Client: TIER 1 INVESTMENT BANK

Case study: Capital Adequacy and Large Exposure system development

Business context:  The client was committed to achieving Basel II advanced rating, having agreed an overall applications architecture linking data from source transaction processing systems through a central trade repository into new credit management applications. The problem was that high quality technical expertise to help implement the architecture was thin on the ground in the face of fierce competition from other banks for scarce resource.  Concern was growing  over the programme’s timetable.

Rule Financial Engagement:  Rule provided a high quality, multi-skilled team of specialists to lend assistance across all aspects of the programme. 

At the business end we reviewed the credit business processes to identify streamlining opportunities. We defined and implemented quick-win tactical improvements to improve processing while the strategic development was underway. In one case we reduced a regulatory capital reporting process from 8 hours down to 20 minutes, while simultaneously removing significant operational risk by automating manual processes.

At the business / IT boundary we specified the business data needed to calculate RWA numbers for the bank’s securitisation business.  We created detailed technical specifications for capital adequacy and the bank’s large exposure reporting system, working closely with its reporting team.  We set up an architecture review board to strengthen business governance over architectural changes to the capital adequacy infrastructure, thus improving business / IT communication and understanding.

Working within the bank’s IT department, our C# developers helped build the workflow engine and models to support risk calculations. Our Oracle specialists designed and created ad hoc reporting and querying facilities for the capital adequacy and large exposure database, and we developed data feeds from the prime services settlement system into the trade repository.

Benefits:   With Rule Financial’s help the bank hit its target date and put the new systems into production on time, enabling it to reduce its regulatory capital as planned.  The quality of our documentation was held as exemplary within the bank, leaving a lasting legacy of improved best practice for communication between business and IT.  The high quality of our systems design and development minimised on-going support costs.