Capital Markets

THE PROBLEM

The customer, a leading global investment bank, has a large and dynamic Capital Markets business unit which undertakes a wide variety of services for its customers and for the bank, including treasury, forex trading, derivatives trading and specialized finance.

The customer has built its business on leading-edge thinking and innovation combined with bulletproof back- and front-office execution.

Its front-office system is Kondor, and its middle- and back-office is Calypso. It also has systems to manage settlement, to manage risk, to control forex compliance, and many others.

These are very large and complex enterprise-level transactional systems, which combined with a highly complex and diversified business model, require very close management of information. Much of the data in these systems lies in obscure places, and the structure of its database is difficult to understand and not well-documented.

The challenge facing this customer is how to gather consistent information from these systems so that it gets a) a complete view of a trade from inception to final inter-bank settlement, b) an objective understanding of the performance of its staff, and c) holistically, client profitability.

Deal profitability in particular was difficult and tedious to calculate, owing to the complexities of the settlement process and consequent allocation of overhead costs. In addition, some of the third-party tools used for reporting were extremely expensive, as well as requiring extensive reliance on technologists and taking unacceptably long to deliver results.

THE APPROACH

Despite the availability of other Business Intelligence platforms in-house, it was decided to go with Microsoft's integrated Bl Solution. This suited the business as the largest parts of its systems are running on Microsoft, and because the Bi tools, bundled with Microsoft SQL Server, would incur no additional cost. Once the architectural decision was made, it was decided to outsource the initial development and implementation. Based on the strong recommendation received from other divisions within the bank, YoungBlood was tasked to provide a solution.

The Foreign Exchange desk was chosen for the first phase of the delivery, owing to the strong support from its business management.

The bank decided that it needed a classical business intelligence solution, with data residing in a warehouse and data marts, and cubes built on these so business users could interrogate the information without having to rely on technologists. This would also protect the production system from the current serious performance impacts caused by lengthy ad­hoc queries.

It also needed to get a better handle on the contents of Kondor and Calypso, with an understanding of what resided where and how the extremely complex structures worked.

The desired outcome was as follows:

  • A well-engineered and well-documented set of data extracts from the operational systems, but primarily Kondor and Calypso

  • A well-designed and flexible data warehouse with analysis and reporting cubes available to end users

  • A set of standard reports that would satisfy the immediate basic requirements of the unit.

THE PROJECT

Youngblood deployed a team consisting of its technical director in the team lead role, its MD as business analyst, a mid-range and a junior development resource. A senior resource from the client was assigned to the project on a 50% basis. Her knowledge of the business was vital in delivering this complex requirement. The emphasis was therefore on high-impact engagement with the customer that would result in focused and quick delivery.

The project team spent a month to gain an understanding of the business and its underlying data structures. After that, the reporting requirement was scoped and source data in the various systems, but particularly Kondor and Calypso was identified. This proved to be an extremely intricate task, particularly regarding the structures created by Calypso when trades are split and then consolidated for settlement purposes. Reconciliation of payments to settlements and prior to that trades, was also a major challenge that the team had to overcome.

The team then designed and built the data warehouse and extracts, as well as thirteen cubes for analyzing the information. Following that, standard reports were produced. Testing showed reconciliation inconsistencies between the source systems, which were acted upon by the client and solved. The data from Kondor, Calypso and the other source systems is now complete, well structured, refreshed daily, and accessible to management.

Youngblood's tested Bl delivery methodology was used, with extensive documentation and training, and solid testing forming an integral core together with deep expertise in financial markets, data analysis and dimensional modeling.

THE BENEFITS

The customer now has a consolidated, trustworthy source of information on its forex operation, from order receipt through to final payment from counterparties. They can analyze profitability, optimize administrative processes and incentivize staff. Monthly reporting is more reliable and consistent, and overall a better understanding of the business has been achieved. The cornerstone for an integrated view of the entire Capital Markets business has been solidly laid.

THE CONCLUSION

With the help of Youngblood and the Microsoft Business Intelligence suite, the customer has achieved its objectives. The team is now engaged with the next rollout for this important customer.