ACL Success Story – Banking & Finance – Axis Bank

2011-01-01

AXIS Bank

“ACL technology has empowered our team to achieve our strategic goals. Without a doubt, ACL has given top management greater confidence in all our audit activities.”

Nabankur Sen, Vice President, AXIS Bank

Founded in 1994, AXIS Bank is a growing Indian company with 841 branches and more than 3,600 ATMs in locations across the country. The bank recently used ACL audit analytics to launch a tactical risk monitoring and data analysis plan. After identifying top risk and compliance goals, the AXIS Internal Audit team has successfully used data analysis to recover lost revenues, cut processing times and resources, and monitor a high-volume transaction environment for anomalies. With ACL, the AXIS audit team continues to strengthen operational controls and enhance confidence in vital compliance verification activities.

Customer Profile

With a central office in Mumbai, AXIS Bank has 841 branches and more than 3,600 ATMs in 521 locations across India. AXIS also has international offices in Singapore, Hong Kong, Shanghai and Dubai, with a focus on corporate lending, trade finance, syndication, investment banking, risk management, and liability businesses. In the financial year ending March 31, 2009, AXIS Bank reported net profits of £226.3 million – a nearly 70 percent growth over the previous year.

Challenges

AXIS Bank is negotiating a variety of business challenges that are both unique to the organisation and familiar to the industry as a whole, including high data volumes, rapid growth, tighter competition, and an increasing number of fraudulent and undesirable transactions. The bank’s top internal challenges include operational risk management, high personnel turnover rates, tighter regulatory demands, on-site internal audit gaps, and meeting customer requirements in a competitive market.

India has also been affected by the recent global downturn, which has changed how top management in every organisation, including Axis Bank and regulators, view risk within the enterprise. The audit committee is demanding mechanisms that increase confidence in internal audit processes and technical practices. The AXIS audit team also needs to analyse 100 percent of its corporate transactions, negotiate multiple dataplatforms, access source data without compromising integrity, and achieve a more standardised, repeatable approach to data analysis.

Solution

After reviewing multiple technology solutions, AXIS managers chose ACL audit analytics to support a strategic audit and risk monitoring plan. The team crafted several key ACL goals and developed more than 50 ACL scripts to monitor daily transactions and identify exceptions such as income leakage or regulatory and compliance violations.

ACL extracts data from the company’s backup server during non-peak hours and analyses this data to generate exception reports, which are automatically sent to the appropriate stakeholders. Extraction, analysis and report distribution used to be performed manually, but with ACL, these key steps are now automated without any human intervention.

AXIS Bank also took an innovative approach to its work plan by dividing audit staff into three teams responsible for supervising ad-hoc analyses, data analysis automation, and fraud assessments and investigations. These teams work from the central Mumbai office, but ACL analytics are now being used to strengthen controls in a number of additional bank departments and offices.

Results

The AXIS Bank audit team has successfully used ACL software to implement a company-wide monitoring and data analysis strategy. Transactions from the bank’s 841 branches are routinely analysed and exceptions are quickly delivered to appropriate internal stakeholders. Trend analyses show that total data deviations have dropped by approximately 30 to 50 percent since the ACL implementation. The team has a direct database link and can analyse entire data populations with almost no delay between transaction and analysis. This full coverage has boosted confidence and eliminated inadvertent biases from limited sample sizes.

By automating data analysis with ACL, the AXIS audit team has been able to cut processing times by 50 to 60 percent and has reduced the resources required for analysis by 20 to 30 percent – freeing audit staff to perform other value-added activities. Providing advance exception reports to field auditors has also cut on-site exception verification times by 20 percent – a number that AXIS expects will rise to 50 percent as the process matures. Off-site data analysis makes it easier for auditors to plan field audits and has enabled the department to enhance its audit coverage without adding more staff members.

Most dramatically, the AXIS ACL implementation has identified significant revenue leakages and over 50 percent of the detected shortfalls have already been recovered. Unusual or suspicious transactions are easier to identify and the team has detailed historical data to analyse patterns at the branch level. With a focused, ongoing ACL data analysis strategy, AXIS is effectively addressing key operational risks and providing solutions that increase confidence and regulatory compliance.