BANKS BRACE FOR BASEL III

BANKS BRACE FOR BASEL III Industry Best Practices in Integrated Risk & Finance IT (Basel III and GL Consolidation) www.wipro.com CONTENTS Introduct...
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BANKS BRACE FOR BASEL III Industry Best Practices in Integrated Risk & Finance IT (Basel III and GL Consolidation)

www.wipro.com

CONTENTS Introduction

3

Data Management Challenges for Banks

4

Oracle PeopleSoft Solution Architecture for BASEL III Reporting

5

Features and Benefits

6

About the Author

7

About Wipro Technologies

7

By: Indranil Debnath

Introduction The Basel III accord is the most recent revision to international capital standards for banks, and was adopted in part as a response to the 2007–2008 financial crises.The main focus of Basel III is to strengthen the banks’ financial position through a sustained increase in capital and improvement in capital quality.The new accord emphasizes the tightening of capital requirements and raising the quality, consistency, and transparency of the capital base.

Measures that banks need to take to comply with Basel III

1

Improving the banks’ liquidity via a global minimum liquidity standard

Stricter rules

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Strengthening the risk coverage of the capital framework

Constraining leverage through minimum leverage requirements and additional safeguards

03

Data Management Challenges for Banks

message across multiple formats between all statutory, regulatory, & internal reporting, so as to not mislead the regulators and the market. Thus, implementing Basel III poses a unique set of data management

To comply with Basel III regulations, banks must ensure that they include data from the operating units, and provide consolidated data at the

challenges for banks. Many banks are looking to upgrade their existing

account level, collateral level and customer level. Banks with global

environment to the necessary standard by adding additional modules to

operations may have to manage different regulations in different

handle additional requirements, whether it is leverage and liquidity

jurisdictions, while at the same time providing a consistent view of

management, stress testing, data warehousing, or reporting. To manage

relationships across all business units and geographies. They will have to capture and store significant volumes of data, including operational risk incident data and default data. Lastly, banks will have to convey a consistent

the above challenges, Wipro has developed Oracle PeopleSoft solution architecture.

Data Management Challenges

Data consolidation

Data storage

Different regulations across different regions

Consistent messaging across multiple formats

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Oracle PeopleSoft Solution Architecture for Basel III Reporting

Wipro’s solution starts with the consolidation of the PeopleSoft General Ledgers and unified COA, which provides a consolidated view of the overall financial results. Using ETL tools, a data warehouse is developed, along with a Basel III related data model. This data model allows banks to

With appropriate packaged solutions unavailable in the market to handle

report for restrictive capital definitions, higher risk-weighted assets,

Basel III requirements, banks are left with no alternative but to rely on

additional capital buffers, and higher requirements for minimum capital

spreadsheets or ad hoc data management tools. This results in the lack of

ratios as per Basel III standards; dashboards are also generated by the

real-time updates and in significant manual efforts, leaving the system

model. From this, reports specific to Basel III requirements may be

vulnerable to errors. So, banks are seeking solutions in the areas of Data

generated. The primary advantage of this approach is that financial

Management, Risk Analysis, and Compliance & Control.

consolidation is fully integrated with the underlying transaction systems.

Basel III Dashboard Basel III Reporting

Data Management

Oracle PS Fin Data Model (Specific to Basel III)

Enterprise Level Risk Platform for Risk Data

Use tools for measuring data gaps

Oracle PS Data Warehouse/PS EMP Oracle ETL Tool

Risk Analysis

Oracle ETL Tool

Oracle PS Consolidated GL for Statutory and Risk Requirement General Ledger 1

General Ledger 2

General Ledger 3

General Ledger 4

General Ledger 5

Compliance and Control

05

Features and Benefits Some of the main features and benefits of Wipro’s solution are: •

Segregation of risk and finance IT into data quality enforcement and validation, risk calculations, and risk and finance reporting to support changing organizational structures



A common data model for risk and finance to achieve compliance and measure performance



Common transformations, enrichments, exceptions, and data custodian function for finance and risk data; ability to build reconciliations and match at various stages across the risk and finance transformation chain



Common reference and hierarchies for organization, customer, account and product (to the extent possible); common master data for customers and legal entities; reference data and master data validation for every transaction going in the DWH



Consolidated/finance risk integrated data marts created using a common data model, common dimension, and common hierarchies; enriched data with risk and financial information



Risk and finance single view for finance controllers, product controllers, legal entity managers, risk architecture team and regulatory reporting teams, and performance evaluators



Ability to build data quality dashboards; identify and provide actionable information through strong data governance



Integrated dashboards and reports, providing finance controllers, risk architecture teams with the ability to view and approve reconciled data

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About the Author Indranil Debnath is the Practice Director and Finance Competency Lead for Wipro’s PeopleSoft Practice. As Practice Director, Indranil leads and mentors all large PeopleSoft Finance accounts and is responsible for defining the Finance solutions.

About WiproTechnologies Wipro Technologies, the global IT business of Wipro Limited (NYSE:WIT) is a leading Information Technology, Consulting and Outsourcing company, that delivers solutions to enable its clients do business better. Wipro Technologies delivers winning business outcomes through its deep industry experience and a 360º view of “Business through Technology” – helping clients create successful and adaptive businesses. A company recognised globally for its comprehensive portfolio of services, a practitioner’s approach to delivering innovation and an organization wide commitment to sustainability, Wipro Technologies has 130,000 employees and clients across 54 countries.

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