In our series to interview actuarial professionals with varied achievements, this time we got a chance to bring onboard Mr. Yash Ratanpal, who is one of the few Actuaries working in the Banking Sector in India.
Let’s listen to Yash on his journey to become a non-traditional Actuary.
TAC: How would you introduce yourself and describe your interests ?
I am one of the co-founders of Acies – a technology and advisory firm based out of Mumbai having a global presence spanning across 5 countries.
I describe myself more as a non-traditional actuary with extensive experience of working with multi-national and regional banks, NBFCs, insurance firms and corporate conglomerates on a diverse set of risk and technology initiatives including ALM, enterprise risk management, predictive modelling and capital adequacy.
My interests and passion revolve around quantitative risk management, emerging technologies, disruptive business models and football (not soccer).
TAC: Can you tell us a little bit about your journey ?
Soon after completing my graduation and getting through a series of nerve-wrenching aptitude tests & interviews, my professional career kick-started in 2015. My first official job hunt landed me a role in the financial risk advisory team of a Big 4 professional services firm based out of Mumbai.
A blend of persistence, luck and an observation that actuarial skills could be applied way beyond insurance, led me to become one of the very few aspiring actuaries who got the opportunity to work in the banking & finance services industry as opposed to the traditional route of working in the insurance and retirement pension space.
I got the opportunity to work with some of the largest banks across the globe and get a first-hand experience of how quantitative actuarial skills can be useful in the banking industry, specifically in areas such as:
- Stress testing and capital adequacy: Validating a range of statistical models that were designed to forecast and assess the financial impact of uncertain stress scenarios (such as the 2008 financial crisis) on their balance sheet and capital requirements
- Credit risk modelling: Re-inventing the credit risk framework for credit concentration modelling and contagion risk measurement and developing econometric models to project expected credit losses (ECL) for IFRS 9 reserving
- Market risk: Constructing a multi-asset VaR model for continuous monitoring of risk impact across positions of a proprietary trading desk
In a move that I had never envisaged, 3 years later I got the opportunity to be a part of the founding team of Acies in 2017. The move to setting up and running Acies, drove a significant transition in my career to say the least – a transition in experience from building quantitative models to now building complex financial risk applications and personally from being just an employee to now being responsible for the success of the firm.
At Acies, I lead the design and development of Antares – a next generation fully automated liquidity and balance sheet management application for financial institutions. Additionally, as a co-founder, I am also a member of the Board of Directors.
In a bid to keep spreading awareness about the role of actuaries across the banking & financial industry, I am currently serving as a member of the advisory group on banking, finance and investments (AGBFI) constituted by IAI and wider fields group on risk management – IFOA, UK. I have previously also been a part of the global banking working group constituted by the International Actuarial Association (IAA).
TAC: Can you tell us a little bit about your academic background ?
YR: I hold a bachelor’s degree in financial markets from H.R. College of Commerce and Economics (Mumbai). Professionally, I am a qualified actuary and a chartered Enterprise Risk Actuary (CERA) who is eligible to be a fellow member of the Institute and Faculty of Actuaries, UK (IFOA) and Institute of Actuaries of India (IAI).
TAC: We all have come across a peculiar term i.e. ‘a non-traditional Actuary’. How would you explain ‘a non-traditional Actuary’?
YR: Actuaries have traditionally been known to work in insurance and pension firms in the areas of pricing, liability modelling, reserving and valuations – both in India and globally.
However, with the increasing need for data-driven predictive analysis across business models, which requires a blend of quantitative modelling, applied statistics and economics, an actuary can apply their skillsets in any company– be it in financial services, e-commerce or even climate change to name a few.
I’ve always been attracted towards exploring non-traditional paths in anything I do. Hence, when I started my actuarial career by applying my skillsets in the banking industry, the term ‘non-traditional’ kept being referred to me by my fellow colleagues. Back then, I did not realize what the term “non-traditional” really meant.
However, standing today, to me, a non-traditional actuary is someone who uses their actuarial skillsets in areas not expected to be traditionally applied – to solve real problems through innovative, practical and technology driven approaches.
TAC: How are Actuaries involved in Banking and what are their responsibilities?
YR: The core business model of a bank has always been to raise money through deposits or borrowings (liabilities) and use the same to generate loans (assets) at a higher rate of interest. However, over time, business models of banks have evolved significantly and have led to banks generating revenue from non-interest income driven businesses such as investment banking, transaction banking, bancassurance, trading, derivative structuring etc.
Ever since the financial crisis, banks have been adopting forward-looking and dynamic risk management frameworks for both regulatory compliance and monitoring overall business performance. Quantitative and forecasting models therefore play a significant role in financial services today leading to institutions seeking specialized skillsets in the field of statistics, mathematics, economics and finance.
