Case Study: ValidMind Empowers General Bank of Canada to Streamline Model Risk Management
General Bank of Canada (GBC), a fast-growing commercial bank headquartered in Edmonton, Alberta, faced the challenge of validating its first fully internally developed financial AI model to comply with regulatory requirements. In this ValidMind case study, you’ll learn how, with limited internal resources and no dedicated model validation team, the bank found a solution that would streamline its model risk management (MRM) process without overextending its budget.
GBC partnered with ValidMind, whose end-to-end model validation platform provided the technology, expertise, and process guidance the bank needed. By implementing ValidMind’s solution, GBC reduced model validation time by 70% and achieved a 90% cost savings compared to initial projections.
The seamless onboarding process, scalability, and responsive support from ValidMind allowed GBC to focus on higher-value tasks like model development and risk management. This partnership has positioned GBC to scale its MRM capabilities efficiently, helping the bank build a robust framework for long-term growth and strengthening its competitive advantage in the financial services sector.
GENERAL BANK OF CANADA OVERVIEW
General Bank of Canada is a fast-growing Canadian commercial bank headquartered in Edmonton, Alberta. Founded in 2005, the bank focuses primarily on providing auto and equipment financing, along with residential and commercial mortgage products. Despite being one of the smaller banks in the Canadian market, General Bank of Canada has developed a reputation for innovation and customer-centric services.
With a commitment to working closely with their partners and offering value to both businesses and consumers, GBC operates as a B2B2C (Business-to-Business-to-Consumer) bank, partnering with various companies to deliver financial products to end customers. Over the years, the bank has grown its presence across Canada and continues to expand its product offerings as part of its long-term strategic vision.
As of 2024, the bank is undergoing a period of significant growth, which includes upgrading its core banking platform and expanding its portfolio of loan products. GBC’s emphasis on trust and innovation in risk management positions it as a forward-thinking financial institution poised to scale its operations in the Canadian financial market.
THE BUSINESS CHALLENGE
General Bank of Canada (GBC) faced a significant challenge: they needed to validate their first fully internally developed financial AI model to comply with strict regulatory requirements, including Canada’s OSFI E-23 guideline.
As a smaller bank, GBC lacked the internal resources and specialized teams to manage this complex task. Unlike larger institutions, GBC did not have dedicated teams for model validation or quality assurance, leaving them unsure of where to begin. They faced the prospect of spending significant financial resources and time to ensure their models were tested, documented, validated, and fully compliant.
“We needed the skill set, the technology, and the process to validate the model. We simply didn’t have the capability internally,” said Adam Ennamli, Chief Risk Officer, General Bank of Canada.
Adding staff or outsourcing posed resourcing challenges that would threaten the return on investment for the model. More resources dedicated to its validation made the bank question whether it was a viable project. But Ennamli and his team understood that this model — and the major first step toward having a robust financial modeling practice within the bank — represented an enormous opportunity to help the bank grow and thrive in an increasingly competitive landscape.
READ MORE: A Model Risk Management Overview of E-23 Compliance Strategies
THE SOLUTION
GBC chose ValidMind to address its model validation needs for several reasons, but Ennamli called out three key areas that made it the right choice.
“We chose ValidMind because of the simplicity of their value proposition, the expertise of their co-founders and employees, and their ability to adapt to our needs throughout the project lifecycle,” Ennamli explained.
ValidMind provided GBC with the complete, end-to-end solution it needed, including technology, expertise, and process guidance that helped GBC streamline its model risk management (MRM) practice.
ValidMind welcomed GBC onto its model validation platform in July 2024. The bank started small with one model and gradually scaled as it gained confidence in the platform. The solution offered an integrated workflow that facilitated communication between model developers and validators while maintaining independence, a crucial aspect of regulatory compliance.
ValidMind Platform Features
Several key features of the ValidMind platform and user experience stood out for General Bank of Canada:
Integrated Workflow: The platform’s ability to foster transparency and collaboration between developers and validators — while maintaining necessary independence — was particularly valuable.
User-Friendly Interface: The intuitive design made it easy for GBC’s team to learn and use the platform effectively from the start of the project. Because of the platform’s intuitive design, very little time was needed to get the team trained and up and running on the platform.
“ValidMind’s workflow and communication tools gave us a worry-free experience, allowing us to focus on value-driven aspects of model validation,” Ennamli said.
Scalability: Starting with one model, GBC has now expanded the use of ValidMind’s platform and plans further scaling to include more models.
Industry Expertise: ValidMind is built by model risk management professionals with deep, in-house experience, providing customers with a trusted partner that understands the nuance and complexity of all aspects of the MRM lifecycle.
