Corporate Data Warehouse Using Oracle Financial Services Applications
"Creating a corporate data warehouse puts VTB on a new level of IT maturity. The availability of complete, accurate and easily retrieved information stimulates us to develop and implement new approaches to business management and opens up new, previously unknown, opportunities for using information in the management of the bank", - Dmitry Nazipov, senior vice president VTB
1. Client
2. Client information
3. Background of the system
4. Project goals
5. Project tasks
6. Progress of the project
7. Results of the project
8. Why Oracle?
9. Further plans
Client: Bank VTB
Client information
Bank VTB is one of the largest Russian banks by size of equity capital. The Bank actively works with corporate clients and with individuals, and is also a player in the market for investment banking services.
VTB is one of the leaders of the national banking sector and holds a strong competitive position in all segments of the market for banking services.
By diversifying its activities VTB is constantly expanding the range of operations in the Russian market and offers clients a wide variety of services which are in line with international banking practice.
VTB was founded in 1990 by the Bank of Russia to service foreign trade transactions of the Russian Federation.
In October 2002 in accordance with the Banking Sector Development Strategy of Russian Federation adopted in 2001 by the Government of the Russian Federation and the Bank of Russia 99.96% stake in VTB that owned by the Bank of Russia was transferred to the Government of the Russian Federation.
In the 1990's the bank specialized in working with major Russian export-oriented enterprises and in fact had the status of a wholesale bank with a limited regional network.
Today, as one of the best capitalized commercial banks in the country, VTB provides the entire range of banking services of the highest quality corporations as well as individuals. The Bank views individual clients as a high priority.
In addressing the challenge of providing the population of Russia with quality banking products and services, VTB nearly tripled the size of its regional network during 2002-2006. VTB Group now has 586 Offices in almost all regions of the country.
Background of the system
With the dynamic growth of the banking sector VTB Bank seeks to strengthen its market position and achieve significant growth in three key areas of business: corporate, investment and retail. The Bank attaches great importance to the development of its branch network. The Banks medium-term development strategy provides that its regional units will operate in all major cities of Russia. VTB develops presence in different markets through equity participation in a number of banks, trading firms and nonprofit organizations that form the VTB Group. Coordination of the activities of VTB Group is one of the key tasks of the bank.
The systems which existed at VTB before the start of the project could not fully achieve these goals: for analytical tasks two different sources were used, for collection and accumulation of data from transactional systems at the head office and branches. The data contained in the sources, was 80% redundant, dispersed, not consistent, not structured, often superfluous and not always reliable, which prevented its use for management decisions. As a result, specialists of the business units were forced to spend their time on the collection and verification of information.
In order to get rid of these deficiencies, VTB decided in the medium and long term to introduce a fundamentally new IT system, built on the basis of a Data Warehouse. The decision was made to use Oracle Financial Services Applications (OFSA), customized to the specifics of the financial sector. Before introduced the decision sought to collect and analyze data to prepare a series of transactional systems as well as presenting the results of analytics and reporting business users and all parts of the bank.
Project goals:
The objectives of establishing corporate data warehouse at VTB Bank were:
- Improved efficiency in the management of business processes by systematizing the major indicators of banking activities and providing users with tools for data analysis.
- Reducing labor costs for external and internal reporting.
- Increased reliability of information security through centralized access control to confidential data
- Eliminating overlapping links in the chain of information and analytical processes.
- The freeing of resources from the Bank's operational systems from functions which do not fall into their domain.
Project tasks:
Implementation of the project included the following tasks:
- Conducting a survey and analysis of business processes and the determination of the sufficiency of the Bank's work on a methodological basis for their automation.
- Research and analysis of source systems for completeness, correctness, integrity and adequacy of the data for subsequent loading into the data warehouse.
- Organizing information flows in reporting at the Bank.
- Creating a corporate data warehouse.
- Implementation of mechanisms for extraction, validation, purification, transformation and loading of data from source systems into the corporate data warehouse.
- Tuning OFSA modules according to the functional requirements of the Bank.
- Developing a subsystem for preparing internal and external reporting.
