Cognos, an IBM company and business intelligence (BI) and performance management (PM) solutions vendor, has announced the launch of a performance application designed to help commercial bankers efficiently price new deals, taking into consideration associated risk factors and the profitability of the overall customer relationship.
The IBM Cognos Relationship Pricing for Commercial Banking Blueprint offers commercial banks a performance management framework that enables relationship managers to efficiently model and price both credit and non-credit deal scenarios that are in line with corporate objectives.
Managers can analyse proposed deals against a customer's existing portfolio, giving them complete visibility into the customer's total projected profitability and corresponding risk, making it easier to identify a deal price that will meet or exceed a bank's defined earnings hurdle rates, and improve risk-adjusted return on capital.
"In this climate of economic uncertainty, punctuated by the recent sub-prime mortgage crisis, effective pricing of products and services for customers is critical. Competitive pricing, at the relationship level in particular, stimulates organic growth, drives new customer acquisition and cross-selling opportunities, and improves overall profitability and risk management," says Patricia Hines, senior analyst, wholesale banking, at TowerGroup.
Combining out-of-the-box functionality from IBM Cognos 8 Planning and IBM Cognos 8 Business Intelligence (BI) software - including dashboards, analytical reports and a pre-configured data model - and encompassing banking industry best practices, the IBM Cognos Relationship Pricing for Commercial Banking Blueprint features:
* Pricing capabilities for credit and treasury services.
* Deal and relationship profitability analysis capabilities for multiple pricing scenarios.
* User-defined dashboards offering relationship managers book of business, profitability and proposal information to facilitate decision-making.
* Flexible dashboards offering executives high-level, up-to-date revenue, profitability and risk information across all portfolios.
* Centralised administration and integrated workflow to ensure consistency and accuracy across the loan pricing modelling, analysis and approvals process. This includes a pricing approvals form, displaying all of the deals that require approval and the high-level details of outstanding proposals.
"Spreadsheet-based pricing models are ineffective because they cannot deliver holistic customer relationship information and insights which commercial bankers need to effectively price new business. These shortcomings are magnified given banks heightened focus on operational efficiencies and risk mitigation," says Laurence Trigwell, Associate Vice-President - Financial Services at Cognos.
"The IBM Cognos Relationship Pricing for Commercial Banking Blueprint offers a consistent best practice risk-based pricing model where relationship managers can quickly evaluate new business pricing scenarios, measure their profitability and associated risk impact, then compare it against corporate hurdle rate targets. This assures executives that pricing deals are being developed in line with corporate goals, and can be easily adjusted as strategies change."
Available immediately to customers, the IBM Cognos Relationship Pricing for Commercial Banking Blueprint is the fifth in a series of Banking Performance Blueprints launched by Cognos since 2006, including solutions for branch performance, corporate and retail banking customer segment performance, and risk-adjusted profitability. Cognos also offers a Performance Blueprint for insurance product profitability.
Cognos is a recognised leader in delivering performance management solutions for the banking industry. Over 1 000 financial services institutions worldwide use IBM Cognos solutions, including nine of the top 10 banks in Europe and all of the top 10 banks in the United States.
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Cognos offers a full suite of Performance Blueprints to address planning and performance management process areas that directly impact an organisation's ability to create business value. Both functional and industry-specific process areas can now be automated, streamlined and transformed to help organisations quickly create more business value. Developed by the Cognos Innovation Center for Performance Management, IBM Cognos Performance Blueprints are a key component within the IBM Cognos Performance Management System, which combines technology, best practices, analytical applications and solutions, and a broad network of partners into a single performance management solution.
Cognos, an IBM company
Cognos, an IBM company, is the world leader in business intelligence and performance management solutions. It provides world-class enterprise planning and BI software and services to help companies plan, understand and manage financial and operational performance. Cognos was acquired by IBM in January 2008. For more information, visit http://www.ibm.com/software/data/ and http://www.cognos.com.
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