Analytical banking solutions from sap

SAP Solution in Detail
SAP for Banking
Analytical Banking Solutions
from SAP
From Strategy to Execution and
Back Again

The analytical applications
available from SAP offer
comprehensive support
for business intelligence;
financial performance man-
agement; governance, risk,
and compliance; and finance
and risk management.
Robust data management
software provides the foun-
dation for this support.
State-of-the-art reporting
and visualization software
enriches industry-specific
calculation engines for
finance and risk manage-
ment. Applications for finan-
cial performance management
help managers align corpo-
rate strategy and execution.

CONTENT

4 Information Management Tools
to Meet Today’s Challenges

5 A Flexible Platform for
Business Intelligence
5 Enterprise Data Warehousing
and Information Management
6 Information Discovery and
Delivery
7 Business Intelligence for High
Data Volumes

9 Comprehensive Tools for
Financial Performance
Management
9 Strategy Management
10 Business Planning
11 Financial Consolidation
12 Profitability and Cost
Management

13 Robust Solutions for Gover-

nance, Risk, and Compliance

14 Finance and Risk Management

15 Financial Accounting
15 Profit Management
16 Basel II
16 Limit Management
17 Asset Liability Management
17 Credit Portfolio Management
17 Regulatory Reporting

19 A Variety of Business Benefits

19 Make the Most of Your Data

20 Quick Facts

Information Management Tools
to Meet Today’s Challenges
Creating a Single, Accurate,
and Timely Source of Data

SAP BusinessObjects The banking industry is constantly awash
Analytical Banking
in new regulatory, market, and opera-
business intelligence tional requirements that demand greater Financial performance management
solutions provide robust business transparency and insight.
Banks must now disclose more infor-
support for enterprise mation and manage more key perfor- Governance, risk, and compliance
information management, mance indicators to address new risk
and compliance issues effectively.
enterprise date ware- Intelligence platform

housing, and information These challenges have made the bank-
ing IT environment much more complex Finance and risk SAP® ERP
discovery and delivery. and costly to maintain. Many banks management Financials

You can draw on data must manage multiple information silos
for individual lines of business and Figure 1: Support for Analytical Banking from SAP
from both SAP and non- expend huge effort and cost to reconcile
SAP sources, clean this the data from those silos. This is exac- This way, banks like yours can create
erbated by redundant interfaces and a “single version of the truth” for infor-
data, and store it in an data that is inconsistent, inaccurate, or mation management that addresses
enterprise data ware- both. All too often, banks do not have the business and operational challenges
the timely control they need over their that face the industry today.
house to form a solid business processes or the quality of
foundation of reliable their offerings.

information. Software for Leading banks have found that they can
information discovery reduce costs and significantly increase
the quality of their information by inte-
and delivery lets you grating the architecture for finance and
access and distribute risk management. They are combining
analytical software within the SAP for
information to business Banking set of solutions with applica-
users in the most intuitive tions from the SAP® BusinessObjects™
portfolio and the SAP NetWeaver®
format. technology platform (see Figure 1).

4 SAP Solution in Detail – Analytical Banking Solutions from SAP

A Flexible Platform for
Business Intelligence
Making the Right Decisions at
the Right Times

To make business decisions that are both The enhanced BI functionality of SAP adapt quickly to new business challeng-
timely and appropriate today, a bank NetWeaver Business Warehouse es and requirements. Enterprise data
must be able to integrate, analyze, and Accelerator (SAP NetWeaver BW warehousing can also facilitate the
report on ever-increasing volumes of Accelerator) software can boost the administration and monitoring of all
information as quickly as possible. Once performance of these or other analytical business processes and proactively
you have used this information to design applications and services to speed the support the handling of possible perfor-
your key business strategies, you must execution of user queries and reduce mance issues.
align those strategies across your insti- IT support time (see Figure 2).
tution and ensure that they are fully sup- Enterprise data warehousing software
ported by business processes through- Enterprise Data Warehousing and from SAP helps you create and operate
out the bank. In addition to the reporting Information Management a data warehouse that can serve your
and dashboard functions of business entire institution. The software sup-
intelligence software, the analytical With rapid growth in the sources and ports both strategic analyses and oper-
banking solutions from SAP give you volumes of enterprise data, banks that ational reporting. It can help you pre-
greater real-time control of key pro- can manage and harness their data pare near-real-time reports by integrating
cesses for closed-loop optimization of hold a strategic advantage. One of the heterogeneous systems and improving
business performance – from strategy major challenges banks face with the design time and runtime of busi-
to execution and back again. respect to business intelligence is inte- ness intelligence models and process-
grating different source systems into es. It provides a solution for business
SAP® BusinessObjects™ business intel- an enterprise data warehouse that pro- intelligence that is flexible, reliable,
ligence (BI) solutions provide robust vides a central repository of accurate, robust, scalable, and straightforward
support for enterprise information man- up-to-date information to help them to administer.
agement, enterprise date warehousing,
and information discovery and delivery.
You can draw on data from both SAP Intelligence Platform
and non-SAP sources, clean this data,
Information discovery and delivery
and store it in an enterprise data ware-
house to form a solid foundation of reli- Query, reporting, and analysis Advanced analytics
able information. Software for information Reporting Analysis Dashboards Search Information delivery Predictive
discovery and delivery lets you access
and distribute information to business
users in the most intuitive format. SAP NetWeaver® Business Warehouse Accelerator

