With a high probability most of the people who work with SAP® products in the banking industry have heard of Financial Services Data Management (FSDM). With FSDM companies can reduce redundancy by managing enterprise data using a single data model called Single Source of Truth (SSOT). Regarding SAP HANA® Core Data Services (CDS), this means providing a conceptual data model as well as a derived physical data model. SAP HANA® Smart Data Integration ensures error-free mapping of your own data models from your source system to a uniform data model for standardized reporting.

FSDM INKUBIT

The basic ideas behind the uniform data model are as follows:

  • Data for different objects of the same class is stored in the same format, although it comes from different source systems.
  • Data for a particular business object is only stored once.
  • Data can be used to efficiently implement a wide variety of reports.

This simplifies the creation of reports because only one data model must be understood instead of many different reports from different source systems. Therefore, the comparability of the data is much easier. So much for the general features of Financial Services Data Management. As some of you may have read in our news section, we are a regular participant in SAP SE's FSDM SAT's (Solution Acceptance Test). In the following blog post, we would like to give you a more detailed look at the latest innovations so that you can get a better idea of the software.

FSDM Systematik

Business Domains in FSDM

A business domain describes a subcategory of semantically related entities within the conceptual data model (CDM). Each entity is part of a business domain. For example, all data relevant for the operational processing of accounts and deposits is part of the business domain "bank accounts".

The following business domains have been extended or added:

Business Partner (Extension): Provides the entities to represent related data between business partners in the context of financial services.

The previous data model had the following relational categories:

  • Definition of the relationship.
  • Definition of specialization / inheritance. New categories must be explicitly modeled in the data model.
  • Definition of the attributes of the relationship.
  • Type is further breakdown but is not part of the key because the category is already defined.

This results in the following weak points:

  • The effort for each new category is high and must be modeled by SAP SE itself.
  • Use of types would be more convenient, but are not part of the key --> Types do not define the structure of attributes
  • Semantics of category and type not totally clear
  • Using the category as a primary key creates a problem with the definition of inheritances.
  • The type is not a key field and therefore multiple types cannot be used for the same category. For this reason, extensibility by type is currently restricted.

The improvements of the new data model:

  • Type and category get a clear semantics: The type defines the relation and the category defines the attribute structure.
  • The type is the primary key for the BusinessPartnerRelation.
  • The category is no longer a key field.
  • Relations with additional attributes do not require additional category (or default category: WithoutFurtherDetails)

Support for compliance with European reporting rules: This business domain provides the technical environment necessary to support some regulatory requirements within the EU, such as Capital Requirements Regulation (CRR) for loan products. This EU regulation mainly contains quantitative requirements for banks, such as capital adequacy requirements, large exposures and liquidity requirements.

The data model completes fields that were missing from the operational data model that represents loans.

New business requirements for the ERR standard required optimizations in:

  • Diagrams
  • Entities
  • Attributes
  • Relations

Derivatives: This domain provides the entities to represent related data between traded derivatives.

The data model contains all the data required to map the following derivative transactions:

  • Listed future contracts and options on securities, interest rate instruments, currency transactions and indices
  • OTC forwards
  • OTC forward rate agreements
  • OTC currency swaps
  • OTC interest bearing swaps - cross currency swaps
  • OTC interest swaps
  • OTC swaptions
  • OTC credit default swaps

Syndicated Lending: This domain provides the entities that are required to represent data related to a syndicated loan, syndicated commitment, participation agreement and other entities under a syndicated loan.

Background: The credit needs of some companies sometimes exceed the financing and credit risk capacity of individual lenders. As a result, some loans are arranged as consortia with funds provided jointly by two or more lenders. A syndicated loan is a form of lending in which two or more lenders jointly lend to one or more borrowers on the same terms and with different obligations.

Primary Insurance: This business domain provides the entities needed to present primary insurance data. The data model contains data to represent primary insurance contracts in the life and annuity business.

This includes the insurance application, the whole insurance product and the core product. Each insurance contract contains a list of cover components, including the possibility to use options or riders.

The data model is based on the following US-specific credit products:

  • Term life
  • Universal life
  • Indexed universal life
  • Fixed-term annuity

The data model is in a way designed to also support the European product lines. The data model also supports the licenses for insurance brokers common in the US market.

Stay on Track

How do you manage the increasing data volumes and requirements in your company? The success of financial institutions in the future will depend, among other things, on how well they manage their complex data landscapes. A modern data management platform can help you ensure consistency, availability, performance and efficiency. One component to reach this goal can be the Financial Services Data Model, which offers a standardized central mapping for all relevant data and can be extended by partners and customers. With the SAP HANA® Data Management Suite and FSDP, financial institutions can not only optimize analytical reporting processes, but also supply operational processes with intelligent data in real time. This enables you to automate process steps and provide customers and employees with all data where it is needed.