It 1 interoperability in the context of using multiple industry standards credit suisse w_bausch...

Break-out Session 3

Interoperability in the context of using multiple industry standards

10/17/2013

Tarmo Ploom and Win Bausch

Agenda

Introduction

Implications of targeting interoperability

Semantic Interoperability @ CS

Architectural Approach

Example of Tooling: The Interface Management System

Conclusion

10/17/2013 Tarmo Ploom and Win Bausch

Introduction

Implications of targeting interoperability

10/23/2013


Common cost/benefit argument conc.

standards implementation

10/23/2013 Tarmo Ploom and Win Bausch 4

• Usage of industry standards both for internal and external interfaces

facilitates in/outsourcing and

redesign of banking value chain

• Today, major industry standards already offer > 50 % coverage for

unique internal attributes in banking

Usage of industry standards

promises large benefits both in external and internal

application, by either allow new

business to be automated or by making existing business

more efficient

• Prerequisites to support transition into target state are very hard to

achieve, as there is a large body of

legacy that needs to be transitioned

at no additional benefit. • The right organizational structures,

technologies and resources (skills,

financials, majorities) are not around

yet and cannot be sustained over the required period of time for a

successful transition.

Introduction of industry standards has too large costs

and uncertainties

Benefit View Cost View

Taking a step back

Why is it so complicated?


Construction of the Tower of Babel (1563), Pieter Brueghel the Elder (1526/1530–1569) Kunsthistorisches Museum, Wien

What are the main options to deal with this complexity?

Conclusion of last year’s break-out session


As per today, the «global financial standards» ecosystem is still fragile and

might not be sustainable in the business/IT environments of the years to

come. There are two main forces that can be used to mitigate this risk:

smarter systems and/or better governance.

1

2

4

«zone of comfort»

«zone of instability»

Effectiveness of governance low high

low

high

tech

nolo

gic

al in

nova

tion

3

6

• Today: Standards migration is tedious, many details to define ad-hoc, a lot of unstructured and undocumented contextual information.

• Only new technology will bring relief: semantically inspired systems understand context.

• Only better governance will bring relief: all parties will define and agree on common context.

• A mix of scenario 2 and 3 is most likely. It will be important to invest into building and broadly adopting technologies and methods that capture semantics/context.

1

2

3

4

Current situation & potential development towards target


Stds with a large body of

implicit semantics

Stds with explicit

semantics for human use

Stds with

explicit

semantics for machine use

Context is largely

undocumented and

hardcoded Knowhow is locally managed

(if at all) Large Number of

Stds Silos Collaborative approach to develop stds (e.g. as

targeted MyStdandards) Transformation engines

to bridge gaps,

transformations coded on purpose by developers

«Interpretation» of stds

by machines

Automated translation

between sender &

receiver context

Automated semantic interoperability

10-20 yrs Another 20+ yrs?

7

Semantic interoperability @ CS

Architectural approach taken

10/23/2013


Steps towards explicit semantics for human use

Step 1

Agree on a limited number of standards for business areas

Step 2

Choose how you want to use standards

Step 3

Provide tooling (repository) to simplify usage of standards internally


Step 1: agree on a limited number of standards for

business areas


Cust

om

er

& P

art

ner

1: P

art

ne

rs &

Pe

rso

ns

Wealth Management &

Advisory

2: F

ina

nce

, In

ve

stm

en

t &

Sa

les

3: Tra

din

g a

nd

Ma

rke

ts

4: C

ash

an

d A

sse

t O

pe

rati

on

s

Payments

Settlement and Clearing

Single Accounts

(SAC)

Acc

ountin

g C

ontr

ol

7: Enterprise Common Services

Business Partner Applications Financial Market Information Enterprise Content Management

