There’s only one thing worse than having no answer: giving an answer based on inaccurate or outdated information. In an information-based business like banking, having access to data with near to zero latency is key to competing successfully.
This is particularly true for finance, risk, and compliance. Most banks wrestle with their technology infrastructure each time a regulation changes or risk appetites adjust. To be truly risk aware, they must almost continuously deploy IT resources and a legion of analysts. Always on the defensive, they have little time to spend on business strategy.
Legacy systems overtaxed and costly
Legacy core systems, developed when batch processing was state of the art – and regulators were more patient – just cannot readily manage the huge volumes of data that banks must quickly analyze today.
Information is imported periodically, not in real time. Because analysts in risk and finance and within lines of business have their own tools and data sources, they must fully document their sources and calculations to ensure against errors. Financial data marts require extensive reconciliation and frequent expansion to add new data elements.
Research sponsored by SAP and conducted by Chartis confirms that issues related to data quality, volume, variety, and silos are the main source of risk and compliance headaches for banks. Besides making it difficult to get a consistent view of collateral or real-time information for intraday changes to risk positions, outdated core systems are highly complex and costly to run.
Integrating finance, risk, and compliance
Using a centralized solution for data management that includes the SAP HANA platform gives finance, risk, and compliance managers a consistent, enterprisewide set of information for analysis, decision making, and reporting. Banks can use this open platform with SAP software for financial accounting, controlling, and risk management or with proprietary and third-party applications.
The flexible and extensible data models that banks can create with this technology can simplify compliance and make it more consistent. Banks can create a complete audit trail and quickly adapt to market and regulatory changes as they occur.
Banks can analyze data at the aggregate level, drill down to the underlying transactions, and readily track data back to its source. With the complex event processing, they can run their analytics against transaction data as it posts – shrinking the time between detecting an anomaly and resolving it.
When finance, risk, and compliance managers have the same data as line-of-business managers, they can communicate with each other more effectively. They can calculate risk-adjusted return on capital using the same income, risk weighting, and capital allocation. Business intelligence tools make it easier to visualize data, leading to faster decision making and better results.
Taking action
An increasing number of banks are using SAP HANA to provide a single, best-in-class source of trusted data for accounting, planning, liquidity management, risk, analysis, and reporting. Such a platform gives financial institutions access to robust technology for managing finance and risk management in complex markets.
Consistent data, a more flexible architecture, and greater risk awareness give banks a huge edge over their competition. Institutions across the globe are reviewing their architecture for finance, risk, and compliance and implementing new technology. How, and when, will you respond?
Be sure to join us in London or New York at one of our coming SAP Financial Services Forums.