NTT DATA: Revolutionising Corporate Risk Hedging via Banking

In this deep-dive, we speak to Marc Garay, NTT DATA Corporate & Investment Banking, on ways banking services can revolutionise corporate risk hedging

Partner at NTT DATA Corporate & Investment Banking, Marc Garay, speaks to FinTech Magazine about the ways generative AI-powered banking services can revolutionise corporate risk hedging. 

Indeed, as Marc notes, “generative AI is a force to be reckoned with… it moves fast, fanning the flame of change across the banking industry, shifting the boundaries of the art of the possible.”

Today, banks are looking to generative AI to support with providing tailor-made product offerings with an enhanced value-add, while others implement the technology to understand internal corporate structures better, facilitating more informed and strategic decision-making for the client. Recently, NTT DATA partnered with Armstrong Wolfe to help foster more innovation in the financial services industry. 

“In both the corporate and banking worlds, risk is an area that requires constant attention,” Marc says. “Effective risk management is crucial to ensure a safe and reliable financial ecosystem. 

“In light of this, it is reasonable to think that the most effective technology must be employed to manage risk most effectively.”

Gen AI: Addressing the needs of the market

Of course, it is vital that banks explore and adopt gen AI technologies. If not, they are at a heavy risk of falling behind to competitors. 

With the necessity to onboard AI present across multiple verticals, for Marc, a ‘win-win’ approach must be adopted to meet the needs of the market. 

He adds: “Looking at the needs of today’s market, banks’ corporate and SME clients are demanding more client-centric solutions focused on enhancing risk management decisions. 

“As a result, banks are keen to improve commercial relationships by cross-selling a wide range of products but to achieve this goal, a win-win approach is critical, ensuring that actual value is provided to the SME or Corporate CFO.

“A win-win approach ensures collaboration and data sharing between the bank and the client, further strengthening their relationship. The collaboration is built to have mutual benefit for both banks and the corporate client, with both gaining from working together.”

The benefits of collaboration for the betterment of both a bank and corporate client are clear to Marc. “On the one hand, corporates will receive services from the bank and will be able to improve their risk-hedging decisions.

“They’ll be able to receive alerts about risk position changes, benchmark their levels of risk against industry peers, and build an integrated offering of tailored financial products to cover risks,” he continues. 

“While banks will be able to enjoy plenty of cross-selling opportunities and increased client engagement, as well as increase visibility of customer needs through transactional data and induce positive externalities for the bank’s credit quality.”

Analytics and AI for hedging corporate risk

Once a framework for creating a ‘win-win’ scenario is established, it then becomes a case of adopting the right analytics and AI tools to effectively hedge corporate risk. 

Corporate risk hedging solutions provide banks with a better understanding of their current risk exposures and support in making superior hedging decisions by including value-added indicators and utilising advanced analytics.

“Such a solution provides incremental value to a banking organisation,” Marc continues. “It can start with a basic Minimum Viable Product (MVP) in the first instance, focusing on credit and country risk migration statement, as well as a risk dashboard. 

“This can then be developed over time, with the ultimate goal of developing this into a complete solution, leveraging advanced analytics and generative AI, which would provide hedging recommendations, peer comparisons and even intelligent chatbots to help clients understand the root causes of the risks they face.”

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