Credits and Syndication

Fin

anci

al A

ccountin

g

Regula

tory

, R

isk

and L

iquid

ity

6: A

cco

un

tin

g, C

on

tro

llin

g a

nd

Re

po

rtin

g

Communication and Access

Logistics

Basic Facilities

V 0.96 2008/12/10

5: Communications & Collaboration Street Side Interfaces

Trading

Product Control

Custody

Corporate Actions

Cust

om

er

Rela

tionsh

ip M

anagem

ent

Order and Trade

Management

FIX, FPML

FIX, FPML, ISO 20022

ISO 20022

FIX, FPML

ISO 20022

FIX ISO 20022

ISO 20022

ISO 20022

IFX

FP

ML

XB

RL

XB

RL

HR-XML

RI-XML

Step 1: agree on a limited number of standards for

business areas what do you get

Predefined messages

− ISO ca 500

− FpML ca 90

− FIX ca 110

Data types

− ISO 3500

− FpML 1500

− FIX 1100

Business Object Model (BOM)

− ISO 20022 Business Concepts

Business process definitions

− ISO activity diagrams

− FIX trade flow definitions


Step 2: choose how you want to use standards

For external communication only

For internal communication

− Usage of predefined messages

− Usage of Business Object Model (BOM)

− Usage of data dictionaries

− Semantic interoperability

60% solution for global semantic interoperability

Different combinations can be used

It is easiest to start with internal usage of predefined messages

− Common by City, Standard Charter, JP Morgan, …


Usage of predefined messages

Order and trade management domain, listed products (non funds)

− Main systems are migrated over to FIX predefined messages

Charles River integration

− Using FIX predefined messages

Order and trade management domain, non-listed products (OTC)

− FpML predefined messages used for vanilla OTC

First systems use ISO 20022 Pain 001/002 messages internally


Usage of Business Object Model (BOM)

BOM is abstraction of information in application. BOM can be used for:

− Service design

− GUI design

− Database design, …

Which BOM should I use if I want to use industry standards in my

application, should I design new BOM?

− No

ISO 20022 offers business concepts with BOM granularity. By using

these concepts usage of industry messaging data dictionaries in

application is simplified

By FpML we have done reverse engineering of FpML XSD model to

UML. We want to use it as basis of our Risk domain and applications


Usage of data dictionaries

Old way

− To achieve globally agreed definition of trade ID months of manpower are needed.

− What if we need agreements for 3000 attributes? Should we invest 500 man years to get common agreement for 3000 attributes globally?

New way

− Instead of arguing whos trade ID is better use externally defined one

− 500 man years discussions are saved

Examples

− FIX data dictionary can be used to define custom messages for listed products

− FpML data dictionary can be used to define delta messages for swap changes (if many lags)

− ISO 20022 data dictionary can be used to define custom operation messages


Semantic interoperability

How to solve semantic interoperability?

− Map all models to all models (N * (N-1)/2 mappings)

− Map all models to model in the middle (N mappings)

Unique attributes needed in banking is ca 11 000

FIX, FpML, XBRL, ISO 20022 provide ca 6 500 unique attributes, it is ca

60% of banking unique attributes needs

FIX, FpML, XBRL, ISO 20022 can be used as model in the middle for

60% of banking unique attribute needs

For the rest of 40%

− Custom model in the middle can be designed (preferred)

− Mappings between models can be defined


Semantic interoperability @ CS

Example of a tool: The Interface Management System

10/23/2013


Where we came from - Interface Management System

(IFMS)

Management of services on

platform independent level (PIM)

− Services are described technology independently

− Ca 4000 services are included in IFMS

Governance of services

Integration with development and

governance environment

Model Driven Architecture (MDA)

generators (ca 60 000 artefacts

are generated monthly)

− > 600 000 code statements a month are generated from service descriptions


Framework for analyzing SOA repositories


Management of SOA metadata

(classical SOA repository)

SOA Governance

(engineering, decomissioning, etc.)

SOA IDE

(Integrated

Development Environment)

Model

Driven SOA

First generation

SOA repository

Second generation

SOA repository

Third generation

SOA repository

Fourth generation

SOA repository

How can IFMS extended to support standards?

