Teradata Financial Services Data Model

Overview and Application

Industry SolutionS / Financial Services

Table of Contents I found it very challenging to manage this enterprise per-

spective. Our group had a great manager who placed a
high value on ensuring consistency between each project
1 Executive Summary
and the enterprise. However, many project managers that
1 Introduction we worked with did not want to invest the additional time
and cost associated with ensuring an enterprise fit. The
2 Teradata Financial Services Data Model (FSDM) end result of often-heated discussions was that the proj-
Overview ect would proceed inconsistent with the enterprise view.

4 Enhancing the FSDM with Unification During my tenure at this company, we purchased another
financial services company, and there was an extremely
5 Teradata FSDM Scenario
time-consuming, painful, and costly effort to integrate
8 Conclusion systems. Our company was eventually purchased by a
large global financial services company, and the integra-
8 About the Author tion issues were even more time-consuming, painful,
and costly. Having a solid enterprise view would have
definitely saved a substantial amount of time and money
Executive Summary during both of these integration processes.

In the Teradata white paper titled, Leveraging the Indus-

Knowing its big picture is critical for a financial services
try Data Model, I provided an overview to the Enterprise
company. It can speed up analysis and design on specific
Data Model (EDM) and the Teradata industry data mod-
projects, better comply with regulations and standards, such
els (iDMs). In this white paper, I focus on the Teradata
as SarbanesOxley, Basel III, and Solvency II; reduce the
Financial Services Data Model (FSDM). This paper will
effort and cost associated with mergers and acquisitions; and
provide an overview of the Teradata FSDM along with the
discover amazing things through business intelligence (BI).
unification framework and a scenario illustrating how to
leverage the FSDM. The goal of this paper is to increase
A well-understood big picture of the organization needs
your awareness of how the FSDM helps organizations like
to be captured and communicated in the form of a model.
yours obtain the big picture more quickly and accurately
A model is a set of symbols and text used to make a
than building an EDM from scratch, thus permitting your
complex landscape easier to grasp. The world around us
organization to answer complex strategic and tactical
is full of obstacles that can overwhelm our senses and
business questions faster and more accurately.
make it very challenging to focus only on the relevant
information needed to make intelligent decisions. A com-
Introduction plex geographic landscape is made understandable via a
model called a map. A complex information landscape
I worked four years as a data modeler and data architect is made understandable via a data model. A data model
for a Wall Street firm in its enterprise architecture group. uses symbols and text to help developers and analysts
As the data modeler, my role was to accurately capture understand a set of data elements and the correspon-
requirements from analysis through design for a particular ding business rules better. In addition, every model has
project. As the data architect, all of my project deliver- a defined scope. A map might be limited to New York
ables had to also be consistent with the enterprise. For City or represent the big picture in the form of a globe.
example, if the project requirements needed Customer, Likewise, a data model can represent a specific functional
yet the enterprise as a whole used the term Client, we area, such as risk management or it can represent the
would need to call it Client on the project design. entire organization in the form of an EDM.
There are resource and skill challenges with creating and models and their metadata. In addition, the FSDM docu-
maintaining an EDM, and therefore organizations are mentation includes PDF files of several books. These
increasingly purchasing starter EDMs in the form of include the Unified Data Models Framework Reference
industry data models instead of reinventing the wheel. Guide (unification will be discussed later in paper), the
An industry data model is a prebuilt data model that Teradata Industry Data Model Physical Design Concepts
captures how an organization in a particular industry Reference Guide, a reference guide specific to the FSDM,
works or should work. Teradata currently offers these and two volumes of Appendices that include support
Teradata industry data models: materials for the modeler, such as a listing of the FSDM
attributes, along with definitions, as well as entity and
Teradata Communications Data Model (CDM) subject area definitions. The Reference Guide also con-
tains a number of other sections, including a robust set of
Teradata Financial Services Data Model (FSDM)
financial business questions.
Teradata Healthcare Data Model (HCDM)
Teradata Health and Human Services Data Model The FSDM has a number of very important characteristics.
(HHS-LDM)
The Top 10 reasons for making the move to the FSDM
Teradata Life Sciences Data Model (LSDM)
include (in no particular order):
Teradata Manufacturing Data Model (MFGDM)
Teradata Media and Entertainment Data Model (MEDM) 1. Provides agile teams with a solid foundation. Out
of all of the industries in which I have consulted, I
Teradata Retail Data Model (RDM)
have found that the financial services section relies
Teradata Transportation and Logistics Data Model most heavily on fail fast agile approaches. Agile
(TLDM) approaches such as Scrum and Lean are practiced with
Teradata Travel and Hospitality Data Model (THDM) the goal of producing working software in a minimal
amount of time. Often however, short-term gains come
Teradata Utilities Data Model (UDM)
with the price of long-term support. Agile teams at
times produce useful project-oriented software that
Teradata Financial Services Data may not follow standards, good design principles,
Model Overview and enterprise architecture. Starting with the FSDM
can dramatically reduce the amount of time to build a
The Teradata FSDM captures how a general financial homegrown, consistent, and well-structured enterprise
institution works, covering retail and commercial banking, model to support agile teams.
brokerage, investment, charge card, and property & casu-
alty and life insurance business operations. It provides the 2. Links with Teradata Data Integration Roadmap. Some
big picture for a financial services organization, containing organizations obtain the FSDM simply because of its
more than 300 broad subject areas, such as customer connection with the Data Integration Roadmap. The
management, risk management, claims management, questions that can be answered out of the box with
operations management, and finance and performance the Data Integration Roadmap are important industry-
management. The FSDM is a living and breathing view of level questions. Here are just a few of the hundreds of
the financial services business. questions:

