modefinance took a further step towards the evolution of its technological offer to SMEs and financial institutions: the new proprietary model, Company Nowcasting, has been launched!
The financial market often faces challenges posed by low data frequency of companies (due to annual and infra-annual balance sheets), by delayed reporting on issues and risky behaviors, and by the lack of information for most businesses.
In order to resolve these issues, we have always worked in the direction towards an increase in technological skills, in the amount of data, as well as in their frequency, for the purpose of obtaining ever more quality information.
Company Nowcasting Model: a brand new service by modefinance
The quantity and quality of data have always been a cornerstone for a company’s state of health assessment, of its solidity and of its possibilities of having access to credit. In a constantly-evolving world, in which changes are often instantaneous, and in a time of insecurity as the one we are living in, there is a widespread perception in the financial world (and elsewhere): the need of a real-time prediction of potential crises. Thus, meteorology and other sciences are introducing a new type of real-time data in order to improve the predictions. Alternative data are being increasingly used in finance, as well as integrated in advanced calculation models, commonly referred to as nowcasting.
Hence, modefinance responded to this reality after months of planning and testing, by developing the Company Nowcasting Model, which has as its purpose the real-time assessment of any enterprise’s economic and financial riskiness, through the evaluation of the number and value of electronic invoices issued by the company (based on SPID – Public Digital Identity System) compared to its micro-sector, identified by:
• Ateco code
• Rating
• Zip code
• Municipality (comune)
• Province (provincia)
• Region (regione).
The Company Nowcasting Model results in two useful outputs for the client. The first output is an alphanumeric assessment (score) capable of detecting the trend of a crisis in real time, and all the unexpected changes (those being improvements or deteriorations). The second output is the Company Nowcasting Index, which marks the riskiness trend of enterprises taken under analysis, always in real time.
The model consists of three main APIs, given by as many main algorithmic methodologies:
• Scoring Trend Analysis: it evaluates the score of the last 12-24 months, score trends and the nowcasting score
• Sales Trend Analysis: it evaluates the variation of turnover of enterprises identified in the sector compared to the previous month, from the beginning of the year and the actual Year-to-Date (YtD) compared to the previous year’s one
• Sales Forecast: it evaluates the prediction of the sector’s future turnover variation for the end of the current, as well as of the following year.
These outputs are available and applicable both through API – with the ease of integration with any proprietary system – and already integrated in our patented credit risk management platform, Tigran.
In order to cope with situations in which there is a strong need for the identification of growth sectors, of financial analyses with lack of data or the recognition of an early crisis situation, we created a monitoring nowcasting framework, capable of providing an evidence of correlation between the (micro)sector and the probability of default.
The new feature, already widely accessible to our clients, has been developed with a view of an ever greater capacity of judgement and strategic development on the part of enterprises and financial services. The benefit of a tool such as Company Nowcasting allows them to secure and protect their activity from possible risks and unexpected events – which are quite frequent in the time we are living in – as well as to steer their investments towards growth sectors, all in real time.