30/01/2024

Addiko Bank, a consumer and SME specialist banking group operating across Central and Southeastern Europe, required a more efficient solution for calculating Expected Loss (EL) across its diverse operations. With a focus on growing its consumer and SME lending activities, Addiko Bank sought to improve the technical performance and reduce the operational costs associated with its existing EL calculation process.

The main challenge for Addiko Bank was the need to optimize the performance and scalability of their Expected Loss calculation. The existing solution was not only costly to maintain but also lacked the efficiency required to support the bank’s expanding operations across multiple subsidiaries. To address these issues, Addiko Bank initiated a pilot project in Croatia in 2019, aiming to enhance the EL algorithm with the help of PI’s technical expertise.

We collaborated closely with Addiko Bank to develop and implement a new algorithm for Expected Loss calculation using Microsoft SQL Server technology. The project’s primary objectives were to improve the technical performance of the EL calculation, ensure scalability for easy roll-out across the bank’s subsidiaries, and reduce operational costs.

The new algorithm was rigorously tested and successfully integrated into Addiko Bank’s Group infrastructure, enabling it to handle the EL calculation for all subsidiaries with optimal performance. This solution met the bank’s expectations and exceeded the requirements for scalability, making it a viable long-term solution for the entire Addiko Group.

The implementation process involved a seamless collaboration between Addiko Bank’s internal experts and our team. The solution was first piloted in Croatia, where it underwent extensive testing to ensure reliability and performance. Following successful testing, the solution was rolled out across all Addiko subsidiaries, using the Group infrastructure already in place to streamline the deployment process.

This approach allowed Addiko Bank to quickly scale the solution, ensuring consistent and reliable EL calculations across its operations. The use of Microsoft SQL Server technology provided the necessary computational power and flexibility, while also reducing the total cost of ownership compared to the previous system.

The collaboration on this project yielded several key benefits:

• Enhanced performance
  The new EL calculation algorithm significantly improved processing times, enabling Addiko Bank to generate regulatory reports more efficiently.
• Scalability
  The solution was easily scaled across all Addiko subsidiaries, providing a unified approach to EL calculation within the Group.
• Cost efficiency
  The new system reduced operational costs, offering a more sustainable solution for the bank’s long-term needs.
• Reliability
  The implementation ensured that all regulatory requirements were met with high reliability, reinforcing the bank’s financial stability.

Our partnership with Addiko Bank has resulted in a highly efficient and scalable solution for Expected Loss calculation. Through optimizing their performance and reducing the costs of their EL processes, Addiko Bank has strengthened its financial operations — ensuring consistent compliance and supporting its growth objectives in the competitive CSEE market.