Teradata Professional Services consultants work directly Customer Oriented:

with clients in the field and provide feedback for model
changes and enhancements to the Teradata Product Which customers have a checking account but not
Manager who then captures these new requirements for a credit card account?
potential addition in the next FSDM release. The current ver- Which customers have a homeowners insurance
sion of the FSDM is extremely robust, containing more than policy but not an automobile insurance policy?
3,200 entities; 13,200 attributes; and 6,500 relationships.
In which geographic area are my insurance customers
concentrated?
The FSDM exists in an ERwin Data Modeler file. ERwin
Data Modeler is one of the more popular data model- Which business segments, based on SIC codes, are
ing tools that offers reports for viewing and printing the growing? Diminishing?

2 Teradata Financial Services Data Model teradata.com

 What type of activities, such as check deposits, are than if a reporting perspective is modeled. In addition,
transacted mostly at a branch versus an ATM? the model takes advantage of generic structures, such
as Party and Event, to ease the mapping effort. On
What are the trigger points (such as a change in
the FSDM, generic concepts like Party and Event are
interest rate) that cause a loan to be paid off early?
groupings for more granular and concrete parts of the
business. For example, Associates and Households are
Fraud Questions:
two of the many more specific variations of a Party,
and Payment and Claim are two of the many more
What is the average deposit amount for a customer
specific variations of an Event.
over time, and how does that compare to current
deposit amounts? (Used to detect money laundering, 4. Minimizes risk. When a data model is built from
for example.) scratch, we sometimes question whether or not we
have everything that is needed somewhere on the
Is the customer transacting at a location that is out
model. What would be the impact if a concept is acci-
of the normal geographic range? (Used to detect a
dently left off the model or represented improperly?
stolen ATM card, for example.)
Costs could include money, litigation, and/or business
credibility. The FSDM is a result of more than 25 years
Account/Policy Questions:
of designing, implementing, and maintaining data
warehouses for financial institutions, and is currently
Which accounts have been securitized?
used in more than 175 financial institutions, a true testi-
What is the average application credit score for mony that it provides a trusted view.
approvals and declines?
5. Facilitates information sharing. If your business
How many insurance applications were accepted from needs to exchange data with other companies within
a particular risk class? the same industry, the FSDM can be very valuable to
Which policies have customers not purchased and establish a common language and set of rules. If two
which they are likely to purchase? organizations need to share data, and they use the
same terms and rules, it will make sharing much easier
What is the number of accounts in a reward program,
and less error-prone.
and points rewarded and spent?
6. Reduces maintenance costs. When a new industry
Which reward programs are most successful?
concept is introduced, Teradata includes this new
concept on the next release of the model and there-
Risk Management Questions:
fore there is no maintenance cost to model the new
concept from scratch. For example, the FSDM was
How much capital should I allocate for credit risk
enhanced to support the banking Basel III regula-
purposes?
tions for risk management. Teradata experts took the
What is the probability of default for a given account? Basel III Accord regulations and identified the business
What is the exposure of my internal investments to data elements paragraph-by-paragraph. These busi-
various European countries? ness data elements were then mapped to the current
FSDM to identify the gaps, and the FSDM was modified
What is the risk level and loss ratio by insurance agent? to include these new regulations. Another example:
What are the insurance salvage, subrogation, and rein- The FSDM was modified significantly in the collateral
surance recoveries on paid losses? area with respect to the valuation and adjustments to
the value of the collateral, the relationship between
What is the difference between the estimated loss at
collateral items and collateral agreements, and the
time of claim and the actual amount paid?
relationship between the collateral agreements to
the loan (exposure) agreements. The model had to
3. Captures business processes and therefore is
account for the fact that a piece of collateral could
integration-friendly. The FSDM captures an opera-
be pledged against many loans within the bank and
tional view instead of a purely reporting view. The
also outside the bank. Teradata experts have done
operational view represents how an organization works
the same kind of analysis for Solvency II (insurance)
as opposed to how an organization does reporting.
regulation. Another area of modification was
Because an organization follows standard business
securitizationloans that are packaged and then
processes, any applications that automate these pro-
offered as a financial instrument to investors.
cesses should map to the FSDM with much less effort

