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SAP Business Suite powered by SAP HANA | Fact Book
Banking
Banks must seek new competitive advantages in response to
changes in customer trust, demographics, and demands, as well
as to profit margins reduced by higher capital requirements,
compliance costs, and lower-fee income.
SAP solutions that leverage the power of the SAP HANA platform
lead the way to new real-time business practices in these key areas
of banking:
General Remark ......................................................................................... 4
Finance, Risk, and Compliance .............................................................. 5
Finance and Risk Data Platform: One-Step Data Management for
Downstream Applications .........................................................................5
Accounting for Financial Instruments on SAP HANA ...........................11
Governance, Compliance, and Surveillance ..................................... 16
Compliance and Fraud Prevention and Detection .............................. 16
Liquidity Risk Management...................................................................21
Manage Funding Liquidity Risk ............................................................... 21
SAP Business Suite powered by SAP HANA | Fact Book
General Remark
Multicurrency accounting
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SAP Business Suite powered by SAP HANA | Fact Book
Interactive analytics
Agile responsiveness
All large banks are looking for a platform to act as central data storage
containing all contracts, customers, transactions, and events that allows
risk, accounting, management and compliance reporting, and calculations.
This is more than a reporting tool. It is a data management infrastructure.
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SAP Business Suite powered by SAP HANA | Fact Book
SAP is able to provide a robust real-time data platform for finance and risk
through a suite of applications that either operate directly on the data
platform or that are integrated.
Instant Challenges
root- Banks are driven by various internal and external factors requiring better
visibility into and transparency of their businesses. For example, banks need
cause to project contractual cash flows for underlying transactions when institutions
manage millions of transactions. Significant regulatory changes require
analysis stringent compliance. Banks need to improve stress testing and accuracy of
analysis.
mobile enabled
When banks have the ambition to build a finance and risk data platform the
challenge begins with the typically very heterogeneous landscape of source
systems. Data from a variety of sources has to be integrated in real time or
periodically. Data modeling and flow management need to be organized
centrally and supported by appropriate tools.
The finance and risk data platform has to serve different business needs and
requires a multipurpose data model. The platform needs to be able to
support standard reporting requirements as well as ad hoc analysis.
Furthermore, it has to serve the information needs of calculation processes
and applications that might be implemented based on SAP and/or third-party
applications. More and more results need to be produced in real time.
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SAP Business Suite powered by SAP HANA | Fact Book
Full drill- Whereas SAP HANA is the core, other components of the SAP Data
Innovation in Detail
Less materialization: Given the processing power of SAP HANA, many
aggregations, transformations, and calculations can happen on the fly. This
leads to less materialization and more virtualization of classical data
warehouse layers. Redundant data structures, such as cubes, can be
replaced by views.
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SAP Business Suite powered by SAP HANA | Fact Book
Data aging: Whenever banks have to handle volumes of Big Data and not
all of this data is required on a daily basis, the near-line storage option for
SAP NetWeaver running on SAP HANA allows data storage on a cheaper,
yet still fast, database (with SAP IQ database software).
Reduction of data latency: Given the fact that SAP HANA allows you to
work with fewer redundancies, the overall data latency is reduced
significantly.
Reference Data Model: The SAP HANA Finance and Risk Analytics for
Banking rapid-deployment solution provides an infrastructure for generating
a physical and virtual reference data model for finance and risk in SAP
HANA. This foundation is used to run SAPs finance and risk applications
and is open to integrate third-party systems via open technology standards.
Mobile: The complete information basis can be analyzed and explored using
mobile devices. This gives a bank always-on visibility into critical events and
situations.
Benefits
We achieved significant business benefits by using SAP HANA to optimize
management of business critical data for banks. This includes:
Integration: The value of the finance and risk data management solution is
increased through the comprehensive integration of analytics solutions, such
as BI and finance and risk applications.
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SAP Business Suite powered by SAP HANA | Fact Book
Easy access to data: Business users get closer to the data, resulting in
improved decision making with more accurate and detailed finance and risk
positions.
Lower total cost of ownership (TCO): Less redundant data structures (for
example, cubes, aggregates, and indexes) lower the overall TCO of a data
warehouse significantly.