Responsive Customer Support: ValidMind offered consistent and efficient support to the GBC team, responding to questions and getting hands-on with the entire team to drive the best possible customer outcome.
“ValidMind is unlike any of the other companies we see that are trying to sell us solutions,” Ennamli said. “We were treated with respect every step of the way. We weren’t pushed or nudged into upselling in any way. ValidMind focuses on helping us in any way they can and making sure we have everything we need to be successful.”
Implementation & Onboarding Process for the ValidMind Platform
The onboarding process was seamless and smooth for GBC. ValidMind’s team ensured a strong understanding of the bank’s specific requirements, starting with one model and with the necessary scalability that the bank required. The ease of onboarding enabled the Ennamli’s team to focus on what mattered most—validating and interpreting the models.
“It was a great experience—seamless, fluid, and no pressure,” Ennamli added. We started with one model, and the platform is now fully integrated. We’ve been discussing bringing more models into the system to scale up our internal capabilities.”
THE IMPACT & RESULTS
Operational Improvements
By leveraging ValidMind’s platform, General Bank of Canada achieved significant efficiency improvements in less than 30 days:
Time Savings: ValidMind helped GBC reduce model validation time by an impressive 70% over its initial project estimates. This allowed the bank to focus on more critical aspects of model validation, such as interpretability and explainability.
Cost Savings: The bank also reported a 90% reduction in costs compared to their initial forecasts for manual model validation.
“ValidMind helped us cut the validation time by 70%. Now that we’ve implemented the platform and built internal expertise, we expect even greater time savings going forward. Additionally, we reduced costs by 90%, far exceeding our initial expectations,” Ennamli said.
Long-term Impact
With ValidMind’s platform in place, General Bank of Canada is now positioned to allocate resources more effectively. The bank has shifted focus from a manual, administrative approach to MRM to more high-value activities like model development and expanding their product offerings. Furthermore, the platform has instilled a sense of trust, which the bank views as a competitive advantage in the financial services industry.
“ValidMind has helped us immensely in making model risk management part of our trust-building strategy. This translates into value for both our customers and our partners,” Ennamli said.
KEY METRICS
Project time to value: 30 days
Time savings compared to projections: 70%
Cost savings compared to projections: 90%
LESSONS LEARNED
During the onboarding and validation process with General Bank of Canada (GBC), two key challenges were faced and the team identified areas for future improvement.
- Validation Documentation:
One challenge arose from the fact that GBC’s model validation tests were conducted outside of the ValidMind platform, with results uploaded externally. This created a limitation in the ability to tag evidence directly to specific tests within ValidMind. Because the tests were not run in the platform, validators could only reference entire documents rather than directly linking to individual assessments. Moving forward, the ability to tag specific sections of externally uploaded documentation would streamline the validation process and improve traceability. - Test Organization and Syntax:
Another issue was related to the organization of pre-built tests within the ValidMind platform. While a wide variety of tests are available, finding the appropriate one, particularly for first-time users, could be challenging. Additionally, there was confusion around the different syntax requirements for regression versus classification models, as the platform’s test descriptions did not clearly indicate these differences. Improving the organization of available tests and enhancing clarity in test descriptions would help ensure smoother navigation for new users.
Despite these challenges, the overall experience was highly positive. The onboarding was seamless, and the platform’s user interface was intuitive. The team at General Bank of Canada appreciated ValidMind’s collaboration and support throughout the process, making the experience largely smooth and efficient.
By addressing these areas, ValidMind can further enhance the user experience for future clients, making the platform even more accessible and effective for model validation across various financial institutions.
KEY BENEFITS FOR GENERAL BANK OF CANADA
– 70% reduction in model validation time compared to baseline project estimates
– 90% cost savings over initial project cost projections
– Seamless onboarding and scalability for future models
– Enhanced ability to focus on high-value model explainability and interpretability
ValidMind continues to be a strategic partner for General Bank of Canada as they navigate future growth and regulatory challenges, building a trusted and sustainable model risk management framework.
CONCLUSION
General Bank of Canada’s successful partnership with ValidMind demonstrates how small and mid-sized financial institutions with limited resources can achieve regulatory compliance and model risk management excellence. Because ValidMind automates the painful parts of the MRM process, a bank of GBC’s size can quickly establish, improve, and scale its model risk management approach. This allows banks to create faster revenue streams in the form of new models and achieve efficiencies by continuously improving existing models.
Through advanced technology, expert support, and a scalable platform, ValidMind enabled GBC to cut time and costs significantly while enhancing its internal capabilities. This collaboration is helping GBC build a robust model validation framework that positions them for long-term growth.
