Financial Services Industry Applications Overview

PeopleSoft has an integrated suite of applications for the financial services industry. These applications, which run within the PeopleSoft Enterprise Performance Management framework, are designed to help calculate and measure the economic profitability of an organization's customers, products, channels, and operating units. These are the PeopleSoft Financial Services Industry applications:

• PeopleSoft Funds Transfer Pricing

  Provides the ability to attribute a net interest margin to sources and uses of funds within a financial institution based on several industry standards and best practice methodologies. Funds Transfer Pricing is also used to calculate the cost of allocated capital, which can then be factored into the profitability of that application or activity.

• PeopleSoft Risk-Weighted Capital

  Allocates capital based on the risk of activities and portfolio balances. The risk-weighted capital amount is typically calculated as a function or based on the unexpected loss for an activity or instrument. With Risk-Weighted Capital, you can determine, for each instrument or business activity in your organization, the equity capital that you should allocate for the associated risk or earnings volatility. You can also calculate the normalizedexpected loss, which can be used instead of actual losses to analyze economic profit and loss. In addition, Risk-Weighted Capital can be used to address significant portions of the Basel II capital accords, particularly regarding credit risk processing.

The Financial Services Industry applications address profitability management by establishing an environment that specifically targets the business requirements of the financial services industry. You can set up the individual financial products or instruments within the system, apply specific processing and calculation rules, and then run the system to measure the values of the balance sheet and off-balance sheet items. You can also measure the sensitivity of those values under alternative economic and operating assumptions.