>1000x approximately 500 million records in your risk data mart. Based on our
experience with similar customer requirements, we have observed:
faster risk data
analysis* > 1000 times faster analysis of risk data
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SAP Business Suite powered by SAP HANA | Fact Book
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SAP Business Suite powered by SAP HANA | Fact Book
Ambition
With the SAP Accounting for Financial Instruments application running on
the SAP HANA platform, banks can decide for a centralized subledger that is
fast enough to act as single source of truth at the individual contract level.
Centralize This central instance covers all accounting requirements and enables
organizations to implement regulatory changes only once. Also, SAP
subledger provides preconfiguration that reflects industry best practices. This
Challenges
Banks have been running finance applications for more than 40 years now.
Often, the applications are quite dated and, because of mergers and
acquisition, the IT landscape has become very fragmented, requiring
numerous interfaces and increasing operational costs tremendously. Data
silos and data duplication result in increased effort for reconciliation.
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SAP Business Suite powered by SAP HANA | Fact Book
The SAP HANA platform enables SAP to follow a new paradigm: Methods
Methods go go to data rather than data goes to methods. That means the finance and
to data rather risk data platform acts as single source of truth and will hold all original data
residing in finance and risk applications from SAP as well as from partners.
than data An application will use SAP HANA views to easily consume results from
another application without replicating the data.
goes to SAP alone owns the complete stack of database, data model, applications,
methods and reporting and is therefore better able than others to design an integrated
solution without redundancy. Eventually, all respective applications will share
the data model of the finance and risk data platform, eliminating the need for
data transformation and data mapping.
Innovation in Detail
SAP BW is no longer mandatory. Reporting can be built directly on SAP
Accounting for Financial Instruments data that is stored in the source data
layer (SDL) and the results data layer (RDL). Respective SAP HANA
database views can be built using the SAP HANA studio or other modeling
tools such as SAP PowerDesigner . The SAP HANA views are also
provided by the SAP HANA Finance and Risk Analytics for Banking rapid-
deployment solution. With these views of the SDL and RDL, data can be
consumed without using bank analyzer-specific access methods such as
primary and secondary data sources.
Customers can also continue to use SAP BW, if they prefer. Three different
scenarios are possible:
1) SAP BW runs on the same SAP HANA database instance. In SAP BW,
only virtual info-provider objects are used. No data is duplicated.
2) SAP BW runs on another SAP HANA database instance. For smaller
amounts of data, a federation approach might be used (data is read from
the other instance at runtime). No data is duplicated.
3) SAP BW runs on another database instance (SAP HANA database or a
classic relational database). As mentioned previously, data can be
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SAP Business Suite powered by SAP HANA | Fact Book
Benefits
With SAP Accounting for Financial Instruments on SAP HANA, reporting and
business analysis can start sooner because no data needs to be replicated
to a data warehouse. SAP HANA enables flexible real-time, ad hoc analysis
with unrestricted navigation, and database indexes predefined by IT are no
longer necessary for optimal performance. In-memory technology provides
unmatched response times. Business insights are now available on demand
on any device, any time. Users can easily consume data directly from the
database with well-established access methods such as native SQL or
Microsoft Excel (MDX). Running SAP Accounting for Financial Instruments
on SAP HANA helps fulfill increasing demand for up-to-date information from
internal management as well as from central banks, regulatory authorities,
auditors, and analysts.
Faster cycles times (for example, at period close) provide room for business
process optimization and innovation.
The possible merging of OLTP and OLAP also reduces processing cost
because SAP BW is no longer mandatory.
to 1hr and A pilot customer reduced the runtime of a month-end process chain in SAP
Accounting for Financial Instruments from 7 hours to 1 hour and 25 minutes.
25 min The application turned out to be extremely scalable; more than 400
processes were running in parallel. The capacity of the application server
for a period-end process was doubled to make full use of the power of the in-memory database. At
chain in SAP Accounting the same time, the size of the SAP HANA database decreased by 50% ( as
for Financial Instruments* compared with a highly aggregated conventional database).
