payments - fintech futures · 2012-09-18 · i 1 contents in this issue march 2012 38 11 24 4...

www.bankingtech.com

MARCH 2012

Dull it isn'tHow Adrian Kamellard plans to steer the Payments Council through choppy waters

Low value, high impactInvestments in SEPA will pay dividends for banks

Exchanges With mergers on hold, what now for global exchanges?

Going beyond standardsWhy standards matter, and who's saying so

Payments:the new

battlegroundBanks are starting to find ways to regain the

initiative against incursions from new rivals

banking

technology

M

AR

CH

2011

www.bankingtech.com I 1

ContentsMarch 2012In this issue

1138

24

4

transaCtions & PaYMents

Markets & investMents

risk & regulation

it & oPs

retail

28 news 31 news analysis

■ Fraud hits record levels in UK


■ clearing and settlement lobby group formed

35 news 36 getting to grips with data

It’s everywhere – financial institutions are virtually made of the stuff ...

38 interview: adrian kamellard The new chief executive of the Payments council

discusses the challenges the industry faces

40 appointments43 going beyond standards

The first of a series of articles examines standards efforts in financial services

47 industry columns & comments52 out of office

4 news

7 news analysis ■ Job prospects continue to suffer from

eurozone uncertainties

8 Cover focus: the payments battlefield a plethora of innovations in the retail sector and

the need to deal with regulatory issues has put banks under seige – till now

12 low-value, high impact

The low-value cross-border payments space is one area where banks are hitting back with new weapons


■ Mobile payments dominate Mobile World congress in Barcelona – this time for real?

20 news 24 exchange of service

Folllowing the collapse of the NYSE Euronext merger with Deutsche Börse, both are turning to IT services as a line of business


eDITORIAL COMMeNTMarch 2012

editor David Bannister,+44 207 017 [email protected]

Regular Contributors Dan Barnes, Sherree DeCovny, Alison Ebbage, Tom Groenfeldt, Eugene Grygo, Graham Jarvis ,Heather McKenzie, Nicholas Pratt, Kristina West,

Production Kosh Naran

Press Releases Send relevant releases to [email protected]

Group Sales Manager Neil Hartley, +44 203 377 5385 [email protected]

Senior Sales executive Leon Thomson, +44 203 377 3493 [email protected]

events Manager Gemma Healy,+44 207 017 [email protected]

Marketing and Circulation Kira McKinney,+44 203 377 [email protected]

Subscriptions and Renewals John Browne,+44 207 017 [email protected]

For Reprints and Web Publishing RightsPlease contact Leon Thomson on+44 203 377 3493

©2012 Banking TechnologyAll rights reserved; no part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electrical, mechanical, photocopying, recording, or otherwise without the prior written permission of the publisher.

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ISSN 0266-0865

“Spring is sprung, the grass is riz – I wonder where the boidies is?” observed Ogden Nash*. It’s a sentiment I’ve experienced over the past month or so as an increasing number of people have told me that they are seeing an increase in activity, or at least they are having many conversations about it.

One consultant put it like this: “We’ve not signed much new business so far this year, but we have been asked to tender for a lot more projects than we have for a while.”

To which I inwardly reply in the words of my wife: “That’s nice dear.” (at least, I hope I replied

inwardly, otherwise I might have put the chap in a potentially embarrassing situation.)I was quite prepared to put this cock-eyed optimism down to the change in the

seasons, February having ended up unusually mild here in London. These new projects are a little like Mr Nash’s boidies, I decided: where are they?

Then, as the month turned, more and more people started talking about this or that project they’ve been called in to actually work on. Quite large, lucrative and ambitious projects, naturally, though we have to bear in mind that this is in the view of people who’ve had a hard time of it these past few years. If they went to Gordon ramsay’s and were offered pork scratchings they’d be the best pork scratchings in the history of food.**

I’m starting to come round to their way of thinking, however, because many things do seem to be happening. Of these, the standout has to be the launch of Barclays’ Pingit.

I’ve been sceptical about this whole mobile thing, but my enthusiasm for Pingit isn’t a Damascene conversion (and it’s certainly not the name). Largely it’s because it’s so boringly simple. Many people go on about the lack of innovation in the financial services industry, and many of the very same people are dismissive of Pingit because it “only” lets people send money in a limited way.

That’s fine by me. In general I don’t want to send money in an unlimited way, despite what my bank manager may think.

Mobile isn’t only about where; it’s also about when. as it happens, I’m writing this on a train, which is something I’ve been able to do since I could write, though with a pen and paper. In another few sentences I’ll stop and do a modest amount of book-keeping. That will include writing a note to myself to transfer some money to my wife’s account. I could transfer it now, if I could be bothered to set up a personal hot-spot, log on to my bank’s website, remember what lie I told about the make of my first car, key a six-digit PIN into the DigiPass dongle ...

... you know what? I just can’t be bothered. I have just installed Pingit on my iPhone, though. BT

David Bannister, editor

* I don’t care what the internet says: it was attributed to Nash in an anthology of comic verse I owned as a boy, so I’m sticking to that.

** Actually, Gordon Ramsay’s pub outlets do sell pork scratchings, and they are very good indeed.

Leaps and bounds

1-2 Bolt CourtFleet StreetLondonEC4A 3DQ


Go to www.bankingtech.com for the latest news and comment

Citigroup has entered into an agreement with IBM to explore possible uses for IBM Watson,

the supercomputer technology that the technology vendor used to beat human competitors on the US game show Jeopardy!

Named after IBM founder Thomas J. Watson, the system was built by a team of scientists to accomplish a long-standing challenge – a computing system that rivals a human’s ability to answer questions posed in natural language with speed, accuracy and confidence. By accurately extracting facts and quickly understanding relationships in large volumes of data, the technology can help accelerate and improve decision-making across a variety of industries, IBM hopes.

Under the agreement, citi will examine the use of deep content analysis and evidence-based learning capabilities found in IBM Watson to help advance customer interactions, and improve and simplify the banking experience.

“at citi, we are constantly developing new, innovative ways to better serve our customers’ financial needs,” said Don callahan, citi’s chief administrative officer and chief operations & technology officer. “We are working to rethink and redesign the various ways in which our customers interact with money. We will collaborate with IBM to explore how we can use the Watson technology to provide our customers with new, secure services designed around their increasingly digital and mobile lives.”

citi will assess ways to use a first-of-a-kind customer interaction solution combined with Watson’s deep-content analytics, natural language processing, decision support, and evidence-based learning to continue to advance digital banking. Watson’s ability to analyse the meaning and context of human language, and quickly process vast amounts of information to suggest options targeted to a consumers’ individual circumstances, can help accelerate and assist decision makers in identifying opportunities, evaluating risks, and exploring alternative actions that are best suited for their clients. BT

Citi and IBM explore Watson in banking

reaction to the Barclays move was largely positive, though most commentators pointed out that the technology is not new, and similar services have been around for some time, both in the developing world and in

“Barclays’ launch is a wake-up call for the UK banking community, but just the tip of the iceberg of what can be done”, said Martin Wilson, chief executive of mobile payments provider Luup. “With the UK’s mobile payments services lagging behind many markets, the launch is a real step forward. For many competing banks this is creates the need for them to revitalise their strategies and realise the potential of a truly mobile payments system.

“Yet it is also worth recognising that the industry is still only looking at the tip of the iceberg of what can be done. For example, for some years now, Luup has been providing corporate mobile payment services for banks to offer their corporate customers. These services include remote invoice presentments, authorisations and payments and bring significant efficiencies and real savings to the cash-conscious corporate. They also provide banks with access to new sources of liquidity and customers.”

Both Barclays and the Payments council emphasise the security challenge of creating a national system, a view that was endorsed by specialists.

“Barclays’ launch of PingIt is a very positive step forward in the development of ‘mobile money’ and we fully support it. however, one only needs to look at high profile incidents over the past month to realise that entrants into the mobile payments space must be sure that all necessary security safeguards are in place,” said Pat carroll chief executive of ValidSoft. “For example, the move to chip and PIN (EMV) reduced card fraud, but it’s well known that criminals just move on to the next weakest area. In mobile money, that means the manipulation of both the sending and receiving of cash, through tactics such as SIM swap (a technique whereby fraudsters can divert calls or actions made via phone away from the number they are intended to reach and towards a different number for their own gain). BT

Barclays Pingit could be the kickstart the UK mobile payments infrastructure needs

Saxo turns to Rapid Addition for FIX

Saxo Bank, the investment bank specialising in online trading and investment, is deploying the c# version of rapid addition’s ra–cheetah as its FIX Protocol engine, replacing an internally developed system.

“having developed our own internal FIX engine and maintained it for years, choosing a third party FIX engine was a strategic decision in order to reduce the total cost of ownership in addition to leveraging the knowledge of industry experts,” said Jonas Gudjonsson, enterprise architect at Saxo Bank.

Designed for the buy- and sell-side, exchanges and MTFs, transaction hubs and independent software vendors, the firm’s solution enables businesses to benefit from increased throughput, lower deterministic latency and operational flexibility. ra-cheetah is in use at institutions across the globe and rapid addition continues to innovate in the ever-demanding low-latency and general trading environments. BT

4 I www.bankingtech.com

March 2012

NEWS

Barclays has stolen a march on its UK rivals with the launch of what it claims is Europe’s first person-to-person service for sending and receiving money

using mobile phone numbers, Barclays Pingit allows users to receive and send money, for free, to anyone with a UK current account and UK mobile phone number, without the need to share bank details.

at launch, only Barclays current account customers will be able to send money via the app, but current account customers of other banks will be able to register online to receive money.

a more generic version of a person-to-person mobile payments service is planned by the UK Payments council, which has commissioned VocaLink to build a central database that will allow customers to link their mobile phone number to their account details, regardless of who they bank with. It will be available to UK banks and building societies before the end of this year as a platform for them to build their own competitive service for their customers.

The announcement of the Payment council’s project was scheduled to have been made shortly before Barclays announced its Pingit service, but was delayed for unknown reasons.

as with Pingit, customers will register for the service through their own bank, with no need to share their details with a third party. The database will enable registered customers to make or receive almost-instantaneous payments from their existing account, using just a mobile phone number. It will be safe, secure and simple to use.

The service will be subject to common minimum standards that will require a pass code or a similar security feature to authorise a payment and enable banks to remotely disable an account, in case a phone is lost or stolen. any payments made will be routed through either Faster Payments or LINK.

It will be technically possible to offer the service on any smartphone with an internet connection on any network. Most commonly this will be through an internet browser or an app, but banks will be free to customise exactly how they offer the service to their customers.

adrian Kamellard, chief executive of the Payments council, said: “There’s clearly a great demand for mobile payments and our work will ensure that banks of all shapes and sizes can offer their own competitive service to their customers. Whether you want to pay a friend or your window cleaner, we are laying the foundation to enable mobile payments to become a mainstream option.”

Barclays Pingit uses the Faster Payments Service, allowing payments to be sent directly to an account without the sender needing to know anything more than the recipients’ mobile phone number. To send money, customers can use the free Pingit app available on iOS, android and Blackberry, or they can register online to receive payments. Transfers are as safe as any other banking transaction and the app is protected by a five-digit passcode set by the user.

antony Jenkins, chief executive, Barclays retail and Business Banking said: “Barclays Pingit could revolutionise the way people send and receive money. For friends splitting the cost of dinner, repaying a borrowed £10 or people sending money to a son or daughter at university, it’s free, quick, convenient, secure and easy to use. You can send and receive money in seconds, without having to enter account details. We’re committed to making customers’ lives much easier, giving them more choice in how they manage their money and Pingit absolutely does that. But it is not just Barclays’ customers who benefit as it’s available to current account holders of all the other UK banks too. I’m sure we’ll soon be wondering what we did before it.”

Nordic cross-market from Nasdaq OMX

Barclays beats rivals as UK banks line up to create generic mobile payment service

Nasdaq OMX Nordic has created an all-asset, cross-market technology platform with the launch of

commodities on its Genium INET platform.In line with a roadmap that was

set out in 2008, all asset classes from all eight regional markets – Sweden, Finland, Denmark, Norway, Iceland, Lithuania, Latvia and Estonia – are now tradable on one common INET-based technology platform.

commodities is the final asset class to be migrated onto the Genium INET platform and includes a variety of power derivatives, carbon emission and natural gas derivatives that will now be traded on the same technology platform as stocks, bonds, equities and fixed income derivatives. Genium INET is a comprehensive multi-asset trading and clearing system with ultra low latency performance.

anna Ewing, chief information officer of Nasdaq OMX, said: “The completion of our technology roadmap is a testament to Nasdaq OMX’s commitment to innovation and our continuous strive to deliver the best possible trading experience for customers and investors. By using our INET technology as the technology backbone at all our European markets, we provide our members with a unique all-asset, cross-market offering that reinforces our company’s ability to trade anything, anywhere.”

hans-Ole Jochumsen, president of Nasdaq OMX Nordic, said: “This marks a true milestone in Nasdaq OMX’s history as we complete the pioneering technology roadmap that was initiated in 2008. The successful commodities launch on Genium INET allows our members to trade a comprehensive portfolio of power, carbon and gas products on the same best-in-class technology platform as we use for all other Nordic and Baltic products. Moreover, now customers can leverage clearing synergies through our Genium INET clearing platform by using Nasdaq OMX’s clearing house for commodities, fixed income and cash derivatives.” BT

All banks to have access to VocaLink central database by year-endby David Bannister



Citigroup has entered into an agreement with IBM to explore possible uses for IBM Watson,

the supercomputer technology that the technology vendor used to beat human competitors on the US game show Jeopardy!

Named after IBM founder Thomas J. Watson, the system was built by a team of scientists to accomplish a long-standing challenge – a computing system that rivals a human’s ability to answer questions posed in natural language with speed, accuracy and confidence. By accurately extracting facts and quickly understanding relationships in large volumes of data, the technology can help accelerate and improve decision-making across a variety of industries, IBM hopes.

Under the agreement, citi will examine the use of deep content analysis and evidence-based learning capabilities found in IBM Watson to help advance customer interactions, and improve and simplify the banking experience.

