Barclays has formed a partnership with Simudyne to improve its predictive capabilities in risk management.
The enterprise-wide license agreement with Simudyne will explore new ways to manage risk in a simulated virtual environment, leading to smarter business decisions according to the bank.
It is running simulations to take advantage of ‘agent-based modelling’, which allows businesses to simulate complex networks, like financial markets, by examining how the interactions of large individual agents may drive broader behaviour.
Unlike traditional ‘regression-based’ models, which analyse the historical behavior of numerous participants and are based on large-scale historical data analysis, the bottom-up approach of agent-based modeling is used to identify and model risk in instances with sparse historical data and relatively few participants.
C.S. Venkatakrishnan, Barclays Group chief risk officer, said: “We are delighted to be using Simudyne’s toolkit as part of our ongoing efforts to improve the ways in which Barclays identifies and manages risk.
“By building agent-based models we hope to spot and prepare for risks arising from dynamic and large, direct and contingent, counter-party exposures. This helps create a more robust and stable bank for our customers, clients and shareholders.”
Barclays first began working with Simudyne when they took part in the 2017 cohort of the Barclays Accelerator, powered by Techstars, in London.
Earlier this year, PWC teamed up with Simudyne to provide financial services clients with the ability to test scenarios, refine strategies and reduce risks in decision making.
The company’s simulation software will work alongside PwC’s strategy, technology and consulting expertise, giving the industry the predictive power to plan for the future.
Simudyne’s technology is already in use by leading banks looking to enhance stress testing models, simulate contagion risk and for a range of other commercial and retail banking activities. Its clients include Bank of England, IBM, Burgan Bank, Gulf Bank, BNY and Microsoft according to its website.
Copyright © 2018 RegTech Analyst
Copyright © 2018 RegTech Analyst
