Dear,
Capital Optimization requires making visible the generation of value by processes and business segments, weighted by their capital consumption.
The General Ledger does not have the capacity to provide this analysis capacity and this is a big problem if we take into account that the General Ledger is at the center of the banking Information Systems.
Measuring the generation of value weighted by capital consumption makes it necessary to represent the organization's accounting, solvency and liquidity situation in an integrated manner, including off-balance sheet items such as commitments, derivative contracts or collateral agreements.
Integration requires the processing of large data tables and the management of large blocks of memory, because each transaction must read and update data records from other areas. This was an unapproachable challenge until a few years ago. For this reason, banking information systems were built as separate silos of information, communicated by interfaces and intermediate tables, with very little integration between them.
Many banks are tackling this problem with the construction of Central Data Hubs with which they try to respond to the accounting and solvency regulatory reporting requirements, although in most cases with mediocre results.
Central Data Hubs receive data from all the operational, silo style, systems of the bank, homogenize the data, and finally store it in an standardized format. So it can be delivered from there to the other analytical and regulatory reporting systems of the banking landscape.
I’ve seen several of these initiatives in the last years, and they all present common difficulties.
Project design follows an ad-hoc/on-demand approach. Data architects collect data requirements from the data consumer systems, and design the data repository according to these requirements. And then, define the interfaces for collecting data from the source systems and populating the data in the destination systems.
To some extent, this approach implies reinventing the wheel, according to the bank’s own experience, and limited integration capabilities of the bank’s information architecture.
SAP has proposed a revolutionary, holistic approach, to manage the analytical requirements of banks. This is the Finance and Risk Data Platform, which takes advantage of the SAP Integrated Financial and Risk Architecture.
The Finance and Risk Data Platform has been designed to fulfill present and future Accounting, Risk and Liquidity regulatory requirements, as an alternative to the ad-hoc/on-demand approach of the Central Data Hubs.
The Finance and Risk Data Platform combines:
- The accumulated knowledge in the design and development of the Integrated Financial and Risk Architecture of Bank Analyzer during the last 2 decades. The Primary Data Objects of the Bank Analyzer Source Data Layer as an standard template of the Operational Data, and the Result Types of the Results Data Layer as an standard template of Analytical Data.
Data Architects take advantage of these standard templates as a basic reference, and enhance them for fulfilling the bank’s specific requirements, without breaking the integrity of the data-model.
- The high-performing capabilities of SAP HANA for storing and managing very-high volumes of data, without intermediate tables and assuring the referential integrity of the database.
- The Extract, Transformation and Loading capabilities of SAP Smart Data Integration in Premise and in the Cloud.
- The Analytical Layers of SAP Bank Analyzer Risk Engines, Liquidity and Risk Management on HANA, Intraday Real-time Liquidity Management, etc.
These are the guidelines followed by our team in the construction of our Capital Optimization system, built on top of the Integrated Financial and Risk Architecture.
Our Capital Optimization system speaks with the business processes of our clients' SAP Systems translating them in terms of Capital and Liquidity generation and consumption. With this information the Capital Optimization system measures the deficits and surpluses of capital and liquidity of the business processes and proposes financial instruments to offset these deficits and surpluses, optimizing the consumption of capital and liquidity of the system.
We are working on presenting our system to the market and looking for business partners and investors. If you are interested, do not hesitate to contact me at ferran.frances@capitency.com
Looking forward to reading your opinions.
Kindest Regards,
Ferran Frances.
Join the SAP Banking Group at: https://www.linkedin.com/groups/92860
Visit my SAP Banking Blog at: http://sapbank.blogspot.com/
Let's connect on Twitter: @FerranFrancesGi
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