High-volume Performance
SAP BusinessObjects BI solutions data analysis optimization
empower business users with:
• Quick, direct access to data (both
structured and unstructured) that is Enterprise data warehousing and information management
relevant, accurate, and clean Data Data Data
Data
• Access online, offline, or off-site integration quality modeling harmonization
• Best-in-class, high-volume enterprise
reporting
• Highly interactive visualization and
dashboarding Figure 2: Support for an Intelligence Platform from SAP
• Powerful ad hoc reporting and analysis
tools

SAP Solution in Detail – Analytical Banking Solutions from SAP 5

Data integration and data quality man- • Enhance data integration – The solu- these goals, business experts within your
agement software from SAP offers tions help you consolidate large, hetero- institution must be able to see and share
enterprise-class software for managing geneous landscapes for data acquisition, up-to-the-minute data securely within a
data integration and data quality. With modeling, and transformation. familiar software environment. Providing
best-in-class tools that use open stan- • Migrate data – You can use the solu- employees with appropriate interfaces
dards and Web-based services, the tions to migrate data from legacy or for working with this information on their
software provides the foundation you obsolete systems to new systems – own can also enhance productivity.
need for key business or IT initiatives. for example, to transactional banking
You can incorporate massive volumes solutions from SAP. Visualization and reporting software
of data from virtually any other system, • Improve data security – Flexible from SAP provides powerful, actionable
database, or application. management of end-user and stan- reporting functionality to help you design,
dard authorizations lets you adhere explore, visualize, and deliver formatted
Together, this support helps ensure the to various security standards within reports that enhance business insight.
data quality and compliance required your organization. You can deploy highly interactive dash-
for today’s complex regulatory report-
ing environment. Such support is par-
ticularly important for global institutions By helping your bank comply with a constantly changing
that must adhere to the requirements
of both local and international authorities.
array of accounting and regulatory reporting require-
These solutions can help you integrate ments, the analytical banking applications from SAP
multiple sources of data into a single
financial database of information that
make it easier to align capital more closely with
is accurate, clean, and standardized for changing market conditions and legal requirements.
all your reporting needs.
In the process, you increase the confidence of your
You can also use the solutions to: stakeholders.
• Foster confident decision making –
World-class tools for enhancing data
profiling and quality help ensure that • Strengthen information life-cycle boards to track and monitor key metrics,
your data is trustworthy, accurate, and management – By reducing online view summary business trends, and
auditable. Data lineage and auditing data volume, the solutions can improve create what-if models. The software is
features further support end-user the performance and lower the cost integrated with Microsoft Office to
confidence. of your BI software. automate the transfer of business intel-
• Streamline development – You can ligence into Microsoft PowerPoint or
simultaneously address data integra- Information Discovery and Delivery Microsoft Excel for further analysis or
tion and data quality management. presentation. IT professionals and report
You can repurpose and redeploy Bank managers everywhere are con- authors alike can use the package to pre-
proven pieces of your data integration cerned about reducing costs, improving pare highly customizable, professional-
framework using a shared repository efficiency, and helping employees make looking reports and create interactive
for development collaboration. well-informed decisions. To accomplish dashboards that they can easily deploy
throughout your business.


You can create a banker’s dashboard, You can also use these solutions to:
for example, that provides an up-to-the- • Transform data into actionable
minute, 360-degree view of your institu- information – A wide mix of reports
tion in a single, consolidated snapshot. available on demand help employees Leading banks have
The dashboard lets you track key perfor- communicate in real time with col-
mance indicators and visualize essential leagues throughout the bank and found that they can
business trends. Data for the dashboard across the globe. Built-in templates, reduce costs and signif-
is directly accessible from both SAP data drivers, and wizards streamline
and non-SAP sources with a high level the reporting process. icantly increase the
of detail and drill-down functionality. • Examine key business processes – quality of their informa-
An intuitive display of key metrics
Using enterprise query, reporting, and and processes lets users play out tion by integrating the
analysis software from SAP, you can multiple what-if analyses directly architecture for finance
link the numerous islands of information from a dashboard.
that disparate sources of data tend to • Empower users – Employees can and risk management.
create. Business users can create their easily combine SAP and non-SAP They are combining ana-
own queries and spontaneously interact data in reports, make calculations,
with this information. Users can apply and customize the report format to lytical software within
advanced filters, sort data and drill down suit their current needs. They can the SAP for Banking
to greater detail, find exceptions, and choose an interface that’s right for
design calculations to suit their specific them – be that a self-service reporting set of solutions with ap-
needs. and analysis tool, access through a plications from the SAP
mobile device, or a high-power inter-
The software can help all your employ- face for drilling down to lower levels BusinessObjects port-
ees answer their own questions quickly of detail. folio and the SAP
through personalized reporting – even • Free up IT resources – User-friendly,
if they have minimal knowledge of the enterprise-wide search and reporting NetWeaver technology
underlying data sources or business functions help employees address new platform. This way, banks
intelligence software. Highly relevant business issues without help from your
search results and suggested actions IT staff. like yours can create
reflect each employee’s role in your a “single version of the
business and honor the business con- Business Intelligence for High
text of each search query. Data Volumes truth” for information
management that ad-
You can use the robust support for ad Today most knowledge workers gener-
hoc queries to align your human capital ate their own reports, use their own dresses the business
resources with your strategic objectives, dashboards, and control processes and operational challeng-
for example. You can create queries embedded into business applications
and reports for new hires and termina- from their desktops. All too often, how- es that face the industry
tions by line of business alongside pay- ever, the burden of support for these today.
roll and benefits costs in a single report activities rests with your IT department
to align with your business goals. – which must manage sophisticated


desktop analytics as well as new
information, users, and query techniques.
These demands, combined with a grow-
ing number of users and an expanding
volume of data, can place a serious
strain on bank IT resources.

