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Basel II ComplianceBasel II Compliance
The New Basel Capital Accord (Basel II) will allow banks that implement consistent, auditable credit and operational risk management policies to substantially reduce their capital reserves, and, therefore, boost competitiveness of their loan products. That is the reason Basel II compliance is already a high priority with most top- and mid-tier banks worldwide.
However, in order to comply with Basel II, banks need to address the following two major challenges:
- Data capture. Capturing and integrating historical data (at least 5 years deep) on borrowers, credit exposures and credit grades/scores, to enable advanced credit risk analysis and portfolio management.
- Automation. Streamlining and automating the loan origination processes, to ensure consistent enforcement of the bank's credit policies and guidelines.
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Avantek helps banks target those challenges by leveraging the following assets:
- Banking Services Hub complemented by Financial Data Integration allow capturing historical data on borrowers, credit exposures (both direct and related), credit risk scores/grades and borrowers' financials.
- Application Components are utilized for accelerated assembly of highly-customized loan origination automation systems from pre-built and pre-tested components.
Large European banks will spend, on average, 115 million over five years to comply with Basel II.
- Forrester Research press release.
According to Datamonitor's report "Credit risk management and Basel II in European financial services: Getting ahead in the B2 implementation space", European banks will spend $1.9bn in 2004 and $2bn in 2005 on Basel II compliance.