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.'

Rabobank Bronnenarchief

blad 'What's news' (EN) | 1997 | | pagina 6