In-Memory of an Eight Hour End-of-Day – Transforming Banks in Realtime

In an effort to speak to other innovations, aside from the popular mobile banking, I thought I would talk about in-memory functionality.

There was a recent article in Forbes about SAP’s HANA product and the game changing power of speed in business. I was at SAP’s SAPPHIRE conference in May of 2010 when they announced the in-memory initiative. About six months before that conference I was at the SAP headquarters in Waldorf Germany and heard rumours of this “game changing” technology. Now I am actually starting to get questions about how the current package of SAP-HANA could help banks in their transformations.

I’m going to talk about the SAP’s HANA offering, however the concepts behind in-memory computing are more important than a brand-name and the overall benefits to a bank is what should be taken away from this blog.

In-Memory: Basically for SAP’s in-memory solution to work you need three things:

1. HANA Database  – This is the new brand name of the SAP in memory data base (IMDB)

2. HANA Appliance  – This is  new hardware.  SAP and their hardware partners have gotten together and basically created a new type of server that replaces the old style iron hard disks with new electronic storage. This is in essence the real speed behind the solution. Storing and retrieving data in the electronic format without the spinning disks saves an incredible amount of time and effort. Once the HANA Database is installed on a certified HANA server it becomes a HANA Appliance.

3. HANA Studio – The toolset used to administer and model the HANA Database is called the HANA Studio

Situation Normal

So you are a bank and you are currently running your daily operations. At the end-of-day you close your books and start to run what can be an extremely long end-of-day process to determine the overall position of the bank, update the general ledger, and produce reports used the following day to manage the bank. In some cases, OK in probably all cases, you will dump a large portion of your data from a number of disparate systems into an enterprise data wearhouse where it will be further  transformed to support other processes and analysis. In this standard method of operation you wait for your data and then, based on the route it takes to get to you, you may question the validity of it.

With In-Memory

Real time transactional data is stored in lookup tables in the HANA Database on the HANA Appliance. There is always going to be some latency between your operational systems and the HANA Appliance so it should be considered near real time. The beauty of this is that you can load SAP and Non-SAP data. Once transactional data is stored in the HANA Database, which was previously modelled using the HANA Studio, you can currently use SAP Business Objects or Excel to produce real time reports without taxing your operating systems. This is where the dramatic change in how a bank does business can occur. Some of the ideas I have around this use include:

1. Realtime FOREX position across an entire bank

2. Treasury and cash management in realtime

3. Realtime operational risk monitoring and reporting

4. Realtime portfolio stress testing

5. The creation of realtime cash management services to be resold to commercial and corporate clients

6. AML monitoring in realtime

7. The ability to pull any current end-of-day report at anytime during the day

Granted these things do not come out of the box and require a not insignificant amount of effort to stand up, however in-memory computing is a relatively new tool that can be leveraged to dramatically transform how a bank does business.