Assessing, pricing and managing credit risk remains one of the most important core business areas of financial institutions. Banks in Hong Kong are facing a myriad of challenges including a changing regulatory landscape, digital transformation, non-bank financial institution interconnectedness risk, integration of climate risk into credit risk frameworks, leveraging the new Commercial Data Interchange and maximising returns on credit assets.
In light of these challenges, traditional banking institutions should review their existing credit and lending platforms while continuing to innovate new product offerings to keep up with the rapid pace of change being driven by new entrants to the market. KPMG has a wide spectrum of credit related services and deep expertise to support financial institutions with credit risk management.
A holistic credit risk approach leads to success
Institutions that want to achieve these goals should proceed as follows – of course, always in compliance with regulatory expectations:
- Standardise: Standardisation and modularisation of data feeds to improve efficiency of the credit lending process and accuracy of data being used for credit risk measurement
- Automate: Creating a smart credit risk control process to enhance operational processes through robotic process automation, reducing manual touchpoints across the entire credit and lending chain
- Analyse: Identification of new innovative sources of credit data and information and use of advanced analytics methods (machine learning / AI, etc) to drive more informed credit risk models
- Integrate: Integration of more advanced straight-through credit approval methods with paperless, more real-time, credit scoring, and efficient and fast credit processes for positive customer experiences while maximising efficiency for the financial institution
Our expertise and experience
Our team of experts offer financial institutions and other business entities a holistic approach to meet internal and external requirements in the context of credit risk. Our team is happy to support you with their interdisciplinary know-how in the following areas:
Credit Model/
Scorecard Development
Credit risk model development (rating models, credit risk portfolio models, early warning systems, RWA, IRB models etc) including in Excel, Python, SAS and ‘R’
Model Validation
Independent validation and testing of credit risk models
Process Optimisation
Credit risk and credit approval process optimisation, including optimisation of rating development and validation of processes
Regulatory Change Management
Management of regulatory change, such as Basel III final reform data collection and operational requirements for the CR-SA
Credit Risk Data Review and Reconciliation
Data review, data lineage and data reconciliation to provide further confidence on credit related regulatory reporting accuracy
Credit and Lending Process Reengineering
Re-engineer organisational and operational structures related to credit approvals, credit risk scoring and credit management
System Implementation
Help financial institutions with implementation of systems including credit technology related systems, lending platforms, Basel III RWA calculation engines
Benchmarking
Provide credit risk management gap analysis and best practice benchmarking
Capital Management
Credit RWA optimisation and capital management support
Credit Risk Compliance Support
Support on credit related compliance issues and forward looking credit compliance management
Stressed Credit Management
- Identify financial statement misrepresentation and other borrower frauds (Credit Assurance)
- Identify/execute turnaround or financial restructuring strategies
- Support creditor sales of loan exposures/portfolios
ESG & Climate Risk
Integration of Climate and ESG into credit risk processes, models, risk appetite, other credit and lending areas
