David Pettersson

Enterprise Architect. I help teams turn strategy into execution.

3 minute read

Introduction

Financial institutions operate in one of the most complex and highly regulated environments of any industry. Strategic objectives, capital requirements, risk management, regulatory compliance, sustainability mandates, and operational efficiency must all be balanced simultaneously.

To manage this complexity, organizations need a shared and stable structure that bridges strategy, business, IT, risk, and data. An enterprise capability map provides exactly that foundation.

This article presents a Level 1 (L1) capability map for financial institutions, suitable for banks, credit institutions, and policy-driven financial organizations. It can be used as a baseline for business architecture, transformation planning, and target architecture development.

Why Capability Mapping Matters in Financial Services

A capability map describes what the organization must be able to do, independent of how it is organized or which systems are used.

In financial institutions, capability mapping helps to:

  • Create traceability between strategy, regulation, and execution
  • Assess the impact of new regulatory requirements
  • Prioritize investments and transformation initiatives
  • Align business, risk, finance, data, and IT
  • Provide stability during organizational or system changes

Because capabilities evolve slowly, they form a reliable anchor for long-term architectural and transformation work.

L1 – Strategy & Governance

This capability area focuses on enterprise-level direction, control, and governance.

Key capabilities include:

  • Strategic governance
  • Business strategy and objectives
  • Capital and funding strategy
  • Sustainability and ESG governance
  • Corporate governance
  • Policy and regulatory framework management
  • Decision structures and mandates
  • External reporting (owners / state authorities)
  • Business architecture and change governance
  • Capability and target architecture
  • Portfolio and initiative management
  • Roadmaps and benefits realization

L1 – Core Business Operations

This domain represents the value-creating core of the financial institution.

Key capabilities include:

  • Customer and business management
  • Customer segmentation and relationship management
  • Contract management and onboarding
  • Customer communication
  • Credit and business decisioning
  • Credit assessment
  • Risk-based pricing
  • Decision processes and delegation
  • Loans and financing
  • Credit administration
  • Disbursement and repayment
  • Terms and conditions management
  • Guarantees and export finance
  • Deal structuring
  • Collaboration with banks and guarantee institutions
  • Contract monitoring and follow-up

L1 – Risk, Compliance & Control

Risk and compliance are integral to the business, not supporting functions.

Key capabilities include:

  • Enterprise risk management
  • Credit risk
  • Market and liquidity risk
  • Operational risk
  • Regulatory compliance
  • AML / CTF
  • KYC and customer due diligence
  • Sanctions and export control
  • Internal control
  • Control frameworks
  • Issue and deviation management
  • Internal audit

L1 – Financial Management

This domain ensures financial integrity, transparency, and capital efficiency.

Key capabilities include:

  • Finance and treasury
  • Liquidity management
  • Funding and capital markets
  • Hedging and derivatives management
  • Accounting and financial reporting
  • Bookkeeping and financial close
  • Regulatory reporting (e.g. IFRS)
  • Supervisory and authority reporting
  • Financial planning and control
  • Budgeting and forecasting
  • Cost management
  • Transfer pricing

L1 – Data, Analytics & Decision Support

Modern financial institutions are fundamentally data-driven.

Key capabilities include:

  • Information management
  • Master data management (customer, deal, counterparty)
  • Data quality and metadata management
  • Analytics and reporting
  • Risk and credit reporting
  • Management reporting
  • ESG and sustainability data
  • Decision support and AI
  • Scenario modelling
  • Credit and risk models

L1 – Enabling Capabilities

Enabling capabilities provide the foundation for scalability, security, and sustainable change.

Key capabilities include:

  • IT and digitalization
  • Application and integration capabilities
  • Information security
  • Architecture and platforms
  • Legal services
  • Contractual and legal support
  • Regulatory analysis
  • HR and talent management
  • Competence development
  • Leadership and culture
  • Procurement and vendor management
  • Third-party risk management
  • Contract performance monitoring

How This Capability Map Can Be Used

This L1 capability map can be used to:

  • Decompose into L2–L4 capabilities
  • Map regulatory requirements to impacted capabilities
  • Link capabilities to processes, systems, and data domains
  • Define target architectures and transformation roadmaps
  • Prioritize initiatives in the portfolio
  • Enable structured dialogue between business, IT, risk, and leadership

Closing Thoughts

For financial institutions, a capability map is not just an architectural artifact — it is a strategic management tool.

Used correctly, it enables both control and innovation, providing a stable structure in a highly dynamic regulatory and market environment.

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