We, along with all of you, have been closely following the developments around COVID-19 (coronavirus) and appreciate inquiries regarding how Twenty Twenty Analytics is preparing and responding, both operationally and through augmentation of our analytics strategy.
Rest assured that Twenty Twenty Analytics’ Business Continuity Plan is up to date. We foresee no significant impact to our ability to serve you.
We are approaching the situation as we do all things – by putting the wellbeing of people first including our staff, clients, and as an extension of your financial institution, your members.
Safety and Soundness – Stress Testing
We’re working rapidly to help our clients gain comfort that their safety and soundness is not threatened by this pandemic. While we believe those with strong risk adjusted capital positions prior to this pandemic will not see threats to their ability to maintain core operations, we have developed additional stress assumptions quantifying your exposure resulting from this Black Swan event. Studies have shown that borrowers with greater credit risk are impacted more heavily in recessionary environments. Our expectation of this event is that it will be more indiscriminate to current credit risk and based more upon geographic region and industry.
Our clients will receive this customized stress test at no additional charge and with no action required. Please contact us if you have not received your stress analysis by 3/20/2020.
Many of our stress scenarios include an interest rate shock. Because downward shifts in interest rates are typical in times of economic turmoil, we suggest you focus on credit risk adjusted net worth (ignoring rate shock). If you are positioned to be impacted negatively in a down rate environment, we suggest consulting with your ALM provider.
Additional Guidance to Proactively Assist your Members
Our December 2019 Blog Post – Capitalizing on Changing Interest Rates examines several initiatives you can take to better serve your members in times of changing interest rates.
Trends have been emerging in determining how you may be able to assist your members at a more granular level. Ideas we have seen from the industry include skip-a-pay, allowing interest only payments and short-term loan availability.
If you are trying to target members individually for these types of offers, data fields you may want to consider are Debt to Income, Income, Revolving Debt Utilization and employment information potentially including Length of Employment, Employer (tourism and hospitality will be heavily impacted) and whether or not your member is self-employed.
We have the ability to pull many of these attributes through our partner, TransUnion, and can update these values for you and generate customized data lists and/or ad hoc reporting without performing a full portfolio analysis.
Please contact us if you would like to discuss.