Automating Counterparty Credit Risk

A European asset management firm embarked on a proof of concept (PoC) with our team, to revolutionise its counterparty credit assessment process. With a substantial portfolio exceeding €30 billion in assets under management, the firm sought to leverage GenAI to automate and optimise its operations.

GenAI: The New Frontier

The generative AI (GenAI) revolution is well underway, promising exceptional performance in information search, retrieval, and synthesis tasks on unstructured content, as well as content generation capabilities across text, images, and code. This capability to process vast amounts of information, synthesise contextually, and auto-generate human-friendly responses is transforming the way we live and work. As a transformative ally, GenAI is emerging as a significant force for change for asset and wealth managers. Innovative firms are already deploying GenAI and reaping tangible benefits across a broad array of use cases by investing in the necessary infrastructure and talent to achieve significant efficiencies.

What Does Gen AI Mean Specifically for Asset and Wealth Management?

Organisations who are still considering GenAI adoption are being left behind—the time to implement is now. However, it is crucial to recognise that despite the hype surrounding GenAI, there are still unknowns, barriers to adoption, and limitations with the toolsets.

Addressing Key Challenges

Manual review processes proved laborious, error-prone, and resource-intensive, highlighting the urgent need for automation. Extracting data from diverse sources, especially annual reports for unlisted entities, presented significant hurdles, underscoring the necessity for innovative solutions.

Insights and Discoveries

The PoC unveiled the transformative potential of automation, revealing that the credit assessment process consumed an extensive amount of time annually. Amidst the complexity of unstructured data sources, exploring GenAI solutions became imperative, prompting strategic considerations and fundamental inquiries. Three distinct approaches were evaluated: Pure Generative AI, Traditional Data Analytics, and a bespoke Hybrid Model with AI Assistants. While each approach offered unique strengths, our Hybrid Model emerged as the most effective, aligning seamlessly with the firm’s objectives and industry demands.

Opportunities with Generative AI

Looking ahead, a robust GenAI strategy becomes imperative for asset managers navigating the evolving landscape. Calimere Point stands prepared to guide organisations in harnessing the power of GenAI, ensuring a safe, trustworthy, and ethically sound implementation. This case study underscores the transformative potential of GenAI in asset and wealth management. As organisations embrace innovation, a strategic approach to GenAI adoption becomes paramount, paving the way for a future of efficiency, insight, and sustainable growth.

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Generative AI Case Study

Asset Management's AI Revolution: Automating Credit Risk

This case study explores the impact of generative AI (Gen AI) on counterparty credit evaluation and asset/wealth management. We investigate practical applications, benefits, and challenges associated with this technological revolution. By collaborating with early adopters and analysing real-world scenarios, we provide an objective assessment of Gen AI's potential.

Our analysis cuts through the GenAI hype, highlighting key limitations and alternative strategies. This approach enables a comprehensive evaluation of GenAI systems' viability and practicality in financial settings.