Inefficient paper-based credit scoring at CGD France delayed loan applications, requiring customers to visit their branch twice for a decision, and raising the risk that they would choose another bank.
The bank worked with Constellation to create a hybrid-cloud credit-scoring app that uses advanced machine learning to rapidly and accurately determine each customer’s creditworthiness.
Enhancescustomer satisfaction through faster credit scoring
Combinesflexibility with robustness and security through hybrid cloud infrastructure
Cutscosts and accelerates development due to innovative architecture
Business challenge story
Getting up to speed with customers
In this age of mobile connectivity and always-on services, banking customers have increasing expectations around speed and efficiency. If they cannot obtain the service they want quickly and easily from their own bank, there are plenty of other options. This was the challenge facing Caixa Geral de Depósitos France (CGD France), where dependence on paper-based credit scoring was preventing customer service agents from making on-the-spot decisions about personal loans. To agree a loan, agents had to wait for the bank’s risk team to generate a credit score – which meant a return visit to the branch for customers.
Jean-Simon Corchia, Director of IT Services at CGD France, explains the impact on the business: “We were at risk of losing customers to our competitors, because securing a loan was rather slow and inconvenient. Our salespeople were frustrated at not having the right tools to meet customer expectations, and at being forced to bring potential customers back into the branch for a second time.
“Separately, new ACPR regulations required us to be able to regenerate five years of past credit scores using whatever risk model was in force at the time, and we knew this would be almost impossible to do with our existing paper-based system.
“To address both requirements, we set out to digitize the credit-scoring process via a responsive web application capable of displaying each customer’s credit rating in real time.”
Cloud: a low-complexity, low-cost approach
There were two key objectives for the credit-scoring project at CGD France: first, to give credit analysts a tool for modeling and maintaining multiple risk models for various types of customer, and second, to use these models to perform real-time scoring for loan applicants.
Working with EVEA and Fabrick within the Constellation group, the bank’s long-term external partner for IT infrastructure, CGD France selected IBM® SPSS® Modeler as the first element in its new solution. Running on a dedicated on-premises server, the IBM software enabled the bank to create formal digital models for its risk-scoring processes, and to more easily re-run historical scoring in line with ACPR regulations.
“The next step was to gain the ability to query our credit models in real time,” recalls Jean-Simon Corchia. “We initially considered another on-premises solution, but this approach – requiring additional software licenses, a second dedicated server and significant software development – was significantly beyond our budget. When EVEA proposed using IBM Watson Machine Learning on IBM Cloud, we saw that we could achieve our business objectives within budget and without adding complexity to our in-house infrastructure.”
He adds, “The cloud approach was also appealing in terms of our longer-term direction. We want to keep accelerating our ability to build new internal and external applications, so the ability to ‘plug in’ new functionality in the IBM Cloud was very attractive.”
Innovative, flexible architecture
EVEA and Fabrick developed the credit-scoring application on IBM Cloud using an agile development methodology and taking advantage of both containers and microservices. For example, user authentication was built as a separate microservice rather than part of a monolithic application. Any future CGD France applications can re-use this microservice, reducing the time, effort and cost involved in software development. The scoring-management module – another microservice – consumes the critical IBM Watson® Machine Learning service via a simple API call. This Watson service provides the sophisticated analytical capabilities to accurately determine credit-worthiness across a flexible variety of criteria almost in real time.
The solution elements running on IBM Cloud connect back through a highly secure VPN to CGD France’s core banking system: Evolan software from Sopra, which runs on IBM i on IBM Power Systems™ servers in the bank’s private data center.
“We already had a very rich back-office environment based on exceptionally stable on-premises systems,” comments Jean-Simon Corchia. “EVEA and Fabrick’s skills in development and knowledge of Watson Machine Learning helped us to surface our core banking environment to create new business value. Spanning both cloud and on-premises infrastructure, this is a true hybrid cloud solution.”
For the credit-scoring app, the team used the Angular framework to enable it to develop a single Java codebase for deployment to practically any target, whether web, mobile web, mobile app or desktop app. Angular helped the team to build a highly responsive mobile app that enables CGD France’s salespeople to conduct loans business on their tablet computers from practically any location – a real advantage for customer service.
