Financial Data Models

What is a financial data warehouse model?

A financial data warehouse mode is a predefined business model of the bank. It consists of entities and relationship between these entities. Because it is geared towards use in a data warehouse environment, most of these models also include special entities for aggregation of data and hierarchies.

What objects do they consist of?
The most common objects included in a data warehouse are:
Involved party – a hierarchy which includes both organizations (also the own banking organization) and individuals;
Product – a hierarchy that not only consists of products but also of services and their features;
Location – the address of a party;
Transaction – a transaction made by the client;
Investments and accounting – positions, balances and transaction accounting environment;
Trading and settlement – Trading, settlement and clearing compliance and regulation;
Global market data – Issue information, identifiers, FX rates and corporate actions and statistics;
Common data – Calendars, time zones, classifications.

Using these objects you can create the most typical banking reports, for instance customer attrition analysis, wallet share analysis, cross sell analysis, campaign analysis, credit profiling, Basel II reporting, liquidity analysis, product profitability, customer lifetime value and customer profitability.

Who are the main providers of these models?

There are several main vendors of these models:
· IBM - Banking Data Warehouse Model;
· Financial Technologies International (FTI) – StreetModel;
· Teradata – Financial Management Logical Data Model;
· FiServ – Informent Financial Services Model;
· Oracle – Oracle Financial Data Model.

I m not going into details of these models they might be available on these vendors websites ..

If you are starting a small data warehouse project to model part of the bank, these models are probably not the way to go. The advantage of having a proven ready-to-use model does not outweigh the disadvantages of the high investment, customization to your situation and training that you will need.

If you are thinking of starting a series of data warehouse initiatives that have to lead to a company-wide data warehouse, these models might accelerate the creation of this data warehouse environment considerably. Still, the disadvantages mentioned will still be applicable.



Advantages of financial models

1. They are very well structured, and they are very extensive;
2. They can be implemented quickly and facilitate re-use of models;
3. They are created using proven financial knowledge and expertise;
4. They create a communication bridge between IT specialists and banking specialists;
5. They facilitate the integration of all financial processes;
6. They support multi-language, multi-currency environments;
7.The y come with an extensive library of documentation and release guides;
8.They can be implemented on a variety of platforms;
9.They are completely banking specific.

Disadvantages of financial models

The following are disadvantages of most, but not all, financial models:

1. You will need to put a lot of effort to align your model of the bank with these extensive detailed financial models;
2. They are based in general on banking in the United States or the United Kingdom, which might differ from banking in the Netherlands or elsewhere in Europe;
3. All banking terms are defined, but does your bank agree with these definitions;
4. You will have to have people working for you that have in-depth knowledge of both the banking processes and the model you use. These people are very scarce, and flying in consultants from one of the model’s vendors might be a costly business. Vendor’s who pretend you don’t need a lot of knowledge to use these models are not telling the truth;
5. Because of the interrelated nature of the models and their extensiveness, you will sometimes have to fill objects that you don’t have the data for. This will result in some workaround that is not desirable;
6.You buy the whole model, not pieces of it. For a small project this will result in a lot of overhead and extra cost;
7.Every model comes with a certain set of tools that someone in the department will have to learn;
8.New versions of the models come with changes in the model, which you have to examine to find out the impact on your current models.

The choice of which financial model to use is a difficult one. The models presented are all extensive and could all fit the bill. For particular situations some extensive research will be needed. Hardware and software standards and cost will surely have an impact on this decision.