3 Teradata Financial Services Data Model teradata.com

 Securitization by banks removes the risk from the 9. Presents the concepts in digestible chunks.
banks books. The FSDM can now trace the financial The FSDM is sectioned into subject areas. Subjects are
instrument back to the loan package (group of loans) neatly captured in separate views, and the use of color
and back to the individual loan. Not having this secu- distinguishing each subject area makes it easier to
ritization tracking process across the business chain digest the larger models.
was one reason for the economic crisis. The underlying 10. Contains unification. Unification allows organizations
loans of many of these packages were high risk, but the option to select the iDM that most closely repre-
the trail was lost between the bank, the special pur- sents their business and then bolt on pieces from
pose vehicle (financial entity) that packaged the loan, other iDMs to create a more representative picture of
and the investor. The FSDM was modified to handle an organization. (Read more about unification in the
securitization agreements from the perspective of the next section.)
selling bank and the investing bank. The FSDM now
has the concept of tranches, which is the piece of the
group of loans offered as a financial instrument. Enhancing the FSDM with Unification

7. Gracefully extends to accommodate new concepts. Rarely can traditional labels define organizations accu-
The FSDM contains a fair amount of abstraction. rately. That is particularly true in the current economy as
Abstraction means combining like things together many branch out to perform functions that cross tradi-
under generic terms, such as Event and Party, to tional industry and market boundaries. More and more,
facilitate integration, and to gracefully handle future companies simply do not fit any specific mold:
requirements. The FSDM can easily accommodate a
new type of Event, for example, as well as connect with Retailers may have a credit card line.
other Teradata iDMs that also use the Event concept. Car manufacturers may have a finance arm for loans.
This allows for greater commonality within and across
Oil and gas refiners may do oil and gas trading
the iDMs. All industries have Events, for example,
(commodity trading).
whether they are campaign solicitations in the bank-
ing industry, emails to change a shipment date in the Utilities may sell electricity (also commodity trading).
manufacturing industry, or service disruptions in the
communication industry. Abstraction has been applied Therefore, even when they know the benefits, diversified
in not just industry-neutral terms such as Event, but companies often say they cannot find a single suitable
also for terms specific for finance and insurance. For industry model that works best for them. Fortunately,
example, instead of specifying all of the dates associ- it is now possible to build a unified data model to see
ated with a claim, the generic concept of Claim Date beyond the enterprise view to the holistic value of an
Type allows for all types of dates to be easily accom- organization.
modated such as Occurred Date, Settled Date, Receipt
Date, and any new types of dates, as well. Companies typically choose an iDM that is tailored for
their industry. But to be at all useful, the model needs
8. Provides global and standard perspective.
to accommodate changes such as expansion into dif-
The structures on the iDMs are designed for international
ferent markets. That might require two or more iDMs
use, and not just United States-based. For example,
that must be either integrated or heavily customized. A
the term postal code is chosen over ZIP code. In
better method is to select one primary iDM and then add
addition, the data elements on each iDM follow best
the relevant components from other industries to cre-
practice naming standards, including the use of class
ate a unique model. For example, a utility company may
words based on the ISO 11179 metadata standard. A
choose the Teradata Utilities Data Model (UDM) as their
class word is the last part of a data element name that
primary iDM, yet leverage the modules of Account, Event,
represents the high-level category in which the data
Channel, Party, Geography, and Forecasting, to handle the
element belongs. Examples of class words are name,
commodity trading side of their business. This method
code, identifier, date, quantity, and amount. So the
of unification captures the best practices of industries
class word for Customer Last Name is name.
and creates a plug-and-play environment that employs