SAP NetWeaver BW Accelerator com-
bines high-performance technology
from SAP and an advanced hardware
design from Intel Corporation to boost
the performance of your analytical ser-
vices and applications. It reduces IT
support time by performing on-the-fly
data aggregation and eliminating the
Banks must also review need for query tuning.

their performance in You can also use the software to:
terms of optimizing costs • Improve user support – SAP
NetWeaver BW Accelerator can
and maximizing profit. significantly speed user queries while
SAP offers solutions to providing access to full historical
data. It gives users greater flexibility
help banks identify ex- in the types and depths of their que-
actly where they make ries, which encourages creativity in
analyzing business problems.
their profit. The solutions • Reduce operational overhead –
use comprehensive cost- The software eliminates the need for
performance tuning, enabling faster
ing approaches to calcu- prototyping of new BI tools and ana-
late cost, revenue, and lytical applications. It can also minimize
the volume of calls to IT departments
other relevant figures – about slow responses to queries.
including funds-transfer • Improve your return on investment –
SAP NetWeaver BW Accelerator fully
prices on the transaction complements your existing hardware
level. and software and lets you accommo-
date more users, data, and BI tools
at a relatively low cost.


Comprehensive Tools for Financial
Performance Management
Turning Business Strategies into
Predictable Outcomes

Historically, a bank’s finance office has You can use the financial performance • Strategy management
relied on a disparate set of tools from management software to connect your • Business planning
multiple vendors to address traditional reporting, planning, and analysis process- • Financial consolidation
duties like financial planning, reporting, es and close the gap between strategy • Profitability and cost management
and consolidation. As CFOs and finan- and execution. The software can help
cial managers take on additional strate- you achieve operational excellence by Strategy Management
gic responsibilities, they need a single identifying and eliminating the most
information platform that is more unified crippling costs to your business and In cases where bank employees do not
and robust. focusing on areas that deliver the most fully understand the organizational
profit. You gain competitive advantage strategies of their institutions, they
SAP BusinessObjects enterprise per- by exploiting key indicators of financial do not recognize how their decisions
formance management solutions deliver and nonfinancial performance and by impact other aspects of the business.
deep business insight based on a holistic benchmarking data for enhanced results And because employee incentive
perspective of the enterprise. These and improved market share. systems are usually not linked to the
include software for financial performance business strategy, the personal goals
management that helps finance officers In addition to reducing compliance costs, of employees are seldom aligned with
and other top decision makers define the software can promote faster perfor- those of the institution. In addition,
and communicate key bank strategies, mance management cycles by helping banks typically lack the tools for linking
plan and measure the execution of those you quickly access and share financial their strategic objectives with their
strategies, forecast future figures, and and nonfinancial information across processes for budgeting, planning,
react to any deviations from anticipated your institution. Included is support for: and reporting.
strategy outcomes (see Figure 3). This
best-of-breed software fosters fast
access to reliable financial information,
a deep understanding of how value is Financial Performance Management
generated, and strategic insight that can World-class applications supporting all financial processes
enabling closed-loop financial performance management
help decision makers more accurately
predict future business outcomes.
Strategy management Business planning
The software helps every stakeholder Define strategy and prioritize accordingly Gain insight to manage and measure
communicate, collaborate on, and exe- to help ensure alignment with corporate business plans and enable proactive,
goals rather than reactive, business tactics
cute a flexible, well-defined action plan.
It can help you identify areas of the bank’s
Financial consolidation Profitability and cost management
business that need improvement and
evaluate alternative strategies for promot- Meet all legal and management reporting Drive enterprise profitability through a
requirements with automated, robust real-time understanding of cost, capacity,
ing efficiency, cutting costs, and enhancing and revenue
consolidation processes
profits. The software can also facilitate
compliance with requirements for finan-
cial reporting and corporate transparency. Figure 3: Software for Financial Performance Management from SAP


