enhanced data usage for improved efficiency and growth
TRANSCRIPT
Enhanced data usage for
improved efficiency and
growth
27 February 2017
Tom Alaerts, Head of Business Solutions, APAC
Geertjan van Bochove, Head of Analytics, APAC
Business Forum Singapore | enhanced data usage | February 2017 2
Major challenges at banks: not enough data readily available
Now mainly tactical stand-alone solutions to cope with business and regulatory demand
Intraday regulatory
reporting solution
Cash
Management
function
Forecasting
LCR
Financial
Crime
Compliance
Timely and accurate data
drive business and reporting
value chain
Reconciliation
Business Forum Singapore | enhanced data usage | February 2017
Technological innovation | Apache Hadoop
An open-source framework that allows for the distributed processing of large
data sets across clusters of commodity computers using a simple
programming model.
3
Scalable infrastructure
Cost effective
Fast *
Resilient to failure
Storage requirements
Native security * HDFS = Hadoop Distributed File System
? Legal boundaries of data ?
? Aggregation of data ?
? Access to data policies ?
Business Forum Singapore | enhanced data usage | February 2017 4
Major challenges at banks: Local versus Enterprise data governance
Payments
data
AU
Payments
data
SG
Analyst
US
Business Forum Singapore | enhanced data usage | February 2017 5
Major challenges at banks: Data quality not consistent
Do you link to all possible data-sources?
Do you know the definition of all data-sources?
Do you know what data has been
processed?
Transparency = confidence
Are all data-points connectable?
Do the data-objects accurately represent ‘real
world’ values?
Definitions of formats (i.e. dd/mm/yyyy)
used across the board?
Do values get the same status across the
board?
Chief data officer guarding data quality
Business Forum Singapore | enhanced data usage | February 2017 6
Connecting back-offices and data-points a major challenge at banks
US
Source 1
Reference table / key for
software to find records
AU
Source 2 Other
data 50
Other
data 51
. . . . . .
Customer input
Processing at the bank
Clearing Settlement Finality
Business Forum Singapore | enhanced data usage | February 2017 7
ISO20022 supports links between financial transaction data and defines common data
types and the understanding of those data types
Reusable Data Types
& Components
Message Definitions
Business Processes
Business Model
Static Data Dictionary
“The Concepts” Dynamic Business Process
Catalogue
“The Context”
A full payment chain – example
Process diagram can be used for drill down visualisations
Debtor’s
Agent
Ordering
Institution
Instructing
Agent
Sender
Instructed
Agent
Receiver
Creditor’s
Agent
Account With
Institution
Debtor
Ordering
Customer
Creditor
Beneficiary
Customer
Your Institution
Mexico
Local Bank
Mexico
Your Institution
HK
Local Bank
China
SWIFT
SWIFT
Business Forum Singapore | enhanced data usage | February 2017 8
Business Forum Singapore | enhanced data usage | February 2017 9
How does SWIFT support the
community to overcome this data
challenge?
Business Forum Singapore | enhanced data usage | February 2017 10
Banks’ cross-border business under pressure
Liquidity
and
Funding
Financial
Crime
Compliance
NSFR LCR ILR FATF Sanctions Wolfsburg
Costs Competition
Your Back office apps
IBAN
validation
Correspondent
SSIs
Clearing
System
members
etc
MT 103, ISO 20022 PACS008...
…
Your institution
Correspondent / Counterparty
FileAct
routing National sort
codes incl
local language
BICs
Costs
Good, complete ref data in your messages ensures
smooth, correct processing
Business Forum Singapore | enhanced data usage | February 2017 11
12
Bank
holidays
Payments
Routing
information
> 820,000
Standing
Settlement
Instructions
> 1,000,000 National bank
identifiers (181 countries)
250
Country
codes
IBAN data of
71 countries,
including
36 SEPA
countries
417,000
Legal
Entity
Identifiers
ALL
Currency
codes
200,000
local
language
codes incl
CNAPS,
Zengin…
FileAct
addresses
Clearing
Systems
membership
112,000
BICs
Credit
ratings
SWIFTRef data – a rich database with much more than BICs, up to date and
always sourced from the original publisher.
