Alliance Bank Transforms Risk Management with SAS Solutions for Growth

In a significant move geared towards enhancing its operational capabilities, Alliance Bank Malaysia Berhad has joined forces with SAS, a leader in data and AI technology. This collaboration is part of a broader strategy aimed at transforming the bank's asset and liability management (ALM) framework, which is deemed critical in today’s financially volatile environment.

SAS® Asset and Liability Management is at the core of this initiative, allowing Alliance Bank to strengthen its oversight of interest rate and liquidity risk management. By incorporating advanced tools such as stress testing, scenario analysis, and predictive analytics, the bank is poised to make informed and swift business decisions, a much-needed capability following a series of bank failures attributed to liquidity issues in the market.

Recently, the banking sector has been rocked by numerous challenges, and among the eight bank failures since 2023, liquidity risk emerged as a prevalent factor in seven. Against this backdrop, Alliance Bank has strategically prioritized a robust response through the adoption of SAS technology.

The bank's initiative is aptly timed, and the new system has improved the monitoring and analysis of liquidity through daily reporting capabilities. By focusing on depositor concentrations and liquidity analytics, Alliance Bank can efficiently manage its liquidity in accordance with immediate funding needs. Moreover, the implementation has enabled the full automation of 90% of the associated processes, thereby heightening productivity and accuracy.

Jacob Abraham, Chief Risk Officer at Alliance Bank, underscored the financial benefits of this undertaking. He stated, "From a cost-efficiency standpoint, this streamlined data sharing, reduced manual interventions, and heightened operational efficiency is forecast to help us realize significant annual savings."

In anticipation of heightened regulatory demands and market fluctuations, Alliance Bank commenced a multi-year upgrade plan in 2023, known as Acceler8. This plan is pivotal to creating a unified data repository while integrating risk and finance operations. Following the deployment of SAS Asset and Liability Management, the bank has recorded remarkable enhancements: a tenfold increase in system availability and uptime, a 10% reduction in operational and manpower costs, and significant savings on production processes.

Furthermore, the average duration required for risk assessment and compliance has been reduced to less than one day, demonstrating the impact of the new technology. The annual financial benefits from this transformation exceed $220,000, showcasing the tangible advantages of such strategic initiatives.

Kunalan Pecheadavar, Senior Vice President and Head of Group Market Risk at Alliance Bank, highlighted that while compliance served as a primary motivation for this upgrade, the new ALM management system has also equipped them with enhanced insights into interest rates and liquidity. This transformation directly feeds into the bank’s Acceler8 strategy aimed at driving efficiencies, growth, and stakeholder value.

In the words of Wilson Yap, Director and Head of Risk Banking Solutions in Asia at SAS, “Due to complex challenges in the industry, ALM processes require a high degree of granularity and transparency. The SAS approach offers a comprehensive package of analytical, computational, and governance capabilities, which is essential for effective balance sheet management.”

Alliance Bank’s commitment to employing SAS technology has not gone unnoticed. The organization was honored with the Best Analytics Initiative at the 2024 WatersTechnology Asia Awards and received recognition through the IDC Future Enterprise Award 2024, affirming its pioneering strides in risk management innovation.

In the wider context of banking, research reveals that Alliance Bank is tapping into a growing trend. A survey conducted by FT Longitude and SAS found that among 300 banking risk executives, 75% forecast an increase in investment towards risk technology infrastructure over the next year, reflecting a wider acknowledgment of the need for improved risk management practices.

Amidst this evolution, further insights can be gleaned regarding AI and GenAI applications in risk management, alongside banks’ capacity for detecting and addressing rampant interest rate and liquidity risks. For those seeking a deeper understanding, the survey report titled 'Transforming Risk Management' provides valuable findings and the perspectives of chief risk officers at sas.com/riskreport.

In conclusion, Alliance Bank's collaboration with SAS symbolizes a forward-looking approach to risk management designed to bolster stability, operational efficiency, and customer focus in an ever-evolving financial landscape. The commitment to leveraging technology and data analytics marks a pivotal chapter in the bank's journey of growth and innovation.