Project Understanding
Data clearing the way
6
IT update
WHAT'S NewS Issue 9 .October 1997
The fact that every branch subjectively defines its products and customers is a
serious problem. Definitions are crucial because they profoundly affect the way
in which products are treated for accounting purposes - and for the way in
which the profitability and the risk associated with any given portfolio is
actually measured. What's NewS reports on the launch of an important new
project devoted to'Understanding Data'.
a real-life example. 'Does this cliënt
belong in our F8cA portfolio - or in
Transport? New York may see it one way,
Utrecht another.' Another example of the
inconsistencies we face occur when for
instance a product assigned to the trade
book of one branch may wind up in the
investment book of another. This will
result in an inaccurate picture of global
market risk when all of the branch
accounts are Consolidated.
CLARIFYING GUIDELINES
The need for consistent information - for
purposes of branch-level planning, for
management information systems, and for
reporting to regulatory authorities - has
led to the launch of an important new
project devoted to 'Understanding Data.'
Under the umbrella of the Controllers'
office headed by Bert Bruggink, the
'Understanding Data' project team is
headed by Lichtenberg and also includes
participants front Global IT. 'We intend to
precisely define what we mean when we
speak of a product, or a cliënt, or even a
concept like 'solvency.' How do we
calculate our return on solvency? What
customer categories do we recognize - and
when does a given customer belong to one
category or another? These questions
range from the trivial to the sublime and
highly complex. They highlight the
importance of having clear guidelines and
common data that we can reliably and
consistently process both for local and for
head office needs.'
Mariëlle Lichtenberg consolidating to
give us an accurate picture of our global
market risk.
The success of our strategie thrust depends
crucially on our ability to adequately
measure actual performance. However
well designed our information
management systems might be, and
however clearly-enunciated the criteria for
long-term success, both will fail unless we
can consistently define what we actually
mean when we refer to a given 'product'
or 'customer'. This deceptively simple task
is actually much more complex than it
seems. And finding the right answers will
be of crucial importance to the network as
a whole. 'We have roughly 120 different
products within the Rabobank
International network ranging from loans
to syndications. There are also a number
of customer categories ranging from food
retailers to institutional investors,'
explains Mariëlle Lichtenberg, head of
financial analysis and management
information systems (Famis). 'Each
product and customer class is accounted
for in a very different way.' For example,
the concept of what constitutes a 'deposit'
or a 'loan' might be understood differently
at the Singapore branch than it is in
London. 'Say we have a cliënt involved in
transporting pigs,' says Lichtenberg, using
Alex Maas - a
product inventory
to simplify life.
STICKING TO SIMPLICITY
Alexander Maas, a project manager in
Information Management Services of
Global IT, explains the procedure. 'Our
intent is not to generate a new set of
burdensome requirements,' he says. 'We
want these standards to be as simple and
as minimal as possible. What's more, local
branches are free to maintain their own
existing internal practices. For instance, if
a branch office recognizes 30 different
customer categories but we only decide to
recognize eight for purposes of
consolidation, that's fine. They can have
their 30 as long as they are able to
produce the eight that we need to satisfy
the requirements of management and
regulators.' (This attitude is important for
Global IT because it will affect the way in
which local software implementations of
common systems are designed.)
KEEPING PACE
Another aspect of the 'Understanding
Data' project is to develop a standing
organization, with its own budget, to
execute and maintain the new standards
once they emerge. 'Without such an
organization,' Lichtenberg suggests, 'you'11
simply end up with thick books that are
sent around to all the branches and then
left untouched in the drawers. We not
only need to describe products and clients,
and the associated standards for
accounting for them, but also to keep pace
with a fast changing market in which new
products are devised almost every day.
The list of definitions and procedures
needs to be maintained.'
CONSENSUS APPROACH
The project team has been careful to
involve the branches from the start, says
Maas. 'The standard's design is based on
material received from the branches. In
every branch, we have a contact person.
We've also appointed an International
Review Group that includes
representatives from several branches. It is
screening proposals and will meet a series
of workshops to finalize ideas. This
should speed their acceptance throughout
the network.' Lichtenberg continues, 'This
consensus approach has of course been
time-consuming. But the alternative would
have been to work in isolation, define
standards that no one would be willing to
use, and therefore present the standing
committee with a huge headache when the
implementation phase begins. Luckily,
we're getting a lot of cooperation from th
branches. Everybody sees the importance
of getting this right.'
