John-Patrick O’Sullivan, Sr. Director-Global Financial Institutions & Real Estate
“To improve is to change; to be perfect is to change often” —Winston Churchill.
Today, the banking industry is echoing these very words, as risk and compliance needs are significantly changing the way banks operate since the financial crisis of 2007 and 2008. The ever-increasing complexity and scope are forcing banks of all sizes to focus more on compliance, especially as it relates to managing data and measuring risks. The understanding of risk and compliance is also getting more specialized—due to new regulations and guidance, indicating that the paradigm is here to stay. S&P Global Market Intelligence, a company that combines a long history of measuring risks with expertise in managing enterprise data, is helping banks flourish in this challenging environment.
S&P Global Market Intelligence was born out of the integration of two strong and market-leading businesses— S&P Capital IQ and SNL Financial. While still at the early stages of the integration, the combination of the two businesses brings together a holistic solution set for the company’s banking clients, which spans industry intelligence, risk solutions, and commercial lending. The company is continuing to focus on designing solutions that meet the needs of commercial banking clients with expanded solutions that let S&P Global Market Intelligence more broadly support clients and help them solve challenges. The company’s combination of SNL’s high-quality Financial Institution (FI) data with S&P Capital IQ’s industry-leading scoring methodology is proving to be transformative by automating Probability of Default (PD) and Loss Given Default (LGD) scoring for FI counterparty exposure. This enables clients to accurately measure risks within their portfolios in a timely manner, which eventually impacts their ability to deploy capital in a more efficient manner.
Sailing through Surging Tides
Amid the overwhelming regulations issued in the industry, many view the recent introduction of the Current Expected Credit Loss (CECL) model by the Financial Accounting Standards Board (FASB) as the biggest change in accounting for banks to occur in years.
We are intensely focused on developing comprehensive and innovative solutions that specifically help our banking clients solve for both today’s and tomorrow’s needs
And the major challenge to adopting the new accounting standard is managing the overwhelming amount of data that is necessary to successfully perform it. CECL requires financial institutions and others that might have debt-based assets in their financial portfolios to book losses based not just on actual performance of the debt instruments, but on projections about how they might perform in the future. S&P Global Market Intelligence views Data Science as the answer to this recent accounting advancement. In almost every case, the data exists to meet requirements like CECL. The problem lies in not having the processes, technology, or data governance in place to easily extract the required data so it can be analyzed and acted upon.
S&P Global Market Intelligence’s internal reporting solution, SNL Banker, provides clients with visibility into their internal data, helping to spot outliers, trends, and risks in real-time. SNL Banker provides a singular view into a bank’s operations by linking data from its internal systems, such as the core processor, general ledger, CRM and any other ancillary system. Users can leverage the easy-to-use dashboard and reporting interface to drive reporting and analysis throughout the enterprise. SNL Banker enables banks to have a real-time view into the complete relationship between their clients and households—allowing them to more easily flag compliance and risk concerns within their portfolios. Users gain a centralized and comprehensive view into their operations to satisfy compliance obligations and drive performance.
S&P Global Market Intelligence’s SNL Unlimited platform helps clients sail through constantly shifting environments. SNL Unlimited gathers the latest financial, regulatory, and market information from across the banking industry to make it easier for their banking clients to stay abreast of a constantly changing environment. Clients can easily monitor peers and competitors; perform demographic and market analysis to drive branch footprint, M&A, and growth strategies; prospect for commercial lending opportunities and monitor competitor originations within markets; and leverage its reporting and mapping tools to meet critical compliance needs—especially related to the Community Reinvestment Act (CRA). Additionally, S&P Global Market Intelligence’s news coverage and proprietary analysis span all major regulatory and industry changes, keeping clients informed about the ever-shifting market.
From helping clients stay abreast of the changes to providing analysis that helps them quantify the cost of these changes, the company’s unparalleled reporting is critical to enable clients to operate in this environment.
Scaling Heights by Understanding Risk
S&P Global Market Intelligence’s determination to ensure that their client interaction meets client needs is manifested in the way they conduct surveys for every client after each interaction—whether it is a support question or a visit by their relationship manager. The survey responses are then reviewed on a regular basis to inform the development of best-in-class solutions. The company also strives to build strong partnerships within the industry. For instance, a Regional Bank based in Northeast that focuses on Commercial Real Estate lending was facing pressure by the regulators, given their growth and size, to move away from their single expected loss scoring approach to a dual risk rating system where separate PD and LGD scores are provided. The bank approached S&P Global Market Intelligence to develop an internal rating system that includes both PD and LGD Models, provides ‘regulator ready’ user and technical documentation, and offers training and ongoing support. Once implemented, the solution offered complete transparency of PD scorecards and LGD models enabling regulatory buy-in; standardized scoring process enabling greater outcome consistency; and better scoring performance enhancing capital assessment and pricing.
"In a time when data is paramount to solving risk and compliance challenges, our solutions offer clients a centralized, comprehensive view into their bank’s performance and operations"
Strength in a Regulatory Reality
S&P Global Market Intelligence believes that to be successful, banks must adopt transformative solutions that proactively address changing regulatory requirements and drive financial performance. S&P Global Market Intelligence helps clients understand that compliance considerations should be always top of mind and not addressed perfunctorily after they have formulated their strategies or designed a new product. S&P Global Market Intelligence leverages the 30+ year commitment to banking from SNL Financial with the expanded solutions from the integration with S&P Capital IQ, to best support banks’ evolving needs. Whether it is dissecting detailed information and helping banks manage their own data, comparing bank performance, meeting compliance needs around CRA, or driving towards PD and LGD assessment in support of CECL, S&P Global Market Intelligence is helping the banking industry drive towards more holistic solutions. Focusing on its core values of integrity, excellence, and relevance, S&P Global Market Intelligence embraces and promotes accountability throughout the organization.