Thomas Liesegang

developing from a utilityto a key factor in Deutsche Bank’s financial customer analysis

A survey of current projects and recent developments

Thomas LiesegangCredit IT – CRM Projektdezernat

London, June 29th 2005

Credit Risk Management

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Agenda

Deutsche Bank’s commitment to XBRL1

Project: Improve process efficiency using XBRL online data5

XBRL in Deutsche Bank’s Credit Risk Management2

Business & technical facts on DB’s financial analysis3

Manual statement capture in today’s CRM process4

Recent changes in business process6

Project: Fully automated process for CRM PBC with XBRL7

Summary, Conclusion, Outlook8


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Deutsche Bank’s commitment to XBRL

Activities

– Member in the German XBRL sub-organisation since 2001 (founder member)

– Participates in the taxonomy group for German AP (HGB).

Motivation

– Up to now clear focus on XBRL consumer side– Facilitate data exchange with customers, data providers and

financial institutions

Targets

– Replace today’s very heterogeneous landscape of data formats by a global common standard

– Support XBRL in order to use potential for streamlining and enhancing financial analysis of customer data

– Shift focus from input to analysis tasks – Allow for a a paperless process in future


4

Credit Risk Management (CRM)

Exercises an independent credit approval and monitoring function for the whole of Deutsche Bank

operates today with appr. 3000 employees in 20 countries in all the main regions worldwide

Uses up-to-date methodology qualifying Deutsche Bank to the Advanced Internal Ratings based approach under Basel II

Is first and ideal application field for XBRL in Deutsche Bank; XBRL offers potential for further process optimisation because of

– Volume: CRM needs to analyse appr. 100,000 financial statements of customers for credit decisions each year.

– Approach: CRM employs a global IT landscape with state-of the art technology using common standards.


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CRM financial analysis – basis & instruments

Analytical basis: CRM uses Deutsche Bank accounting model as proprietary scheme– consisting of appr. 180 input positions

– allowing for uniform representation of financial statements of all international accounting standards (US-GAAP, IAS, HGB etc.)

– Defining the bank’s risk view and using common ratio definitions in order to assure comparable analyses on a common basis.

New instruments integrated in process:– Extended single customer analysis

(cash flows statement, comprehensive ratio sheet)

– Financial rating models tailored to DB’s portfolio

– Multi-customer analysis(peer groups, industry comparison)

Result: increased quality and significance


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CRM financial analysis - technical platform BARS

IT consolidation: 14 heterogeneous and non standardised spreading tools merged from 2001 to 2003 in one application

Today CRM’s uniform system BARS(“Balance Sheet Analysis and Rating System”)

– Optimally supports CRM analysis and process

– Is available worldwide and allows for global access

– supports online Import of Belgian Bureau van Dijk data in BEL-FIRST format.

XBRL and BARS are a perfect match

– Uniform worldwide standard ↔ global DB tool

– Homogeneous interface structure will allow for higher flexibility in information retrieval andIT cost containment

– BARS uses XML technology


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Extended scope of financial analysis since 2002

Customer / Industry Comparison

Peer Group Analysis

Industry Comparison over time

Comments, KWG 18

Financial Rating

Income Statement (TC or CoGS)

Cash Flow Statement

Extended Ratio Sheet

Balance Sheet

Extended uniform financialanalysis in global BARS application (since 2002)

Income Statement

Financial Summary / Basic Ratios

Balance Sheet

Standard financial analysis in 14 different DB systems

(until 2001)

Multi CustomerAnalysis

automatic calculation

on demand

Single CustomerAnalysis

system generated reports

DB Accounting Scheme≈180 input positions


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Income Statement

Financial Summary / Basic Ratios

Balance Sheet

Standard financial analysis in 14 different DB systems

(until 2001)

Extended scope of financial analysis since 2002

Customer / Industry Comparison

Peer Group Analysis

Industry Comparison over time

Comments, KWG 18

Financial Rating

Income Statement (TC or CoGS)

Cash Flow Statement

Extended Ratio Sheet

Balance Sheet

Extended uniform financialanalysis in global BARS application (since 2002)

Multi CustomerAnalysis

automatic calculation

on demand

Single CustomerAnalysis

system generated reports

Focus on:

Data Entry(→ Efficency)

Analysis(→ Quality)

DB Accounting Scheme≈180 input positions


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Status quo of financial analysis

Quality: Optimum decision support by financial reports automatically generated by BARS

Efficiency:– Except for Belgium manual data capture still

indispensable and requires DB-analysts to map the customer financials from the official accounting

standard onto Deutsche Bank’s proprietary scheme

enter balance sheet and income statement figuresin BARS.

– Manual spreading takes from 20 to 40 minutes

– Remains most time-consuming entry activity in a highly optimised CRM process.

– Improvement by further automation difficult without common standard as Electronic financial data is difficult to acquire

Due to individual structure additional interfaces create significant increase in IT costs without XBRL


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Manual statement capture in CRM’s automated process

Prepare andmake

financialanalysis

Accountinformation

CustomerData

Rating/ScoringMethodology

CreditReporting System

Financial AnalysisSystem(BARS)

WorkflowManagement

System

CRM ITprocess

CRM Analyst

Financialstatement

Step2:Data Capture

in BARS system

Step1: Mappingon Deutsche

Bank Scheme

- Set up credit report- Take credit decision


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XBRL project 1: Improve process efficiency ….

