Ensuring the stability and health of banking institutions has always been a priority. One of the most significant advancements aiding banks in this endeavor is the implementation of early warning systems (EWS). These systems are designed to identify potential risks early, enabling banks to take proactive measures to mitigate them. In this regard, BCT Digital’s rt360 Early Warning System has been instrumental in enabling banks to scale up banking operations while keeping risks under control and delivering substantial financial benefits.
rt360 Early Warning System illustrates a remarkable growth trajectory. The scale at which it operates today is a testament to its effectiveness and the trust it has garnered within the banking sector.
In FY 2018, BCT Digital monitored Rs 1,49,064 crore (USD 17.9 billion) of banking assets through rt360 Early Warning System. By FY 2023, this figure had increased exponentially to an astounding Rs 20,06,364 crore (USD 24.1 billion) – a 14x increase. This growth is not just in terms of the volume of assets monitored but also the customer base, which has expanded by 12x in terms of institutional asset size. Slippages across the system were substantially reduced to just Rs 34,372 crore (USD 4.14 billion) in FY23 – a remarkable 40% improvement from the previous year.
The product itself has undergone significant improvements. From a single on-premise product to a cloud-based ecosystem in just four years, it has notably evolved to address the changing needs of the Indian and global banking systems. Today, rt360 Early Warning System tracks around Rs 21 lakh crore (USD 250 billion) of assets in banking institutions worldwide.
These figures underscore the critical role rt360 Early Warning System plays in safeguarding banking assets. The ability to scale operations and impact a larger portfolio is indicative of the system’s overall robustness and efficiency.
Demonstrating customer success through a compelling ROI and economic impact
One of the most compelling aspects of rt360 Early Warning System is its tangible financial benefits to banking institutions. Since 2018, its implementation has secured tangible business impact and improved bottom lines. As per BCT Digital’s estimates, each PSU bank has saved at least $500 million per year within the first few months of implementation. This figure is hard-hitting in an industry that is plagued by credit risks.
One of the recent examples involves a bank with an asset size of USD 50 billion with 10% NPA. Even a conservative reduction of 1% fresh NPAs translates to a figure of USD 500 million in the bank’s book.
The financial savings realized by banks using rt360 Early Warning System are substantial. On average, the system potentially recovers around Rs 2,100 crore (USD 2.5 billion) annually. This recovery not only enhances the financial health of these institutions but also ensures greater stability and reliability for their customers, investors and the larger financial community including regulators.
The journey from tracking the Banks’ corporate clients to now monitoring their retail consumers
Another impact of our product is financial inclusion in the long term. rt360 Early Warning System was initially implemented by banks for tracking corporate customers, particularly in five of the country’s leading banks. (Read one of our success stories here.) Some of them are now increasingly facing the need to extend this to retail customers. Ultimately, if loans disbursed to retail customers are serviced well, broader segments of the retail population will have more access to bank loans – leading to a marked increase in financial stability.
rt360 Early Warning System is also serving Indian taxpayers. The Indian government has a track record of recapitalizing banks that sustain heavy losses due to NPAs using taxpayer money. By reducing the incidence of fresh NPAs, BCT Digital is effectively helping to preserve public funds.
Real time monitoring system: The future of EWS in banking
As financial institutions continue to navigate an increasingly complex environment, the ability to anticipate and mitigate risks will be crucial. rt360 Early Warning System demonstrates how leveraging advanced technology can lead to significant improvements in asset management and financial stability. We believe the future of early warning systems in banking is the real-time monitoring system. BCT Digital’s rt360 real time monitoring system is a comprehensive surveillance mechanism for monitoring transactions and events from loan accounts on a continuous and real-time basis. Recognized by the Reserve Bank of India (RBI) under its regulatory sandbox, RTMS represents a significant advancement in fraud prevention and risk management. Moving forward, the continued evolution and adoption of real time monitoring systems will likely play a pivotal role in shaping a more resilient and secure banking industry. The benefits extend beyond financial savings, contributing to a more robust economic framework that benefits customers, institutions, and the broader financial ecosystem.
Author
Shankar Ravichandran
Senior Manager, Credit RiskHis profound expertise in the field of corporate and retail banking spanning across Credit Risk, Transaction Banking, Service Delivery and Product Management is close to decade. He is an MBA graduate from Indian Institute of Management, Bangalore.