The use of a hybrid cloud architecture enabled the non-disruptive integration of new functionality with the existing core banking systems. It is also helping the bank to meet what appeared at first sight to be contradictory regulatory demands, as Jean-Simon Corchia explains: “The ACPR regulations requiring us to regenerate historical credit scores initially appeared to be incompatible with the demands of the GDPR, an EU directive that restricts businesses from keeping sensitive data on their customers. By designing a hybrid cloud solution, we are able to keep all customer data within our on-premises storage, where it is covered by our global GDPR approach, including data anonymization techniques. Using APIs, the credit-scoring solution is able to securely access this customer-related data as and when required.”
More power to core banking
As part of the project, EVEA recommended upgrading to the latest IBM POWER8® processor technology to accelerate back-office data processing, and adding a Linux partition alongside the core IBM i partitions to host new Evolan CRM components. The upgraded Power servers have delivered significant performance increases, providing more responsive core banking services during the working day and shrinking the overnight batch window.
“We remain extremely happy with our Power i environment, which continues to provide the robustness, security and performance we need as a bank,” says Jean-Simon Corchia. “Each new evolution of the Power technology is perfectly managed by both IBM and EVEA, and we also appreciate the fact that the ISVs for IBM i are ready to take advantage of the new capabilities.”
Faster decisions mean happier customers
The credit-scoring solution deployed by CGD France has successfully met both of the original objectives, accelerating decisions on personal loans and enabling the bank to comply with industry regulations. With a cross-platform app that delivers decisions on credit-worthiness almost in real time, the bank’s salespeople can provide a better, faster service to customers in practically any location. Those customers get a decision right away rather than needing to make two separate visits to a CGD France branch, and salespeople are no longer left hanging on the telephone waiting for decisions from head office.
“The credit-scoring solution running on IBM Cloud improves our competitive stance by enabling us to handle loan applications much faster and more efficiently,” says Jean-Simon Corchia. “The interface is highly ergonomic and intuitive, so it was quickly adopted by our salespeople with no specialist training required.”
Business and technology in lockstep
The combination of agile development methodologies and hybrid-cloud architecture helped CGD France achieve very short time-to-market for the new solution, in addition to keeping costs low. Likewise, the close involvement of business stakeholders with technical teams throughout the project ensured a final product that completely matched the original specifications.
“EVEA and Fabrick fully understood the technical and the business objectives, and kept both sides working together with regular meetings to review prototypes,” comments Jean-Simon Corchia. “This was an iterative process in which the business users were able to review and provide feedback on the interface within a week of starting the project. The continuous feedback loop meant that the development team never got off track but was able to keep realigning to the business needs and goals. Thanks to the excellent project management from EVEA and Fabrick, both business and IT understood the constraints in each of their respective domains, and we were able to find solutions that satisfied both sides.”
Repeatable model for future growth
With a hybrid-cloud environment that integrates cloud-hosted components with core banking systems on IBM i, CGD France has increased the flexibility and scalability of its services without compromising on stability, security or cost of ownership.
Microservices created by EVEA and Fabrick for the credit-scoring application can be re-used to assemble new applications at low cost and high speed. Indeed, the bank is set to launch a second application that will accelerate decision-making processes around non-standard transactions in branches.
The hybrid-cloud environment presents significant opportunities to further increase speed and efficiency, as Jean-Simon Corchia concludes: “We are now looking to optimize our processes around contractual subscriptions to new products, which are currently complex, slow and overwhelmingly paper-based. By building hybrid-cloud apps that will make it faster and easier for customers to invest in our services, we can both improve our competitive edge and boost our revenues.”
About Caixa Geral de Depósitos France
Caixa Geral de Depósitos France (CGD France) is a universal bank with 48 branch offices in France. A subsidiary of the largest bank in Portugal, CGD provides a broad range of services including current accounts, credit cards, savings, loans, business financing, treasury, insurance and international development to enterprises, SMEs and private individuals.
Take the next step
To learn more about IBM Power Systems, please contact your IBM representative or IBM Business Partner, or visit the following website: ibm.com/power
A new player in the French IT landscape, the Constellation Group brings together the expertise of nine star companies to support organizations at every stage of their IT transformation projects. Evea Technology, the infrastructure star, supports mid-sized and enterprise clients in the optimization and industrialization of their information systems. Fabrick, the DevOps star, helps them reinvent their services with the design of Native Cloud Applications developed in Agile mode. To learn more about the Constellation Group, visit: www.constellation.fr