Microsoft Server Product Portfolio
Customer Solution Case Study
Investment Bank Improves Competitive Edge
with High Performance Computing
Overview
Country or Region: Germany/Europe
Industry: Financial Services
Customer Profile
UniCredit Group is a private bank with
more than 142,000 employees, 7,200
branches, and over 35 million customers in
40 countries. Markets & Investment
Banking (MIB) is a division of UniCredit
Group and headquartered in Munich,
Germany.
Business Situation
MIB’s Structured Derivatives Business
deals with computationally intensive
problems through the complex nature of its
products. Hence flexible and cost efficient
computing capacity turns out to be a
critical success factor for business growth.
Solution
MIB’s Structured Derivatives Business built
it’s 2nd generation of high performancecomputing cluster based on the 64bit
Windows Compute Cluster Server 2003
platform to speed up pricing and risk
management applications, simplify
development and cluster management.
Benefits
 Reduced processing time
 Improved time-to-market
 Improved IT efficiency, competitive focus
 Expanded business opportunities
"We can manage growth and complexity more
effectively. High performance computing is directly
linked to the success story of the structured
derivatives business.”
Andreas Kokott, Manager Structured Derivatives Platform Strategy, UniCredit Markets & Investment
Banking
The primary objective of UniCredit Markets & Investment Banking
Division (MIB) is the establishment of one of the leading and most
profitable European investment bank with a clear focus on selected
products and client segments. MIB is expanding its prominent role
as a top-notch provider of structured derivatives for retail, corporate
and institutional clients through a geographical diversification from
Germany, Austria and Italy into the rest of Europe.
Structured Derivatives Business deals with computationally
intensive problems through the mathematically complex nature of
its products. Hence flexible, scalable and cost efficient computing
capacity turns out to be a critical success factor for business
growth. Joint work of Structured Derivatives IT Specialists with
technology partners Microsoft, IBM and AMD made it possible to
establish an innovative solution for its parallelized .NET based
pricing and risk management engine leading to significant
acceleration of risk computations and lowering complexity in cluster
management.
"By using Windows as a
standard platform for
our business, IT can
concentrate on the
development of specific
competitive advantages
of their solutions."
Andreas Kokott, Project Manager CADP,
Global Derivatives-Markets and Investment
Banking, HVB
Situation
UniCredit Group is the third-largest European
banking group by market capitalization,
serving 35 million customers in 40 countries
through over 7,200 branches.
Markets & Investment Banking Division (MIB)
links the entire capital market expertise in
the Group and efficiently implements the
concept of an integrated capital market bank.
The primary objective of this division is the
establishment of one of the leading and most
profitable European investment banks
specializing in derivatives and cash products,
structured finance, equity capital markets,
debt capital markets and corporate finance
advisory services. This is achieved by
exploiting the Group's strong position in key
European markets, including CEE, and forging
strong links with domestic markets in Italy,
Germany, Austria and CEE countries;
achieving the best cost/income ratio and
return on capital of the sector; and
establishing a long-term relationship with
institutional and corporate clients (including
client acquisition through the Retail, Private
Banking and Corporate distribution
networks).
Starting with a strong position in the
structured products business, HVB sought to
extend its leading position as a provider of
structured derivatives for retail, corporate
and institutional clients through a
geographical diversification from Germany
and Italy to the rest of Europe. Key factors for
success are the ability to structure innovative
products, time to market, state of the art risk
management capabilities and excellent preand post-sales services. Thereby HVB is
adopting a strong solution-driven approach.
MIB’s Structured Derivatives Business deals
with computationally intensive problems
through the complex nature of its products.
Hence flexible, scalable and cost efficient
computing capacity turns out to be a critical
success factor for business growth and
results in unique requirements regarding the
computational power at hand and how fast
this computational power could be leveraged.
Andreas Kokott, responsible manager for the
Structured Derivatives Platform Strategy
explains: “The structured derivatives
business segment is characterized by
investors constantly on the hunt for better
yield-enhanced or tailored risk-reward
structures, which creates high pressure on
financial engineers and traders to supply
increasingly sophisticated and complex
products. A trader’s burning concern is timeto-market, because being first means reaping
the most profit. Speed is king! The structured
business requires an IT platform with a high
degree of flexibility in terms of supporting
product and model variety and innovation
along the complete value chain.”
Powerful computing resources for the
business is one side of the coin, the other
side is a standardized platform in order to
allow financial engineers, developers and
operational staff to organize in an
industrialized fashion. For example,
developers can focus on the implementation
of business solutions without being slowed
down by migrating and porting them to
different infrastructures.
Solution
As the bank’s business was taking off, it
quickly reached the limit of the classical
server based infrastructure.
In 2002, IBM supported HypoVereinsbank
(HVB), now a member of UniCredit Group to
launch their first High Performance
Computing Cluster for the structured equity
derivatives business, a fundamental
milestone for HVB’s Markets & Investment
Banking Division (MIB).
"Previously it would have
taken several days to
run our algorithms. Now
for even more complex
tasks processing often
completes in seconds.
This gives us the
opportunity to increase
the scale of our
business as we want
to.”