SWIFTRef
Costs
Business Forum Singapore | enhanced data usage | February 2017 12
13
System error,
42.10% Insufficient reference
data, 57.90%
Non SWIFTRef subscriber
Invalid BIC
destination 26.32%
Branch code
error 15.79%
BIC11 error 10.52%
Address error 5.26%
System error, 92.31%
Insufficient reference
data, 7.69%
SWIFTRef subscriber
Importance of accurate reference data
Costs
Business Forum Singapore | enhanced data usage | February 2017
Business Forum Singapore | enhanced data usage | February 2017 14
SWIFTRef – Value Proposition
14
Bank data
Build your Master Bank Database
Identify Financial Institutions
International payment validation
National ID – BIC translation
Cross-reference of more identifiers
(CHIPS, LEI…)
Understanding bank hierarchy
IBAN/SEPA data
Validate IBANs and BIC codes
Find BICs from IBANs
Construct IBANs from BBANs
SSI data
Find the beneficiaries’ BIC
Find the correspondent bank
Find the intermediary bank
ISO country codes
ISO currency codes
Commercial payments, FX, MM
Payments Plus (XML data feeds or TXT files)
Bankers World Online (online tool) Look-up all the data contained in SWIFTRef and more (i.e correspondent banking data)
Bank Directory Plus (file)
BIC Plus (file)
Entity Plus (file)
Reach Plus (file)
IBAN Plus (file) SSI Plus (file)
Costs
Business Forum Singapore | enhanced data usage | February 2017 15
Business intelligence portfolio
Competition
Services RMB tracker
Products
Global Transaction
Banking
Watch Analytics
SWIFT Scope
On-site Business Intelligence
Workshops & Training
Enriched Watch
data Cash & Trade
SWIFT Business Intelligence products & services support various business lines and give opportunities
to optimise functions and understand where business growth sits in the market
Central banks
Peer benchmarking
Corporate Business
Development report
Watch Analytics
Premium
RMB Market
Insights
NEW
Global Transaction
Banking
ASEAN commercial cross-border flows 2016 (first 3 quarters) cross-border MT103 value sent and received
Source: SWIFT Watch Analytics
Business Forum Singapore | enhanced data usage | February 2017 16
• 27% commercial flows are intra-ASEAN
• Extra-ASEAN flows are mainly with the USA, UK, Hong Kong, China and Japan
SG
ID
MY
PH
BN
VN
MM KH
LA
TH
United States
Hong Kong
United Kingdom
Japan
China
Australia
Netherlands
Korea, Republic of
Taiwan
Switzerland
United Arab Emirates
France
India
Germany
Belgium
Others
Extra-ASEAN Commercial Flows in 2016 by value
Outgoing pyaments Incoming payments
Competition
Bank C
Bank A + B average
Bank D
Bank E Bank F
Bank G
Bank H
Bank J
Bank K
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
-40% -30% -20% -10% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
Benchmarking Payments and trade finance in Hong Kong
Business Forum Singapore | enhanced data usage | February 2017 17
Competition
Trade value growth 2015/2016
Payment volume growth
2015/2016
*Size of the bubble
represents the value
of payments and trade
combined for 2016
18
New Banking Analytics Premium
Banking
Analytics
Premium
Business & Strategy
WHAT:
New set of data insights
In Cash & Payments
And Trade Finance
WHY:
• New business opportunities
• Strategic and competitive analysis
• Focused sales force
• Insightful market practices
• Etc.
Payments
Intermediation
Payments
Details of
Charges
Trade LC’s
Confirmations
Trade LC’s
Length
MT103s & MT202s
WHAT:
. Details of charges (field 71A)
. Instructed currencies (field 33B)
. Initial Ordering and End Beneficiary
Countries (field 52A and 57A/58A)
WHY:
• Map clearing business
• Discover new revenue streams
• Benchmark payments charges
against market practices
• Understand your STP efficiency
• Focus on high value payments
MT700 & MT400
WHAT:
. Confirmation instructions (field 49)
. L/C tenor length buckets
(field 31C/31D)
. Credit availability (field 41A)
WHY:
• Increase LCs individual margin
• Understand Market trends
• Assess Potential of LCs corridors
• Request faster LCs payments
• Look LCs confirmed LCs locations
• Focus on high value LCs
RA
NK
ING
/ D
AIL
Y D
ATA
/ C
UR
RE
NC
Y S
TA
TS
/ E
tc.
Competition
Business Forum Singapore | enhanced data usage | February 2017
Business Forum Singapore | enhanced data usage | February 2017 19
SWIFT Intraday Liquidity Reporting Survey
Banks share the same data management challenges
Lack of Business
Practice for Intraday
Reporting for
Nostro & LVPS
Accounts
Lack of Data
Centralisation
No Practice on Data
Model
for Regulatory
Reporting
Too low transaction’s
coverage
Lack of timeliness vs.
time stamping
Transaction types:
“ book transfers”
No defined use cases
Decentralised
management of Nostro
accounts
No central treasury
application
Different messaging
instances
Lack of definition for
regulatory tools (e.g.
credit lines, time specific
obligations)
No common high level
data model beyond
message types (e.g. extraction, data
aggregation)
Liquidity
and
Funding
Business Forum Singapore | enhanced data usage | February 2017
SWIFT messaging covers the main data challenges for intraday
liquidity monitoring
Source: Industry feedback from 35 individual banks workshops on BCBS 248
Source: BCBS
Daily maximum intraday liquidity usage “Use of transaction-by-transaction data of movements on the account(s)”
Start of the business day
Largest positive net
cumulative position
Largest negative net
cumulative position
Net
cum
ula
tive p
ositio
n
• Many banks have historically worked based on their
internal projections systems
• There are reporting coverage and consistency issues
both as a Direct Participant of LVPS and as a user of
Correspondent Banking services
SWIFT messaging key source of critical
transactional data for real-time liquidity monitoring
Liquidity
and
Funding
20
Business Forum Singapore | enhanced data usage | February 2017 21
Data consumption globally by banks – what do we see?
