Dear,
In the last months, several clients have asked me about the new concept of Smart-AFI of Bank Analyzer, and its differences with the traditional Accounting for Financial Instruments Module of SAP Bank Analyzer.
I’ll start with a short description of the evolution of the Accounting for Financial Instruments module of SAP Bank Analyzer until the most recent 9.0 version, which includes Smart-AFI.
The Accounting for Financial Instruments module of Bank Analyzer is the system responsible of creating a Financial Statement, including the valuation, of the Financial Instruments (Securities and Over the Counter Contracts) of a Bank. Actually Bank Analyzer call them Financial Instruments when they are securities, and Financial Transactions when they are Over the Counter contracts.
Until the Version 5, the Accounting for Financial Instruments Module of Bank Analyzer was not a proper sub-ledger. The Version 4.2 and older versions were not capable of integrating the Financial Statements of the Financial Instruments in the General Ledger, in fact the results were stored in the Results Data Base (precursor of the Results Data Layer but much less flexible). From the Results Data Base, the system provided Data Sources for sending the Financial Statements to an specific Business Content in Business Information Warehouse. At the end we could import the Financial Instruments statements and the General Ledger Statements to a Business Information Infocube which contained the complete Financial Statement of the Bank. This approach, which “merged” the Financial Instruments Statements and the General Ledger in a Business Information Warehouse Infocube, was called Merged Scenario.
With the Version 5.0 (released 10 years ago), we got the first Bank Analyzer - AFI System which could be called a real sub-ledger, this version brought two big improvements:
- The Results Data Layer, capable of storing Accounting, Risk and other formats of data (including external Data). Foundation of the Integrated Financial and Risk Architecture.
- The General Ledger Connector, responsible of extracting the Accounting Data from the Results Data Layer and send it to the General Ledger, where the aggregated accounting entries, fully reconcilable with the Financial Instruments sub-ledger, are posted.
Version 5 of Bank Analyzer supported multi Accounting System functionalities (actually older versions supported several accounting systems too), meaning that the Financial Statements of the Financial Instruments could be generated according to different Accounting Principals (typically Local GAAP and IFRS).
And finally, we arrive to Bank Analyzer 9 and Smart-AFI. One point that we must consider when we’re thinking about Bank Analyzer-AFI is that Bank Analyzer valuates individually and builds a complete Financial Statement per individual contract (Financial Transaction or per every Security managed in an specific Securities Account), and this is a huge computing effort, when we’re valuating the portfolio of a commercial or investment bank.
Additionally, if the Bank is evaluating the portfolio according to several Accounting Systems (for instance Local GAAP and IFRS), the system suffers a double computing effort. This is the way that all Bank Analyzer versions, older than Smart-AFI, support the multi Accounting System requirements.
On the other hand, there’s a more efficient way of generating multiple Financial Statements, according to multiple Accounting Systems. Instead of creating completely isolated Financial Statements, the system can create a Central Ledger, and additional Ledgers, with the differences-adjustments, also called “deltas”, from the Central Accounting Systems to the parallel ledgers, supporting alternative Accounting Systems.
From a Legal Accounting perspective, the result is the same, but from a performance-computing perspective, the Smart-AFI is much more efficient. Smart-AFI covers the same multi-Accounting requirements, with the same accuracy and flexibility, but with much less computing effort; this is the Smart part of Smart-AFI.
Looking forward to read your opinions.
Kind Regards,
Ferran.
Join the SAP Banking Group at: https://www.linkedin.com/
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