• Formalize your operational review
process – You can present certified
SAP for Banking solutions provide full support for information on goals, initiatives, and
the industry reporting requirements that banks face metrics for structured operational
reviews that present a unified story
today. Predefined standard reports help ensure a of performance and synchronize the
rapid return on your investment. Integration with flexi- activities of individual departments.
• Communicate business strategies
ble, user-friendly tools in the SAP NetWeaver Busi- more effectively – SAP
ness Warehouse component enhance these reports BusinessObjects Strategy Manage-
ment provides a collaborative envi-
through state-of-the-art technology. ronment of user-defined views through
which bank employees can visualize,
discuss, and update business
The SAP BusinessObjects Strategy You can use the application to address objectives.
Management application helps banks such key strategic areas as risk-adjusted • Manage key initiatives – The applica-
integrate their goals, initiatives, and return on capital (RAROC). With SAP tion helps you focus on initiatives that
metrics to help all levels of their organi- BusinessObjects Strategy Management, are most critical by analyzing the inter-
zations improve performance, productivity, you can inform profit centers, risk man dependencies of those initiatives and
and satisfaction among employees and age ent staff, and other relevant parties
m evaluating projects based on specific
customers. By clearly linking your bank’s about the new performance measure milestones.
strategic plans to specific business ini- and explain the new incentive scheme.
tiatives, performance measures, and staff Business Planning
responsibilities, you can set easily under- You can make regular RAROC reports
stood priorities and tasks that all employ- to senior management from individual Business planning can be a chaotic,
ees can address with confidence. business units. To improve manage- frustrating, and ineffective process at
ment’s acceptance of RAROC, you can many banks. To be effective, you must
The application helps line-of-business create a response forum where stake- be able to integrate corporate and
managers and corporate executives holders can discuss their experiences departmental planning, intelligently
align enterprise strategy with individual, and revise their business objectives. model different cost scenarios, and
functional, and divisional performance determine operational budgets based
measures and establish objectives, You can also use the application to: on various strategic plans and economic
measures, metrics, and key performance • Make written plans more meaningful assump ions.
t
indicators that truly reflect the levels – Your plans can include rich contex-
of achievement in your organization. tual visualizations that drive a greater The SAP BusinessObjects Planning
It can empower employees to leverage understanding of key objectives. and Consolidation application can help
their collective intelligence, work collab- Managers can test various strategy you standardize processes for planning,
oratively toward a common mission, alternatives to identify the cause-and- budgeting, forecasting, predictive anal-
and understand exactly how they bring effect relationships that maximize ysis, and reporting with tools that are
value to the business. performance. familiar and intuitive. In addition to help-


ing your bank make better-informed • Enhance business reporting – You The software can intelligently cope with
decisions, the application can minimize can perform production and manage- multiple reporting channels, differing
risk by helping to ensure the validity ment reporting (including exception charts of accounts, account flows, and
and accuracy of your data and reports. reports) as well as multidimensional numerous analysis dimensions to retain
Employees will also better understand analysis. A “park-and-go” feature past reporting frameworks. This helps
the tasks they are expected to perform. captures data to let you work remotely finance professionals safely adapt to
offline. changing needs without rebuilding pre-
In balance sheet planning, for example, vious reporting scenarios.
the application can help you calculate Financial Consolidation
key figures such as net interest Supported by powerful analytical func-
income. You can create forecasts Banks must deal with multiple curren- tionality, the software delivers informa-
based on the average volumes and cies, accounting standards, and report- tion on a near-real-time basis, with
rates of various products. ing requirements. Many also grapple updates that flow automatically from a
with the challenges that result from reliable central data source. Advanced
You can also use the application to: mergers and acquisitions, such as inte- benchmarking functionality lets you pull
• Streamline your planning processes grating new business units into the in key data about your competitors, then
– You can perform bottom-up and reporting chain. Financial departments use that data to measure and improve
top-down financial and operational often find themselves in the eye of performance. Scenario-creation tools
planning, collaborate on plans with these business whirlwinds. With both help you exploit this data for more
other stakeholders, track plan ver- internal and external reporting require- accurate merger and acquisition planning.
sions and changes, engage manag- ments to fulfill, your finance people
ers in the planning process, and help need information that is detailed, accu- The software makes it easier to meet
ensure clear task ownership and rate, and up-to-date. complex statutory, regulatory, and com-
accountability. pliance requirements. It can address
• Strengthen forecasting – Repeatable The SAP BusinessObjects Financial multiple accounting standards and new
business activities can be streamlined Consolidation application helps you legislation that requires additional IT
into a specific set of steps called a recover critical time in your closing and support. It can help ensure that your
business process flow. Business management reporting cycles – without bank’s investors and shareholders get
process flows are tightly linked to your sacrificing the controls or auditing the fast, easy access to data that they
planning and budgeting data to simpli- capabilities you need for today’s com- expect.
fy and strengthen the forecasting plex compliance environment. The soft-
process. What-if modeling and scenario- ware supports the robust consolidation You can also use the software to:
planning functions let you assess processes you need to meet all legal • Automate your consolidation
budgeting reasonability in real time. and management reporting requirements. processes – You can handle currency
Predictive analysis functions help This support can help you minimize translation adjustments, minority
you create rolling forecasts and incor- business risk, complete financial report- interest and equity calculations, inter-
porate real-time actuals with historical ing faster and with greater accuracy, company reconciliations, and auto-
data for effective forecast seeding. improve compliance, and generate a matic cash flows through a standard
fully documented audit trail that reduces user interface and intuitive wizards.
external audit costs.


