The ** Financial Work Conference held in October 2023 proposed that "risk prevention and control is the eternal theme of the financial industry". Looking back on 2023, the Measures for the Risk Classification of Financial Assets of Commercial Banks and the Measures for the Management of Capital of Commercial Banks (Draft for Comments) have been released one after another, which will promote the data governance and risk management capabilities of commercial banks to a new level. In fact, in the past few years, some large banks have been exploring the process of risk management system construction and data governance, and the digital upgrade of risk management system has also been launched.
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Offline to online migration Risk prevention and control has ushered in a number of innovations
During the epidemic period, banks shifted a large number of businesses from offline to online, which put forward higher requirements for banks' risk control capabilities. In the context of building a new development pattern and the post-epidemic era, the banking industry is relying on big data, cloud computing, artificial intelligence, blockchain and other technologies to accelerate digital transformation, reshape the risk control model through digitalization, and continue to improve the intelligent identification, accurate detection and agile disposal of credit risks. In the semi-annual report released in August 2023, many banks mentioned such as strengthening the construction of risk control systems, optimizing digital risk control platforms, and building digital risk control systems.
ICBC said it would improve its digital risk control capabilitiesto build a full-process risk control system for inclusive finance characterized by digital access, intelligent risk control, and online and offline cross-verification. CCB has built a digital risk control system for agriculture-related finance, the application of digital tools, to promote the construction of offline grid and online intelligent risk control system of service points. China Merchants Bank uses financial technology to enhance digital risk control capabilitiesWe will use risk data to drive risk decision-making, improve risk awareness and risk control efficiency, continue to promote the online and platform-based management of "all risks", accelerate the intelligent process of "all risks" risk control, and improve the collaborative efficiency of risk management.
Digital risk control needs to pay attention to four aspects
Senior practitioners in the industry pointed out that from the perspective of the supporting elements and related practices required to establish digital risk control, banks need to focus on the construction of data, systems, teams and mechanisms in the process of establishing a digital risk control system.
Data is the foundation. Data is the foundation of digital risk control, and banks should pay attention to external data resource planning while strengthening internal data governance and application based on their own realities. At present, many banks have been connected to local government data, such as provident fund, taxation, social security, etc. At the same time, by continuously introducing external commercialization data, the model iteration is strengthened, and the basic support of data for digital risk control is consolidated.
The system is key. Digital risk control requires real-time risk decision-making, and requires efficient coordination and coordination of systems with different functional positioning. Based on actual business needs, some banks have temporarily built systems to meet certain business needs to complete certain business needs, achieving low cost investment and completing tasks, but it is not conducive to long-term development. Practitioners suggest that banks should plan first, formulate a clear system plan based on the perspective of building a digital risk control system, and then implement it step by step based on their own actual conditions, so as to ensure that the performance of key systems has long-term support capabilities.
The team is at the core. Digital risk control requires a relatively stable team composed of expert talents, so as to form complementary capabilities and knowledge, and accumulate risk control experience in continuous practice. For small and medium-sized banks, they can solve their own capacity deficiencies by strengthening external cooperation in the early stage of construction, but they still need to accelerate the formation of a team with independent risk control capabilities. Large banks have established an incentive model for independent training of fintech talents to carry out differentiated talent training paths. In short, banks need to design for the introduction, training, motivation and career planning of digital talents, so as to achieve "attraction, good use, and stability" of talents.
The mechanism is the guarantee. Under the digital risk control model, the integration of business and risk control has been significantly deepened, and a normalized communication mechanism has been established between the business department and the risk department. If data, systems, and teams determine whether a bank can successfully establish a digital risk control system, then the mechanism will determine the effectiveness of the bank's digital risk control system.
The speed and extent of digital transformation has increasingly become the key to whether a bank is able to and can remain competitive. Among them, the construction of a digital risk control system is a key point that banks must pay close attention to in digital transformation, and it is also a difficult point for banks to invest resources and accelerate breakthroughs. In the future, digital risk control will not only be the comprehensive application of financial technology such as data and models, but also an innovative model for the deep integration of commercial banking business and management.