inlumi enables Nordea to meet regulatory requirements with Oracle EPM.
Nordea is a universal bank with a 200-year history of supporting and growing the Nordic economies. It is the largest bank in the Nordics and has a strong market position within four business areas: Personal Banking, Business Banking, Large Corporates & Institutions and Asset & Wealth Management.
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Nordea decided to re-domicile its headquarters from Sweden to Finland as of October 1st 2018. The move involved new regulatory requirements as the group moved from the Swedish jurisdiction to the Finnish one and under direct supervision of the European Central Bank (ECB) in the Banking Union.
Being such a large bank, Nordea is also subject to the Global Systemically Important Bank (GSIB) reporting. The ultimate receiver of the GSIB reporting data is the Basel Committee, but the data is channelled through the national bank of the domestic country of the GSIB bank. As Nordea moved its domicile, the GSIB data also had to be delivered to Bank of Finland (BoF) instead of Riksbanken in Sweden.
Since the data required for the national Finnish data collection and the GSIB are to a large extent overlapping, Bank of Finland decided to require one data delivery covering both the requirements. This enabled Nordea to build only one data collection, consolidation and reporting process and technical solution which covers two reporting requirements, thus being more efficient.
The reported data covers the balance sheet of the whole group specified in numerous ways; operating segment (banking/insurance/other), customer country, customer sector, transaction currency, remaining maturity, and guarantor country are some of the required specifications. Additionally, GSIB requires further specification of the derivatives. Producing such granular information at the consolidated group level is demanding for the data collection, transfer and consolidation.
It was a pleasure to experience the dedication and flexibility of the inlumi team. With somewhat moving target due to finalising the reporting requirements with the central bank parallel to designing and building the solution, inlumi displayed excellent agility and adaptability. I’m looking forward to the next possibility to collaborate with inlumi.
Heikki Jousi, Reporting Specialist at Nordea
inlumi has been helping Nordea for years with the consolidation, planning and analytics systems, and had the required competence to design and build the solution for this project.
The inlumi team consisted of four consultants: Lauri Järvinen, John Sylenius, Annika Olsson and Abdelmajid Makrani. Lauri architected the consolidation solution based on the reporting requirements and Nordea’s internal business requirements. John and Annika designed the data integration solution from the corporate data warehouse and the group statutory consolidation application into the new regulatory reporting solution, and the output to the text file, whose format is set by the regulator. Abdelmajid took care of the performance testing.
At Nordea, staff from regulatory reporting team, consolidation team, IT on data warehouse and EPM IT teams contributed to the project by setting and communicating the requirements, preparing the needed server infrastructure and analysing the data available in the bank’s systems. Testing was done in a few rounds by the project team and later involved the to-be users of the bank.
Oracle’s EPM Suite, including Hyperion Financial Management (HFM) and the data integration tool Financial Data Quality Management (FDMEE) have been the tool of choice for consolidation at Nordea since years. The ability of FDMEE to meet the data integration challenges in both ends of the process together with HFM’s capability to handle the high number of dimensions and consolidation requirements were the key drivers to select Oracle EPM as the tool for the new regulatory reporting.
A key factor was the newest version at the time (18.104.22.168) with its extensible dimensionality and FDMEE with powerful mapping capabilities, ability to use databases for data integration and HFM applications as a source for data.
In the solution design, the granular reporting requirements set by the BoF were translated into an HFM application design with 14 custom dimensions. This is much more than a typical consolidation application usually has. The project team felt very confident that the tools would handle the expected data amounts and the complexity of the solution. Nevertheless, early checks were done to confirm that the solution could handle the large volumes.
One of the requirements of the project was managing the amount of data transferred from the corporate data warehouse. The data needed to be handled efficiently and without human intervention. FDMEE has built-in support for open interface tables which allows data to be sourced from a database and so integration can be built without moving files around.
Bank of Finland requires this data-driven report to be delivered in a delimited text file using semi-colons as field separators. The file is created by extracting data from HFM using FDMEE and compiled to the required format using scripts.
One of the challenges during the project was dealing with the ever-changing requirements during the solution design in 2018. Since Nordea is the only Nordic bank required to file the GSIB, the reporting framework was also new for the receiver, Bank of Finland. Throughout the year, BoF issued new and modified reporting instructions where specifications were required for additional instruments.
Since the early design phases, a principle was used in which the specifications that could logically be applied to different kinds of instruments are located in their dedicated dimensions. This includes transaction currency, customer sector, customer country and remaining maturity. The specifications which could be applied only to certain instruments were placed in the same dimensions.
With this approach the total number of dimensions grew by two or three, but it provided the flexibility to respond to BoF’s changing requirements without any major difficulty. Also, such specifications to the instruments were already available in Nordea’s source systems in the data warehouse, so the changing requirements required only small changes in the setup.
The large number of dimensions posed a challenge for the system’s user interface. The project team built the main user interface using the Excel add-ins Oracle Smart View and MerlinXL. Excel integration enables users to analyse the complex data across the dimensions with familiar tools in a way hardly possible with data forms or fixed reports.
The project met the tightly set deadlines with a good margin and the solution was able to handle the constantly evolving requirements from BoF. The first actual reporting to BoF using the solution was done at the end of January 2019 successfully.
The flexibility of the solution design was proven during the build phase with the changing requirements. This increases Nordea’s confidence that this solution will serve the purpose going forward even if further reporting requirements should change.
Päivi Riedberg, Expert Developer at Nordea: “Overall the teamwork between inlumi and different Nordea teams worked very well throughout the project. The clever and flexible HFM/FDMEE solution design done by inlumi is very valuable going forward and was already proven to work well during the project when the requirements from BoF were constantly changed. We have confidence that inlumi can solve new challenging EPM design cases in the future and look forward to work with inlumi again.”
Heikki Jousi, Reporting Specialist at Nordea: “It was a pleasure to experience the dedication and flexibility of the inlumi team. With somewhat moving target due to finalising the reporting requirements with the central bank parallel to designing and building the solution, inlumi displayed excellent agility and adaptability. I’m looking forward to the next possibility to collaborate with inlumi.”
In light of our experience, we encourage companies think “outside of the box” and use the potential Oracle EPM tools and modern application design offers. With a clever application design of both HFM and FDMEE, the Oracle EPM suite can be used for advanced reporting purposes beyond its original application.
Overall the teamwork between inlumi and different Nordea teams worked very well throughout the project. The clever and flexible HFM/FDMEE solution design done by inlumi is very valuable going forward and was already proven to work well during the project when the requirements from BoF were constantly changed. We have confidence that inlumi can solve new challenging EPM design cases in the future and look forward to work with inlumi again.