5 Lessons Learned for Banks Having Acquired an FI

5 lessons you need to know to smooth out model integration

So, your bank has newly acquired a financial institution. But this may keep you up at night, fretting over how to integrate those models, but more so, how to communicate with the other firm about such.

1. Absolutely make sure that you are included in the conversion team. Only when you sit in planning meetings will you know what questions to ask. Simply, the adage “you don’t know what you don’t know” speaks volume.

2. Check your assumptions at the door. Go into it with the mindset that everyone is new to this space and know nothing about what you’re talking. This includes understanding the definition of a model, let alone model risk framework.

3. Starting with a clean slate, make assessment to make sure that you had all the model risk procedures – look at their definitions and compare it to yours.

4. Challenge yourself: are the different models even speaking the same language? Also, just look at the semantics of models, processes, and tools. You may have heard that they’re ‘AI’ if you talk to the business line but it’s ‘tools’ to model risk management.

5. Partner with your third-party risk team, or even your contracts management team, because as they conduct due diligence, you’ll be able to determine what vendors were used for models. Then connect the dots back to the model owners, a sort of short back-door means to delving deeper.