement a best practice customer level behavioural scoring tool that could be used to drive customer focussed strategies throughout its businesses... "
Probe SM is now imbedded within our operational infrastructure and the investment in our Basel II programme has significantly enhanced our credit risk capabilities. This, coupled with the low risk nature of our retail portfolios, should result in a reduction in permanent tsb’s regulatory capital requirement, given the Group’s recently received IRBA accreditation.
The system provides a platform for customer focused strategies across the bank and on a monthly basis processes four million records, including current accounts, loan accounts, savings accounts and customer records, which are aggregated to provide a customer level view.
permanent tsb has already leveraged a number of benefits from this decision analytics/rules engine approach and plans to generate further benefits from the exploitation of this functionality.
David Curtis
Basel II Programme Manager
permanent tsb
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