• Streamline legal reporting and based planning and budgeting. You can
disclosure – The software helps you identify business processes with the
more easily address the legal report- highest value to your organization and
ing and disclosure requirements of measure every cost and profitability for
the International Financial Reporting specific customer segments, products,
Standards (IFRS), the U.S. Sarbanes- and distribution channels.
Oxley Act, and other regulations.
The application can help you identify
Profitability and Cost Management exactly where your profit is made
through calculations of cost, revenue,
Many banks lack sufficient understand- average balances, or other relevant
ing of how their products and customers information. You can then use this infor-
consume support services and contrib- mation to support tactical and strategic
ute to other indirect costs. They need decision-making processes by organi-
detailed visibility into enterprise expenses zational unit, product, or individual cus-
for areas such as sales, distribution, tomer. A common reporting environment
finance, and IT to measure the financial provides data for balance sheets and
performance of individual products and profit-and-loss statements.
customers and make informed deci-
sions that reduce costs and optimize You can also use the application to:
profitability. • Create agile analytical models –
Employees across the enterprise can
The SAP BusinessObjects Profitability quickly build complex models for
and Cost Management application can activity-based costing with an intui-
increase visibility into enterprise costs tive, user-friendly interface and pre-
• Validate your data – Finance centers and help you align operational resourc- defined dimensions. The models
can see that incoming information fol- es and capacity with demand. This scal- reflect true organizational costs and
lows the expected timing and format; able, enterprise-class application pro- can be easily maintained, updated,
makes sense; is consistent, complete, vides reliable, on-demand analysis and and altered to meet changing busi-
and appropriately commented; and scenario modeling that is user-friendly, ness needs.
goes through the right auditable rapid, and efficient. Activity-centric • Perform what-if analysis and scenario
approval process. functionality extends the value of your modeling on demand – You can model
• Improve business decisions – All profitability and cost management costs at any level in the organization,
processes, data, and users are con- efforts. down to highly granular transaction
nected to the application’s integrated data, and easily update and share
data model to help ensure that every In a single application, you get support models in real time. This can help you
decision is based on data that is both for service costing and cross-charging, accurately invoice cross-charging of
consistent and reliable. as well as driver-based and activity- shared services for IT, HR, and finance.


Robust Solutions for Governance,
Risk, and Compliance
Improving Transparency and
Maximizing Growth

Effective governance, risk, and compli- To reduce the risk of fraud in invest-
ance processes have become a top pri- ment banking, for example, the solu-
ority for banks in the wake of operations can help you analyze past instanc-
tional losses, the increased emphasis es of fraud, identify process loopholes,
on business process transparency, and and define measures that can prevent
concerns about infrastructure security future abuses – such as improved con-
and data privacy. At the same time, trols for access to trading systems. In
banks are anxious to avoid stiff penal- addition, you can compare daily trading
ties for failed regulatory compliance, volume with a meaningful threshold –
the high cost of unmitigated business defined by an exposure measure on the
risk, and damage to their brand image daily updated time series of trading vol-
or market position. umes. Any volume that exceeds this
threshold would have to be inspected,
SAP BusinessObjects governance, and the reason for the breach would
risk, and compliance solutions – along have to be documented.
with software for analysis and reporting
– can help you align your strategies with You can also use the solutions to:
today’s risks and opportunities. They • Handle significant threats more
can help you put the proper controls in effectively – You can analyze risks
place to mitigate risk, ensure regulatory in terms of severity and likelihood of
compliance, and execute your strategic impact and quickly identify risks of
goals. By providing the support you high impact or probability that exceed
need to predict and minimize risk, these company-specific thresholds.
solutions can maximize business viabili- • Improve process control – The solu-
ty and continuity, increase your com- tions help you implement controls for
petitive advantage, and optimize oppor- key risks through a combination of
tunities for growth. Through integrated, automated control monitoring, manual
continuous control monitoring, they can control tests, and self-assessments.
also help you reduce the cost and bur- • Strengthen access control – The
den of compliance. solutions are specifically designed to
help banks address compliance with
the Sarbanes-Oxley Act and other
regulatory mandates.


Finance and Risk Management
Providing Information Across Your
Institution

Changes in the business environment • To help ensure that this information • Scalability and deployability – The
are forcing banks to invest in an infra- can be easily adapted to changing SAP NetWeaver technology platform
structure that fosters information con- needs gives SAP Bank Analyzer a state-of-
sistency, transparency, and quality for the-art technological foundation that
both finance and risk management. The core features of an integrated makes it highly suitable for a wide
Most industry-standard software that finance and risk architecture include: variety of IT environments. Conse-
supports operational, portfolio, and risk • A layered model – Source data, quently, SAP Bank Analyzer can
management supports one of four solu- valuations, and results data areas provide support to local and specialty
tion areas: management accounting, and functions are clearly separated banks as well as data centers and
financial accounting, risk controlling, to facilitate adaptation to new large, international institutions.
and regulatory reporting. This separation requirements.
limits the possibility of using informa- • Integration cornerstones – SAP Bank By providing the foundation for an
tion across different departments and Analyzer is the consolidated source open business process platform, SAP
restricts a bank’s ability to leverage for valuation processes (the source NetWeaver helps banks bring innovative
investments in multiple areas. data layer) for any kind of financial products and services to market long
instrument. Valuation results are before their competitors. Leveraging
The SAP Bank Analyzer set of applica- stored for a variety of purposes (the SAP technology and service-oriented
tions can help your bank integrate valu- results data layer). Together, the source architecture, enterprises can build a
ations and calculations for various data layer and the results data layer business process platform that brings
financial instruments – and measure combine the benefits of integration together the following key elements:
success and risk based on your value with an open and modular • A repository of industry-specific
chain. When combined with the SAP architecture. enterprise service definitions for
ERP application, SAP Bank Analyzer • Standardization – Providing a harmo- transactional, customer-centric, and
provides a modular, service-oriented, nized data model for both source and analytical banking
integrated finance and risk architecture results data fulfills the diverse infor- • Service-enabled applications that
that covers all your IT requirements for mation needs of the banking industry. implement these enterprise services
enterprise management (see Figure 4). • Modularity – SAP Bank Analyzer is for managing deposits, loans, and
built along modular lines to support collateral
Based on globally recognized guide- incremental implementation based on • Support for composing, provisioning,
lines for integrated finance and risk your requirements. and managing enterprise services
architecture, SAP Bank Analyzer can • Openness – Standard interfaces let and service-enabled applications
address today’s strategic requirements you integrate partner products or • A technology environment that helps
and help ensure that your IT architecture proprietary tools into the architecture. users visually design and model busi-
is future-proof. The software reflects This helps you optimize the software ness processes for execution within
three SAP goals for banks: for your needs. and beyond the boundaries of their
• To provide consistent, high-quality • Service orientation – Information is enterprise
business information efficiently provided as a service to let you reuse
• To make this information available for data for new or changed business
both decision support and reporting needs.


