It’s the question that can makes the most seasoned bank CFO squirm in their seat: We’re publishing our quarterly income statement the day after tomorrow and need you to explain why our numbers have changed.

I found out how one startup is providing answers to these profoundly complex questions at the recent SAP Financial Services Innovation Summit held at the SAP Leonardo Center in New York.

“It’s easy for the CEO to ask what’s going on with number fluctuations, but extraordinarily hard for risk managers to explain exactly what’s happened in last quarter to cause these changes,” said S Ramakrishnan, co-founder and chairman at Xplanr Analytics.

Manage Previously Unmanageable Risk

After a 20-year career steeped in solving the problems of risk and finance analytics, Ramakrishnan jumped at the opportunity to launch his startup that relies on the latest technologies.

“We couldn’t do this three years ago,” he said. “We now can solve enormously complex business problems, helping banks eliminate hours of tedious, time-consuming work that still didn’t capture the information they needed to answer tough but important questions, such as which customers are likeliest to default on their loans, and what those losses could total.”

Ramakrishnan said he wanted to provide technology to help risk and finance professionals at banks manage the previously unmanageable to support stress testing and CECL (Current Expected Credit Loss). “The behavior of loans is based on an in-depth understanding of the risk of every customer. But banks are operating in a wildly fluctuating economic environment, and managing loan portfolios of many accounts with volatile characteristics. You need interactive, responsive tools for computation of the data that provides an understanding of what’s going on so you can better explain the numbers – here’s what changed and why, and here’s what could happen.”

Fintech helps banks intelligently calculate which customers are likeliest to default on loans

Finance Longer in the Dark

Running on Hadoop and Spark, which is part of the Big Data-as-a-Service solution from SAP, Xplanr Analytics takes advantage of sophisticated, cloud-based technologies.

“Customers are surprised someone has attacked the problem so comprehensively,” said Ramakrishnan. “They were resigned to doing this manually and being in the dark.”

Ramakrishnan walked me through a demonstration of Xplanr Analytics, showing how people can use its built-in computational tools to interactively slice and dice millions of rows of data in seconds. The dashboard allows someone to select various scenarios for each portfolio of products and investments, and calculate a multitude of “what if” computations. It also “remembers” past calculations so people can quickly compare and create new analyses based on that history.

“When it comes to estimating risk and expected credit costs, there’s never one single answer,” said Ramakrishnan. “We developed this so financial professionals can explore a range of results based on many factors including portfolio, volume, security, borrower credit scores, or even banking process changes.”

Xplanr Analytics is working on large-scale POCs that Ramakrishnan expects will validate the automated, interactive capabilities of the technology.

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