Starting situation in CRM: 50% of all customer statements are in German AP (HGB)

Objective: Shift focus from capture to analysis Means: Allow for online processing of financial

data in common standard XBRL To do: Integrate XBRL taxonomy mapping tool Open points / uncertainties:

– Availability of data: Are there enough producers of XBRL instant documents in Germany?

– Business case: What’s the exact time saving?Part of the analysis done during data capture!

Strategy: Pilot with German AP, expansion to other taxonomies later (→ reusability)

Dependencies: adoption of German AP 2 taxonomy by XBRL Germany e.V.(planned for September 2005)


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… by processing XBRL documents online with BARS

Taxonmy Mapping

Financial AnalysisSystem(BARS)

CRM Analyst

Financialstatement

Step2: Data capturein BARS system


Bank Scheme

Traditional approach:manual mapping and

data entry

XBRL instance

document

BARS Import Dialogue

Additional access path:Online XBRL data import


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Behind the scenes

400 T EUR

150 T EUR

550 T EUR

German AP Taxonomy (HGB)

Deutsche Bank Accounting Model

Online conversion from official taxonomy into Deutsche Bank accounting model representation (private taxonomy)

Requirement: Business mapping for each relevant taxonomy

Advantage: No dependency on providers


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The CRM world changes …

Developments and trends in the last two years:

Reorganisation: Due to cost pressure some commercial banks have transferred financial statement capture to external service providers.

Improvements in methodology: – Analysis is more and more determined by statistical

risk instruments (→ rating, portfolio analysis)– Financial statement analysis also becomes an

indispensable part for CRM segments in charge of small & medium size companies.

– State of the art methodology requires more financial data than ever before to be analysed without increase in processing time and costs.

The XBRL focus turns from a utility for streamlining and efficiency to a must factor for setting up new high quality processes.


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State-of-the-art analysis requires more financial data in future

Private & Business Clients(PBC)

Germany, Spain, Italy,Belgium, Poland

MidCap Europe

Multi-Nationals

(ICC)

Increasing

num

ber

of c

usto

mer

s

dive

rsity

of a

ccou

ntin

g st

anda

rds

Traditional use ofexplicit financial statement analysis

Increasing importance of multi customer analysis creates need for more financial statement data of multinationals and MidCap companies

New user of financial analysis in lean version

Rating as key component Extended need for financial data

of small & medium sized companies


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XBRL project 2: Fully automated process for CRM PBC

Objective: Create online interface to Informa financial statement data stock in Spain

Project scope:– Direct import, mapping and rating of financial

customer data identified by Spanish fiscal ID

– Workflow support by email notification on arrival of new statements

– Electronic archive: Financial data in original format stored and available online in Deutsche Bank systems

BARS becomes multi channel access system allowing for– Manual data capture

– Online import of XBRL data

– Information retrieval in external databases

Dependencies: If XBRL taxonomy for Spanish commercial law not available mid of 2006, XML will be used as intermediary solution!


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BARS as multi channel access system using XBRL

Financial AnalysisSystem (BARS)

CRM Analyst

Financialstatement

Step2: Data capture

in BARS system


Bank Scheme

XBRL instance document

Import XBRL documentin BARS online

BARS Taxonmy Mapper

Da

ta re

qu

est

XBRL

data

An

alyse

d d

ata

Data providere.g. Informa,

Datev

Data request

XBRLInstance

documents

XBRL

data

XBRL document


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Summary, Conclusion, Outlook (1)

XBRL is the missing element for streamlining resp. adopting high quality financial analysis in CRM.

The time is overripe for the new standard. If not implemented in short term business development will continue with different and less uniform solutions!

Public perception of XBRL increased in the last two years, but many companies remain observant for a final proof of concept (missing propensity to invest).

At the end of 2006 Deutsche Bank’s will be able to implement XBRL data import for CRM financial analysis worldwide assumed that appropriate taxonomies and instance documents exist.


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Summary, Conclusion, Outlook (2)

Successful XBRL implementation is dependent on

– Stable taxonomies and specifications

Specification 2.1 is a milestone

However, some European taxonomies are still missing or currently being revised.

– Sufficient amount of XBRL data

XBRL as standard does not automatically generate new data sources.

At the beginning offer of financial data will remain different in EU countries (e.g. Belgium, Spain ↔ Germany).

Electronic data exchange is almost never a technical, but sometimes a legal or even psychological problem.

Deutsche Bank will further try to establish XBRL in the German financial sector and to surmount existing reserves and difficulties. XBRL will not succeed without enough participants!


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Please contact:

Deutsche Bank AG

Thomas Liesegang

Credit IT - CRM Projektdezernat

Taunusanlage 12

D-60325 Frankfurt

Phone: +49 (0)69 910-35363

Mail: [email protected]

Your feedback and questions are always welcome


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very muchfor your attention!