The growing popularity of alternative financial instruments - including stocks, bonds, debentures, subordinated debt, interest rate swaps and derivatives - has made it increasingly difficult for financial institutions to measure risk accurately, not only for regulatory mandates, but also for internal business planning purposes. To keep an accurate measure of its financial positions and relative risk, Charlotte-based Wachovia ($512 billion) uses the excess computing power at its disposal, both in terms of servers and PCs.
To harness the computing power for these measurements, the bank relies on GridServer Virtual Enterprise Edition software from New York-based DataSynapse, relates Tony Bishop, director of strategy, architecture and governance for Wachovia's corporate investment bank. The bank upgrades the software every six months, he notes. "The [computing] grid is critical for us," Bishop says. "We make much quicker analysis of our positions and risk than we could any other way."
The basic parameters of Basel II, for example, require banks to calculate and demonstrate regulatory capital and risk-weighted capital. Without the computing power afforded via the DataSynapse-powered grid, the measurements could take 10 times to 100 times as long to compute, making the data much less timely, according to Bishop. The faster Bishop's team has the data, he says, the more quickly it can alter strategy in the event of a big change (e.g., sharp interest rate or market swings).
"Without this, we couldn't identify the risk in our portfolio with the granularity and in the time frame that we need," Bishop explains. "Being able to keep track of transactions and risk throughout the trading life cycle is very key for us."
The DataSynapse solution is important enough to Wachovia that the bank sits on DataSynapse's advisory board. Additionally, it works in partnership with the vendor to develop the twice-a-year upgrades, explains Bishop.
We Need More Power
During every upgrade, DataSynapse and Wachovia identify more resources to increase computing power, Bishop relates. The most recent upgrade, which was completed in the fourth quarter of 2004, enabled Bishop to add the power of "thousands" of new computing devices throughout the organization to the computing grid, he notes.
Currently, the grid allows Wachovia to tap both servers and PCs, according to Bishop. When the devices are not otherwise in use, the DataSynapse software accesses the available nodes to give Bishop the additional computing power. When the computer or server is accessed by another person or application, it automatically reverts to its primary use(s).
Grid Gains Traction
Though other competitors have entered the field since DataSynapse and Wachovia first started working together in late 2001, the company is "clearly the best of breed," Bishop contends. "The functionality of the software continues to get smarter [and] the performance continues to get better. ... With every upgrade we can handle more [data] volume and a more in-depth analysis," he continues.
"When we first started with this, the idea of grid computing was kind of a nascent concept," Bishop says. "Now, it's becoming more commonplace and more pervasive." The next step, he adds, is to marry DataSynapse with systems running open source platforms in order to include even more computing power on the grid.
Institution: Wachovia (Charlotte, N.C.).
Assets: $512 billion.
Business Challenge: Provide accurate and timely regulatory capital and risk information to internal and external sources.
Solution: Semi-annual upgrades of GridServer Virtual Enterprise Edition from DataSynapse (New York).