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EY intervened to aid VIPA by developing and deploying an automated loan pricing tool.
Recently, EY stepped in to assist VIPA by creating and implementing an automated loan pricing tool. This innovative tool provides more personalized pricing options for customers and streamlines the decision-making process for the company, enabling it to properly price and manage credit risk.
The core of the tool is a credit risk scoring module, which enables an automated and personalized assessment of client probabilities of default and generates custom loan pricing options which reflect the specific risk profile of particular clients.
Moreover, the overall loan pricing engine considers the funding costs as well operational costs borne by VIPA to ensure that loan pricing is proportional to the overall level of costs/ risk assumed by VIPA and consistent with target profit margins.
Some of the key benefits of the tool already experience by the client are:
- More sustainable use of EU and state budget funds due to better risk-based pricing
- Reduced internal administrative burden due to automation of many of the manual calculations that were previously required
- More efficient and speedy client service
The tool was developed in close cooperation between EY Baltics and Czech Republic team, leveraging the leading financial sector quantitative risk management practices to bring long-term value to the client. Overall, the automated loan pricing tool developed by EY for VIPA is a prime example of how cutting-edge technology and expertise can be used to improve the efficiency and effectiveness of credit risk management processes.
Summary
EY has developed an automated loan pricing tool for VIPA that uses a credit risk scoring module to generate custom loan pricing options. The tool considers the funding and operational costs borne by VIPA to ensure that loan pricing is proportional to the level of risk assumed and consistent with target profit margins. The benefits of the tool include better risk-based pricing, reduced administrative burden, and more efficient client service. The tool was developed in cooperation between EY Baltics and Czech Republic team, using leading financial sector quantitative risk management practices to improve the efficiency of credit risk management processes.