“at citi, we are constantly developing new, innovative ways to better serve our customers’ financial needs,” said Don callahan, citi’s chief administrative officer and chief operations & technology officer. “We are working to rethink and redesign the various ways in which our customers interact with money. We will collaborate with IBM to explore how we can use the Watson technology to provide our customers with new, secure services designed around their increasingly digital and mobile lives.”

citi will assess ways to use a first-of-a-kind customer interaction solution combined with Watson’s deep-content analytics, natural language processing, decision support, and evidence-based learning to continue to advance digital banking. Watson’s ability to analyse the meaning and context of human language, and quickly process vast amounts of information to suggest options targeted to a consumers’ individual circumstances, can help accelerate and assist decision makers in identifying opportunities, evaluating risks, and exploring alternative actions that are best suited for their clients. BT

Citi and IBM explore Watson in banking

reaction to the Barclays move was largely positive, though most commentators pointed out that the technology is not new, and similar services have been around for some time, both in the developing world and in

“Barclays’ launch is a wake-up call for the UK banking community, but just the tip of the iceberg of what can be done”, said Martin Wilson, chief executive of mobile payments provider Luup. “With the UK’s mobile payments services lagging behind many markets, the launch is a real step forward. For many competing banks this is creates the need for them to revitalise their strategies and realise the potential of a truly mobile payments system.

“Yet it is also worth recognising that the industry is still only looking at the tip of the iceberg of what can be done. For example, for some years now, Luup has been providing corporate mobile payment services for banks to offer their corporate customers. These services include remote invoice presentments, authorisations and payments and bring significant efficiencies and real savings to the cash-conscious corporate. They also provide banks with access to new sources of liquidity and customers.”

Both Barclays and the Payments council emphasise the security challenge of creating a national system, a view that was endorsed by specialists.

“Barclays’ launch of PingIt is a very positive step forward in the development of ‘mobile money’ and we fully support it. however, one only needs to look at high profile incidents over the past month to realise that entrants into the mobile payments space must be sure that all necessary security safeguards are in place,” said Pat carroll chief executive of ValidSoft. “For example, the move to chip and PIN (EMV) reduced card fraud, but it’s well known that criminals just move on to the next weakest area. In mobile money, that means the manipulation of both the sending and receiving of cash, through tactics such as SIM swap (a technique whereby fraudsters can divert calls or actions made via phone away from the number they are intended to reach and towards a different number for their own gain). BT

Barclays Pingit could be the kickstart the UK mobile payments infrastructure needs

Saxo turns to Rapid Addition for FIX

Saxo Bank, the investment bank specialising in online trading and investment, is deploying the c# version of rapid addition’s ra–cheetah as its FIX Protocol engine, replacing an internally developed system.

“having developed our own internal FIX engine and maintained it for years, choosing a third party FIX engine was a strategic decision in order to reduce the total cost of ownership in addition to leveraging the knowledge of industry experts,” said Jonas Gudjonsson, enterprise architect at Saxo Bank.

Designed for the buy- and sell-side, exchanges and MTFs, transaction hubs and independent software vendors, the firm’s solution enables businesses to benefit from increased throughput, lower deterministic latency and operational flexibility. ra-cheetah is in use at institutions across the globe and rapid addition continues to innovate in the ever-demanding low-latency and general trading environments. BT

Eurozone crisis continues to dampen job prospectsThe latest figures from eFinancialCareers show jobs in operations heavily down as banks consolidate and move offshore, but there are some specialist pockets still hiring.

News ANALYsIsMarch 2012

signs of recovery in the banking and finance sector took a knock in the second half of last year, and several sectors showed dramatic year-on-year decline in the jobs market.

according to eFinancialcareers, demand for operations professionals suffered most over the period, recording a decrease of 28% in the fourth quarter of 2011. Banks have been looking for cost-efficiencies through streamlining their operational functions. Very often this means combining back office teams across multiple platforms, a shared services model, or offshoring (or near-shoring) these functions to cheaper locations, it says.

“It is clear that business as usual is not an option for banks and financial institutions as they grapple with a changing operating environment,” said James Bennett, managing director for EMEa and asia Pacific. “Ongoing concern surrounding the eurozone sovereign debt and the volatility of the stock markets have ‘darkened the moods’, and as a result, the city’s recruitment activities have been focused more on replacement and restructuring hiring rather than new hires. Looking forward into 2012, eFinancialcareers believes this pattern of recruitment activity will continue until there is more clarity on some of the issues impacting financial services.”

By late 2010, the global banking and finance industry had demonstrated its resilience, and by mid-2011, most of the numbers depicted an industry that had emerged from the 2008 financial crisis.

By the second half of 2011, however, banks and financial institutions were impacted by the sovereign crisis in Europe and the depressed global economic outlook. The number of job opportunities for finance professionals in the UK, continental Europe and asia Pacific in 2011 mirrored the market, posting growth in the first half of the year, followed by a decline in the second half. In those regions, the number of job opportunities increased 4% year-on-year for the quarter ended December 31, 2011, from 7,254 average daily job postings in Q4 2010 to 7,515 in Q4 2011. asia Pacific recorded the strongest growth (+6%) over the period, followed by continental Europe (+4%) and the UK (+2%).

The number of job postings for finance professionals in the UK showed an overall year-on-year growth of 2% in the fourth quarter of 2011. The number of job opportunities declined by 8% from Q3 to Q4 2011. In a ‘normal’ market environment, recruitment activities in the front office tend to slow down in the last quarter of the year as professionals wait for their bonus payouts before making a move. On the recruiter side, this is an expensive period to hire as they need to buy out a large proportion of their bonus to snap up top talent. This quarter’s slowdown, however, is more likely to be a reflection of the market uncertainty rather than costs or bonuses.

Top advancers and declinersWhen looking at Q4 2011 over the preceding quarter, positive growth in the number of job opportunities was recorded in private equity/venture capital (+6%), hedge funds (+ 6%), and compliance/legal (+5%).

Three sectors registered strong losses over the same period: operations (-28%), consultancy (-23%) and equities (-20%).

The private equity sector has been more reluctant to make redundancies than

other areas of finance, and has instead encouraged a proportion of partner level employees to retire to make cost-savings. This has prompted some internal promotions and therefore a need to recruit externally to replace those moving up. eFinancialcareers is also seeing pockets of hiring activity within certain sub-sectors, notably distressed-focused investors and for private equity professionals with mid-market experience.

Banks and financial services firms have been deluged with a number of new regulatory initiatives, which has increased the burden on their compliance teams. In the past, banks were reluctant to hire for non-revenue generating positions, but mandatory regulation has placed too great a strain on their compliance teams and they have been forced to bolster these divisions.

hedge funds performance was badly affected throughout 2011, but some smaller funds have held up relatively well and a raft of start-ups throughout the year has ensured a steady uplift in the number of roles. While the larger funds have cut back headcount in recent months, there are still opportunities within technology and operational functions. BT


eFinancialCareers is now accessible at www.bankingtech.com/careers


Go to www.bankingtech.com for the latest news and commentNewSMarch 2012

Chilean bank Banco Monex, a member of Monex Grupo Financiero, has gone live with the allTRA Java J2EE trade finance bank back-office solution from Surecomp. Banco Monex will leverage allTRA to improve customer service, enhance efficiency, reduce processing charges, lower maintenance costs, and support the Bank’s drive for a greater market share. Managed by Surecomp’s Santiago-based Latin American operations unit, the implementation was completed in a single phase with all solution modules.

ZAO Raffeisenbank has chosen Advent’s wealth management solutions to automate processes and improve client reporting in anticipation of the development of its private banking activities. The bank will move from the proprietary solution it has been using for portfolio accounting and management to an enterprise-ready, purpose-built to improve service level and operational efficiency.

SS&C Technologies has entered into a definitive agreement to acquire Thomson Reuters’ Portia business, a middle-to-back office investment operations platform, for $170 million. The platform provides a broad set of middle-to-back office capabilities that allow investment managers to track and manage the day-to-day activity in their investment portfolios. Its offering will complement SS&C’s existing solutions portfolio. The acquisition adds over 140 staff across locations in Boston, Bangalore, London, Hong Kong, Singapore, Dubai, Tokyo and Bangkok. Christy Bremner, president of Portia, will continue in her current role.

experian, the global information services company, has a new version of Hunter, its data-sharing fraud prevention system, featuring integration with Google Maps, automated completion of fraud submissions to CIFAS and greater sharing of fraud intelligence and investigatory capabilities across multiple business units within an organisation. The integration of Google Maps into Hunter allows fraud investigators to see how the addresses on a number of connected applications relate to each other geographically, through the use of its Street View, Satellite and Standard map views. This will, for example, enable investigators to spot geographic connections that are not obvious from the data, such as potential fraud collaboration between residents of neighbouring properties located on different streets, and to ensure that commercial properties are not passed off as domestic residences.

BNP Paribas Securities Services has selected Calypso to support its enhanced global OTC Valuation Services. The Calypso software will enable BNP Paribas to provide more robust OTC valuation services for its clients as well as open up opportunities in new market segments in a highly competitive market. BNP Paribas will deploy the software in Europe with a view to eventually extending it to its other hubs to service its global client base in more than 100 countries.

ICAP, the interdealer broker, has extended its long-established distribution partnership with Quick, the Japanese supplier of real-time financial information. The new three-year agreement will continue the provision of ICAP’s data products and services to Quick customers in Japan and internationally via Quick’s ActiveManager and Astra product series.

Caplin Systems has launched Presenter, the latest of its products to support financial trading web applications and improve developer productivity. Presenter enables a graphical user interface design to be easily translated into a fully-functional web app. Specifically designed for trading applications, it simplifies the process of designing and building interface components such as trade tickets and trade tiles, automatically integrating them with the appropriate trade model in Caplin’s workflow library. It allows a “separation of concerns” enabling user experience designers to create the visual elements of the application using HTML with appropriate CSS styling, independent of the behaviour of the application. The behaviour is developed in parallel and HTML5 attributes are used to bind the behaviour to the visual elements.

Interdealer broker Tradition has made data from Trad-X, its hybrid trading platform for OTC derivatives, available as specialist content from data vendors Thomson Reuters and Bloomberg. The data will be available on desktops with the ability to license its use within non-display applications. The data will initially focus on Euro Interest Rate Swaps and, for the first time in this market, Trad-X data will display real-time executable best bid and offer prices across all active sectors, streamed directly from the 11 global banks that founded and support the Trad-X platform. These include BNP Paribas, Citi, Credit Suisse, Goldman Sachs, HSBC, Morgan Stanley, Nomura, Société Générale, Royal Bank of Scotland and UBS.

Bloomberg Tradebook has selected Broadridge’s consolidated business process outsourcing solution to support its equity and option clearance and settlement business. The agreement is designed to help Bloomberg Tradebook minimise its fixed-cost investment in technology and operational infrastructure while also creating new revenue-generating opportunities as it moves from its current fully-disclosed clearing model to self-clearing. Broadridge’s processing platform and integrated product solutions will support Bloomberg Tradebook in its transition to a self-clearing operating model. Broadridge’s customisable and scalable BPO solution will provide all back-office operations and support globally.

Software firm Microgen, whose Aptitude platform is used by many global banks and digital media providers, has a new product to address the need to extract insights from stored business data. DBClarity Developer is aimed at both IT and business users, allowing them to extract informational insights in the form of marketing intelligence, operational statistics and management metrics. The solution has an intuitive graphical environment that allows users to define data access and analysis routines by simple drag and drop. The visual nature of Microgen DBClarity Developer enables collaboration between technical and business users and improves the ability of teams to extract information from IT systems. Microgen DBClarity Developer diagrams can be deployed to all major databases.

Commerzbank Corporates and Markets has unveiled its enhanced eFX platform, Commander, based on the current platform, Click&Trade FX. Commander has a number of new features: a new FX structuring platform, Kristall; an expanded product range; and improved usability with multimedia support, real time event news, tutorials, opinions and research. It also features real-time charting tools with access to a comprehensive historical and real-time overview for a full market picture. BT

Eurozone crisis continues to dampen job prospectsThe latest figures from eFinancialCareers show jobs in operations heavily down as banks consolidate and move offshore, but there are some specialist pockets still hiring.

News ANALYsIsMarch 2012

signs of recovery in the banking and finance sector took a knock in the second half of last year, and several sectors showed dramatic year-on-year decline in the jobs market.

according to eFinancialcareers, demand for operations professionals suffered most over the period, recording a decrease of 28% in the fourth quarter of 2011. Banks have been looking for cost-efficiencies through streamlining their operational functions. Very often this means combining back office teams across multiple platforms, a shared services model, or offshoring (or near-shoring) these functions to cheaper locations, it says.

“It is clear that business as usual is not an option for banks and financial institutions as they grapple with a changing operating environment,” said James Bennett, managing director for EMEa and asia Pacific. “Ongoing concern surrounding the eurozone sovereign debt and the volatility of the stock markets have ‘darkened the moods’, and as a result, the city’s recruitment activities have been focused more on replacement and restructuring hiring rather than new hires. Looking forward into 2012, eFinancialcareers believes this pattern of recruitment activity will continue until there is more clarity on some of the issues impacting financial services.”

By late 2010, the global banking and finance industry had demonstrated its resilience, and by mid-2011, most of the numbers depicted an industry that had emerged from the 2008 financial crisis.

By the second half of 2011, however, banks and financial institutions were impacted by the sovereign crisis in Europe and the depressed global economic outlook. The number of job opportunities for finance professionals in the UK, continental Europe and asia Pacific in 2011 mirrored the market, posting growth in the first half of the year, followed by a decline in the second half. In those regions, the number of job opportunities increased 4% year-on-year for the quarter ended December 31, 2011, from 7,254 average daily job postings in Q4 2010 to 7,515 in Q4 2011. asia Pacific recorded the strongest growth (+6%) over the period, followed by continental Europe (+4%) and the UK (+2%).

The number of job postings for finance professionals in the UK showed an overall year-on-year growth of 2% in the fourth quarter of 2011. The number of job opportunities declined by 8% from Q3 to Q4 2011. In a ‘normal’ market environment, recruitment activities in the front office tend to slow down in the last quarter of the year as professionals wait for their bonus payouts before making a move. On the recruiter side, this is an expensive period to hire as they need to buy out a large proportion of their bonus to snap up top talent. This quarter’s slowdown, however, is more likely to be a reflection of the market uncertainty rather than costs or bonuses.

Top advancers and declinersWhen looking at Q4 2011 over the preceding quarter, positive growth in the number of job opportunities was recorded in private equity/venture capital (+6%), hedge funds (+ 6%), and compliance/legal (+5%).

Three sectors registered strong losses over the same period: operations (-28%), consultancy (-23%) and equities (-20%).