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SAP Business Suite powered by SAP HANA | Fact Book
Bank Analyzer applications. All other scenarios of SAP Bank Analyzer, such
as profitability analysis, will follow. In the future, the finance and risk data
platform will also integrate balances of the general ledger as well as views of
financial consolidation and financial planning. This will provide a single
source of truth for the office of the CFO in banks.
SAP now also supports SAP HANA for production use on vSphere 5.5, a
component of vCloud Suite, for scaling up to a 1 TB virtual SAP HANA
appliance.
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SAP Business Suite powered by SAP HANA | Fact Book
is the Accounting for Financial Instruments to the SAP HANA database. There is
no need to adjust business configuration when switching from a conventional
standard database to SAP HANA. Only a very few technical settings regarding data
access might vary. The following steps have to be taken:
DB for 1) Upgrade the existing SAP Accounting for Financial Instruments system
SAP Accounting for from SAP NetWeaver 7.11 to 7.40
2) Upgrade the existing SAP Accounting for Financial Instruments system
Financial Instruments from SAP Banking Services FSAPPL400 to FSAPPL450 (also requires
upgrade of FINBASIS and SEM-BW)
3) Copy the upgraded system from the classic database to an SAP HANA
database instance
The SAP Consulting organization and SAP AGS provides standard services
for each migration step. In addition, specialized consulting partners for SAP
Accounting for Financial Instruments offer respective services.
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SAP Business Suite powered by SAP HANA | Fact Book
Governance, Compliance,
and Surveillance
Compliance and Fraud Prevention
and Detection
for fraud tighten supervision of the financial system, and a U.S.-led crackdown on
money laundering and terrorist finance has led to renewed interest in
management prevention
Technology drivers The rise of Internet and mobile banking has
are no longer increased the speed and volume of transactions. These technologies
sufficient have made financial crime easier to commit and made the job of
compliance and fraud teams harder to accomplish.
Ambition
100x Banks must keep up with quickly changing fraud patterns, reduce damage
caused by fraud and irregularities, and comply with stricter regulations and
improved and faster laws in all countries where they do business.
fraud detection
With the power of SAP HANA, fraud can be detected faster, rules can be
process* calibrated interactively, and new rules can be created more easily. SAP
HANA enables banks to address the various fraud and financial crime
scenarios holistically, based on one integrated platform, as illustrated in the
following:
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SAP Business Suite powered by SAP HANA | Fact Book
Holistic
approach
based on a single
and integrated
platform
Challenges
Banks have to tackle a growing number of fraud-related challenges:
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SAP Business Suite powered by SAP HANA | Fact Book
Global fraud management dashboard showing the number of open alerts, efficiency, average
processing time, and top-10 countries by risk value across various regions
Innovation in Detail
The SAP Fraud Management for Banking application enables banks to
analyze, detect, investigate, and prevent fraud and irregularities in
ultrahigh-volume data environments. It targets both fraud and
compliance scenarios that can be based on SAP and non-SAP data
sources. The fraud management application makes the following
innovations possible:
A holistic approach: Because point solutions are costly and do not provide
deep insight across various topics, banks are currently looking for a platform
that can address all use cases related to financial crime. Because SAP
HANA can handle massive data volumes at low latency, it can help banks
meet this challenge.
Greater accuracy: As proven by false positive rates that are far too high,
the current rules and methods that can be used for fraud detection are
neither effective nor efficient. With the online calibration tool provided by
SAP Fraud Management for Banking, banks can calibrate and back test their
implemented fraud detection methods to improve their efficiency.
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SAP Business Suite powered by SAP HANA | Fact Book
Fraud management dashboard showing the most important information at a glance: alerts, top-
10 countries by risk value, fraud detection efficiency, average processing time, total risk value,
and more
Benefits
Paradigm shift: Thanks to its real-time processing functionalities and better
and faster fraud detection functionalities, SAP Fraud Management for
Banking can help banks shift their paradigms from fraud detection to
prevention.
Proof Points
A proof of concept (POC) for fraud management for a tier-one bank was
done based on an anti-money laundering (AML) scenario. The current
banking solution requires between 40 and 60 hours for an entire evaluation
run. This is far too long and consequently prevents the bank from detecting
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SAP Business Suite powered by SAP HANA | Fact Book
fraud early and implementing better fraud detection methods (that would
also increase the evaluation time).