4 Teradata Financial Services Data Model teradata.com

elements of the separate iDMs as building blocks for Another opportunity area for this insurance company
others. Consequently, the models reflect real-world appli- is to understand the exposure and risk associated with
cations while providing a single view of the operation to natural disasters such as earthquakes, floods, or hurri-
support growing business plans. canes. Although today there is some analysis done in the
residential insurance area, such as additional premiums
In general, roughly 45 percent of the content of a Teradata required if a house is near an earthquake fault line or in
industry model is a candidate for unification with the a flood zone, this insurance company does not have the
other industry models. By leveraging these building big picture and cannot answer, for example, What is my
blocks, an organization can select one industry Data exposure across all lines of business if there is a Class 5
Model to represent its primary business. That one indus- hurricane that will hit the southeast?
try model then becomes the foundational reference guide
or framework with which the other building blocks or To answer broad business questions such as these requires
independent modules are integrated. an integrated enterprise data model within the scope of
an enterprise architecture. Although there are knowledge-
The benefits of a unified data model include: able business and information technology staff within each
LOB, there are no resources that have expertise in all three
More frequent model releases. Instead of receiving business areas. Senior management therefore decides to
model releases annually, releases can be sent when- fund a Center of Practice (COP) containing a senior busi-
ever a building block is enhanced. ness analyst and data architect from each LOB to work
together to create an enterprise architecture.
Less customization. By adding the necessary build-
ing blocks to an existing iDM, organizations need less
The three business analysts and three data architects
model customization to fit a particular implementation.
meet and realize even the most basic concepts vary in
Greater applicability. As organizations continue to definition and sometimes terminology. For example,
morph across industries, iDMs can adapt and accom- returning to the natural disasters question earlier, each
modate their needs. line of business classifies the reason for the claim differ-
ently. Because of this it is impossible to determine broad
Teradata FSDM Scenario exposure risks.

A medium-sized insurance company in the Midwest For example, in the automobile line of business, there is
primarily writes three lines of business (LOB): Auto, Resi- only a general classification used, which is an indicator
dential, and small commercial or Business Owners Policies capturing whether the claim was a result of human negli-
(BOP). Each business unit currently operates autono- gence or a result of Mother Nature. The business division
mously, and senior management has as a core business does have a more robust classification scheme than the
objective to integrate analytics and reporting for all three automobile LOB, yet it is done based upon character-
lines with the goals of more efficient operating processes, istics rather than events. So for example, if a hurricane
and more powerful and useful analytics information. causes damage to a small business that has its business
Today, even relatively simple reporting questions, such policy with this insurance company, instead of captur-
as How many of our auto insurance policyholders are ing the hurricane event, this insurance company captures
self-employed and therefore potential candidates for the characteristics of the incident such as the claim was
business liability insurance? can only be answered after a result of wind or rain. The residential unit does have the
much manual effort. Often there is a high degree of error in most robust way of capturing the cause of the claim, and
the results. Last year, for example, this insurance company they use Claim Reason Codes for this purpose. For exam-
conducted a direct mailing campaign to personal lines ple, a Claim Reason Code 55 is for a hurricane and a Claim
customers whom they believed were good prospective Reason Code 25 is for a broken water pipe. So right away
business liability insurance policyholders, offering them an even with this first example, there are major integration
attractive multi-policy discount. However, because of a issues. How can we answer the previously-raised question,
high degree of errors in answering cross-LOB questions, What is my exposure across all lines of business if there is
this insurance company mistakenly offered the multi-policy a Class 5 hurricane that will hit the southeast? if each line
discount to more than 200 existing business liability of business categorizes the cause of claims differently?
insurance policy holders who did not qualify for the offer.