The private equity sector has been more reluctant to make redundancies than

other areas of finance, and has instead encouraged a proportion of partner level employees to retire to make cost-savings. This has prompted some internal promotions and therefore a need to recruit externally to replace those moving up. eFinancialcareers is also seeing pockets of hiring activity within certain sub-sectors, notably distressed-focused investors and for private equity professionals with mid-market experience.

Banks and financial services firms have been deluged with a number of new regulatory initiatives, which has increased the burden on their compliance teams. In the past, banks were reluctant to hire for non-revenue generating positions, but mandatory regulation has placed too great a strain on their compliance teams and they have been forced to bolster these divisions.

hedge funds performance was badly affected throughout 2011, but some smaller funds have held up relatively well and a raft of start-ups throughout the year has ensured a steady uplift in the number of roles. While the larger funds have cut back headcount in recent months, there are still opportunities within technology and operational functions. BT


eFinancialCareers is now accessible at www.bankingtech.com/careers

One of the most obvious constraints – or excuses for inactivity, depending on your point of view – was the uncertainty over SEPA end-dates. In February, the European Parliament voted overwhelmingly (approximately 95%) in favour of adopting SEPA end date regulation. The deadline for changeover to both SEPA Credit Transfers and SEPA Direct Debits has been set for 1st February 2014 for all Member States using the Euro as their currency.

“The finalisation of this long awaited regulation marks a major milestone for European payments, moving our industry and all payment users into SEPA’s Mandatory Adoption Phase. Already to date we have seen a steady move to SEPA and today’s vote is extremely important to the continued success and adoption of SEPA,” said systems vendor Sentenial, adding that this will now mean moving to a “mass adoption phase which will undoubtedly usher in considerable innovation to the European payments space”.

Others agree – with the end now in sight, the considerable investment in systems modernisation that has been made can now be deployed as a competitive weapon. “We’re very bullish on SEPA,” said a London-based executive of one US bank. “It has made us leaner and meaner in ops right across the investment and corporate parts of the bank.”

Paul Taylor, head of FI Sales, GTS EMEA, at Bank of America Merrill Lynch, says that SEPA is really part of the developments that have been going on behind the scenes. “Banks have not failed to innovate, though it is really more evolution: they have made significant efforts to provide global consistency while still being local, and the channels through which we now do our banking are infinitely more sophisticated than a trip to the teller,” he says

According to Taylor, the lack of an end date was a constraint because there was no reason for banks to do it unless it was mandatory, though there have been side-benefits.

“There has been a lot of work on SEPA, but you can’t push a rope uphill. That’s not about defending the position of the banks – it’s a market economy, and if the market demands something it usually happens. The industry needs a better sense of the underlying benefits and the real value, though SEPA has reduced the sheer opacity of moving money cross border,” he says. “SEPA may have been driven by regulation, but it means that the spaghetti of connections we started talking about 10 years ago is being replaced by a hub, including the layer in front of the applications for new channels, and that has really simplified the take on of new channels and services.”

Kislingbury agrees: “SEPA may have been driven by regulation, but it means that the spaghetti of connections we started talking about 10 years ago is being replaced by a hub, including the layer in front of the applications for new channels, and that has really simplified the take up of new channels and services.”

The evolution of systems has also helped, says Joe Mazzetti, executive vice president, corporate development at Fundtech. “Payment hubs, for instance, are unifying the channels so that the


customer experience is unique. Bank of America is now developing what would normally be a cash management system but the hub is making it very transparent to the end user, and that increases fundamentally what they can do in service terms. It is all about value-add.”

Research conducted by Cognizant, through the Financial Services Club among 300 payments professionals, showed that 40% of the organisations surveyed will be using just two to three key payments platforms in ten years’ time, compared with the nine platforms that 21% of these organisations use currently.

“This clearly indicates that payment systems will undergo substantial change as traditional payments frameworks are being challenged by the demand for more cost effective, more transparent and faster remittance services,” says Tony Virdi, vice president and head of Cognizant’s banking and financial services practice for the UK and Ireland. “We can expect a period of consolidation and transformation over the next decade, but in order for companies to remain competitive, they must quickly adapt to these >

The US FATCA rules still require lots of clarification, but will add a further burden on the payments process because of the requirement to report on activities of accounts that the US Internal Revenue has an interest in.

Moreover, it requires Foreign Financial Institutions to withhold a percentage of the value of payments made to entities that are not confirming to the rules defined in FATCA (30% for withholdable payments, variable for pass-through payments).

Under FATCA, a withholdable payment is defined as:■ “any payment of interest (including any original issue discount), dividends, rents, salaries, wages, premiums, annuities, compensations, remunerations, emoluments, and other fixed or determinable annual or periodical gains, profits, and income, if such payment is from sources within the United States” ■ “any gross proceeds from the sale or other disposition of any property of a type which can produce interest or dividends from sources within the United States”.

FFIs are also required to monitor accounts where the customer has reoccurring payments to the US or often instructs payments from the US. Being able to determine this, according to the rules, requires the FFI to be able to identify any customers that have regular payments/standing orders setup to send money to the US. This implies a need to be able to search all payment schedules for relevant customers for any where the beneficiary is in the US.

FATCA does not yet specify what ‘from the US’ means – it could be that the US is the source of letters, or ‘called from’ telephone numbers for telephone banking or possibly IP address geolocation for online banking.

FATCA information requirementsMost of the information that the FATCA legislation requires is likely to already be in the payments message, but the withholding tax is a new element.■ Source country for the payment ■ Payment type e.g. interest, dividend■ Status of the ultimate beneficial owner (if known)■ Status of the next financial institution in the chain■ Withholding tax deducted so far

www.fatcasolutions.com

FATCA for Fat Cats


A plethora of innovations in the retail sector and the need to deal with regulatory issues has put banks under seige, but they are starting to fi ght back, writes David Bannister.

Cover story: PaymentsMARCH 2012

the newbattleground

payments:

Area in particular, but also the US Foreign Account Tax Compliance Act, which extends anti-money laundering and due diligence obligations in all sorts of strange and bewildering ways (see panel).

Recently, however, some of the constraints that have been holding things back have fallen away, and a sense of purpose seems to have returned. As Barry Kislingbury, global solutions manager for payments and messaging at Misys, puts it: “There has been a speed change over the past few months, and some of the banks do seem to be fi ghting back. It’s like a light bulb has come on.”

the past few years have seen an enormous number of new choices in the consumer market, and an even more enormous number of claims for innovative new ways of doing old things.

Many of these come from the world of mobile commerce and mobile payments. This has given rise to the notion that banks are being left in the dust in the rush to a brave new mobile world.

In the bank-to-bank payment world, meanwhile, everyone has been concentrating on the changes being wrought by regulation – the Single Euro Payment

One of the most obvious constraints – or excuses for inactivity, depending on your point of view – was the uncertainty over SEPA end-dates. In February, the European Parliament voted overwhelmingly (approximately 95%) in favour of adopting SEPA end date regulation. The deadline for changeover to both SEPA Credit Transfers and SEPA Direct Debits has been set for 1st February 2014 for all Member States using the Euro as their currency.

“The finalisation of this long awaited regulation marks a major milestone for European payments, moving our industry and all payment users into SEPA’s Mandatory Adoption Phase. Already to date we have seen a steady move to SEPA and today’s vote is extremely important to the continued success and adoption of SEPA,” said systems vendor Sentenial, adding that this will now mean moving to a “mass adoption phase which will undoubtedly usher in considerable innovation to the European payments space”.

Others agree – with the end now in sight, the considerable investment in systems modernisation that has been made can now be deployed as a competitive weapon. “We’re very bullish on SEPA,” said a London-based executive of one US bank. “It has made us leaner and meaner in ops right across the investment and corporate parts of the bank.”

Paul Taylor, head of FI Sales, GTS EMEA, at Bank of America Merrill Lynch, says that SEPA is really part of the developments that have been going on behind the scenes. “Banks have not failed to innovate, though it is really more evolution: they have made significant efforts to provide global consistency while still being local, and the channels through which we now do our banking are infinitely more sophisticated than a trip to the teller,” he says

According to Taylor, the lack of an end date was a constraint because there was no reason for banks to do it unless it was mandatory, though there have been side-benefits.

“There has been a lot of work on SEPA, but you can’t push a rope uphill. That’s not about defending the position of the banks – it’s a market economy, and if the market demands something it usually happens. The industry needs a better sense of the underlying benefits and the real value, though SEPA has reduced the sheer opacity of moving money cross border,” he says. “SEPA may have been driven by regulation, but it means that the spaghetti of connections we started talking about 10 years ago is being replaced by a hub, including the layer in front of the applications for new channels, and that has really simplified the take on of new channels and services.”

Kislingbury agrees: “SEPA may have been driven by regulation, but it means that the spaghetti of connections we started talking about 10 years ago is being replaced by a hub, including the layer in front of the applications for new channels, and that has really simplified the take up of new channels and services.”

The evolution of systems has also helped, says Joe Mazzetti, executive vice president, corporate development at Fundtech. “Payment hubs, for instance, are unifying the channels so that the


customer experience is unique. Bank of America is now developing what would normally be a cash management system but the hub is making it very transparent to the end user, and that increases fundamentally what they can do in service terms. It is all about value-add.”

Research conducted by Cognizant, through the Financial Services Club among 300 payments professionals, showed that 40% of the organisations surveyed will be using just two to three key payments platforms in ten years’ time, compared with the nine platforms that 21% of these organisations use currently.

“This clearly indicates that payment systems will undergo substantial change as traditional payments frameworks are being challenged by the demand for more cost effective, more transparent and faster remittance services,” says Tony Virdi, vice president and head of Cognizant’s banking and financial services practice for the UK and Ireland. “We can expect a period of consolidation and transformation over the next decade, but in order for companies to remain competitive, they must quickly adapt to these >

The US FATCA rules still require lots of clarification, but will add a further burden on the payments process because of the requirement to report on activities of accounts that the US Internal Revenue has an interest in.

Moreover, it requires Foreign Financial Institutions to withhold a percentage of the value of payments made to entities that are not confirming to the rules defined in FATCA (30% for withholdable payments, variable for pass-through payments).

Under FATCA, a withholdable payment is defined as:■ “any payment of interest (including any original issue discount), dividends, rents, salaries, wages, premiums, annuities, compensations, remunerations, emoluments, and other fixed or determinable annual or periodical gains, profits, and income, if such payment is from sources within the United States” ■ “any gross proceeds from the sale or other disposition of any property of a type which can produce interest or dividends from sources within the United States”.

FFIs are also required to monitor accounts where the customer has reoccurring payments to the US or often instructs payments from the US. Being able to determine this, according to the rules, requires the FFI to be able to identify any customers that have regular payments/standing orders setup to send money to the US. This implies a need to be able to search all payment schedules for relevant customers for any where the beneficiary is in the US.

FATCA does not yet specify what ‘from the US’ means – it could be that the US is the source of letters, or ‘called from’ telephone numbers for telephone banking or possibly IP address geolocation for online banking.

FATCA information requirementsMost of the information that the FATCA legislation requires is likely to already be in the payments message, but the withholding tax is a new element.■ Source country for the payment ■ Payment type e.g. interest, dividend■ Status of the ultimate beneficial owner (if known)■ Status of the next financial institution in the chain■ Withholding tax deducted so far

www.fatcasolutions.com

FATCA for Fat Cats


changes and be flexible and transparent enough to adapt.”

The internet and rise in mobile usage in particular are introducing significant changes to the retail and corporate banking sectors. The research showed that for wholesale as well as retail banks, internet-based payments feature in the top three technologies that will have the most impact on their payment platforms. Around 96% of retail banks cite the internet and 82% cite mobile technologies as either the most important change or one of the important changes. “These emerging technologies pose a threat to traditional payment methods, because they are more accessible and quicker and easier to use,” says Virdi. “By the end of this decade we can expect the cheque to have disappeared and we will see reduced volume of cash and plastic. Mobile payments will soon take the lead, as they take advantage of the always-on, service-rich mobile internet, and a wealth of ever more secure NFC-enabled smartphones. Regional Pan-European Automated Clearing Houses will have been established and physical borders will no longer be a barrier to effective, real-time payments.”

Virdi’s view is that traditional payments providers are being squeezed out by the combined effects of channel evolution, disruptive innovation from players such as Google, the threat of consolidation with the likes of PayPal and mobile telecommunications companies, and regulation designed to open up payments competition and to provide regional as opposed to country-specific services. The result, he says, is that in Europe “clearing houses for retail payments will be locked in a competitive battle” while in Asia they will consolidate, “with some pan-regional or potentially global players likely to emerge”.

Others are less pessimistic about the future role of banks. “Banks have different challenges, and it means that they often struggle in the face of new devices and services that don’t have the same restrictions, newcomers such as Payment Service Providers have far less legacy and regulations,” says Kislingbury.

“Payment Services providers are trying to go after the FX business and use their reach – which resonates with some of the corporates, but there have always been new ideas out there – I think that it is making the bankers stronger, because it is pushing them and you see an awful lot of effort in the banks in improving the customer experience with dashboards and apps,” says Fundtech’s Mazzetti. “The people that are making the most noise are making the least progress. If alternative currencies get big enough governments will start regulating them – as they did with telcos. More importantly, we’re not so sure how the Western Unions and so on are going to be able to service the customers in terms of the expertise and advice that banks can give, and there is such tremendous pressure from regulation and cost issues that they are starting to recognise that they need to partner.”

