Enabling 360-degree transaction monitoring at a leading Asian bank through Unified Monitoring System
About the client
The client, a major bank headquartered in Asia, commands a substantial asset size of USD 145 billion. With an extensive network comprising 10,800 branches, the bank caters to a staggering 12.5 million customers. The immense operational scope of the bank poses distinctive challenges in efficiently monitoring transactions and mitigating emerging risks.
Summary
The bank was losing a substantial share of its finances to credit fraud – amounting to approx. INR 4,000 crore. Although they had invested in applications and technologies for fraud monitoring, these were disparate in nature and fell short of providing 360-degree perspectives on customer accounts and credit risks across different units. Their newly setup Staff Transaction Analysis Cell too fell short in terms of providing real-time transactional updates to key stakeholders, impacting on-time intervention and remediation. In 2022, the bank decided to create a new transaction monitoring and fraud management vertical with a unified, integrated outlook towards managing frauds.
Implementation snapshot
Extensive coverage of assets, liabilities, staff and office accounts
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Branches
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million
Customers
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million
Accounts (includes all a/cs)
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million
Transactions scanned daily
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Users
0
Business rules
The challenge
The bank encountered several critical challenges prior to the implementation of a Unified Transaction Monitoring System:
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Increasing loan-related frauds: The bank faced a growing trend of loan frauds, highlighting the need for a robust monitoring system to mitigate risks effectively.
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Challenges in monitoring a growing loan book: Their expanding loan portfolio presented difficulties in managing the rising volume of transactions, resulting in operational complexities.
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Delayed follow-up: Traditional credit monitoring methods using internal and external ratings led to delayed follow-up actions, hindering the bank's ability to respond promptly to potential risks.
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Rising non-performing assets: A surge in NPAs underscored the necessity for proactive measures to mitigate credit risks and improve asset quality.
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Absence of composite portfolio view: Disparate customer information across various systems impeded the bank's ability to assess and address vulnerabilities effectively, lacking a comprehensive view of its portfolio categorized by risk levels. Consolidation of information generated by different applications was also a major challenge.
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Complex monitoring landscape: Managing a large customer base across multiple branches, the bank faced challenges in monitoring various types of fraud, including credit fraud, staff fraud, suspicious transactions, credit audits, and forex transactions, exacerbated by the complexity of multiple monitoring systems.
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Multi-vendor ecosystem: The bank's critical applications were deployed by various vendors, complicating the management of these vendor relationships.
Transformation
Following extensive rounds of vendor evaluations, the bank partnered with BCT Digital to implement a Unified Monitoring System to address the above challenges. The unified solution would integrate the following disparate applications into a single platform:
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BCT Digital’s rt360 Early Warning System (EWS) for Credit Monitoring
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OTMS (Offsite Transactions Monitoring System) – a third-party application for suspicious transactions (such as in staff or customer accounts)
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EFRMS (Enterprise Fraud Risk Management System) – a third-party application focussed on frauds for both assets as well as liabilities
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Staff Transaction Monitoring System (STAC) – a third-party application for monitoring of staff accounts
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BCT Digital’s rt360 Real Time Monitoring System (RTMS) – a new requirement for real-time transaction monitoring
The rt360 RTMS system has robust integration capabilities, establishing a real-time connection to a CBS Replica server through bots and API-based technologies. This ensures immediate data flow following transactions or events. The data extraction layer pulls transaction data from the replica database using ETL and producer bots, which is processed in real time. As transactions are captured, an in-memory rule engine scrutinizes them against pre-set rules from a configured library, quickly identifying any suspicious activities. Consumer and alert generation bots produce alerts based on predefined logic and are stored for further action through a workflow mechanism. Additionally, a microservices-based component processes the data using configured metadata, enabling user-centric workflows and supporting extensive reporting and dynamic dashboard visualizations. This systematic processing ensures comprehensive monitoring and management of transactions.
The engagement was complicated by multiple data sources and variations in application frameworks, hardware configurations, and server setups. The immense scope of the project, encompassing end-to-end automation of the entire bank’s operations and support for 20,000 concurrent users across various departments and user levels, along with intricate workflows and standard operating procedures for alert handling, were significant aspects of this implementation.
Beyond the consolidation of multiple applications under a unified umbrella, the comprehensive solution provides real-time visibility, offline tracking, and analysis of transactional activities. It monitors critical events related to financials, business, management, and industry to detect emerging credit stress. The primary objectives are to identify anomalies or suspicious activities indicative of fraud or operational risk.
Leveraging advanced analytics and technology, the system streamlines surveillance, strengthens fraud detection capabilities, and enhances overall risk management practices as follows:
- Expandable rule library – 300+ rules in action
- Unified view of alerts from multiple systems e.g. EWS, EFRMS, Audit
- Comprehensive alert coverage (Asset/Liabilities/Office a/cs, staff a/cs, forex)
- Coverage across fund-based and non-fund-based facilities
- Risk scoring based on multiple parameters to quantify risk of customers
- Extensive real-time capabilities
- Queuing for real-time streaming of transactional data
- In-memory processing for real-time alerting of suspicious transactions; scanning for irregularities, payments monitoring, round tripping/fund siphoning, and transaction pattern analysis
- AI/ML enabled modelling for business logic
- Multiple threads for parallel processing; optimized throughput by increasing resource allocation
- Automated data ingestion & alert generation
- Usage of bots/APIs and automated schedulers
- Reverse feedback to source systems (e.g. Rating, audit)
- Configurable workflow & notifications
- Flexible rules for alert delivery across levels
- Configurable criticality levels, resolution times at alert level
- Mobility for anywhere, anytime access
- Responsive design | Compatible with Android/iOS | Multiple form factors
- Industry standard security protocols | Role-based access
- Detailed reporting & dashboards
- 360-degree customer and portfolio view for managerial decisioning & follow-up
- Aggregated customer & processed data across modules
Results
The implementation of the Unified Transaction Monitoring System yielded significant benefits for the bank:
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Unification of monitoring systems to a single platform, enabling a holistic view of the bank’s loan portfolio, assets and liabilities.
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Current, accurate portfolio view empowering informed decision-making and proactive risk mitigation strategies.
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360-degree customer profile: Each customer's financial history, behaviour, and interactions with the bank were intricately mapped, providing a detailed and interconnected view to enhance customer management.
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Prompt action-taking ability: The system facilitated prompt actions to address emerging issues, such as initiating collection efforts, adjusting credit limits, or offering targeted financial solutions to support distressed customers.
Awards & Recognition
Chartis Research’s top 100 RiskTech companies 2022
RiskTech100 2021
Provider of the year 2019
rt360 Early Warning System by Banking Frontiers
business of the year 2021
of the year 2020
rt360 is a risk management product suite to manage the entire risk portfolio of banks and financial institutions that includes credit risk, capital allocation, pricing risk, liquidity risk, model risk and operational risk.
rt360 is designed by bankers, risk practitioners and technology specialists with a Business First, Technology Next approach, empowering banks and financial institutions to focus on their credit growth and profitability while managing their risks. The product is fully designed and made in India to address the complexities of the financial sector globally. The suite comprises of five distinct products to manage each of the risk portfolio.
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