• Determine financial reporting data –
Finance and Risk Management Subledger functions produce detailed
reporting data for financial instruments.
Risk Management
Basel II You can post business transactions
Reporting and financial General ledger Asset liability and execute calculations and valua-
performance management management tions on a single contract level. The
Limit management criteria used to create items in the bal-
Regulatory reporting
Financial product valuation ance sheet and profit-and-loss state-
Cost of operations Credit portfolio
management ment are flexible enough to meet your
Results data layer particular business and reporting needs.

Valuation layer Accounting Profit Management
Financial accounting
Source data layer management
accounting Banks must also review their perfor-
Profit management mance in terms of optimizing costs and
maximizing profit. SAP offers solutions
Figure 4: Software for Finance and Risk Management from SAP to help banks identify exactly where
they make their profit. The solutions use
Financial Accounting The SAP for Banking solution portfolio comprehensive costing approaches to
provides the integration and coordination calculate cost, revenue, and other rele-
Today banks face complex reporting of information that banks require for key vant figures – including funds-transfer
needs driven by internal management financial and management accounting prices on the transaction level.
requirements and external rules for activities and the creation of related
regulatory disclosure. Top-tier banks reports. SAP for Banking can also inte- Information about cost drivers is includ-
in the European Union must meet new grate accounting activities with other ed through an activity-based costing
financial accounting requirements under analytical banking areas, such as risk approach. (See the previous section
the IFRS. Increasingly, banks outside management. In addition, the software “Profitability and Cost Management.”)
Europe are adopting IFRS requirements can help you: The profit management software sup-
as well. Meeting these goals demands • Value and post financial instruments ports tactical and strategic decision-
enhanced support for valuing and post- – Classic subledger functions within making processes in banks on various
ing financial instruments and determin- SAP for Banking solutions help you levels – such as organizational units,
ing financial reporting data. Now more value financial instruments under products, or customers. This is done
than ever, banks must fully integrate today’s regulations, post these valua- by an analysis of profit and cost figures
their accounting data and processes tions, and post business transactions. in reporting, such as contribution margin
more seamlessly and coordinate the You get full support for IFRS and the schemes.
internal and external reporting of finan- International Accounting Standards
cials and risk. (IAS), including IAS rules 32 and 39.


Basel II strategic information-gathering initiatives The SAP Limit Management application
– and satisfy your oversight obligations delivers enhanced limit management
The capital adequacy framework within – while returning value to your bottom features that help you measure, analyze,
Basel II promotes improvements in risk line. In addition, the software can help you: and control risk throughout your enter-
management and regulatory capital • Perform robust calculations for prise. This global limit solution is avail-
allocation for the estimated 5,000 banks credit risk and capital adequacy – able practically around the clock and
in more than 100 countries that are You can calculate default, dilution, can handle calculations for all your
likely to fall under the regulations. To settlement, and residual-value risk. transactions. The software has a fully
be competitive, many other banks will The application supports the standard, integrated framework that can manage
voluntarily adopt the framework. Doz- comprehensive standard, foundation limits for overall bank controlling. You
ens of top European institutions now IRB, and advanced IRB calculation gain greater control of risk limits for your
use the SAP Basel II application to satis- approaches that provide values for bank as a whole, as well as control at
fy the rigorous and evolving require- risk-weighted assets and expected the portfolio and business partner levels.
ments of Basel II – and establish a loss. SAP for Banking also offers an online
technology and process framework • Help ensure strong support for super- limit solution with integrated limit control
that helps ensure baseline standards visory review – SAP Basel II supports for trading book transactions. In addition,
for understanding and managing risk. the reporting transparency and trace- the software can help you:
ability necessary for the supervisory • Perform comprehensive calculations
SAP Basel II can help your institution review required under Basel II. – SAP Limit Management can handle
meet all Basel II requirements for risk • Use flexible functions for disclosure all methods of calculating exposure.
exposure and capital adequacy and and reporting – SAP Basel II provides You can create different limits for
implement risk-mitigating supervisory significant flexibility in designing, counterparty and issuer risk and set
review and disclosure processes. The creating, and expanding credit-risk limits for settlement risks. You can
solution also integrates data and analyt- reports. It lets you access this infor- differentiate between primary and
ics in a flexible financial database that mation at regular intervals according secondary credit risks and take into
accommodates all standard financial to your particular needs. account whatever collateral items are
products – making it a strategic founda- • Employ integrated data management necessary.
tion for ongoing compliance and delivery – SAP Basel II integrates data man- • Institute active limit management –
of business insight. agement by incorporating both histori- The application uses a dual-control
cal and financial databases, each of feature that requires active limit
SAP Basel II integrates internal and which serves a distinct function. authorization by two users. You can
external credit-risk management on a further control the limit management
single platform and supports all Basel II– Limit Management process by automatically sending a
specified methods for credit-risk calcu- message to any recipient you choose
lation – from the standardized approach Increasingly, banks must closely tie risk on a specified date. You can also
to the advanced internal ratings-based management to profitability. This requires increase the limit amount for a speci-
(IRB) approach. You can also integrate setting appropriate limits that keep your fied period of time and lock the limits
your compliance activities into other exposure under tight control. of a business partner.


