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BI in Basel II – Intro

SAP has added a great value through its various OLTP modules, its value has been powered up and recharged through its OLAP ideas. SAP BI, obviously the tool to bring out its advantages, has been seen playing a good role in IS-Banking as well. Well, let me come straight to the point.

Some of us or even most of us might be aware of Basel II Accord. Still, I am writing this to make it to the point in simple terms specifically for people, who haven’t even heard about Basel II Accord, Bank Analyzer ( Aah! so many ‘B’s 🙂 ) , the role of Business Intelligence in Bank Analyzer etc, the purpose and its use in Banking through the SAP Bank Analyzer.

Before we go further, let’s understand what Basel II Accord is all about.

Basel II is a set of recommendations and regulations issued by the Basel Committee on Banking Supervision. The objective is to protect the international financial system from risks that might arise in case of series of bank collapse. This is achieved by dictating regulations in terms of Capital Management Requirements so that the bank holds enough capital to face the risk and survive through it. Basic idea being, the bank has to have the amount of capital, proportional to the risk of exposure to risks. So, apparently, the whole focus is on Risk Management.

Basel II Accord is universal to all financial institutions and compliance to this Accord is strongly emphasized. So, does this mean that all banks have to strictly follow this Accord? No! Not exactly! The local governing body for respective countries (like RBI in India) might suggest regulations that are deviant (not too much though!) from the Basel II Accord without altering main framework of the Accord.

In terms of implementation in SAP, it means that the Basel II Accord comes as Business Content and the level of customization that is involved is the deviated regulations dictated by the Local Financial Governing Body (like RBI). Apart from these, each bank will have its own way of calculation of capital etc, but that will stick to the Basel II Accord on the whole.

So, now, coming to Bank Analyzer, this is the one that contains all relevant components that help in Risk Assessment by providing with whole lot of standard and customized analyzers(like reports). These help the Risk Management Team within the financial institution to asses the risk and take decisions accordingly.

So, where is BI coming into picture?? BI has been incorporated as one of the primary components in using the financial data that may come from disparate systems and by a series of methodology, it maintains data in a way that’s more efficient in analysis of these financial data. The architecture of the whole product has been made in such a way that the Basel II Accord implementation and customization is easier. Accelerators are available in the form Business Content that helps in faster deployment of these applications. It is noted that though BI is used as a component in Bank Analyzer, the architecture is quite different and it’s not like BI7 or BW 3.5, though the overall concept are the same. So, what needs to be understood is that, this solution is not implemented using BW 3.5 or BI 7, but, Business Intelligence as a technology has been packaged in Bank Analyzer.

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  1. Sandra Rossi
    Great intro. I have worked for a while on Bank Analyzer and this strange BI, which is not a BI, but… Interesting to read your impressions about it, and share with you.

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