IBM unveils new offering to help banks improve business operations, manage regulations

IBM today announced a new offering that combines software, hardware and consulting services for financial institutions that will enable them to integrate, manage and gain immediate insight on the business information generated by everyday operations and customer activity. The offering can help banks manage information in a way that is more consistent with the obligations of the forthcoming Basel II Capital Accord.

IBM`s Risk and Compliance -- Basel II Information Management Offering works with a company`s existing technology framework and enables banks to connect scattered data repositories and make the right business information accessible on an automated basis. For instance, the new offering can slash the time it typically takes to identify and reconcile any discrepancies in their business records from weeks to hours, by providing a single, integrated view of disparate data sources across the enterprise. To that end, reports are automatically generated that flag discrepancies between a bank`s general ledger and actual transactions. Using this technology to connect repositories of otherwise-isolated data can also help banks to more accurately project profits, sell new products and services to customers, better manage the investment and allocation of assets, and streamline business practices.

The offering is designed to help banks manage the information requirements associated with the Basel II, such as recording, accessing, presenting and analysing several years worth of customer and operational data in a rigorous, specific manner. For instance, Basel II will ask banks, for the first time, to evaluate the default rates of old loans to customers in a particular industry or geographic location. IBM`s solution can help trace the source of information originally used to determine the risk levels of those loans, and correlate it to the outcomes of those transactions. This will enable banks to more precisely determine how they will lend money in the future to similar banking customers.

The Basel II Accords, which are recommendations from the Basel, Switzerland-based Bank for International Settlements` Basel Committee on Banking Supervision, are official guidelines that standardise measurements of credit risks, market risks and operational risk. Formation of the guidelines began in partial response to the billions of dollars that were lost in the last decade to fraud and poor risk management practices. According to a report from the UK-based Datamonitor consultancy, titled "Credit Risk Management and Basel II in European Financial Services", European banks will spend an estimated $4 billion on software and services over the next two years to help them comply with Basel II.

The recommendations state that banks should have between three and seven years of information on hand by the end of 2006 (potentially many terabytes worth of information) sparking urgency in 2004 to adopt Basel II solutions that address banks` data management needs. In fact, 96% of senior bank executives responsible for implementing Basel II solutions polled by IBM`s Business Consulting Services said data management was their main challenge -- including identifying the right data, integrating and managing the data across the enterprise and applying sophisticated analysis and reporting features.

With more than 100 new regulations in place in all industries (by IBM`s estimation), businesses need a technology framework that enables them to collect, store, access, share and analyse information in a systematic, intelligent and automatic manner. IBM`s Risk and Compliance -- Basel II Information Management Offering provides banks with a multipurpose framework to subsequently adopt other specific solutions for a variety of regulations, such as Sarbanes-Oxley, anti-money laundering regulations, and international accounting and financial reporting standards.

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"IBM`s strategy is to help companies transform the way they do business to not only help them navigate new regulations, but to also improve their business operations and make more strategic business decisions," said Janet Perna, general manager, DB2 Information Management Solutions, IBM Software. "The combination of IBM`s industry-specific software and hardware, combined with the industry expertise of our consultants, provides the best time-to-value for helping businesses make their operations more efficient, anticipate their customers` needs, and address regulatory obligations."

IBM`s Business Consulting Services (BCS) Financial Services Sector`s (FSS) expertise plays a key role in the new offering, serving as the conduit for providing customers with practical business solutions tailored to meet the specific challenges of the financial services industry. Specifically IBM is working with clients to aid them in the implementation of the process and technology components of their current Basel II compliance programs, including credit, operational and organisational risk.

At the technological heart of the offering is IBM`s Banking Data Warehouse and DB2 Universal Database. The IBM Banking Data Warehouse provides a banking-specific data model which can be used to build a database for Basel II purposes, or even a general purpose data warehouse for better understanding customers. DB2 provides the capacity and sophisticated, built-in analytics for storing and analysing information. Meanwhile, DB2 Information Integrator - unique in the industry for tapping all types of data stored in disparate repositories, in real-time - provides a single view of information across an enterprise and value chain of business partners. Hardware such as eServer pSeries and IBM TotalStorage Enterprise Storage Server are provided for the solution`s scalability and performance. IBM`s storage offerings can help banks address a variety of regulatory compliance issues (particularly those that involve record-keeping), while pSeries are optimised for all of IBM`s business intelligence solutions.

The range of technological and business resources assembled in IBM`s offering is believed to be one of the industry`s broadest. Customers can control costs by starting small, choosing aspects of the solution that work best for them at a particular time. IBM`s Risk and Compliance -- Basel II Information Management Offering is available immediately.