• Use online limit checks – The soft- To meet these challenges, you need a With effective management of its credit-
ware offers a cross-trading system highly flexible data integration platform risk portfolios, a bank can align the risk
that can check limits for all of your that you can restructure as needed over and return for those portfolios and
bank’s products online against the time. In addition to addressing changing improve its risk-adjusted return on eco-
relevant transaction exposure levels for market and regulatory environments, this nomic capital. This can be achieved by
individual calculations. After the online platform must ensure data completeness, hedging or by engaging in credit-risk-
check, new transactions also appear in accuracy, and availability and provide bearing positions. SAP Bank Analyzer
reports and can be called up directly. high-volume processing functionality. integrates best-in-class credit portfolio
• Expand your reporting capacity – models to quantify the economic capital
Standard limit-management reports The Asset and Liability Management within the bank’s credit volume. Credit
created by the application show spe- application by SAP and SunGard is a portfolio models of third-party vendors
cific limits and their utilization. You can market-leading solution for managing can be integrated smoothly as well.
also create reports based on individu- interest rate, foreign exchange, and
al risk characteristics and access liquidity risks. Financial institutions gain Regulatory Reporting
reports on individual transactions that full support for funds transfer pricing and
provide exposure calculations in detail. hedge management practices under IAS Obtaining the quality information you
39. In addition, the software can help you: need for financial or risk reporting can
Asset Liability Management • Manage risk more effectively – The be difficult if you use multiple data ware-
application can help you measure, houses or have software from different
Regulatory requirements such as Basel II monitor, and control interest rate, sources that is cumbersome and expen-
and IAS 39 demand more accurate and foreign exchange, and liquidity risks. sive to reconcile. Your bank cannot
comprehensive measurement of inter- A more accurate and future-oriented function effectively if there is wide-
est rate, foreign exchange, and liquidity approach toward risk measurement spread data redundancy or diminished
risks. As a result, asset liability manage- can help you improve profitability. confidence in the accuracy of essential
ment professionals must focus simulta- • Improve process integration – You business and regulatory information.
neously on detailed risk calculations can integrate asset liability manage- SAP for Banking solutions provide full
involving earnings and economic value. ment processes with processes for support for the industry reporting require-
hedge accounting, enterprise risk man- ments that banks face today. Predefined
As market competition heats up, you agement, and profitability analysis. standard reports help ensure a rapid
must also increase your institution’s return on your investment. Integration
economic value and earnings stream by Credit Portfolio Management with flexible, user-friendly tools in the
transforming the precise and proactive SAP NetWeaver Business Warehouse
measurement and management of your Given today’s unstable credit markets, it component enhance these reports
balance sheet’s risk-and-return profile is particularly important that banks have through state-of-the-art technology.
into a strategic advantage. In addition, effective methods for monitoring and In addition to support for the require-
you must contain IT costs and integrate managing credit risk. This involves the ments of Basel II, SAP for Banking can
asset liability management activities oversight of assets such as loans, bonds, help you handle reporting required by
with those for enterprise risk manage- committed lines, letters of credit, and the Committee of European Banking
ment and accounting. counterparty risk stemming from OTC Supervisors – as well as your internal
derivatives – both of a bank’s overall reporting needs. In addition, you can
portfolio and selected subportfolios, such use the software to:
as those for specific business units.