Actuaries have primarily been known to work with insurance companies to help them assess impact of long-term risks through usage of forward-looking models. Given the diversity, nature and rigor of the actuarial curriculum, specialized skillsets possessed by actuaries is almost sector agnostic today and can be used to assist any organization, especially financial institutions to measure and model the monetary impact of uncertain events and risks.
For example, the same techniques used to predict mortality & morbidity rates for human lives in life & health insurance can also be used to predict probability of default on credit loans advanced to borrowers of a bank.
Here are a few areas in a bank where actuaries can play a pivotal role based on their niche skillsets:
TAC: How do clients value the Actuaries in Banking?
YR: To be very honest, I think we are still quite far off from the day when banks would recognize actuaries the same way as insurance companies do – but there is a growing level of recognition in the industry.
However, my personal experience of working with financial institutions has taught me that while such institutions might not officially hire candidates solely based on actuarial exams/certifications yet, they unknowingly value and appreciate the knowledge base and intangible skill sets brought to the table by actuaries. In fact, Actuaries are not known as “Actuaries” in the banking space, but their skillsets are recognized more as “Quants” or “Data Scientists”.
TAC: How has been the feedback so far from your clients considering you are the one of very few Banking Actuaries in India?
YR: Typically, our clients are more interested in the knowledge and experience we bring to the table and how we design and implement practical solutions to solve their problems.
When our clients see the tangible success achieved through our implemented solutions, they eventually want to know more about our team who came up with such solutions, and that is how we get the opportunity to talk about our actuarial background in some cases, which evokes interest in them knowing more about the actuarial profession.
TAC: There has been a lot of advancement in South Africa in terms of Actuarial Banking. What should we do to bridge that gap in India?
YR: South Africa has paved the way for actuaries in banking and can be seen as a case study for actuarial societies across the globe when it comes to spreading awareness about application of actuarial science in the banking industry.
Having said that, I think each country will face its own set of challenges and hurdles when trying to do the same due to country specific regulatory constraints and lack of awareness about actuaries beyond insurance.
As we speak, even the Institute of Actuaries of India (IAI) is working on devising an implementation strategy for the same. In my view, it has to be a multi-dimensional approach wherein we need to open communication channels with not only banking regulators such as the Reserve bank of India (RBI) but also directly start reaching out to senior and mid management of banks and NBFCs in India to create more awareness about skillsets possessed by actuaries and how it could be useful for them. This can possibly be done through exploratory proof of concepts which might lead to tangible use cases of actuaries using their skills to solve specific problems faced by the banking industry in India.
If we are able to successfully come up with a tangible case study for even a few banks or NBFCs, I think several other banks and NBFCs will start recognizing actuaries for their skillsets and this could possibly lead to creation of massive opportunities for actuaries both as an employer and employee in the Indian banking and financial industry.
TAC: Do you use any specialized software/hardware when it comes to working in this field?
YR: As explained above, complex quantitative models play a significant role in both regulatory compliance and business decision making for financial institutions today. Given the sheer size of data and complexity of calculation methodologies involved, most banks have continuously invested to automate such models as part of their digital transformation journey.
There are a range of software’s and technologies used across the global financial services industry. Each of them used for a very specific purpose. Listing down a few based on my experience.
- Compute and modelling: Python, R, Scala, Spark, C++, MatLab
- Data management tools: Hadoop, SQL, MongoDB, Apache Airflow
- Visualizations: Power-BI, Tableau, QlikView
- Financial market data: Bloomberg and Reuters
- Web application frameworks: Flask and Django
TAC: What tips would you give to the readers who are interested to work in the Banking sector and are on the path to become Actuaries?
YR: First and foremost, begin with gaining a fundamental understanding of how banks work, what is their underlying business model, what is their role in the financial services industry and how the global financial services operates today. For the same, I would recommend going through annual reports and financial statements (Balance sheet and income statements) published by the top 10 banks in India and around the world as a starting point.
Secondly, familiarize yourselves with key banking regulations prescribed by central banks like the Reserve Bank of India and global banking guidelines published by the Basel Committee on Banking Standards (BCBS) in areas related to risk management with specific focus on credit risk, market risk, IRRBB, ALM, interest rate risk, capital adequacy and stress testing.
In addition to clearing actuarial papers relevant for the banking sector, aspiring actuaries should also focus on applying their skillsets using technology – first by learning how to code using new age open-source technologies such as Python, Scala, R etc. and second by building prototype models on real-life datasets if possible.
Lastly, I would strongly advice aspiring actuaries wanting to work in the banking sector to have a positive mindset since the pathway to becoming a banking actuary is definitely a road less taken, but it is a career path that can turn out to be extremely rewarding in the long-term, if followed with persistence and passion.
Thank you so much, Yash for taking out time from your schedule and sharing your experience and knowledge with us on Banking. You can connect with Yash here on LinkedIn! Wishing you luck for your future endeavors.
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