The data volume used for the POC was 10 million customers, 20 million
accounts, and one billion of transactions. The data was uploaded to SAP
1200x Fraud Management for Banking and between 7 and 10 of the most important
fraud detection rules for AML were implemented. The results of the POC
faster evaluation* showed that the evaluation process could be reduced from 40 hours to two
minutes, or in other words, the evaluation process could be made 1200
times faster than before. The results also showed that the bank could take a
holistic approach to fraud, improve fraud detection by accelerating the
detection process significantly, implement better fraud detection methods,
and calibrate the currently implemented rules on the fly.
SAP plans to develop this solution together with customers through a co-
innovation partnership. The customers developing the solution together with
SAP would have the following advantages:
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SAP Business Suite powered by SAP HANA | Fact Book
Report internal and external key figures and support their detailed
analysis.
drill-down Ambition
from key As a result of the credit crunch, in nearly all financial institutions, liquidity risk
figure to has become the most important risk category. The widening of credit
spreads means higher liquidity costs requiring a highly efficient and effective
granular management of liquidity risk. Therefore, interactive liquidity risk management
enabling the analysis of instantaneously generated forward liquidity
data exposures is a key capability.
providing intuitive As a result of the financial crisis, banks need the ability to perform ad hoc
understanding of definition and analysis of stress scenarios.
results In addition, a long list of new regulatory requirements needs to be covered.
In the first place, Basel III requires key indices, such as the liquidity
coverage ratio, to ensure the short-term resilience of a banks liquidity risk
profile. Also required is the net stable funding ratio a medium- to long-term
cash-flow key performance indicator for available-to-required funding.
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SAP Business Suite powered by SAP HANA | Fact Book
Challenges
Liquidity risk management should be possible in an interactive way but
many financial institutions struggle with inconsistent cash-flow data, getting
correct cash-flow data to the right place, calculation performance, and
timelines. Finally and quite importantly, banks are not able to execute quick
analysis to support decision making. The following reasons are responsible
for a poor liquidity risk management:
Free up Market changes require new stress-test definitions, but their introduction
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SAP Business Suite powered by SAP HANA | Fact Book
Basel III compliance and simulation of key figures, such as the liquidity
coverage ratio, through time
Minimization of liquidity costs through efficient management of collateral
made possible by instantaneous calculation of selling strategies
supporting their optimization
Revolutionized decision making thanks to interactive stress testing and
new business simulation and to collaboration between relevant
departments
Interactive,
dynamic
stress
testing
enabling
multidimensional
insights into risk
potential Visualization of forward liquidity exposures and counterbalancing capacities under normal and
stressed conditions, showing where detailed analysis could be started interactively into various
dimensions
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SAP Business Suite powered by SAP HANA | Fact Book
End-to-end off rates, which can be linked to arbitrary portfolios down to the single trade
level.
be reduced new business portfolios (for example, bond issues, hedge instruments) can
be introduced interactively on the cash-flow level, and the analysis of the
dramatically outcome can be performed in collaboration with different departments, such
as risk, treasury, and finance.
from hours to seconds,
simplifying architectures Mobile version: An integrated mobile version enables collaboration
between departments anytime and anywhere. Real-time calculations help to
guarantee quick communication.
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SAP Business Suite powered by SAP HANA | Fact Book
Benefits
We have achieved significant business benefits by using SAP HANA to
optimize and rethink business processes:
Consistent data: Help ensure consistent static data and cash flow data
across all operative systems.
Enhanced decision making: The ability to take into account new business
portfolios and the support for collaboration among different departments
enables organizations to make decisions about liquidity usage.
Proof Points
Lets assume youre planning an implementation project and have millions of
cash flows. Based on our experience with similar customer environments,
we have observed the following improvements:
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SAP Business Suite powered by SAP HANA | Fact Book
* Source: SAP internal lab tests as of Sept. 2013. All performance KPIs are preliminary. SAP internal lab measurements and productive customer
performance can deviate.
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