“In the consumer space there are some interesting new models, and banks have not been as good in this area, but I don’t think banks should necessarily worry. In the wholesale payments space we need to increase

security, reduce risk and increase the flow of cash,” says BAML’s Taylor. “I come at it from the point of view of someone who, working for a payments processor, found himself pushing water uphill. Now I’m on the banking side and I see things differently, and I see that if you compare the businesses, it isn’t equal – it’s like comparing a tyre maker and a car manufacturer, they may be the best tyres, but they are only a part of the picture. A bank is more like the car manufacturer. At the end of the day, payments are about facilitating something – a securities transaction, an FX trade or a trade finance activity.” BT

■ If anything, in 2011 the innovation pace increased, and the market became even more competitive. Visa and MasterCard continued on a trail of acquisitions and partnerships in their transformation journey from card networks to payments companies and beyond. American Express and its Enterprise Growth team have been busy launching products and announcing digital initiatives of their own. China UnionPay became the largest card scheme in the world.■ As expected, mobile provided the story of the year in consumer payments innovation. With Google Wallet up and running and other initiatives in the works, mobile is finally entering the high street. Although mobile at the retail POS remains years away from being mainstream, different visions will compete fiercely.■ Security in payments is a must. Mobile devices and increased connectivity are raising the bar for security requirements and create new roles in the payments ecosystem, such as Trusted Service Manager. Also, the questions around EMV in the US are rapidly moving from “if and why” to “when and how.”■ Just like security, making use of available data is increasingly a must for a successful payments business. Big Data, a buzzword of 2011, has been accumulating ink and conference air time. However, Celent’s view is that Enterprise Intelligence, an effective application of customer, business, and transactional intelligence would be far more effective. When it comes to analytics and data, banks should walk before they can run.■ Durbin continued to dominate the debit cards and broader retail banking discussions in the US. The rules have been announced, and the industry has been busy interpreting, implementing, and responding. However, almost no one is happy, and we think this story is far from over.■ In Europe, the looming regulatory end date for SEPA is expected to force the procrastinating banks to get ready. Not that it will be easy, especially if the impact on corporations is going to be as large as feared.■ Still more regulation and standards seems to be about the only certainty in uncertain times. This, combined with the need to balance product enhancement and operational efficiency, puts most of the IT budgets in transaction banking on a knife edge.■ At the infrastructure level, the clear trend is towards faster payments at all ends of the spectrum, including low-value payments. Many countries are either implementing or planning to implement same-day or near-real time payment processing infrastructure. In the US, if NACHA’s proposal for same day services wins the vote in Q1 2012, it would become mandatory for all participants, presenting banks a number of challenges to overcome, from technical issues to questions of how to price the payments.■ In 2011 Celent noticed the initial signs of a trend towards a fundamental rethinking of the transactional retail account. Although this is not a trend with short-term impact, it should be considered by anyone seeking differentiation from a crowded marketplace and investing in new technologies.

www.celent.com

Celent: Top trends in payments

Cover story: PaymentsMARCH 2012

processing of low value, cross-border payments will be more efficient in SEPA.”

There are challenges when it comes to processing low value, cross-border payments. Among these is the unpredictable nature of the clearing cycle. While SEPA will help to standardise timings in Europe, says Sinha, there needs to be a similar approach in other regions. This is one of the reasons other regions, such as the Middle East and Africa, are looking at the SEPA model in order to rationalise their payments infrastructures.”

The idea of IPFA’s framework is simliar to that of SEPA – to develop governance, rules, standards and documentation that will help in a regional context. “This will deliver the benefits of scale because banks will be using the same processes, standards and methodologies for cross-border payments,” says Cousins.

IPFA’s members include ANZ Banking Group, Swift, PayPal, VocaLink, Standard Chartered Bank, Fundtech, JP Morgan and Clear2Pay. Absent are some of the large correspondent banks. “The big international banks are not really on board because they have their own networks and infrastructures. Where IPFA comes into its own is with the tier two and regional banks,” says Cousins.

In these straitened times, even the very large banks may be reviewing their cross-border payments strategies for low-value transfers. Gene Neyer, senior vice-president, product management at software developer Fundtech, says SEPA has paved the way for


greater convergence of high value and low value cross-border payments. “There is no longer any reason to have separate payments silos. Payment services hubs can deliver multi-instrument, multi-currency and multi-country processing,” he says.

Neyer’s colleague, George Ravich, executive vice-president and chief marketing officer, says a desire to lower the cost of processing to as little as possible is driving outsourcing – although these days it is likely to be called cloud computing. “Banks of all sizes are

looking to outsource the processing of payments in order to lower their costs and improve operations. There is little differentiation that can be achieved in back end payments processing, which makes it an ideal candidate for outsourcing.”

He argues that innovation can be found in the payments space. “There is little doubt that the state of the global economy and the banking

business is affecting innovation. But we are seeing very clearly that banks in emerging countries have the funds and the appetite to innovate. Local banks in the growth regions realise that investments are being made in infrastructure, offices, factories etc and that they have to provide better payments systems because they will be increasingly competing against international banks.”

Organisations such as PayPal are also innovating, making online payments a very easy option, says Swift’s Raymaekers. “The danger here for banks is that PayPal >

“In a number of regions, including ASEAN, Africa and Central and South America, SEPA has been identified as

a good idea and its principles are being developed for

these regions,”Arthur Cousins, IPFA


There’s little appetite for innovation in the banking sector; profit margins are low and regulators are forcing divestments. Battening down the hatches seems to be something of a theme. But at the same time, non-banks are stealing a march in areas that could prove to be lucrative for embattled financial institutions.

Take, for example, low-value, cross-border payments. Many of these payments are workers’ remittances – payments to relatives made by migrant workers earning a living in other countries. In its December 2011 publication, Outlook for Remittance Flows 2012-14, the World Bank estimated total remittance flows to developing countries had reached $351 billion in 2011, up 8% on the previous year. For the first time since the financial crisis, said the bank, flows to all developing regions had increased.

However the low-value, cross-border payments category is not the sole preserve of remittances – there is an increasing online element to these payments. A decade ago it would have been unlikely that a consumer would buy goods from a supplier in another country, but the internet has made this possible and, in most cases, straightforward.

But in workers’ remittances and in online consumer payments, banks have not taken a leading role – in many cases the innovators are non-bank financial institutions or not even financial institutions.

When it comes to processing such payments there are significant challenges: different languages, conventions, relationships, business models and regulations can throw up obstacles to achieving low-cost, efficient processing. The correspondent banking network was developed to tackle these barriers, but at a cost, which many corporations, consumers and even financial institutions are no longer so keen to carry.

Myriad forces are at work in the low-value, cross-border space. At the high end, large corporations that have set up shared service centres and payments factories are seeking further efficiencies from these structures by implementing payment on behalf of models, where a centralised entity makes payments on behalf of another entity (a subsidiary) in another country. Mid-tier corporates are increasingly engaging in business in new countries and regions, and finally, consumers are making online purchases of goods sourced from around the world.

Wim Raymaekers, head of banking market at Swift, says there are new developments and innovations in the retail space that will have an impact on the banking business and international payments. “I believe there is

a clear trend towards ‘right here, right now’ payments, where consumers are visiting websites and want to pay for goods immediately without having to go to their bank website or to wait for several days for funds to clear.”

In order to deliver right here, right now payments, he says, the banking industry needs faster, low-cost payment services and back-end infrastructure that allow payments to be processed in real time. VocaLink’s Faster Payments service in the UK and the mobile services developed by India’s ACH, NPCI, are examples of this. By taking such developments a step further, such as interlinking these schemes, international remittances and transfers are made much more straightforward.

Interlinking is a developing theme at the International Payments Framework Association, which is driving the development of rules, standards, operating procedures, and guidelines to improve cross-border payments. Says IPFA: “... because globalisation is driving a broader base of clients who demand a more cost-effective, less complex, and more certain payment service with a wider reach, standardisation is more important than ever.”

Arthur Cousins, chief executive of IPFA, says that at a strategic level now is not the time to be innovating in the banking world. “Innovation and new ideas do not have the same focus of attention as they did before the financial crisis. Transaction, investment and retail bankers are to a significant extent just doing the basics, looking after their customers as best they can.”

Despite this, IPFA is working to improve processing of low value, cross-border payments, aligning its developments with the innovation its members are seeing on the fringes in areas such as mobile payments initiation and handling. Much of the work is focused on supporting the global trend of workers’ remittances, says Cousins.

The Single Euro Payments Area has established procedures that go a long way to removing some of the costly obstacles to cross-border payments processing. It has harmonised diverse national and cross-border euro systems at the technical, customer services and procedural levels. The SEPA rulebooks set out rules, practices and standards to provide a common understanding of how to move funds from account A to account B.

While in Europe SEPA has faced delays and doubts about the future of the euro itself, elsewhere in the world the concept of a payments zone has been greeted with rather more enthusiasm. “In a number of regions, including ASEAN, Africa and Central and South America, SEPA has been identified as a good idea and its principles are being developed for these regions,” says Cousins. “People realise that they need to do cross-border, low value transactions within these regions more effectively and efficiently.”

The passage of the SEPA end date regulation in the European Parliament is good news as SEPA will help corporates to rationalise their bank accounts, says Anupam Sinha, director and EMEA head of corporate payments at Citi Global Transaction Services. “The

Banks are looking for new weapons to fight back against new competitors, writes Heather McKenzie. The low value

cross-border market could provide some opportunities.

Low value, high impact

PAYMENTS: low vAluE croSS-bordErMARCH 2012

processing of low value, cross-border payments will be more efficient in SEPA.”

There are challenges when it comes to processing low value, cross-border payments. Among these is the unpredictable nature of the clearing cycle. While SEPA will help to standardise timings in Europe, says Sinha, there needs to be a similar approach in other regions. This is one of the reasons other regions, such as the Middle East and Africa, are looking at the SEPA model in order to rationalise their payments infrastructures.”

The idea of IPFA’s framework is simliar to that of SEPA – to develop governance, rules, standards and documentation that will help in a regional context. “This will deliver the benefits of scale because banks will be using the same processes, standards and methodologies for cross-border payments,” says Cousins.

IPFA’s members include ANZ Banking Group, Swift, PayPal, VocaLink, Standard Chartered Bank, Fundtech, JP Morgan and Clear2Pay. Absent are some of the large correspondent banks. “The big international banks are not really on board because they have their own networks and infrastructures. Where IPFA comes into its own is with the tier two and regional banks,” says Cousins.

In these straitened times, even the very large banks may be reviewing their cross-border payments strategies for low-value transfers. Gene Neyer, senior vice-president, product management at software developer Fundtech, says SEPA has paved the way for


greater convergence of high value and low value cross-border payments. “There is no longer any reason to have separate payments silos. Payment services hubs can deliver multi-instrument, multi-currency and multi-country processing,” he says.

Neyer’s colleague, George Ravich, executive vice-president and chief marketing officer, says a desire to lower the cost of processing to as little as possible is driving outsourcing – although these days it is likely to be called cloud computing. “Banks of all sizes are

looking to outsource the processing of payments in order to lower their costs and improve operations. There is little differentiation that can be achieved in back end payments processing, which makes it an ideal candidate for outsourcing.”

He argues that innovation can be found in the payments space. “There is little doubt that the state of the global economy and the banking

business is affecting innovation. But we are seeing very clearly that banks in emerging countries have the funds and the appetite to innovate. Local banks in the growth regions realise that investments are being made in infrastructure, offices, factories etc and that they have to provide better payments systems because they will be increasingly competing against international banks.”

Organisations such as PayPal are also innovating, making online payments a very easy option, says Swift’s Raymaekers. “The danger here for banks is that PayPal >

“In a number of regions, including ASEAN, Africa and Central and South America, SEPA has been identified as

a good idea and its principles are being developed for

these regions,”Arthur Cousins, IPFA

SEPA strives to bring simplicity into low value cross border payments by reducing the need for a plethora of legacy clearing systems and schemes and creating standardisation.

The SEPA migration deadline is just round the corner, (targeted for 1 February 2014) when low value intra Europe payments should be executed via SEPA compliant schemes. A harmonised set of standards by which any clearing system or infrastructure should comply to in order to execute intra Europe payments.

The costs and inefficiencies of maintaining parallel infrastructure for SEPA and legacy ACH have long been recognised, and present new opportunities for banks to offer a consistent services across Europe to their clients.

How does this compare with high value payments?High Value Cross border payments in Europe are already homogenised with the EBA and Eurosystem operating the pan-European euro high value clearing platforms, CHAPS for Sterling and Six for Swiss franc amongst others.

Settlement cycles, the time it takes from payment initiation to arrival of funds into the beneficiary’s accounts in Europe used to typically range from 3 to 5 days (or even longer) and the complexity of making

payments through multiple systems with multiple formats, used to be a barrier to the migration of payments from high value to low value payment systems. Since 1 January 2012, under the Payment Services Directive, the maximum settlement cycle for electronic payments reduced to D+1 across Europe.

These factors are expected lead to further migration of volume from high value to low value clearing systems over time. For some types of payment, a transfer of volume from one system to another (as corporates update their ERP systems to take advantage of SEPA or Faster Payments in the UK for instance) could result in a reduction in payment related revenue for banks. However, banks can find opportunity in these changes to offer new types of services to their customers, to offer clients choice (between high and low value payment systems) and to deepen existing client relationship across currencies and channels. Operators of the high value payment systems are recognising the potential for migration of payment volume to low value systems and a number are even discussing the possibility of introducing SEPA or ISO 20022 compliant payment options (to match what is being offered in the low value clearing systems) to safeguard the continued use of high value payment systems in the future.

High value or urgent? Various sources quote that up to 50% of payments currently settled through high value clearing systems could be eligible for low value clearing at a lower cost. Sometimes banks refer to payments being either ‘urgent’ or ‘non-urgent’ (recognising that SEPA has no upper value limit). Banks and customers do value the additional comfort that real time settlement, through a high value clearing system, provides for systemically important or high value payments. Hence, the use of the term high value and low value payments still seems relevant even if low value payments systems have no upper value limit (yet).

What are the remaining barriers to migration?The need for banks or corporate to upgrade systems, or update customer mandates could still be a significant factor affecting the quick take-up or migration of this option. That said elsewhere in Europe we do see clearing systems catering for both high and low value payments on a single platform, as in Switzerland, or conversion services being offered by some banks to simplify the migration further.

Alice Gregoriadi is head of cash management product, EMEA, at JP Morgan Treasury Services


up-market and targeting the small and medium-size corporate segment. The shift from mature countries to a multipolar economy with a stronger presence from Asia and developing markets will have a profound impact on the banking business and payments flows. Seventy percent of payments volume growth in this decade will be generated by these regions, whereas payments volumes in North America and Western Europe will grow at 6% and 5% respectively, well below the global average of 9%. Banks in the mature markets will thus need to partner with banks in Asia and developing market or grow their own operations in those countries,” says the white paper.

A September 2011 report on cross-border payments by Glenbrook Partners, which was sponsored by Earthport, also identifies considerable opportunities in the cross-border payments space. It says unmet needs are driving opportunities for new payments solutions. Based on a survey of more than 200 bankers and other payments professionals worldwide, the report found the most significant cross-border payment challenges were time required for funds to clear, difficulties in tracking payment progress and in-payment reconciliation, and lack of foreign exchange fee transparency. “Respondents perceived large corporations, particularly those with their own treasury functions, to be well served by existing solutions.