5 Teradata Financial Services Data Model teradata.com

Senior management knew that some more standard- Since integration is an activity that needs to involve differ-
ized business processes would be coming out of this ent levels in the organization, from business professionals
six-person group, and would therefore support changing through the very technical roles of database administra-
existing business processes. The six-person team decides tors and developers, there needs to be different views
to therefore use the FSDM as an integration point for their of the data as captured through different levels of data
operational systems and as a foundation for the inte- models. The group decided therefore that four data mod-
grated data layer within their data warehouse program. els were needed: an enterprise subject area model, an
So they started with the FSDM term of Incident. A subset enterprise conceptual data model, and both logical and
of the definition for this term from the FSDM is: physical data models of the data warehouse-integrated
data layer. Together the group crafted explanations and
This is a subtype entity to EVENT and describes incidents purposes for each of these models, as shown in Figure 1.
that are of interest to the financial institution. This applies
to events that cause (usually multiple) insurance claims, Enterprise Subject Area Model
such as traffic accidents, natural disasters such as hurri- The FSDM comes with a Subject Area Model that contains
canes and health episodes, such as a heart attack. A major ten key concepts and their relationships for the financial
incident might also be referred to as a catastrophe. services industry. See Figure 2. It captures the concepts
and relationships across the FSDMs broad subject areas.
The group decided terms like Incident should be used The Teradata Subject Area Model allows an organization
organization-wide, and incidents are events, and events tie to achieve a high-level big picture of the organization
to people, organizations, locations, policies, and time peri- without getting overwhelmed by jumping straight into a
ods. Terms such as these are therefore ideal for integration.

Built All at Once

Model Purpose or Incrementally

Enterprise A communication tool for the Top 10 concepts and their business rules All at Once
Subject Area within the organization. Useful for explaining core concepts and for
Model explaining the similarities across the different business units.

Enterprise Although more detailed than the Enterprise Subject Area Model, this All at Once
Conceptual model still fits on a single piece of paper, and contains more industry-
Data Model specific terms, yet at a high enough level where the units fit together
holistically. Useful for communicating scope of large initiatives such as
the data warehouse program.

Integrated A very detailed and normalized view of the business, not tainted with Incrementally,
Data Layer technology such as software and hardware constraints. Useful for driven by project
Logical/Physical ensuring the data warehouse contains the information to answer busi- requirements
Data Model
ness questions, both questions within an LOB as well as cross-LOB
questions.

Integrated Data The integrated data layer PDM tainted with technology, such as soft- Incrementally,
Layer Physical ware and hardware constraints. Useful for working with database driven by project
Data Model administrators and developers to ensure the business questions are requirements
being answered with the most efficient structures and process. Along
with this model, we also need to have a spreadsheet containing the
mapping from source application data models to this model.

Figure 1. Types of Data Models Needed.

6 Teradata Financial Services Data Model teradata.com

 PARTY ASSET
Tangible or AGREEMENT
intangible items.
A contract or deal
PARTY between parties that
An individual, business is of interest.
or group of individuals
of interest to the financial
institution. FINANCE
The internal accounting and
human capital management
of the business.
EVENT
PRODUCT Something of interest that
Any marketable or tradable happened that may or may
product or service including terms, not involve contact with the
conditions and features. customer.

