The need for clients to receive independent advisory or diagnostic reviews has been a long lasting requirement for many institutions. Such reviews follow a variety of different approaches and frameworks.
Qarar’s OPIT methodology has specifically been designed to enable organisations to understand its capabilities across a range of functions and operating pillars. Understanding how you operate versus your competitors and regional and global peers is crucial to the development of an on-going plan for improvement in business performance.
With a focus on credit risk, this diagnostic process assesses specific products, credit lifecycle areas or the entire business, and provides an independent assessment of what has been done well and where improvements could be made based on the consultant’s significant regional and global experiences.
What is the Qarar OPIT Methodology?
Qarar has developed its Proprietary OPIT methodology to ensure that the key areas of Operational Processes, Policy, the use of Information (MIS) in managing the business, and the organisation`s use of Technology are assessed.
OPIT involves assessing in detail the following:
- Operations which covers all the operational functional aspects
- Policy which covers the lending policies or strategies
- Information which covers the use of management information
- Technology which covers the use technology or software related
How is this OPIT methodology used?
The OPIT methodology is used for specific business reviews. Organisations can choose whether to look at the entire credit lifecycle or to focus on particular functions (for example, new account originations). Similarly, there might be a requirement to focus on a specific consumer product based on specific perceived issues or growth plans.
Figure 1 below shows the high level steps that are undertaken during a healthcheck
The following steps are taken when executing and using the OPIT methodology:
- A high level questionnaire to enable Qarar’s consultants to tailor an onsite data and information gathering agenda specific to your organizational structure and business need.
- Onsite sessions will include meetings and interviews with key process stakeholders as well as the potential for process shadowing or call listening across the Operations, Process, Information management and Technology.
- Qarar will then formulate its findings into a comprehensive report during a typically offsite stage. This report will include an assessment of each function reviewed versus local and regional standards and will identify areas for improvement.
- Each opportunity will be prioritized based on Qarar’s view as to the benefits and the implementation cost/complexity and a roadmap is developed on the best approach in which to execute.
- The report is then formally presented and discussed with the business stakeholders.
Below are some of the areas that are reviewed using the OPIT methodology for a typical Collection:
- Organizational structure and the role of Credit Risk within that structure
- Organizational risk goals and objectives
- Incentive plans within operational teams
- The processes for delegated authorities for lending
- Capacity planning
- Credit products and positioning within a retail environment
- Credit life cycle decision points
- How policy is defined and signed-off
- How compliance with policy is measured
- The use of predictive models (Scorecards) and how these are developed and monitored.
- How the organisation uses MIS to drive its business decisions.
- The appropriateness, effectiveness and timeliness of the MIS produced.
- Specific assessment of MIS versus best in class examples.
- The organisations analytical processes and the degree to which analytics is used to measure and challenge the effectiveness of lending strategies and process.
- Details of existing systems technology and functionality utilised at each point in the customer credit lifecycle.
- Existing account originations workflow and decision technology including its ability to be used for future capacity planning including integration with internal and external systems and for further automation of strategies.
- Credit Limit Management systems
- Collection systems including the use of auto diallers
- MIS and Analytical systems and software
What are the Business Benefits from OPIT?
Qarar has unrivalled domain experience in analysing credit data and advising and developing credit risk management solutions for lending organisations.
The OPIT proposition is a tried and tested solution that has helped clients with:
- Reduced operational expense generated through the fine tuning and evolution of direct and indirect processes and policies from origination through to recoveries.
- Improved customer services through faster turnaround and response times.
- Identifying requirements for a more automated workflow.
- Delinquency improvement through better credit decisioning and optimised collections and recovery policies and processes
- Improved MIS and the used of diagnostic and predictive analytics across the life-cycle
- Increase in profit generated by improved customer management strategy design and execution Increase in recoveries via the implementation of a strategic analytical approach to collections activity for written off portfolio
- Optimizing strategy across the Account Management/Collections/Recovery Portfolio
The landscapes, in which financial institutions operate within, are becoming increasingly competitive. Market conditions are often adverse and unpredictable. Banks and finance companies are becoming more
sophisticated, adopting new technologies, processes and strategies, and the need to understand how effective each of these are in isolation and collectively is becoming more important.
The OPIT methodology forms a critical part of the integrated offering of Qarar`s advisory services in the Middle East. Qarar’s OPIT methodology has been successfully utilised for a number of its clients and real business value has been generated as a result. Qarar support key stakeholders by formulating best in class strategies through the right modelling, policies, approaches, tools and infrastructure.