First stage

− Import predefined messages

− Provide means to manage predefined standard messages

Second stage

− Import of industry standard data dictionaries (Fix, FpML, ISO 20022)

− Provide means to build new messages based on standard data

dictionaries

Third stage

− Semantic interoperability

− Provide unique set of industry standard attributes as model in the

middle


Predefiend messages in IFMS

IFMS will be extended by following functionality

− Import predefined messages

− Browse predefined messages

− Search predefined messages

− Presentation of predefined messages

− Mapping of predefined messages to IT-Landscape component model

− Extension of predefined messages

− Updated governance process for predefined messages based service

design

− Updated governance process for predefibned messages import

approval

− Reporting


Data dictionaries in IFMS


− Import of data dictionaries (FIX, FpML, ISO 20022, XBRL)

− Data type browser

− Attribute sets for specialized business domains

− Business domain management

− Governance process for data dictionaries import

Main focus is

− How to manage enormous number of atributes (ca 6500)

− How to find appropriate attribute in 6500 attributes?


Semantic interoperability in IFMS


− Marking of global industry standard attributes as model in the middle

− Mapping on non model in the middle attributes from global industry

standards to model in the middle (semantic search algorithms we have

developed have ca 70% accuracy)

− Mapping of non industry standard attributes from IFMS to model in the

middle attributes (if mapping is possible)

− Mapping of non-mapped nonindustry standard attributes from IFMS to

the own custom model in the middle

As precondition for mappings extensive attribute descriptions in data

dictionary is needed to make semantic search algorithms working as

efficiently as possible


Governance

Design governance needed:

− Is appropriate predefined message used?

− Is appropriate attribuite from data dictionaries used?

− Are extensions designed appropriately?

Predefined messages governance

− Are appropriate predefined messages imported?

− How many versions of predefined messages can be managed?

Data dictionary governance

− Which version of data dictionaries has to be imported?

− How many versions of data dictionaries can be managed?

Month Day, Year LEGAL ENTITY, department or author (Click Insert | Header & Footer)

Conclusion and Outlook

10/23/2013


Common cost/benefit argument conc.

standards implementation


• Usage of industry standards both for internal and external interfaces

facilitates in/outsourcing and

redesign of banking value chain

• Today, major industry standards already offer > 50 % coverage for

unique internal attributes in banking

Usage of industry standards

promises large benefits both in external and internal

application, by either allow new

business to be automated or by making existing business

more efficient

• Prerequisites to support transition into target state are very hard to

achieve, as there is a large body of

legacy that needs to be transitioned

at no additional benefit. • The right organizational structures,

technologies and resources (skills,

financials, majorities) are not around

yet and cannot be sustained over the required period of time for a

successful transition.

Introduction of industry standards has too large costs

and uncertainties

Benefit View Cost View

Redesign of banking value chain

Usage of global industry standards opens

options to insource/outsource business

capabilities

− Payments services

− Custody services

− Risk calculation, reporting, …

From value chain towards value network

− Customer business case is routed through many

legally distinct companies, which themselves

invoke applications and services from other legally

distinct companies in value creation

− Value chain transforms towards value network

Banks operate in the middle of value

network orchestrating activities in the

network


Questions?


Appendix


Business benefits from usage of global industry

messaging standards internally

Increased M&A integration capability

Improved out-sourcing capability (payments, custody, …)

Improved in-sourcing capability (prime services, reporting)

Improved business partner integration capability

Improved business & IT alignment (use of the same language)

Reduced integration effort in TCO

Reduced effort in global integration

Integration of COTS products (Charles River, …)


Industry Messaging Standards in banking

First tier standards

− ISO 20022: International Organization for Standardization

− ISO 15022: International Organization for Standardization

− FIX: Financial Information eXchange Protocol FIXML

− FAST: FIX Adapted for Streaming

− FIXML: Markup Language for the FIX Application Message Layer

− FpML: Financial Products Markup language

− XBRL: Extensible Business Reporting Language

Second tier standards

− BIAN: Banking Industry Architecture Network

− RIXML: Research Information Exchange Markup Language

− IFX: Interactive Financial eXchange

− XR-XML: Exchange of HR data

Third tier standards

− IRML: Investment Research Markup Language

− MDDL: Market Data Definition Language

− FinXML: The Digital Language of Capital Markets

− TWIST: Treasury Workstation Standards Integration Team

− OAGi: Open Application Group

− ... 10/17/2013 Tarmo Ploom and Win Bausch

Introduction Industry Messaging Standards

Ad-hoc internal messaging standard − Proprietary internal standards for point to point integration