INTERNAL ORGANIZATION
A party that is a unit of business. CHANNEL
The vehicle by which a
LOCATION party may interact
A physical address, with the financial institution.
electronic address, CAMPAIGN
geographic or spatial A communication plan
area. to deliver a message.

Figure 2. Teradata FSDM Subject Area Model.

complex logical design. The colors used on this model for Integrated Data Layer Logical Data Model
each subject area are also used for all of the entities within The integrated data layer logical data model for this
each subject area, for easy traceability. For example, all of example scenario was built incrementally on a project-by-
the Party entities in the FSDM are red in the Subject Area project basis. An in-depth business questions analysis was
Model, and also in the Conceptual and FSDM models. performed, and sets of business questions were bundled
into project deliverables. Many business analysts found it
It is typical to customize industry data models based on challenging to extract questions from the business folks.
need, and therefore even on this high-level data model Luckily, the FSDM and the Data Integration Roadmap came
some of the names and definitions need to be modified with several hundred typical business questions, which
for this particular insurance company. For example, this were used as a brain-storming technique with the busi-
insurance company prefers the term Sales Channel over ness to agree on a set of common questions. As you might
Channel, and so this entity was renamed on this model. expect, the integrated data layer LDM required more effort
than the prior two models. It had more detail and required
Enterprise Conceptual Data Model the most discussions to resolve the integration issues.
The conceptual data model contains more detail than the
subject area but yet still at a high enough level to be easily The FSDM was the starting point for each project, and the
readable on a single piece of paper. The FSDM also comes project teams often extended the model themselves with
with a conceptual data model, and this model contains the Architecture Center of Practice group reviewing any
about 200 entities, as opposed to the ten on the subject modeling work to ensure consistency.
area. Much of the additional detail on the conceptual
comes through subtyping, a small example shown for the
Event concept in Figure 3.

7 Teradata Financial Services Data Model teradata.com

 ideas back to the Enterprise CDM. This keeps the Enter-
prise CDM up to date and continuously valuable.
Event
Knowing the big picture saves design time and allows for
each new application to fit together cleanly with existing
applications. The FSDM proved to have an indispensable
Incident role in creating this big picture.

Investment Event Conclusion

Contact Event The Teradata FSDM saves organizations substantial
amounts of time and money in building a data warehouse
Financial Event by providing a detailed and well-proven data model as a
foundation for an organizations enterprise architecture. In
Agreement Event addition, the FSDM can be easily extended as the business
grows (especially by leveraging the unification framework)
Figure 3. Subset of FSDM Conceptual. and provides the organization with a common under-
standing of business terms.

Integrated Data Layer Physical Data Model About the Author

The Enterprise Physical Data Model (PDM) was also built
incrementally on a project-by-project basis, driven from
Steve Hoberman is the most requested data-modeling
the logical data model. A combination of views, indexing,
instructor in the world. In his consulting and teaching, he
and de-normalization were frequently-deployed tech-
focuses on templates, tools, and guidelines to reap the ben-
niques to ensure that the reporting was user friendly with
efits of data modeling with minimal investment. He taught
quick response times.
his first data modeling class in 1992 and has educated more
than 10,000 people about data modeling and business
Smooth Sailing Ahead intelligence techniques since then, spanning every conti-
All of the insurance companys future operational and nent except Africa and Antarctica. Steve is the author of
BI applications relied on the Enterprise Conceptual Data five books on data modeling, including the bestseller Data
Model (CDM) as a starting point for design. When each Modeling Made Simple. He is the founder of the Design
application data model was considered complete, a review Challenges group, inventor of the Data Model Scorecard,
took place to identify possible Enterprise CDM changes and CEO of Technics Publications. Steve can be reached at
as a result of this application model. So each application me@stevehoberman.com, @DataMdlRockStar on Twitter,
starts with the Enterprise CDM and then contributes new or through Steve Hoberman on LinkedIn.

10000 Innovation Drive, Dayton, OH 45342 Teradata.com

Teradata and the Teradata logo are registered trademarks of Teradata Corporation and/or its affiliates in the U.S. and worldwide. Data Model Scorecard is a trademark of
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