They perceived challenges for smaller businesses, particularly for those making payments of less than $10,000, especially those in the $500 to $2,000 range,” says the report.

The perceptions of payments professionals surveyed by Glenbrook were closely aligned with the views of payments initiators, “though we were surprised at the magnitude of challenges reported even by those companies with mature treasury and payments functions”.

One of these challenges, says Citi’s Sinha, is central bank reporting requirements, particularly for corporates that are trying to move from domestic to cross-border payments models. “In some cases such requirements force corporates to open local accounts. These requirements are scheduled to be removed in Europe by 2016, but other regions also need to make similar moves.”

He cites reconciliations as another challenge for cross-border payments, particularly when there are a number of banks in the payment chain. “The more banks, the greater chance that remittance information will go astray. Swift and global banks are working together to agree on standards to address this challenge. Work also needs to be done with clearers to develop standards.” BT

Q&A: Alice Gregoriadi, JP Morgan Treasury Services


sucks liquidity out of the banking system, because users are funding their PayPal accounts out of their banking accounts. Banks are not only losing out on the payment transaction, but they are also losing the liquidity as PayPal users store value in their PayPal wallets.”

Low value international money transfer is a juicy business, he says, with people willing to pay more

to send money to their relatives in other countries, for example. But the appetite for innovation among banks is very low at the moment and the cost of doing business is increasing. “Moreover, some regulations might discourage banks from entering the space – in the US new consumer protection laws under

Dodd-Frank will require money transfer operators to state their charges and FX rates up front.”

With banks margins and profits under pressure, there is a strong argument for a more collaborative approach to developing solutions for low value, cross-border payments, he says. Banks need to cut costs

and ‘rightsize’, according to Correspondent Banking 3.0, a Swift white paper published late last year. It argues that correspondent banking is the primary channel to deliver cross-border banking services such as payments and is therefore an attractive business, given that cross-border payments on Swift were 67% of total volumes in August 2011.

Bank-to-bank payments volumes maintained a 7% compound annual growth rate during the year to August 2011 and global payments volumes are forecast to grow by 9% per year through to 2020. “Provided along with cash management, trade finance, and sometimes foreign exchange or custody services, payments are at the core of the services provided by a bank’s transaction processing division and generated $590 billion revenues in 2010. Within these, cross-border payments punch well above their weight,” says the report.

New entrants such as PayPal, Google Wallet and mobile network operators are driving expectations in consumer payments, says the white paper, bringing ease of use, immediacy of transfer, transparency of pricing and tracing capability. This is in stark contrast to the traditional correspondent banking model that doesn’t reach such levels of service. “Money transfer operators, which have long been in this business, are now aiming

Are low value, cross-border payments a growing category?Yes we see a growing demand from clients to execute their transactions via more cost effective channels predominantly in Europe. The trend in this region is driven by SEPA and by the on-line electronic ‘supermarkets’ that enable goods and services to be viewed and purchased easily on the web, between countries. The motivation of corporates is mainly to achieve economic benefits (cost reductions) and enhance visibility and control of their flows and operational processes. More specifically:■ In the current volatile environment there is increased demand from our clients to enhance their visibility and control of their flows and balances. Many clients are also looking to achieve economic benefits through a cash management restructure that will consolidate their transactions. It is a common phenomenon in organisations with decentralised cash management structures, to have local subsidiaries/

branches executing payments that are not the most cost effective.■ Centralisation of payments and flows is typically generating benefits on all of the above mentioned aspects (visibility, costs, control). ■ SEPA, the low value clearing system for euro, is a great way to enable clients to achieve their targets for the following reasons:

1. SEPA transactions can be significantly less expensive than of a high value payment cost and can offer same or next day clearing therefore generating economic and working capital benefits for its users.

2. Clients can use a standardised message/file format for transactions in 32 countries, simplifying the workflow and processes and creating operational efficiencies.

3. Financial Institutions with strong SEPA propositions can offer their clients a fully integrated solution with any overlay structure; thus enabling their clients to

rationalise their accounts and banking relationships, eliminate fragmented positions and idle balances, enhance the visibility and control of their cash positions across multiple legal entities and facilitate the administration of intercompany lending.

4. Using SEPA may also deliver enhancements in forecasting and risk mitigation as balance sheet exposure to local banks and peripheral countries can be managed more efficiently■ While there are other drivers for the growth of the volume of low-value payments, SEPA has clearly been the catalyst. Not all payments are suitable for execution via the low value clearing systems and clients are recommended to seek consultation from their Banks.

How are banks processing these and what are the challenges?Banks like JPMorgan have invested millions in upgrading payment platforms in advance of SEPA and continue to do so in anticipation of greater SEPA volume.

SEPA investments will pay dividends for banksas new opportunities are created

“Banks are not only losing out on the payment

transaction, they are also losing liquidity as PayPal users store value in PayPal wallets.”

Win Raymaekers, Swift


PAYMENTS: low vAluE croSS-bordErMARCH 2012

SEPA strives to bring simplicity into low value cross border payments by reducing the need for a plethora of legacy clearing systems and schemes and creating standardisation.

The SEPA migration deadline is just round the corner, (targeted for 1 February 2014) when low value intra Europe payments should be executed via SEPA compliant schemes. A harmonised set of standards by which any clearing system or infrastructure should comply to in order to execute intra Europe payments.

The costs and inefficiencies of maintaining parallel infrastructure for SEPA and legacy ACH have long been recognised, and present new opportunities for banks to offer a consistent services across Europe to their clients.

How does this compare with high value payments?High Value Cross border payments in Europe are already homogenised with the EBA and Eurosystem operating the pan-European euro high value clearing platforms, CHAPS for Sterling and Six for Swiss franc amongst others.

Settlement cycles, the time it takes from payment initiation to arrival of funds into the beneficiary’s accounts in Europe used to typically range from 3 to 5 days (or even longer) and the complexity of making

payments through multiple systems with multiple formats, used to be a barrier to the migration of payments from high value to low value payment systems. Since 1 January 2012, under the Payment Services Directive, the maximum settlement cycle for electronic payments reduced to D+1 across Europe.

These factors are expected lead to further migration of volume from high value to low value clearing systems over time. For some types of payment, a transfer of volume from one system to another (as corporates update their ERP systems to take advantage of SEPA or Faster Payments in the UK for instance) could result in a reduction in payment related revenue for banks. However, banks can find opportunity in these changes to offer new types of services to their customers, to offer clients choice (between high and low value payment systems) and to deepen existing client relationship across currencies and channels. Operators of the high value payment systems are recognising the potential for migration of payment volume to low value systems and a number are even discussing the possibility of introducing SEPA or ISO 20022 compliant payment options (to match what is being offered in the low value clearing systems) to safeguard the continued use of high value payment systems in the future.

High value or urgent? Various sources quote that up to 50% of payments currently settled through high value clearing systems could be eligible for low value clearing at a lower cost. Sometimes banks refer to payments being either ‘urgent’ or ‘non-urgent’ (recognising that SEPA has no upper value limit). Banks and customers do value the additional comfort that real time settlement, through a high value clearing system, provides for systemically important or high value payments. Hence, the use of the term high value and low value payments still seems relevant even if low value payments systems have no upper value limit (yet).

What are the remaining barriers to migration?The need for banks or corporate to upgrade systems, or update customer mandates could still be a significant factor affecting the quick take-up or migration of this option. That said elsewhere in Europe we do see clearing systems catering for both high and low value payments on a single platform, as in Switzerland, or conversion services being offered by some banks to simplify the migration further.

Alice Gregoriadi is head of cash management product, EMEA, at JP Morgan Treasury Services


up-market and targeting the small and medium-size corporate segment. The shift from mature countries to a multipolar economy with a stronger presence from Asia and developing markets will have a profound impact on the banking business and payments flows. Seventy percent of payments volume growth in this decade will be generated by these regions, whereas payments volumes in North America and Western Europe will grow at 6% and 5% respectively, well below the global average of 9%. Banks in the mature markets will thus need to partner with banks in Asia and developing market or grow their own operations in those countries,” says the white paper.

A September 2011 report on cross-border payments by Glenbrook Partners, which was sponsored by Earthport, also identifies considerable opportunities in the cross-border payments space. It says unmet needs are driving opportunities for new payments solutions. Based on a survey of more than 200 bankers and other payments professionals worldwide, the report found the most significant cross-border payment challenges were time required for funds to clear, difficulties in tracking payment progress and in-payment reconciliation, and lack of foreign exchange fee transparency. “Respondents perceived large corporations, particularly those with their own treasury functions, to be well served by existing solutions.

They perceived challenges for smaller businesses, particularly for those making payments of less than $10,000, especially those in the $500 to $2,000 range,” says the report.

The perceptions of payments professionals surveyed by Glenbrook were closely aligned with the views of payments initiators, “though we were surprised at the magnitude of challenges reported even by those companies with mature treasury and payments functions”.

One of these challenges, says Citi’s Sinha, is central bank reporting requirements, particularly for corporates that are trying to move from domestic to cross-border payments models. “In some cases such requirements force corporates to open local accounts. These requirements are scheduled to be removed in Europe by 2016, but other regions also need to make similar moves.”

He cites reconciliations as another challenge for cross-border payments, particularly when there are a number of banks in the payment chain. “The more banks, the greater chance that remittance information will go astray. Swift and global banks are working together to agree on standards to address this challenge. Work also needs to be done with clearers to develop standards.” BT


TRANSACTIONS & PAYMENTSMarch 2012

Following the announcement of firm SEPa end-dates, hSBc has confirmed that it is implementing the Dovetail Payment Services hub for its European Volume Payments System.

The Dovetail Payment Services hub will initially process SEPa credit Transfers and SEPa Direct Debits as well as automatically managing both Debtor and creditor mandates for 11 countries. The project, said to be well under way, supports hSBc’s expanding European presence and underscores the bank’s readiness for, and commitment to, the upcoming SEPa end-date regulation.

Martin coen, chief executive of Dovetail, said: “With significant pan-European domestic volumes and commitment to the region, we are very pleased to be working with hSBc to help support its mass payments needs. Dovetail’s proven productised approach and scalable modern architecture means we can tailor both the product and the processing capability to meet hSBc’s operational needs today, as well as its strategic needs and anticipated growth in the future.”

hSBc is one of four of the top six global transactions banks that have chosen the Dovetail payment services hub strategy, the vendor says. It recently announced that Bank of Montreal has adopted the system, a breakthrough deal in canada that expands its North american footprint, and it has recently set up new offices in Italy and the Nordic regions. BT

Bankcard association china UnionPay has registered Planet Payment as a worldwide third party service provider. Through this registration, Planet Payment can provide processing support for china UnionPay’s credit and

debit cards directly to banks and acquirers on a worldwide basis.Launched in 2002, china UnionPay has become one of the largest card brands in

the world with over 2.8 billion cards issued worldwide. With the new agreement, Planet Payment is adding support of china UnionPay to its transaction platform, providing acquirers and their merchants with an way to accept UnionPay credit and PIN debit card transactions for all merchant market segments, including ecommerce, retail, restaurant and hospitality. The targeted launch date for the Planet Payment china UnionPay service for the hospitality vertical is in the second quarter of 2012.

In addition, Planet Payment will be enhancing iPay, its e-commerce payment gateway, to include support for china UnionPay’s new UnionPay Online Payment service. UPOP provides merchants with the facility to authenticate and process UnionPay debit cards online, providing merchants with better access to the burgeoning chinese e-commerce space which is projected to overtake the US as the largest e-commerce market by 2015. The targeted launch date for the UPOP service is in the second quarter of 2012.

“china UnionPay is one of the world’s leading bankcard schemes,” said Philip Beck, chairman and chief executive of Planet Payment. “With this new agreement, our acquirer or processor customers globally can accept UnionPaycredit and PIN debit cards, enabling merchants to sell more goods and services to chinese cardholders and tapping into one of the largest markets for potential new customers. BT

HSBC moves on SEPA with Dovetail

China UnionPay lands on Planet Payment


Gemalto pushes EMV in US

Gemalto has launched an in-branch EMV instant issuance card system for US banks, designed to streamline and accelerate EMV migration there. It allows banks to immediately issue and activate initial and replacement cards at the

physical bank branch, rather than sending personalised cards in the post.The Dexxis EMV system performs smart card chip encoding in addition to

magstripe encoding and plastic printing or embossing. It can run directly from the bank’s servers and is also offered as a managed service, easing the transition to EMV for US customers. BT


Kiwibank reconciles with Broadridge

Kiwibank, the largest New Zealand bank, has selected Broadridge’s Proactive reconciliation solution

for the automation of reconciliations and investigations at an enterprise level across all areas of the bank. The Broadridge solution will support reconciliation requirements across the bank’s cash nostros, point-of-sale transactions, and its products for aTMs, credit cards, foreign exchange and interbank payments.

The system will enable Kiwibank to reduce operational risk through earlier detection of exceptions and increased efficiency in investigating and resolving outstanding issues as well as deliver transaction reconciliation and exception management at a more detailed level, increasing transparency and reducing the potential for losses or over-payments.

Proactive reconciliation will support Kiwibank’s continual growth through the provision of an enterprise reconciliation platform that increases the efficiency and effectiveness of reconciliation processes across the organisation. The bank will also introduce automated workflow for reconciliation of discrepancies using the Broadridge tools so that they can be centrally managed and tracked through to resolution.

“What ultimately led us to Broadridge’s Proactive reconciliation solution were its fixed-price, fast-track implementation, and the ability to manage our total cost of ownership by transferring skills to configure new reconciliations ourselves rather than incurring post-implementation consultancy fees,” said Terese Tunnicliffe, general manager for Payment Services at Kiwibank. “Other attractive features included the flexibility of the platform, user-friendly screens and configuration tools.” BT

The bank will introduce automated workflow for reconciliation of discrepancies so that they can be centrally managed and tracked.

Mobile is moving onMobile banking and payments have been a talking point at the mobile industry’s annual Mobile World Congress event for years. This year it seems to have moved on, reports Paul Skeldon

The influence of banking has never been more strongly felt at Mobile World Congress, the annual mobile industry jamboree in Barcelona. Not only were banks, payment providers and others queuing up to unveil partnerships and services that see mobile payments edge ever-closer to the mainstream, but demonstrators spurred on by the near collapse of the Spanish economy were also very vocal – albeit just outside the event.

