Large Bank Examination Workshop February 2026

Key Areas Where Models Drive Decisions for Banks • Pricing of Financial Products  Models calculate fair values for derivatives, mortgages, and structured products.  They help optimize interest rates, fees, and spreads to balance profitability with competitiveness. • Forecasting & Strategic Planning  Predictive models forecast liquidity needs, customer demand, and macroeconomic trends .  Banks use them to plan growth strategies, manage reserves, and anticipate regulatory changes.

27

• Investment & Portfolio Optimization  Quantitative models optimize asset allocation, balancing risk and return.  They are used in hedging strategies and to maximize shareholder value. • Fraud Detection & Compliance  Machine learning–based quantitative models identify unusual transaction patterns.  They support compliance with anti-money laundering (AML) and other regulatory requirements. Key Areas Where Models Drive Decisions for Banks

28

14

© Global Financial Markets Institute Inc.