Banks and other financial institutions don’t have to worry about possible risks gone ignored and missing out on important details regarding the clients no more. EWS (Early Warning Signals) sends in an alert on what could possibly go wrong and helps rectify the same. This minimizes the possibility of customer defaults with the constant evaluation of the customer portfolios, thus keeping a check on the loan quality. In case of a possible risk, a trigger warning is sent out alerting the bank and meanwhile, the system works on preventing the disaster.
The approach of the EWS system in tracing out the red flags is through certain indicators. These can be financial, behavioural, industrial, geographical and demographical, employer-employment and even perceptual. Asset related issues can be discovered with the financial indicators. They can be relied on to reveal some of the earliest symptoms like a late loan payment or sudden overdraft, return of issued cheques, payment rejection against ECS Mandate, irregular submission of Inventory/Receivables statement and much more. Behavioural indicators help the lenders in knowing about the integrity and competency of their clients. These are tracked down by identifying if there was any attempt at deception of misinterpretation of facts, delay in response to questions or requests and frequent personnel changes to the accounting team. Industry indicators on the other hand identify the industry-specific problems like the drop in growth rate, rise in regulations and other treats related to the industrial sector. Tracking the loss, profit, shortage of materials, decline in demand for products and competitors of a company can be carried out using the employer-employment indicators. Geographic and demographic indicators are often restricted to a certain area of concern. This can be used to point out the continuous decline in the economic growth of a particular region. Thus the factors leading to it can also be brought into light. Another indicator that has a vital role to play is the perception indicators which help in boosting the growth and assets of a company. Perception problems are more related to the public. That is, tracking the fall in the company’s media exposure, popularity of its logo, deteriorating relationships, negative price perceptions by the end customers and so on.
All these indicators make the Early Warning Signals system efficient enough to track down the potential risks and notify the firm to work on resolving them. But where does the system gather its information from? The sources can range from the bank’s internal documents to the mobile application, financial statements within the bank to any unstructured data and Borrower Health Profile (BHP), Document Management System (DMS), KYC and AML to CBS and other internal systems.
So what does Sesame promise to offer? The trio of analyze, alert and action. Everything ranging from customers, product and trend to demography and mortality will be analyzed. Then the real job of alerting will be done in the cases of fraud detection, forecast behaviour and watch lists. The, to act upon it, procedures like follow-ups and monitoring can be carried out. Thus, you can dig up and eradicate the risks and potential threats to the growth of your firm in good time.