− Usually specific to a location

Local industry messaging standard − Defined externally by single organization for local usage

− For example in

Switzerland: SIC, LSV, DTA

US: NACHA, DTCC

Global industry messaging standard − Externally defined messaging standard which is meant for global usage

− Open governance

− ISO20022, BIAN, FIX, FpML, XBRL, XFRML, RIXML, IFX …


Credit Suisse eXtend Language - CSXL

How to encouple lifecycles on externally defined industry standards from

internal interface management lifecycles?

Lifecycles of ISO 20022, FpML, FIX, XBRL have certain variability.

Some parts have higher variability than others.

FpML, ISO 20022, FIX provide different means for extensions, however

in these cases original message is modified

Instead of modifying external schemas we wrap external schemas in an

envelope and

− Add missing atrributes in envelope header

− Overwrite needed structures in envelope header



There is no need to define predefined messages again, again, again …

− Streetside and trade management systems for listed products can reuse FIX messages

− Settlement/clearing messages internally can be ISO 20022 based

Shift in mindset

− Not, what attributes I need

− But, what additional attributes I need

Extension mechanism to add new attributes needed

− Credit Suisse eXtend Language, standard mechanism for extensions (described later)

− Extension of predefined messages is usually ca 10 - 20%

Benefit

− Dont need four months to design a stable new message

− Need may be some weaks




Publisher/

Consumer

Street Side

Interfaces

Payments Corporate

Actions

Settlement

And

Clearing

Credits Custody Trading OTM Product

Control

Street Side

Interfaces

ISO 15022, ISO 20022

ISO 15022, ISO 20022

ISO 15022, ISO 20022

ISO 15022, ISO 20022

ISO 15022

Payments ISO 15022,

ISO 20022

Corporate

Actions

ISO 15022 ISO 15022, ISO 20022

Settlement

and

Clearing

ISO 15022 ISO 15022, ISO 20022

ISO 15022

Credits ISO 15022 ISO 15022, ISO 20022

Custody ISO 15022 ISO 15022, ISO 20022

ISO 15022, ISO 20022

ISO 15022

Trading ISO 15022,

ISO 20022

ISO 15022,

ISO 20022 ISO 15022 FIX,

FpML

FIX,

FpML

OTM ISO 15022, ISO 20022

ISO 15022, ISO 20022

ISO 15022 FIX, FpML, ISO 15022

FIX, FpML, ISO 15022

Usage of BOM, example, BusinessComponent Role


Tooling for transformation

By FIX, FpML, ISO (MT, MX)

predefined messages there is

some overlap

Transformation tooling which

carries out complex

transformations between FIX,

FpML, ISO (MT, MX) predefined

messages is needed


Disclaimer

This presentation was produced by Credit Suisse AG and/or its affiliates (hereafter "CS") with the greatest of care and to the best of its knowledge and belief. However, CS provides no guarantee with regard to its content and completeness and does not accept any liability for losses which might arise from making use of this information. This document must be interpreted in connection with the verbal comments given by the speaker. The opinions expressed in this presentation are those of CS at the time of writing and are subject to change at any time without notice. This presentation was provided for information purposes only and is for the exclusive use of the recipients. It does not constitute an offer or a recommendation to buy or sell financial instruments or banking services and does not release the recipients from exercising their own judgment. The recipients are in particular recommended to check that the information provided is in line with their own circumstances with regard to any legal, regulatory, tax or other consequences, if necessary with the help of a professional advisor. This document may not be reproduced either in part or in full without the written permission of CS. It is expressly not intended for persons who, due to their nationality or place of residence, are not permitted access to such information under local law. Neither this document nor any copy thereof may be sent, taken into or distributed in the United States or to any U. S. person (within the meaning of Regulation S under the US Securities Act of 1933, as amended).

Copyright © 2013 Credit Suisse Group AG and/or its affiliates. All rights reserved.


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