CASE STUDY
Helping DF Capital's Journey to Banking Licence Approval
Company Overview:
In 2018, DF Capital was at a pivotal growth stage as they aimed to transition from a commercial lending entity into a regulated bank. This required a comprehensive regulatory business plan, including a sophisticated financial model to support their banking license application to the Prudential Regulation Authority (“PRA”), part of the Bank of England.
Our Partner at DF Capital:
Gavin Morris, CFO at DF Capital
The Role of TriFidus:
TriFidus was entrusted with overhauling DF Capital's forecasting financial capability to:
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Develop a model to support the requirements for a regulatory business plan.
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Provide the granularity needed for product-based stress testing.
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Formalise the business planning and budgeting process.
Project
Overview:
The project entailed re-engineering DF Capital's financial model to align with the transition to become a regulated bank.
The requirements:
Re-engineer the financial model to adequately support the regulatory business plan submission.
Ensure the model facilitated stress testing for ICAAP (Internal Capital Adequacy Assessment Process) and ILAAP (Internal Liquidity Adequacy Assessment Process) requirements.
Collaborate closely with the DF Capital team to integrate their evolving product portfolio and business strategy into the model.
How TriFidus supported this project:
Re-engineered the existing financial model to:
Provide insightful, integrated outputs that consistently demonstrated the impact of the financial plan.
Provide outputs with the required detail on lending and borrowing (deposit) products.
Allow capital (ICAAP) and liquidity (ILAAP) stress-testing to be through an integrated scenario manager.
Provided financial leadership to design, implement, and manage a business planning and budgeting process with ExCo and achieve Board approval:
Received and challenged input from across the organisation.
Worked with the CEO and CFO to ensure the plans were coherent with proposed strategy.
Reflected Board approved direction in the Regulatory Business Plan for submission to the PRA.
Output integrated financial statements.
The Results:
TriFidus' financial model was pivotal in supporting DF Capital's banking license application. The model's comprehensive stress testing capabilities and financial planning insights were key requirements to becoming a regulated bank.
"The financial plan TriFidus helped us to create, gave us the level of detail needed on our products. It also allowed us to do the required stress testing for ICAAP and ILAAP. TriFidus’ assistance with these processes meant we could work at significant pace.
By having demonstrated expert financial modelling capability, TriFidus was key in supporting the development of the plan. The conclusion of the work meant we had a robust financial model that had all the required granularity."
It was a pleasure for us to be given the opportunity to collaborate with DF Capital on its next phase of growth. Working alongside their dedicated team has been a rewarding experience for us as we were able to share our experience helping financial institutions to develop their capability.