• Implement industry best practices – and map this data to create XBRL-
Preconfigured content uses best- instance documents. And because
practice models. The SAP SAP BusinessObjects XBRL Publishing
BusinessObjects XBRL Publishing comes with a leading XBRL engine,
application by UBmatrix works you can be confident that your docu-
together with SAP consolidation and ments are valid for the taxonomies
financial reporting applications to you use. It includes well-documented
enable your staff members to prepare application program interfaces and
eXtensible Business Reporting full functionality for distributing infor-
Language (XBRL) report submissions mation to other data warehouses.
right from their desktops. Now • Improve decision making – SAP for
finance and compliance teams can Banking can help you convert data
create, interact with, customize, and into actionable information and help
validate all kinds of XBRL documents ensure that it is delivered at the right
– quickly and efficiently. Preparers time to the right person in the right
first assemble financial reports using: format to support effective business
– SAP BusinessObjects Planning decisions.
and Consolidation • Access reports on demand – SAP for
– SAP BusinessObjects Financial Banking supports interactive informa-
Consolidation tion analysis via both the Internet and
– SAP Business Suite software mobile devices. You can make ad hoc
– SAP Basel II application queries via the Internet. Information-
– SAP Accounting for Financial broadcasting tools let you distribute
Instruments application information from different sources,
You can then use SAP BusinessObjects in different formats, using different
XBRL Publishing to tag, transform, modes and channels.


A Variety of Business Benefits
Improve Decision Making, Compliance,
and Your Use of Capital

By helping your bank comply with a At the same time, the applications make
constantly changing array of accounting it easier to adapt risk calculations to
and regulatory reporting requirements, the needs of various internal users of
the analytical banking applications from risk reports. Analyses of credit risk can
SAP make it easier to align capital more be based on book value for users in the
closely with changing market conditions lending area, for example, and on present
and legal requirements. In the process, value for users in the trading area. You
you increase the confidence of your can further customize your analyses with
stakeholders. external price calculators.

By enhancing the accountability and By providing a self-service environment
transparency of your financial and profit- for finance and business users, the
ability data, you help managers make software helps involve more employees
better-informed business choices. as strategic advisors to the business
Data analysis that is more automatic without having to rely on your IT depart-
and streamlined can also be more cost- ment. You get greater support for strat-
effective. Enhanced reconciliation of egy management, business planning,
information for management, statutory, profitability management, and financial
risk, and regulatory reporting can improve consolidation. In addition, the software
operational efficiency. can help:
• Increase the return on other IT
Using the same market data, transaction investments
data, and calculation engines for risk • Improve efficiency and productivity
analysis means that risk management • Lower costs
within your bank can be more consistent • Heighten employee satisfaction
and effective. You gain greater control • Foster greater collaboration
over both static and dynamic market • Increase your competitive advantage
risks and can handle risk for a broad
range of products. You can perform Make the Most of Your Data
nominal or book value, present value,
and risk-adjusted calculations simulta- For more information about the many
neously and apply the results to other ways that the analytical applications
risk evaluations. Inclusion of risk-reducing from SAP can help your business, call
measures in the display of net expo- your SAP representative or visit us
sure gives you a complete risk picture online at www.sap.com/banking.
for greater accuracy in other business
calculations.


Quick facts www.sap.com /contactsap

Summary
Analytical solutions from SAP can help banks build a centralized source of accurate, up-
to-date information and make that information available throughout their institutions. The
solutions provide robust support for business intelligence and financial performance man-
agement – as well as for the management of governance, risk, and compliance. A fully
integrated architecture for finance and risk management helps banks more effectively
handle valuations for a wide range of financial instruments and measure success and risk
across their value chains.

Business Challenges
• Meet new regulatory and operational requirements that demand greater transparency
• Improve data consistency, accuracy, and timeliness
• Reduce the effort and cost of data reconciliation required by multiple silos of information
• Improve control over business processes and the quality of products and services

New Features
• Business intelligence – Gain quick access to data (online, offline, or off-site) as well
as best-in-class, high-volume enterprise reporting
• Financial performance management – Tap robust tools for strategy management,
business planning, financial consolidation, and profitability and cost management
• Governance, risk, and compliance – Put the proper controls in place to mitigate risk,
help ensure regulatory compliance, and execute your strategic goals
• Finance and risk management – Integrate valuations and calculations for a wide range
of financial instruments and measure success and risk based on your value chain

Business Benefits
• Comply with new accounting and regulatory reporting requirements
• Align capital more closely with changing market conditions and legal requirements
• Increase stakeholder confidence
• Enhance the accountability and transparency of your financial and profitability data
• Make more informed business decisions
• Improve operational efficiency and manage risk more effectively
50 089 843 (09/04)
For More Information ©2009 by SAP AG.
All rights reserved. SAP, R/3, SAP NetWeaver, Duet, PartnerEdge,
Call your SAP representative, or visit us online at www.sap.com/banking. ByDesign, SAP Business ByDesign, and other SAP products and
services mentioned herein as well as their respective logos are
trademarks or registered trademarks of SAP AG in Germany and
other countries.

Business Objects and the Business Objects logo, BusinessObjects,
Crystal Reports, Crystal Decisions, Web Intelligence, Xcelsius, and
other Business Objects products and services mentioned herein as
well as their respective logos are trademarks or registered trademarks
of Business Objects S.A. in the United States and in other countries.
Business Objects is an SAP company.

All other product and service names mentioned are the trademarks
of their respective companies. Data contained in this document
serves informational purposes only. National product specifications
may vary.

These materials are subject to change without notice. These materials
are provided by SAP AG and its affiliated companies (“SAP Group”)
for informational purposes only, without representation or warranty of
any kind, and SAP Group shall not be liable for errors or omissions with
r
espect to the materials. The only warranties for SAP Group products
and services are those that are set forth in the express warranty
s
tatements accompanying such products and services, if any. Nothing
herein should be construed as constituting an additional warranty.

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