INSIGHT - 5 min read

One bank's quest for bringing its risk modeling enhancements in-house

How reducing reliance on third-party vendors brought more speed and confidence in risk model management

February 19, 2024

With only two hundred employees, a privately held banking institution in East Asia originally planned to outsource their model management processes to a third-party vendor. But as the bank’s business expanded, their streamlined team of analysts would struggle with the contract’s limitations, which was risking the bank’s growth potential, productivity, and budget. 

The bank’s primary challenge was consistent and frequent model tuning, which is necessary in producing reliable models. As a result, the bank’s analysts spent their limited time investigating false positive alerts generated by the existing models. The team could request additional testing from a vendor — but the bank would have to incur additional costs and strain resources even further.   

Helping unlock confidence with Model Edge 

Having worked with PwC on a previously successful engagement, the privately held banking institution turned to the team for help. Model Edge, a PwC product, gave them the confidence to know they could bring their model tuning in-house according to their specific needs and goals. 

Model Edge helped empower the bank to tune and optimize anti-money laundering models easier and other anti-financial crime models while enabling compliance and regulations. Also, Model Edge integrated data from disparate sources to leave an audit trail, enhancing the bank’s ability to make informed decisions quicker and efficiently. 

Adding speed and efficiency with model tuning ownership 

To replicate their rules and scenarios, the bank used Model Edge’s coding workbench to create an automated testing library for model tuning and enhancements. This approach allowed the bank to take control of the tuning process and increase efficiency, while helping to reduce reliance on any future third-party vendors. 

The bank used Model Edge’s document automation feature to help streamline the tuning timelines and reduce associated costs. Utilizing Model Edge, the bank was able to tune thirty scenarios, significantly reducing the tuning cycle time by nearly 80 percent. This transformation allowed the financial institution to complete the tuning cycle within a matter of weeks, as opposed to months. 

The bank continued to unlock more benefits through utilizing PwC's tailored tuning methodologies and templates, which helped them scale their model operations and processes. 

A single environment to document, develop, assess, and govern models 

With the implementation of Model Edge, the financial institution successfully transitioned their model tuning and optimization operations in-house, resulting in a more cost-effective and efficient approach. The financial institution now has greater control and ownership over the tuning process, empowering them to be proactive in conducting tuning activities as often as they need. Model Edge’s scalable architecture can allow the financial institution to seamlessly expand their risk management capabilities as their business grows. 

As many other financial institutions navigate an increasingly complex landscape, embracing end-to-end risk management solutions like Model Edge will become imperative to stay ahead of the curve. By leveraging automated documentation and reporting, tested templates, and integrated coding, Model Edge can empower you to better address emerging regulatory issues, enforce standardization and help streamline risk model development and tuning more effectively — and more confidently. 

Want to learn how Model Edge can unlock confidence in your model tuning management?

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