Software applications

Many of these examples refer to banking but this is merely because, for obvious reasons(!) this has been a particularly active area…don’t be put off! The technology can be and is being applied to a wide variety of sectors. We are always keen to discuss tailored solutions for individual businesses.

If you believe that you have identified a specific need for your business sector we are happy to explore a means to work with partners to jointly develop and market bespoke solutions.

Contact: David G Wilson david@ontonix.com at Ontonix UK

Click on pictures to enlarge

Customer-retention and credit risk early-warnings.

Banks are interested in establishing new  rating methods for credit risk. Using OntoDyn™, a specific system designed to actually measure the stability of a client of a bank based on the client’s transactions, it is possible not only to quickly rank and classify its customers from a global health/risk perspective, it also indicates the ones which at risk of being lost. The system performs such analysis at the end of every month. Given the highly turbulent nature of the global economy, the OntoDyn system establishes a dynamic rating and early-warning system.Read more. 

Monitoring and Ranking of Bank Subsidiaries.

Just like with its customers, banks have interest in establishing a holistic health/performance index of each subsidiary or branch. The difference between the complexity and the corresponding critical value establishes an innovative ranking mechanism. Highly critical or close-to-critical subsidiaries are more difficult to manage and therefore require more management resources or restructuring. Subsidiaries close to critical complexity have a limited growth potential.Read more.

Process and Operational Risk Analysis in Banks.

Operational risk analysis is a fundamental concern in modern banking. Bank processes are highly sophisticated, time-consuming and costly. It is of paramount importance to establish the points of a given process in which vulnerability and fragility are concentrated. These maybe identified with the hubs – indicated in red and blue in the process maps which OntoSpace™ creates automatically based, for example, on Monte Carlo analyses. In similar fashion, the nodes in which much of the process complexity is concentrated may be established. Information on process vulnerability and complexity may be used to streamline the process which maintaining its performance and robustness intact.

Superior Business Intelligence.

It is known that when a system functions in the proximity of its critical complexity, it is very difficult to manage and grow and, at the same time, it is quite risky. In such situations the system may develop unexpected modes of behaviour. Based on corporate data it is possible to measure the evolution of corporate complexity and therefore to track in a holistic fashion the manageability and growth potential of the corporation. Before critical complexity is reached the management may either decide to re-structure (drain entropy) or consider a merger. In the latter case the corresponding critical complexity threshold is elevated, thereby increasing the growth potential. Critical business units (hubs of the business) are indicated in red in the process map.

Advanced Portfolio Design and Asset Management.

The Ontix is a holistic complexity-based index conceived by Ontonix and is used to track the complexity of stock markets, asset portfolios or generic financial products. The image on the left illustrates a Process Map built automatically using real-time values of the following indices: ATX, BEL-20, CAC 40, DAX, AEX General, OSE, MIBTel, ISE, Madrid General, Stockholm general, Swiss Market and the FTSE 100. The plot of the Ontix index the map are refreshed every 30 minutes and may be viewed in the home page of our site. Complexity-based methods of portfolio design go beyond the limitations of the covariance-based MPT.

Trends in World Economy.

Analysis of data which is published by Central Banks and the WTO is used to periodically conduct analyses of the trends of complexity, entropy and state-of health of the World’s economy, as well as that of specific regions and market segments. In the period 2004-2007, for example, the complexity of the World economy has doubled, while entropy has increased by 50%.

Anticipating Conflicts and Failing States.

A socio-economical system becomes fragile when it functions in proximity of its critical complexity. At critical complexity a system becomes vulnerable and extremely fragile, as often a minute change in any of its parameters may trigger transitions to unwanted and unexpected modes of behaviour. Social unrest, civil war or armed conflicts are examples of such modes. Terrorist attacks are examples of triggers. Moreover, critically complex countries are ideal terrorist sanctuaries. Process maps, complexities and the corresponding critical complexities may be established for single countries or regions. Those regions in which complexity grows at high rate require closer monitoring.

Crisis Anticipation.

The sub-prime crisis in the US became known to the wide public in August 2007. However, based on our analysis of the US housing market data spanning the period 2004-2007, we have shown how during 2006 the complexity and entropy of the market rose steeply by about 40%. None of the conventional methods delivered early warnings of the upcoming crisis while complexity-based technology indicated clearly that the market was building up entropy at least a year before the August melt-down.

Real-time Monitoring of Bank IT Systems.

IT systems in banks are extremely complex dynamical systems, composed of disparate hardware platforms, disk, routers, software applications, and are accessible by the bank’s customers via the internet. Clearly, the correct operation of a bank’s IT infrastructure is of vital importance. Real-time monitoring of the complexity (and fragility) of a large IT system may be used to issue early warnings to the system’s managers, helping intervene before the systems reaches a state of crisis.

Identification of Financial Crisis Precursors

Recent developments in the international financial arena show how conventional risk rating and risk management tools and techniques prove inefficient in a highly turbulent and globalized economy. Sudden default of AAA companies is a fact which has been observed on more than one occasion in the past few months. The cause of these failures may be attributed to a substantial increase of complexity without the management’s knowledge. It is known that excessive complexity may in fact  "drown" a business if it is unprepared. Therefore, it is mandatory to measure and manage complexity. In the near future, risk management will become complexity management.