Liquidity
and
Funding
Business Forum Singapore | enhanced data usage | February 2017 22
How can SWIFT help with ILR in practice?
Review
As-is (optional)
Use SWIFT data to understand liquidity flows at all levels
Gap
analysis
Leverage SWIFT experience to assess data coverage and reporting readiness
Data
consolidation
Data capturing from all sources relevant for intraday liquidity, SWIFT and non-SWIFT flows
Data
transformation
/ normalization
Transform and normalize liquidity information flows, establish data logic and calculation metrics
Visualization
and reporting
Generate key
metrics
Monitor account
positions
Produce
regulatory
reports
Liquidity
and
Funding
Business Forum Singapore | enhanced data usage | February 2017 23
SWIFT Scope – End-to-end real-time business intelligence solution
Collects all
necessary intraday
reporting data
Integrates and
processes the data
Produces key
metrics and reports
Liquidity
and
Funding
Enriching your ISO 20022-based data model for investigations
Debtor’s
Agent
Ordering
Institution
Instructing
Agent
Sender
Instructed
Agent
Receiver
Creditor’s
Agent
Account With
Institution
Debtor
Ordering
Customer
Creditor
Beneficiary
Customer
Your Institution
Mexico
Local Bank
Mexico
Your Institution
HK
Local Bank
China
SWIFT
SWIFT
Financial
Crime
Complian
ce
National
Sort
Code?
Bank Directory Plus
> 1,000,000 national sort codes
Entity Plus
Business Forum Singapore | enhanced data usage | February 2017 24
Aggregated
amount towards
legal parent?
Reporting?
Intensity map (value/number of payments/change % since previous Q / etc)
from Mexico overview -> drill down
drill down
Financial
Crime
Complian
ce
Business Forum Singapore | enhanced data usage | February 2017 25
Drivers behind entity identifiers, LEI, BIC
Many new regulations related to Risk Management are being imposed since the economic crisis.
Regulatory Reporting of the transactions done with counter-parties is an important component.
Regulatory Reporting on transactions requires
• To aggregate transactions per counter-party legal entity
• Mapping of proprietary IDs or BICs in transactions on the LEIs of the counter-parties
• Automation due to high numbers of counter-parties and it subsidiaries/branches
The BIC is an established identifier in financial transactions
• Counterparties and beneficiaries
• Addressing, SWIFT connectivity
The LEI is becoming an enabler for
• Risk management, transparency, transaction reporting
• Dodd-Frank, Emir, MiFID II, MiFIR, Solvency II, Basel III…
Regulations that require LEIs (Nov 2015)*
• 21 regulations mandate LEI
• 22 regulations require either LEI or another identifier 26 * Progress Report LEI ROC, 5 Nov 2015
Financial
Crime
Complian
ce
27
Entity Plus in numbers (December 2016)
Identifier cross-reference
file
1,158,000 Total Identifiers
472,000 LEIs
120,000 BICs
242,000 GIINs
231,000 BRNs
1,100 MICs
15,000 IDs added per month
Entity relationship
file
55,000 Total FI entities with a parent & ult.
parent relationships
87,000 BICs with a parent & ult. parent
relationships
16,550 GIINs with a parent & ult. parent
relationships
75,000 LEIs (Fis) with a parent & ult. parent
relationships
250,000+ FI’s legal entities
Financial
Crime
Complian
ce
Business Forum Singapore | enhanced data usage | February 2017
28
SWIFTRef Entity Plus - Cross-referencing via parent entities
ING Luxembourg S.A.
BIC CELLLULLXXX
GIIN 5B7B1V.00014.ME.442
BRN B6041
EID 000OF60
ING Luxembourg S.A.
BIC CELLLULLTRD EID 001THFM
Domestic branch or
type of business
Head-Office
(legal entity)
ING Belgie N.V.
LEI JLS56RAMYQZECFUF2G44
BIC INGBBEB1XXX
GIIN 5B7B1V.00004.ME.056
BRN 403.200.393
EID 000S3RC Legal parent
(legal entity)
HEADOFFICE
OWNER *
* gradually populated
Financial
Crime
Complian
ce
Business Forum Singapore | enhanced data usage | February 2017
Business Forum Singapore | enhanced data usage | February 2017 29
Take-aways
Access to and
understanding of
data is key
Competitive,
regulatory and
cost pressure
make data-
driven banking a
necessity
SWIFT’s suite of
solutions is
tailored to
support your
data challenges