Our client’s Credit team was using spreadsheets and other manual processes to perform tasks their Credit System was not handling. These manual steps were workarounds and added extra time to their daily processes. The Credit System was generating incorrect values for Margin Calls and Callbacks. This alone was potentially exposing our Client to millions of dollars of credit risk. Recent upgrades and subsequent patches did not solve the problem and added to the increasing frustration our client was having with the vendor customer support. Our consultant was brought on to help work with the Vendor and Credit team to get the issues resolved.
On average, the client’s credit analyst was spending an additional 2 hours a day ensuring the Margin Calculations were being calculated correctly. It was estimated that 75% of the time, the system was generating incorrect values. Our consultant provided daily technical support to the Credit and Contract teams, while investigating the long-term support issues that hadn’t been resolved. Our consultant worked with the Vendor to fix the Margin calculations, automate Margin letters, supported test case development and testing to address +/- exposure with inbound/outbound collateral.
Our consultant, along with the Vendor’s assistance, was able to resolve long-term support issues, properly coded the Margin Calls ensuring the calculations performed correctly, automated the margin letters and developed effective User Acceptance Test Cases. The client saw an estimated $25,000 savings per year by automating the process versus using manual workarounds. This does not include the dollar value associated with the risk of generating incorrect margin values and the loss of financial opportunities.