While riot police, burning rubbish bins, placards and chanting students demanding less is spent on trade shows and more on education is a very new feature of the Congress this year, the idea of mobile as a banking and payment tool isn’t. For many years mobile payments have formed a cornerstone of the plans of the global mobile industry. And yet they have remained elusive.

Until this year. Just before the show kicked off,

Barclays announced its PingIt service, which allows peer-to-peer money transfers using a system that ties mobile phone numbers to their users bank accounts. This major breakthrough – not least for its utter simplicity and obviation of the need for any ancillary equipment – has already grabbed the headlines.

But while Mobile World Congress itself has been awash with operators, banks, payment providers, third parties, and even Facebook, jabbering on about how mobile is now a payment tool, there still seems to be a gulf between mass market adoption and what the hype says is happening.

However, this could all be set to change with a number of big names entering the space and promising to bring their trusted brand power to the table.

There are really two sides to mobile and money. Firstly there is what banks, money networks and the like are looking to achieve in getting mobile to be a virtual wallet/card payment tool. And then there are all the companies setting up wallets, looking at how to use other payment channels to pay for things and a raft of offerings to try and make the in-store payment market work with mobile.

Oh, and then there is Near Field Communication for contactless payments.

The biggest news at the show was meant to be MasterCard’s announcement of all the things it is in mobile. Instead, it was pipped by Vodafone and Visa who

have partnered to bring the Visa payment ecosystem to mobile wallets.

Visa Prepaid Mobile gives the idea of pre-paid mobile wallets an air of security, reliability and that sort of va-va-voom of marketing that having a big brand name attached that they need to become mass market (and trusted). Partnering with Vodafone means that it potentially has access to some 40 million users worldwide.

But the tie-up means much more than that, say analysts. “In a bid to enable interoperability between mobile money networks, Visa proposes to use its robust settlements system to manage cash-in and cash-out transactions between mobile operators,” says Sheridan Nye, Senior Analyst at Informa Telecoms & Media. “Vodafone’s decision to launch a prepaid-credit-card enabled m-wallet follows a trend among mobile operators that want to offer e-commerce and point-of-sale payments on phones. Orange and Telefonica-O2 have also launched similar prepaid wallets as a first step in their NFC payment rollout plans.”

The move also adds in good old NFC – Near Field Communications – making contactless payment possible to make the mobile payment process smooth and – if we are being honest – gimmicky enough to tantalise people into using it.

But the tie-up is perhaps more significant than that. “Visa’s announcement has the potential to fill a significant hole in the current payments ecosystem,” says Catherine Haslam, an analyst at Ovum. “A major barrier for many operators is the need to build a relationship with one or several financial institutions in order to offer services. Such negotiations are typically long and complicated and this would replace it with a simple contract with Visa. In effect Visa is doing what it’s been threatening to do for several years and expanding its traditional intermediary role in payments to mobile. The fact that it is also supporting non-Visa payments shows that the payments giant recognises that ubiquity is the key to success in mobile money systems.”

But Visa is not walking into an open market. It faces competition from international financial hub systems, such as the M-wallet and HomeSend services offered by international carrier BICS, and it has barriers it must overcome. Firstly, Visa must establish a viable business model that

operators will accept. BICS already has a well-respected model and many existing operator customers. However, Visa’s brand and scale should make this possible, especially if it can offer operators a plug-and- play solution.

A bigger barrier, at least in the short – to medium – term, is that the system relies on the NFC in the consumer device and at the point-of-sale, and that is a long way from critical mass.

Against this backdrop, MasterCard tried to steal the show with an announcement made hours earlier that it and its partners Comviva, Intel, iZettle, Santander and Turkcell were unveiling a vision for the future of mobile payments.

The announcement was, in keeping with Mobile World Congress tradition, long on vision, short on substance. The plan includes Wanda, a joint venture between Telefónica and MasterCard designed to provide mobile payments to 87 million Movistar customers in Latin American. These will be linked to a mobile wallet or prepaid account that will allow for money transfers, mobile airtime reload, bill payment and retail purchases.

MasterCard also flagged up a partnership with BOKU that will enhance the shopping experience for consumers, allowing them to make payments, receive discounts and targeted offers, and monitor spending – all via their mobile phones anywhere MasterCard is accepted. Offered through a mobile subscriber’s mobile network operator, BOKU Accounts with MasterCard Prepaid gives consumers a convenient way to pay while on the go.

So, with the two major card processing companies teaming up with the two largest mobile phone networks in the world, we can hopefully this year expect big things from mobile payments. But looking at the many other announcements that cover everything from in-app payments for digital goods right through to point of sale systems in shops, there still seems to be a long way to go with linking what banks and operators are now planning to roll out and getting merchants to figure out how to integrate it into their businesses.

This challenge will be what we see being debated at the event next year – it is likely to be why we are still not quite using mobile to pay for things. Maybe it will come to pass and the students will have some money to spend using it by 2013. BT


TransaCTion & PayMenTs: neWs analysisMArCH 2012

Eurex, the derivatives exchange jointly owned by Deutsche Börse and SIX Swiss Exchange plans to switch to a new internally-developed trading system at the end of this year. The new platform will be based on the platform currently used b

y the International Securities Exchange, another Deutsche Börse subsidiary.The new system is scheduled for launch on 3 December 2012, followed by a three-

to six- month migration phase during which products will be moved from the current to the new trading system.

The move is the culmination of several years of development, dating back to 2006, when it laid the foundations with the implementation of a new generation of interfaces – the Enhanced Broadcast Solution, the Enhanced Transaction Solution and the Enhanced risk Solution – that allowed it to remove the need to use the older Miss trading infrastructure and Values market data aPI.

In 2011, with Eurex release 14.0, three additional interfaces were introduced: the Eurex FIX Gateway, the Eurex Market Data Interface and the Eurex clearing FIXML Interface. along with the common report Engine and the WebTrading solution, these further removed dependence on the MISS infrastructure.

With the new trading system, Eurex will completely drop Miss and Values and move to interfaces based on industry standards such as FIX and FaST, though it says that it will “strive to ensure a high degree of backward compatibility for the new interfaces allowing participants to leave their trading applications unchanged in future releases of the new trading system”.

“Technology is a very important differentiator in today’s competitive global market environment. With the move to the new system, we again deliver a best-in-class solution to our exchange participants. They will get more choice and greater performance, and the reliability they can expect from Eurex”, said Jürg Spillmann, the deputy chief executive of Eurex responsible for IT and operations. “The complete overhaul of our trading architecture is a decisive element of our vision to operate markets globally around-the-clock.”

The exchange said that the new platform will include “a highly flexible operating system, an internal high performance messaging architecture for minimum latency, high speed communications and reliable database systems”. It also plans to add new tools for further strategy and spread trading. BT

Eurex sets year-end for roll-out of new trading platform

Energy and commodities systems specialist Brady is to acquire Navita Systems, a Norwegian software and services company operating in the same markets. The acquisition gives Brady a larger footprint in the areas of physical power and gas, as well as data management, scheduling and nominations, which will enhance its current product offering to the energy markets. Navita was formed out of the world’s first power exchange, Nord Pool, in 2003. “The completion of this acquisition will represent a significant step for Brady in our strategy to accelerate growth in our energy business and builds on the success to date of our Viz Risk Management acquisition in December 2010,” said Gavin Lavelle, chief executive of Brady. “The extended solution set which the combined company will bring to the market offers best of breed solutions, enabling customers to benefit from a one-stop shop for both their physical and derivatives trading and risk management solutions.”

Saxo Bank has launched a new market information and trading app for iPhone and Android mobiles. The free app provides financial market content such as news, analysis, video blogs, commentary, research, financial calendar, quotes and charts on more than 13,000 instruments. Users can also sign up for a free trial directly from the app and trade on the markets for 20 days using a simulated account. Existing clients of Saxo Bank can use the trading app section to view their account status, place or cancel orders and trade all Saxo Bank’s products.

Cameron Edge has launched FIXinsight, a service for securely storing and using logs of FIX messages to completely reconstruct a trading day, allowing anyone to step through the day’s trading. The basic level of service is free.

The Stock Exchange of Thailand will see the first rollout of what trading platform developer Cinnober claims is the financial industry’s fastest real-time index engine. The exchange is implementing new trading, market data and surveillance systems based on the vendor’s platform. The Index Engine is a standalone product that connects to market data feeds or directly to feeds from other venues, and then calculates and disseminates the indexes in real time after each updating event. Multiple plug-ins for calculations and corporate actions are available, such as price weighted index and market cap weighted index. These can be extended or replaced by customised solutions.


Bloomberg looks to future with Next gen market data service

Voice specialist IPC Systems is demonstrating its vision of what traders may be using in the next few years with Trader Cockpit, a combination of various existing and emerging technologies, such as social media, multimedia news feeds and sentiment engines.

The concept also shows integration with IPC comms systems such as Unigy, and applications developed by partners, to give greater insight to the process.

Simon Jones, senior product marketing manager at IPC, describes Trader Cockpit as a “concept car”, saying that not all of the features of the demo will be implemented in reality, but user feedback will shape what does. BT

BT

MARKETS &INVESTMENTS


March 2012

Market information giant Bloomberg has formally launched Next, the latest

generation of its Professional service, after a $100 million revamp that is intended to make it easier for users to find information on the service.

Bloomberg Next has already been adopted by almost one-third of the firm’s 313,000 users, company officials said. It is now embarking on a major promotional and educational drive, visiting users in all major trading centres with a view to migrating the remainder before the end of the year.

Unlike most of its rivals in the market data and news fields, Bloomberg has always taken the approach of constantly adding to its service while holding the price relatively steady, rather than having a pick-and-mix approach. as a result, all users have theoretical access to all of the information in Bloomberg’s datasets, but over time it has inevitably become harder to navigate through the volume that has built up in the 30 years the company has been operating.

The Next project, which involved 3,000 technologists working with customers, attempt to make it easier for users to find the information they are looking for, the company says.

The development has also been driven by the fact that traders are increasing researching across markets rather than simple price discovery. “It is a much more cross-market world,” Jean-Paul Zammitt, global head of core product development,

told Banking Technology. This meant that it was a comprehensive and “pretty dramatic” change.

Zammitt said that one of the central approaches was to study users’ workflows and processes in different markets. “We looked at thousands of use cases across fixed income, commodities, FX and equities,” he said. “What we are giving clients is an answer, but they can still continue to anywhere to analyse that answer – the terminal is suggesting or prompting the user through their workflow.”

In simplistic terms, the new screens bring together a range of information on the instruments the user is looking at: rather

than simple price information, they will also get relevant analytics and other information, such as spreads, volumes and yield curves, where appropriate. The Bloomberg service also “learns” user behaviour (if they opt in) so that it can prompt them and anticipate the sorts of information they might be looking for.

as part of the development process, Bloomberg created a usability laboratory at its London offices where clients “test-drove” the system interfaces while the vendor’s technologists analysed their behaviours – looking at their keystrokes, which commands they commonly use, and so on, in order to design the interfaces around user habits.

The result is intended to be a common look and feel across the service, independent of the asset classes and job function of the user.

announcing the Next development, Tom Secunda, co-founder and vice-chairman of Bloomberg, said that having a single platform for all users had been a challenge for the company, but it also has benefits: “We’re able to have useful searches essentially because it is finite and we have curated the information,” he said.

It also eases the migration path: asked when he expected the migration of users from the “old” to the “new” product, Secunda said: “This is the old product – it’s not window-dressing. Over time, the old stuff disappears.” as a result, he said he expects that “by December we’ll turn off the old interface”. BT



Eurex, the derivatives exchange jointly owned by Deutsche Börse and SIX Swiss Exchange plans to switch to a new internally-developed trading system at the end of this year. The new platform will be based on the platform currently used b

y the International Securities Exchange, another Deutsche Börse subsidiary.The new system is scheduled for launch on 3 December 2012, followed by a three-

to six- month migration phase during which products will be moved from the current to the new trading system.

The move is the culmination of several years of development, dating back to 2006, when it laid the foundations with the implementation of a new generation of interfaces – the Enhanced Broadcast Solution, the Enhanced Transaction Solution and the Enhanced risk Solution – that allowed it to remove the need to use the older Miss trading infrastructure and Values market data aPI.

In 2011, with Eurex release 14.0, three additional interfaces were introduced: the Eurex FIX Gateway, the Eurex Market Data Interface and the Eurex clearing FIXML Interface. along with the common report Engine and the WebTrading solution, these further removed dependence on the MISS infrastructure.

With the new trading system, Eurex will completely drop Miss and Values and move to interfaces based on industry standards such as FIX and FaST, though it says that it will “strive to ensure a high degree of backward compatibility for the new interfaces allowing participants to leave their trading applications unchanged in future releases of the new trading system”.

“Technology is a very important differentiator in today’s competitive global market environment. With the move to the new system, we again deliver a best-in-class solution to our exchange participants. They will get more choice and greater performance, and the reliability they can expect from Eurex”, said Jürg Spillmann, the deputy chief executive of Eurex responsible for IT and operations. “The complete overhaul of our trading architecture is a decisive element of our vision to operate markets globally around-the-clock.”

The exchange said that the new platform will include “a highly flexible operating system, an internal high performance messaging architecture for minimum latency, high speed communications and reliable database systems”. It also plans to add new tools for further strategy and spread trading. BT

Eurex sets year-end for roll-out of new trading platform

Energy and commodities systems specialist Brady is to acquire Navita Systems, a Norwegian software and services company operating in the same markets. The acquisition gives Brady a larger footprint in the areas of physical power and gas, as well as data management, scheduling and nominations, which will enhance its current product offering to the energy markets. Navita was formed out of the world’s first power exchange, Nord Pool, in 2003. “The completion of this acquisition will represent a significant step for Brady in our strategy to accelerate growth in our energy business and builds on the success to date of our Viz Risk Management acquisition in December 2010,” said Gavin Lavelle, chief executive of Brady. “The extended solution set which the combined company will bring to the market offers best of breed solutions, enabling customers to benefit from a one-stop shop for both their physical and derivatives trading and risk management solutions.”

Saxo Bank has launched a new market information and trading app for iPhone and Android mobiles. The free app provides financial market content such as news, analysis, video blogs, commentary, research, financial calendar, quotes and charts on more than 13,000 instruments. Users can also sign up for a free trial directly from the app and trade on the markets for 20 days using a simulated account. Existing clients of Saxo Bank can use the trading app section to view their account status, place or cancel orders and trade all Saxo Bank’s products.

