Case study

automated process that would significantly cut the extent of effort needed to obtain meaningful risk assessments. This is because banking software in this market has traditionally 2 Case study . Axis Bank decided to use the Kondor Global Risk system from Misys. both to ensure enterprisewide consistency by harmonizing the data. one of India’s top three private banks. manual computation precludes enablements namely dynamic stresstesting and Management Information System. has selected Kondor Global Risk for real-time risk management across its trading operations. fixed income products (including corporate Indian bonds). Axis has expanded consistently at a rate higher than the industry average and currently has over 1400 branches. At Axis. flexible limits definitions and back testing – all parts of the risk arsenal needed by today’s risk analysts to keep the pace with the speed of business. Company profile Axis Bank is one of India’s top three private banks. all this functionality needed to be performed on a timely basis and in an STP. including seven overseas offices serving retail and corporate customers. AN OPPORTUNITY FOR GROWTH Axis Bank. Head of Market Risk Management at Axis Bank. but with a state-of-the-art risk monitoring function its business could push itself to higher annual growth rates. The new system allows Axis to make proactive business decisions based on genuine risk intelligence while operating in line with regulatory demands and supporting growth opportunities. As a result.Axis Bank – Kondor Global Risk – Beyond regulation. Indian banks’ flagship systems have been focused on core banking functions which can capture the trades and do static credit checks. As an innovative. The consolidation of positions in a single system separate from pre-existing trading systems was an important requirement. Today Axis is growing at 3035% per annum. The move is being driven as much by the bank’s strong risk management culture as by the Indian banking regulator which has embraced the advanced approaches under Basel II including the internal model (IM) approach and has set timelines for its adoption. “We were looking for an enterprise wide market risk system capable of integrating with multiple trading systems and consolidating all economic position information in a single place that could drive dynamic risk engines. After looking at a number of vendors and shortlisting four. but lack comprehensive and dynamic market risk functionality. this was addressed by building internal market risk functionality as an add-on to multiple in-house trading systems. designed to meet financial controls. typically involving more manual and less of STP type computation of risk numbers. Pravat Dash. rather than address risk management needs. The business challenge Axis Bank is one of India’s most forward looking banks in terms of transitioning to an advanced risk management system. new-generation bank in India. The risk systems’ technology in Indian banks has not kept pace with the business growth. treasury products like money market and FX. The majority of risk management systems in Indian banks do not effectively support transition to IM. an opportunity for growth BEYOND REGULATION. explained. and derivatives. created in 1994 as part of India’s opening up of its banking sector that for decades had been dominated by government banks. Even more important was Axis’ strategic decision to up its risk management wherewithal as a way to enable accelerated growth. It offers a wide range of services and products ranging from core banking products. Regulation was not the only driver behind Axis’ proactive decision to implement a modern risk management solution. been accounting-oriented. The limitations of fragmented. as well as to ensure timely analysis by virtue of not having to constantly go back to source systems. define limits and support drill-down”. Importantly.

