IMD & IRD Awards 2020: Best Counterparty Data Project or Initiative—Fitch Solutions

Fitch Solutions is the winner of the Best Counterparty Data Project award thanks to its Bank Scorecard offering. Launched in September 2019, Bank Scorecard is Fitch Solutions’ answer to the challenges faced by bank counterparty credit analysts when assessing the creditworthiness of unrated banks. Almost 90% of banks globally are unrated, with particularly large data gaps in frontier and emerging markets. 

“Client portfolios are a mix of rated and unrated banks, but both need to be assessed,” explains Paul Whitmore, global head of counterparty risk solutions at Fitch Solutions. “From talking to clients, it is clear that many different methodologies are used to analyze a bank’s creditworthiness, but often you find inconsistencies in approach within the same portfolio. There may be one approach for rated banks and a different approach for unrated banks. What we wanted to do was to create a framework that would emulate the viability rating section that Fitch Ratings uses for rated banks.”

Offered through credit analytics platform Fitch Connect, Bank Scorecard is a bank credit risk scoring tool that aligns to the Fitch Ratings Banking framework and draws on Fitch Solutions’ extensive financial dataset of more than 36,000 banks. The breadth and depth of the underlying bank data is considered a particularly strong point of the offering. “We are generally recognized for having the deepest dataset on banks,” says Whitmore. “We have been collecting it for many years and we have historical data going back 30 years. We also have a very broad dataset covering a wide range of markets.”

Using this data, Fitch Solutions is able to automatically populate much of the Bank Scorecard. Users can then supplement this, exercising their own expert judgement to make adjustments to each of the risk dimensions.

The reception to the Bank Scorecard has been positive and, along with strong uptake among credit risk departments in banks, it has been well received by central banks and regulatory bodies in a number of international jurisdictions, who place particular value on the Fitch Ratings methodology.

Onboarding of new clients has continued steadily during the Covid-19 pandemic, with users especially appreciating the qualitative element the Bank Scorecard provides. “Clients like that Bank Scorecard offers more than a pure quantitative model. It is an expert judgement model,” says Whitmore. “Some things cannot be captured in numbers, which is particularly relevant during this pandemic. You cannot just reply on the end-of-year numbers for 2019.”

Read more about the Inside Market Data & Inside Reference Data Awards 2020 winners