Cameron Edge has launched FIXinsight, a service for securely storing and using logs of FIX messages to completely reconstruct a trading day, allowing anyone to step through the day’s trading. The basic level of service is free.

The Stock Exchange of Thailand will see the first rollout of what trading platform developer Cinnober claims is the financial industry’s fastest real-time index engine. The exchange is implementing new trading, market data and surveillance systems based on the vendor’s platform. The Index Engine is a standalone product that connects to market data feeds or directly to feeds from other venues, and then calculates and disseminates the indexes in real time after each updating event. Multiple plug-ins for calculations and corporate actions are available, such as price weighted index and market cap weighted index. These can be extended or replaced by customised solutions.



Voice specialist IPC Systems is demonstrating its vision of what traders may be using in the next few years with Trader Cockpit, a combination of various existing and emerging technologies, such as social media, multimedia news feeds and sentiment engines.

The concept also shows integration with IPC comms systems such as Unigy, and applications developed by partners, to give greater insight to the process.

Simon Jones, senior product marketing manager at IPC, describes Trader Cockpit as a “concept car”, saying that not all of the features of the demo will be implemented in reality, but user feedback will shape what does. BT

BT

Clearing the airA new clearing and settlement lobbyist group has been set up under the auspices of the Financial Services Club. Graham Jarvis reports from its inaugural meeting.

Does the industry need a new body looking at the clearing and settlement issues raised by new regulation? The London-based Financial Services Club thinks it does, and has set up a Clearing and Settlement Working Group, which met for the first time at the end of February.

Chris Skinner, founder and chairman of the club, said the purpose of the working group will be to put pressure on legislators and regulators to ensure that any proposed or existing regulation that affects clearing and settlement operations is justifiable and workable.

Whether or not it is actually possible to trade seamlessly across international borders, Skinner said that much is changing, and has changed, in how the market operates from a technology and operational perspective. For example, the Markets in Financial Instruments Directive led to a requirement to record client interactions, but huge implications arose about how and where this kind of data was to be stored. The trouble is that not all companies deal with their clients in this way, and face-to-face interactions make this kind of data more difficult to capture.

The areas the working group will cover include sub-committees that will focus on regulation, risk, standards, transaction reporting and trade data repositories.

At the inaugural event, attended by 175 delegates, speakers also considered whether the Giovannini Group’s 15 barriers still exist, and how to promote cross-border trade and competition without national politics getting in the way of progress.

“The focus of much of the debate over the last 12 months has been on the political process behind the drafting of the new rules and regulations,” said Andrew Rogan, policy director of capital markets and infrastructure at the British Banking Association. Like many of the meeting’s panellists he feels that there is insufficient focus on how the new obligations and requirements are going to be implemented.

For example, he says that in almost a year’s time many firms will be “forced to engage in conduct – clearing – that they would never have done before, and so they need to ask themselves what it means for them”. The trouble is that the political process is being dragged out, which is making hard for questions like this

to be answered. No-one is quite sure how regulations like MiFID II and the European Market Infrastructure Regulation will work in practice, so this makes it harder for the market to prepare itself operationally and technologically at the moment.

“There is not a lot of clarity over what the new processes that are required by EMIR will actually mean for businesses’ bottom lines, and corporates may not have the systems infrastructure or compliance culture in place to manage,” Rogan argued. This raises questions about how this will create or reduce transactional and operational risks, and no-one quite knows what it’s all going to cost.

He said that while the G20 meetings aimed to reduce risk, the EU’s policymakers have overlooked these aspects of the new regulations. The EU is also pushing back against the US about what it feels is being imposed on them due to the domestic US politics.

There is talk of establishing a transatlantic working group, but what has emerged is an understanding of the key differences between the two jurisdictions. No solutions have been found to date. As he points out, it’s a US presidential election year and there are votes to win – that’s what counts over there.

“The introduction of EMIR and Dodd-Franks in the US will result in OTC derivatives markets adopting the Central Counterparty Clearing House model and the creation of trade repositories that will provide regulators with a window into the activities of these markets”, said Mark Profeti, a consultant with The Realization Group. From a technology perspective there will need to be an expansion of existing CCP solutions and platforms to include the ‘in-scope asset’.

So the regulations will create a new market, which will include the technology providers, as the existing CCP clearing platforms will need to incorporate the new asset types. This will have a downstream impact on CCP clearing and margin processes because the organisations affected by the regulations will need to think about how they can accurately calculate the risks associated the changes. This will necessitate using new risk arrays for calculating initial and variation margins. Profeti added that the systems will also have to receive new price feeds to “calculate the notional value of open positions.”

Chris Pickles, head of industry initiatives at BT Global Services’ Global Banking and Financial Markets division, said that the main issue at the moment is about making sure that the right standards are adopted and put into place. “We have been hearing from people that the standards are already there, but they are not using them,” he said. This might be because they feel that the costs and risks are too excessive, or because they don’t wish to replace legacy systems.

So discussions about reducing the time to clear securities transactions to two days may be as important as security and exchange interoperability, but nothing can work if the standards aren’t adopted, he said. Regulators will be keen to do what they can to encourage companies to do adopt the new standards as they wish to make all services more easily accessible to customers and investors. Technology can enable this to happen, but not without the will to comply with them.

As for the impact of MiFiD II, no-one will know its until after it comes into force in about 2014. The consensus is that its first iteration has removed some of the 15 barriers to efficient cross-border clearing as mentioned in the EU-commissioned Giovannini Group’s reports of 2001 and 2003. “The removal of national differences in IT and interfaces used by clearing and settlement providers has proven to be largely successful”, said Robert Fair, product management director at Euroclear. He expects T2S to remove other barriers as it will involve creating a common settlement platform, which would fully remove at least six barriers. So the new working group has much to play for to make sure that the regulations will actually work in practice. BT


Market & InvestMents: news analysIsMARCH 2012

NYSE Euronext, Nasdaq OMX and the London Stock Exchange all actively bundle and sell their technological capabilities, including trading systems and network connectivity.

Deutsche Börse already sells its Xetra trading platform to other exchanges: the Budapest Stock Exchange, Shanghai Stock Exchange and Vienna Stock Exchange all license it, but the united IT services business emphasises the need to eke cash from every technology-based deal it makes.

Reto Francioni, chief executive of Deutsche Börse, said: “Deploying our combined expertise and capabilities to optimum effect in customer acquisition, competition for market share and regional presence will be increasingly important when it comes to boosting the Group’s international positions.”


NYSE Euronext’s chief executive, Duncan Niederauer, also spoke of the need to concentrate on technology following the failure of the merger proposal. his firm saw its market share of equity trading for shares listed across its four European markets had fallen to 65% in Q4 2011 from 73% in Q4 2010, by its own reckoning.

With no clearing business in the group and the planned expansion of its derivatives market capped by the EC, the exchange will have to derive further revenues from its already strong technology offering, with the potential acquisition or development of a clearing house also offering the chance to capitalise on revenues that are generated post-trade from both cash and derivatives markets.

Back from the brinkOther exchanges will be breathing a sigh of relief that their already super-sized rivals on the derivatives markets have not become unassailable.

As derivatives products are subject to licensing, with data used to price contracts controlled by the issuer, it is not possible for one exchange to offer trading of another’s products, or to create fungible derivatives products that are directly equivalent to a rival’s. That prevents competition on the basis of cost and so keeps liquidity for well-used products firmly tied up. >

“Anything else big is likely to draw the same ruling from the European Commission; effectively they have put a stop to large mergers in Europe.”

Fred Ponzo, GreySpark Partners


Expansion of technology services offers a lifeline to those exchanges whose plans to expand by acquisition have been thwarted. Merger activity will continue in 2012, but the high-profile collapse of several big deals will make smaller partnerships more likely.

A key driver for consolidation in the sector was pulled on 1 February, when the merger of NYSE Euronext, the transatlantic market operator, and Deutsche Börse, Germany’s equity and derivatives trading infrastructure firms, was blocked by the European Commission, which concluded that the deal would have resulted “in a quasi-monopoly in the area of European financial derivatives traded globally on exchanges”.

This ruling will provide a benchmark for similar deals, says Fred Ponzo, founder and managing partner at consultancy GreySpark Partners: “Anything else big is likely to draw the same ruling from the European Commission; effectively they have put a stop to large mergers in Europe.”

Chris Turner, asset management and exchanges analyst at broker Goldman Sachs, observed in an analyst note issued on 1 February that non-European market mergers would also be impeded.

“The DB/NYSE tie-up is the third-consecutive large exchange merger to fail in 18 months (the fourth, if one includes the NASDAQ and ICE bid for NYSE that was aborted after US competition authorities expressed their concerns),” he said. “This low success rate seems likely to temper the appetite of exchanges to attempt other large mergers in the near future.”

Deutsche Börse’s derivatives trading venue and clearing house, Eurex, combined with NYSE Euronext’s LIFFE would have created the dominant European trading venues with a central clearer, effectively offering a one-stop shop for the majority of trading in the region.

The biggest in a spate of proposed cross-border exchange mergers, NYSE Euronext and Deutsche Börse had threatened to create derivatives giant, just as regulators legislated for over-the-counter trading to be centrally cleared, with much pushed on-exchange. That combination threatened the ability of others to enter the market, according to the EC.

In August 2011, as part of its investigation into the proposed merger, the EC said that the deal would effectively “remove a strong competitor from the market and would give the merged company by far the leading position in derivatives trading in Europe,” with the inability for other firms to access the post-trade infrastructure offering it further concern.

The deal’s collapse has left NYSE Euronext in the worse position of the two, according to Peter Lenardos, analyst at broker RBC Europe. In a note published at

the end of January he asserted that Deutsche Börse has a more diversified business, with less reliance on cash trading.

“In 2011E, NYSE Euronext should generate 64% of its revenue from cash markets, and 89% of its revenue from [combined] cash markets and derivatives,” he said. “Deutsche Börse should generate just 13% of its revenue from cash markets, and 55% of its revenue from [combined] cash markets and derivatives.”

InequityThe drivers for consolidation and acquisition remain.Equity trading has become so commoditised that secondary markets are competing on price alone, pushing returns down. That leaves exchanges looking at other business lines such as derivatives, post-trade processing and data/technology sales to drive sustainable profits.

Deutsche Börse, whose Eurex derivatives market and Eurex Clearing already allow provide it with the full range of revenues from trading and post-trade, announced in February that it would be integrating its technology-led businesses to extend its service offering. Its IT department, including system and service development, the market data and analytics division and selected external services, are all to be pooled together.

The blocking of the proposed merger of Deutsche Börse and NYSE Euronext has prompted them both to look to increased provision of IT services in the future. Dan Barnes looks at their plans.

Exchange of service

SECURITIES: ExChangESMARCh 2012

NYSE Euronext, Nasdaq OMX and the London Stock Exchange all actively bundle and sell their technological capabilities, including trading systems and network connectivity.

Deutsche Börse already sells its Xetra trading platform to other exchanges: the Budapest Stock Exchange, Shanghai Stock Exchange and Vienna Stock Exchange all license it, but the united IT services business emphasises the need to eke cash from every technology-based deal it makes.

Reto Francioni, chief executive of Deutsche Börse, said: “Deploying our combined expertise and capabilities to optimum effect in customer acquisition, competition for market share and regional presence will be increasingly important when it comes to boosting the Group’s international positions.”


NYSE Euronext’s chief executive, Duncan Niederauer, also spoke of the need to concentrate on technology following the failure of the merger proposal. his firm saw its market share of equity trading for shares listed across its four European markets had fallen to 65% in Q4 2011 from 73% in Q4 2010, by its own reckoning.

With no clearing business in the group and the planned expansion of its derivatives market capped by the EC, the exchange will have to derive further revenues from its already strong technology offering, with the potential acquisition or development of a clearing house also offering the chance to capitalise on revenues that are generated post-trade from both cash and derivatives markets.

Back from the brinkOther exchanges will be breathing a sigh of relief that their already super-sized rivals on the derivatives markets have not become unassailable.

As derivatives products are subject to licensing, with data used to price contracts controlled by the issuer, it is not possible for one exchange to offer trading of another’s products, or to create fungible derivatives products that are directly equivalent to a rival’s. That prevents competition on the basis of cost and so keeps liquidity for well-used products firmly tied up. >

“Anything else big is likely to draw the same ruling from the European Commission; effectively they have put a stop to large mergers in Europe.”

Fred Ponzo, GreySpark Partners


Regulatory efforts are afoot to break these product silos. Under MiFID II, it has been proposed that venues and clearing houses should be provided with access to one another’s derivatives products; by providing the data streams to other venues and clearers the derivatives would become fungible. however the European Parliament and the Council of the European Union, the two key legislative bodies, may change the text as they review it over the next year.

Despite this impediment, the London Stock Exchange has been building its own derivatives franchise on the back of its existing EDM market combined with the Turquoise multilateral trading facility trading platform to fight off NYSE/Deutsche Börse.

Turquoise Derivatives was given a boost following the acquisition of the controlling stake in FTSE International, the index provider, last December, which will allow the creation of new derivatives products based on the FTSE index.

Adrian Farnham, chief executive of Turquoise, said: “We are seeking to challenge the dominance of traditional venues and are positioning ourselves to take advantage of regulatory change that promotes an open and competitive environment.”

Acquisitions that support organic growth are likely to continue. Goldman Sachs’ Turner said: “We expect exchanges to pursue acquisitions that are more modest, and less transformative, in scale. The recent acquisition of 50% of the FTSE index business by LSE is a good example of this.”

Without additional scale, the LSE may be considered a modest takeover itself. It will need to decide how it will operate in future: as a national exchange, as a predator or as part of a larger market and infrastructure firm?

Defensive play“The LSE is now looking more like a target than a predator,” says Ponzo. “Even if their plan is to build mass so that they are too big to buy, they haven’t reached that point yet.”

There are plans to grow. The Anglo-French clearing house LCh.Clearnet, confirmed that it entered exclusive talks with the LSE last September, having rejected a bid from derivative evaluation firms Markit that was supported by NYSE Euronext. Post-trade

infrastructure will be a necessity for both the LSE and NYSE Euronext in the near future, and the transatlantic firm is said to have renewed its interest in the clearer since losing out on access to Deutsche Börse’s clearing operations.

The London Metal Exchange has confirmed it will be reviewing bids from over 10 interested parties at a meeting of its board on 23 February. The firms that have made expressions of interest include both the LSE and NYSE Euronext, according to industry sources; neither offered comment on these claims. Firm bids from interested parties will be received a week before the meeting. The commodities venue would not only diversify the LSE away from equities, it would also allow it to grow beyond the cash markets, providing a fertile ground for new derivatives products.