Progress of the project:
RDTEX began the project to establish a corporate data warehouse for VTB Bank in June 2006. Oracle Financial Services Applications (OFSA) was chosen as the basic platform for the project. OFSA represents an analytical model of banking activities and a set of business applications that work with this model. OFSA modules allow the automation of various aspects of banking activities, including budgeting and management reporting, financial risk management, preparing mandatory reports for the IFRS and for the Bank of Russia:
- A mechanism for fetching, reconciliation, purification, transformation and loading of data into the data warehouse.
- Verified information exchange using the XML format.
- Loading speed XML flow was increased 10 times, downloading the full data load of one branch (100-200 Mb) in 30 minutes.
- Improved reliability of the system when dealing with complex schemes with high volumes.
Implementing a data warehouse allowed the implementation of functional Oracle business applications. In particular to complete the first phase of the project RDTEX specialists deployed:
- Normative Reference information System
Centralized maintenance of the normative reference system provided the completeness, integrity and validity of all of its constituent directories and qualifiers, which is a prerequisite for accurate reporting. The normative reference information is divided into groups (for example, the general Russian classifiers, classifiers of the Bank of Russia, general bank reference) that helps achieve good manageability both in terms of access rights and administration, and personification of responsibility for specific references. Adding new guides in the module is done without programming, through a visual interface.
Deployment of the system improved the quality and speed of decision-analytical tasks in the Bank through the standardization and harmonization of regulatory and background information used in its various units.
- The Management Accounting Module
The deployment of the management accounting module allowed the automation of the process of reporting on key indicators, including the calculation of transfer financial results, the calculation of cost / income from the creation and dispersal of reserves, as well as the calculation of the financial results of Bank products.
Calculation of financial results is based on the principles of IFRS. For example, the calculation results on securities is performed using "mark to market" (IAS 39).
Analytical reports on income and expenses are formed for each "object of analysis" (product, client, point of sales, etc.) using management accounting techniques.
Deployment of the system alleviated the time-consuming task of reporting "dirty" data in accounting systems and writing requests for their correction.
- Treasury Support System
Designed for analysis and management of the interest and currency positions of the Bank, as well as assets and liabilities with the goal of ensuring liquidity. The basis for the system is showcase Treasury data, based on Oracle Business Intelligence tools and allows the formation of arbitrary reports using data warehouse.
As a result of the work on the showcase Treasury data and related analytical modules, the methods and data were unified, both in the analysis of the positions of bank and in building the payment calendar.
- The Management Reporting System
At the end of the first phase of the project, a management reporting was implemented for documentary operations and international transfers and reporting on transactions of customers.
In the pilot production operation the following modules were also deployed:
- Predicting the current position.
- Form 0409101 module "Central Bank Reporting".
- Managing accounting for the corporate unit.
- Transfer pricing.
Work on the functional expansion of the corporate data warehouse at VTB Bank continues.
Results of the project:
Corporate information repository Bank VTB allowed for the collection of data from operational sources, their centralized storage and systematization, as well as information analysis for business users. The data warehouse plays a key role in the IT landscape of the Bank, combining data from heterogeneous operating systems and business units at the bank into a coherent whole. Overhead costs for analytical work were reduced.
At the same time, the data warehouse allowed the deployment of OFSA modules OFSA for budgeting and management accounting, financial risk management and preparation of mandatory reporting for IFRS and for the Bank of Russia.
Why Oracle?
Oracle Financial Services Applications is a unified model, introduced as a result of years of international experience of Oracle Corporation in the field of data warehousing for financial institutions. Oracle Financial Applications solutions provide unique opportunities for banking solutions. Due to the fact that all applications modules use the OFSA data model, applications inherit the flexibility and scalability inherent in this model. RDTEX has expanded the functionality of OFSA, adapting it to fit the specifics of the Russian market and develop the modules "Central Bank Reporting" and "IFRS Reporting".
Further plans
During the second phase of the project which is anticipated to last until 2009 a continuation of the deployment of functional modules for Oracle Financial Services Applications is planned. In particular:
- to continue the further extension of the Normative Reference Information System module at VTB Bank, and then at VTB Group;
- to complete the last phase of implementation of management accounting methodology - the functional cost analysis system;
- to begin the task of forecasting the mandatory standards in the development of support systems for the Treasury;
- to introduce a module on financial risk management;
- to automate the process of preparing for mandatory reporting to IFRS and the Bank of Russia.