The local Misys team had the skills to ensure that project risk would be kept to a minimum. Looking to the future After the implementation of the new market risk system. both for internal use and for regulators • Risk analysts for modeling risk and conducting drill-down analysis • Users who will do some integration with the current credit risk system The project has been structured around three phases. • Less manual processes: Significantly reduce the manual effort involved in analytics and Management Information System. which are expected to be in the form of add-ons. As a possible future plan. and in particular the fact that it has a local support team in India that has previous experience in implementing VaR systems from Misys at six other Indian banks.” Pravat Dash Head of Market Risk Management. the next natural milestone is to tune it to the IM regulations eventually enforced. • Regulatory-ready: Prepare Axis Bank to comply with IM regulations when they decide on migration. there will be three core user groups who will benefit from the new market risk system: • Users focused on producing reports. especially in terms of a convergence between market and credit risk. limits. thus making the risk management process more accurate and timely. was a good fit to Axis Bank’s needs. In total. This was important to Axis because the Indian market has a number of peculiarities (for instance. Axis Bank Case study 3 . Beyond that. delivered over 2011/2012: • Position consolidation and implementation of market limits to support pricing in client front office applications • Implementation of historical simulation for market risk VaR • Implementation of Monte Carlo simulation for market risk VaR “Kondor Global Risk provides responsive risk dashboards to ensure risk transparency at any level of the organization. credit risk presents the next area where Axis Bank might upgrade its risk management practices.Axis Bank – Kondor Global Risk – Beyond regulation. Key benefits The new system is expected to have a significant impact in a number of areas: • Can support growth: Effectively support Axis Bank in its high growth momentum by enhancing effectiveness of market risk measurement. Dash said. as well as responsive risk dashboards to ensure risk transparency at any level of the organization. • Source of insight: Provide good visibility on the risk dynamics faced by Axis Bank through the dashboard for its large portfolio encompassing around 15 banking products and an array of derivative products. The project also required the integration of numerous front office systems from different vendors. another important element in Axis’ decision was the comprehensive nature of Misys delivery and support organization. Axis Bank might consider leveraging KGR as well for credit risk and use it as a platform for potential new credit regulations. so trading credit risk is excluded. Ideally. corporate bonds in India require special treatment). Axis Bank would like to remain ahead of the other major banks in the market and finish the project ahead of schedule. conceived from scratch as an enterprise risk system that can exist independently of any trading system (including trading systems from Misys like Kondor+). monitoring and control related to treasury products and target a stable business and income growth rate. Today credit risk is managed in the core banking systems. and compliance with our internal model requirements.” Beyond the functional and technological benefits. an opportunity for growth The solution The Kondor Global Risk (KGR) system. It provides stress testing and back testing. “KGR provides a good platform for the bank’s requirements in VaR.

Misys was formed by the merger of Misys with Turaz. TRADING AND RISK MANAGEMENT HEDGE FUND JOURNAL AWARDS 2011 STRUCTURED PRODUCTS TECHNOLOGY RANKINGS 2011 Number One Trading System – Equities Number One Trading System – Interest rates Number One Pricing and Analytics – Equities BEST RISK MANAGEMENT INITIATIVE ASIA ASSET MANAGEMENT AWARDS ABOUT MISYS Misys is at the forefront of the financial software industry. providing the broadest portfolio of banking.MISYS RECENT MARKET RECOGNITION NUMBER ONE TRADING SYSTEM TECHNOLOGY PROVIDER RISK TECHNOLOGY RANKINGS 2011 Number One Overall Trading System Number One Pricing and Analytics – Equity Number One Pricing and Analytics – Inflation STRUCTURED PRODUCTS TECHNOLOGY RANKINGS 2012 Number One Trading System – Credit Number One Trading System – Cross Asset Number One Trading System – Foreign Exchange Number One Trading System – Rates Number One Risk Management – Collateral Management NUMBER ONE RISK MANAGEMENT TECHNOLOGY PROVIDER ASIA RISK TECHNOLOGY RANKINGS 2011 Number One Overall Risk Management Number One Trading System – Equities Number One Trading System – Foreign exchange Number One Trading System – Interest rates Number One Derivatives pricing and risk analytics – Equities Number One Derivatives pricing and risk analytics – Interest rates Number One Derivatives pricing and risk analytics – Hybrids Number One Support services – Implementation efficiency BEST TRADING PLATFORM BACK OFFICE ASIAN BANKER TECHNOLOGY AWARDS LEADING SINGLE TECHNOLOGY PLATFORM – PORTFOLIO.800 customers in 120 countries our team of domain experts and partners have an unparalleled ability to address industry requirements at both a global and local level. Misys is the trusted partner that financial services organisations turn to for help solving their most complex problems. trading and risk solutions available on the market. With 1. Combined they are able to address all customer requirements across both the banking and trading book businesses.com 48003711 . Misys and the Misys “globe” mark are trade marks of the Misys group companies.misys. which includes the award-winning Kondor+ product line. Find out more at www. All rights reserved. treasury. Copyright© 2012 Misys.

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