Andreas Kokott, Project Manager CADP,
Global Derivatives-Markets and Investment
Banking, HVB
At a very early stage the Markets &
Investment Banking Division (MIB) set the
course for their structured derivatives
activities towards products combining all
existing and therefore established, asset
classes like equity, credit, interest rate,
foreign exchange, and commodity. Hence one
of the central projects was the transformation
of rather silo-based trading and risk
management landscape towards a crossasset trading platform based on service
oriented architecture (SOA) principles. Still, a
MIB-specific balance between “build versus
buy” had to be found, taking into account
existing environments, resources, skills, etc.
In the light of SOA high performance
computing belongs to the core services of
MIB’s Structured Derivatives Business
platform.
After a Proof of Concept over several months
the bank decided to use Microsoft .Net
Framework as strategic development
platform “We like the idea of .NET as a full
product family, the support for diverse
programming languages, the excellent
interoperability particularly with Excel, the
higher developer productivity, e.g. through a
highly integrated development environment”
says Kokott. “To reduce complexity and
streamline our development and operations,
it made sense to use a Windows-based
platform with full 64bit support as
foundation. That way, we have one
homogeneously implementation of our
business logic deployed across all relevant
computing environments, from desktop to the
computing backbone.
Together with their Microsoft Enterprise
Strategy Consultant the team defined a
roadmap for their .NET based HPC activities.
In 2005, Microsoft Services supported the IT
specialists to deploy several hundred nodes
with the Windows Server 2003 on dual-core
IBM eServer LS20 Blade Center server. The
bank maintains the cluster in two locations
for load balancing and disaster recovery, and
uses Microsoft SQL Server™ 2005 for data
storage.
HVB has made several changes since the
initial installation in 2005. With support from
IBM and Microsoft Services, the bank
migrated the entire cluster to a 64-bit
Windows Compute Cluster Server in August
2006; it also anticipates adding more nodes
as business demands increase.
Kokott reports that deployment is
straightforward and fully automated.
“At the moment it takes minutes to have a
complete system update. The deployment of
the operating system is separated from that
of the application, where the development
team implemented a dynamic loading
concept for the assemblies on the compute
nodes” Cluster management is equally
uncomplicated. It is managed centrally with
IBM management tools.
The bank implemented its own job processing
logic based on .NET. Since productivity is
crucial the development team is using Visual
Studio Team System with Team Foundation
Server and SharePoint Portal Server. Kokott
says, “With our completely integrated
development environment, we can organize
our development process in a highly efficient
manner.”
The structured derivatives business uses the
cluster to support the entire trading process.
Kokott says, “We use the cluster for
essentially two types of activities. One activity
serves daily front office business needs like
real-time risk analysis and the pricing of
complex financial instruments, and the other
activity involves overnight processing where
we deliver data internally to other
departments.”
Benefits
High performance computing is a critical
success factor for the structured derivatives
division to expand their business and take
full advantage of a rapidly evolving
marketplace.
Reduced processing time, better time-to
market for structured products and
client services:
“Before we installed a high performance
cluster it would have taken several days to
run our algorithms. Some products and
pricing models are more complicated than
others, but even for more complex tasks
processing often completes in seconds. This
gives us the opportunity to increase the scale
of our business as we want to.”
Now HVB can handle more volume and the
permanently growing complexity of its
business. Kokott says, “Without HPC we
could neither do the business we do today
nor have a chance to match our ambitious
business targets.”
Improved IT Efficiency, Competitive
Focus:
The bank wanted to make IT support for
computing resources easier. “The idea is to
have the most standardized IT environment
possible so that managing the cluster is just
part of the normal workflow for IT personnel.
The complexity should only be in the
algorithms not in the infrastructure. Getting
rid of porting algorithms to specialized
environments reduces complexity and cost,
and accelerates the business.”
Now the bank can refocus IT resources: “By
establishing a highly standardized
infrastructure across our different computing
environments, our IT resources can shift their
focus on solutions for the business that give
us a competitive advantage.”
Expanded Business Opportunities:
HVB Group has recently merged with the
UniCredit Group, a major financial
corporation in Europe creating one of the
largest banking and financial services
organizations in Europe with more than 35
million customers and a presence in 40
countries. The structured derivative business
is poised to take advantage of this
dramatically expanded customer base and is
confident it can meet the growing volume of
customers and markets with faster service
and innovative solutions. “We can handle
larger volumes of data faster and with greater
subtlety, you can reduce time-to-market for
innovative product solutions, make smarter,
faster trade and risk management decisions,
reduce investment and operational risk, and
improve profitability,” says Kokott. “High
performance computing is directly linked to
the success story of the structured
derivatives business.”
For More Information
Microsoft Server Product Portfolio
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For more information about
HypoVereinsbank products and services,
call +49 (89) 378-0 or visit the Web site at:
www.hypovereinsbank.de
Software and Services
Microsoft Server Product Portfolio
− Windows Compute Cluster Edition
2003
− Windows Server 2003 Standard x64
Edition
− Microsoft SQL Server 2005 Enterprise
Edition (64-bit)
− Microsoft Office SharePoint Server
2007
 Windows XP Professional
 Microsoft Visual Studio
− Microsoft Visual Studio 2005 Team
Foundation Server

This case study is for informational purposes only. MICROSOFT
MAKES NO WARRANTIES, EXPRESS OR IMPLIED, IN THIS
SUMMARY.
Document published May 2007
Services
− Microsoft Consulting Services (MCS)
 Technologies
− Active Directory
− Microsoft .NET Framework 2.0

Hardware
− IBM eServer LS20 BladeCenter server
computers
− AMD Opteron Dual Core 2x2.2GHz