If London is to expand, accumulating other UK-based assets such as the LME and LCh.Clearnet would provide it with a stable regulatory environment and would allow it to avoid the sort of nationalism that blighted it own proposed merger with Canadian market operator TMX and the ill-fated Australian Securities Exchange/Singapore Exchange tie-up.

Russia and Japan are both in the process of tying up national cash and derivative exchanges. The MICEX/RTS merger in Russia, expected to complete in 2013, is supported by the government, which needs a strong capital markets infrastructure to sell-off state owned assets. Although there is a strong appetite to reform Russia’s capital markets, infrastructural differences such as the settlement models used by each of the venues will need to be standardised. Currently access to Russian market for overseas investors is frequently gained via depository receipts trade on the LSE.

The unlisted Tokyo Stock Exchange and publicly-traded Osaka Securities Exchange (OSE) have agreed to merge, but shareholders of the OSE have raised concerns that the terms of the deal may not be appealing to them, threatening to derail the deal if they are not appeased.

For the LSE, shareholder support will also be key to deciding its future independence. BT

SECURITIES: ExChangESMARCh 2012

US politicians and pundits didn't like the idea of German control of the New York Stock Exchange, but in the end it was scrapped by the European, not US, regulators.

A recent study by Accenture of nearly 4,000 current account customers in the UK and Ireland found that improved customer complaints procedures seem to be working. The survey found that:

■ Customer complaints made directly to the banks fell from 18% in 2010 to 14% in 2011.■ More customers were satisfied with their bank’s complaint handling process (up from 34% to 39%).■ Some complaints were resolved immediately (30%) or within a week (28%), but as many as 21% took a month, 15% took three months and some (5%) even six months.■ As a result of their complaint experience, 20% of customers switched or plan to switch to another provider, 41% indicated that they didn’t take any action, and 48% vented their frustrations with the complaint handling process at their friends and family, while 8% did the same via social networking sites.

“These results show that banks’ efforts to fix underlying service issues and engage better with their customers are working but there is still a large number of customers lodging complaints and there is much room for improvement in the complaint handling process,” said Peter Kirk, author of the research, and head of Accenture Banking Distribution and Marketing Services in the UK and Ireland. “It is essential that the banks improve the way they handle complaints because customers today are much less loyal and their expectations continue to rise.” BT

Metro Bank, the UK bank entrant, has selected Australian online banking solutions provider Sandstone to pilot an online application service for ISA products. Working with partners CallCredit, Sandstone’s BankFast Apply platform has been deployed by the bank to allow immediate online customer applications incorporating Electronic Identification and Anti Money Laundering checks to facilitate immediate application approval.

Hitachi and Turkish bank Isbank have installed the largest network of biometric finger vein scanners in Europe. Around 3,400 scanners have been installed in ATMs and branches, so customers can withdraw cash and use other services without a bank card. Hitachi’s finger vein authentication technology uses the pattern of veins within a finger to verify identity. The finger vein pattern is impossible to counterfeit and unlike most other biometrics is non-traceable, – it cannot be acquired and replicated like fingerprints. Biometric banking is commonplace in Japan, where more than 75,000 finger vein based ATMs have been installed since 2006. BT

Accenture study shows banks making improvments in complaint handling

“Banks’ efforts to fix underlying service issues and engage better with

their customers are working.”

RETAIL


March 2012


Sales force effectiveness is a crucial topic for banks in Europe according to a joint report by The Boston

consulting Group and Efma, which found that more than 60% of the banks surveyed estimate a 15% uplift potential in sales by implementing best practices.

The study, Sales Force Effectiveness: Getting full value from the sales channel, highlights three key pillars of a comprehensive sales force effectiveness programme: ■ Focusing the sales force: targeting, incentives, training, and performance management■ Making the machine hum: operating rhythm, lead management, sales process, and management of information■ aligning the organisation: organisation, resourcing and utilisation.

“BcG experience has shown that some of these levers can yield significant results in a relatively short term, while others require more investments in time, funding or both,” says axel reinaud, partner and managing director at BcG. “however, a comprehensive change programme is required for a sustainable step-change in overall sales force effectiveness.”

“It is important to note that sales force effectiveness is a continuous journey,”

says Patrick Desmarès, secretary general at Efma. “The bar has been continuously raised over the past decade, due to changes in competitor best practices and new technological possibilities. We explore in this report how changes in the multichannel environment have enabled many improvements in past years.”

This report brings together opinion from over 130 participants from 90 European banks, as well as findings from a series of conferences, webinars and in-depth discussions with experts from the banking industry.

In a wider international study BcG found significant differences in performance between the best and worst performers:■ Banks that spend the most face time with clients were the most successful: best-in-class bank advisors spent up to 60% of their time with customers, while advisors at other banks spent more than half their time on administration and non-client-facing activities. Winning banks also devoted more overall time to customer-facing roles – with top banks devoting nearly 80% of their FTEs to sales and service.■ call centre performance shows significant gaps between top and bottom

performers: the best bank call centres achieved a call wait time of 18 seconds, a call handling time of 1minute 42 seconds and a resolution rate of 97%, compared with medians of 54 seconds, 5 minutes and 80% respectively.

■ The best banks provide a smooth customer experience: there are stark differences between banks’ cycle times for signing customers up for new products. For example, cycle times for opening new accounts varied from 5 minutes to 76 minutes. and the best banks focused on providing customers with a “walk out working” experience, with functions (for example, a working debit card) fully-operational when the customer leaves the bank. BT

http://bcgperspectives.com

Good sales practice means good business, study finds

Partners offer secure solution for cards

“The bar has been continuously raised over the past decade, due to

changes in competitor best practices and new

technological possibilities.”

Cardless withdrawals at ATMs to launch in June in the UK

UK consumers will soon be able to make cardless aTM withdrawals through a partnership between Ukash and Bank Machine, the independent aTM operator. This partnership enables customers to exchange online funds into

cash, without the need for a debit or credit card, at Bank Machine aTMs throughout the British Isles.

customers are able to buy Ukash at over 420,000 retailers worldwide which can then be used to pay online on thousands of websites. The new collaboration between Bank Machine and Ukash will allow consumers to “complete the cash circle” by converting their Ukash back into cash at Bank Machine aTMs, the partners say

Bank Machine and Ukash have been working together on this initiative since april 2011 and plan to have cardless cash withdrawals live at the start of June 2012.

Where users accumulate a balance from online competitions, or have unspent online balance, they can opt to use the Ukash Out service which will convert their balance into a unique code. This code, along with other identifying information, can be entered into participating Bank Machine aTMs allowing the customer to immediately withdraw cash.

ron Delnevo, managing director of Bank Machine said: “at Bank Machine, our focus is on improving accessibility to cash at our aTMs. This latest innovation achieves that, whilst also vividly demonstrating that aTMs can provide services that complement those offered on the internet.” BT

Thales and aconite, a provider of smart application management and EMV transaction processing

solutions, have integrated their solutions to support the secure personalisation of smart cards, secure elements on mobile phones and other chip-based tokens, and the processing of smart transactions. card and mobile application issuers and transaction processors can now deploy smart card and mobile application personalisation simply, efficiently and securely. aconite solutions integrate with Thales pay Shield 9000 hardware security modules to provide chip personalisation, transaction processing and the key management processes that underlie these operations. BT

A recent study by Accenture of nearly 4,000 current account customers in the UK and Ireland found that improved customer complaints procedures seem to be working. The survey found that:

■ Customer complaints made directly to the banks fell from 18% in 2010 to 14% in 2011.■ More customers were satisfied with their bank’s complaint handling process (up from 34% to 39%).■ Some complaints were resolved immediately (30%) or within a week (28%), but as many as 21% took a month, 15% took three months and some (5%) even six months.■ As a result of their complaint experience, 20% of customers switched or plan to switch to another provider, 41% indicated that they didn’t take any action, and 48% vented their frustrations with the complaint handling process at their friends and family, while 8% did the same via social networking sites.

“These results show that banks’ efforts to fix underlying service issues and engage better with their customers are working but there is still a large number of customers lodging complaints and there is much room for improvement in the complaint handling process,” said Peter Kirk, author of the research, and head of Accenture Banking Distribution and Marketing Services in the UK and Ireland. “It is essential that the banks improve the way they handle complaints because customers today are much less loyal and their expectations continue to rise.” BT

Metro Bank, the UK bank entrant, has selected Australian online banking solutions provider Sandstone to pilot an online application service for ISA products. Working with partners CallCredit, Sandstone’s BankFast Apply platform has been deployed by the bank to allow immediate online customer applications incorporating Electronic Identification and Anti Money Laundering checks to facilitate immediate application approval.

Hitachi and Turkish bank Isbank have installed the largest network of biometric finger vein scanners in Europe. Around 3,400 scanners have been installed in ATMs and branches, so customers can withdraw cash and use other services without a bank card. Hitachi’s finger vein authentication technology uses the pattern of veins within a finger to verify identity. The finger vein pattern is impossible to counterfeit and unlike most other biometrics is non-traceable, – it cannot be acquired and replicated like fingerprints. Biometric banking is commonplace in Japan, where more than 75,000 finger vein based ATMs have been installed since 2006. BT

Accenture study shows banks making improvments in complaint handling

“Banks’ efforts to fix underlying service issues and engage better with

their customers are working.”

Fraud hits record high in the UKAs austerity takes hold, fraud by invididuals is going up – but the figures show that the career criminals are getting more sophisticated.

Last year was a record year for fraud in the UK, with a 9% increase from 2010 taking the total to 236,516

cases and confirming that the decrease seen in 2010 was a one-time ‘blip’ in the context of an ever growing fraud problem.

CIFAS – the UK’s Fraud Prevention Service, has released Fraudscape, a 48-page report that lays bare the frauds recorded by the 260 cross-sector CIFAS Members during 2011, in the context of previous years.

Identity Fraud, the use of a fictitious identity and the misuse of another party’s identity details, and Facility Takeover Fraud, the use of data to hijack a victim’s account, accounted for a “staggering” 58% of all the frauds identified in 2011, says CIFAS. Plastic card accounts, bank accounts and communications products were the products that experienced increased attention from fraudsters in 2011, while plastic card accounts remained firm favourites for hijacking by a fraudster, an 18.4% increase from 2010.

The importance of data to the organised fraudster, the methods used to obtain data, the popularity of the internet as a means to commit fraud and the fraudsters’ favoured targets are also comprehensively examined in the report.

In collaboration with the Ordnance Survey, Fraudscape also presents a series of maps revealing where victims were targeted, and where frauds were concentrated in 2011. While London and the South East remained the centre of attention for all frauds, analysis confirms that identity fraud victims are more likely to be targeted for the nature of the locations in which they live (frequently urban areas),

in contrast to account takeover victims who are found proportionately in more sparsely populated areas.

Other areas of interest include: why were Daventry and Monmouthshire locals more likely to fall victim to account takeover fraud? What is significant about the Western Isles in terms of fraud? And, did you know that Coventry, Luton, Peterborough, Glasgow and the Manchester area were also significant fraud hotspots in the UK?

First party fraud – fraud committed by the genuine account holder – remains as potent a problem as identity related crime, and Fraudscape examines this in several ways. Notably, the 13% increase in the fraudulent misuse of accounts (Misuse of Facility Fraud) – was driven as much by the economic climate as the desire to spend funds and retain aspirational accounts/services (e.g. smartphones). Attention is also drawn to the increasing misuse of bank accounts and the ‘money mules’ targeted by organised criminals, as well as the particular issues faced by payday lenders.

The report also shows the range of lies told in applications (such as withholding address and credit history details or false employment details), the differences between home and motor insurance frauds being committed, and how men seem to be more likely to commit fraud but women seem to favour frauds against mail order and communications providers.

Finally, Fraudscape offers an insight into the types of product favoured for specific types of fraud. Bank accounts remain the most frequently targeted


RetaiL: News aNaLysisMArCh 2012

product (up by over 4% from 2010), communications and loan products have experienced surges in fraudulent activity while plastic card accounts experienced more identity related crime than they did in 2010

CIFAS communications manager richard hurley, said: “Fraud is a complex subject, affected by a wide range of factors. however, it is a threat both to organisations and individuals. By examining the ways in which your details can be used, and the lies being told to organisations, CIFAS is able to cast light on the murky realities of the fraud problem and strengthen the call for more public and private organisations to act responsibly and share data to prevent fraud before having to recover losses.”

Nick Mothershaw, director of identity and fraud services at Experian UK & Ireland, said that the report matches his experience. “CIFAS’s report is a timely reminder that fraud continues to be a significant threat to the UK’s financial institutions and their customers. Its findings echo Experian’s fraud data, which has shown big increases in mortgage and current account fraud attempts over the last year. Current accounts are frequently targeted, pointing towards an increasing trend for deposit accounts to be targeted for money laundering purposes or to then be used as a springboard to more lucrative credit products. More than 90% of mortgage fraud tends to originate from genuine individuals misrepresenting their financial situations attempting to buy property that would ordinarily be out of reach.”

Gary Clark, vice president at security firm SafeNet, said: “The reported sharp increase in banking fraud and identity theft raises significant concerns over protecting consumers’ personal data and financial details. As hackers adopt more sophisticated methods to target social data and online transactions, financial organisations need to make sure that their data security strategies are evolving at the same pace, or even faster than the most elaborate hacking threats. There is no excuse for organisations to not adequately protect consumer data as solutions for that are available and proven to work.” BT

Fraud Type 2010 2011 % change

Identity Fraud 102,672 113,259 +10.3%

Facility Takeover Fraud 21,226 25,070 +18.1%

Misuse of Facility Fraud 47,731 53,996 +13.1%

Application Fraud 44,680 43,263 -3.2%

Asset Conversion 539 532 -1.3%

False Insurance Claims 537 396 -26.3%

Total 217,385 236,516 +8.8%

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Fraud hits record high in the UKAs austerity takes hold, fraud by invididuals is going up – but the figures show that the career criminals are getting more sophisticated.

Last year was a record year for fraud in the UK, with a 9% increase from 2010 taking the total to 236,516

cases and confirming that the decrease seen in 2010 was a one-time ‘blip’ in the context of an ever growing fraud problem.

CIFAS – the UK’s Fraud Prevention Service, has released Fraudscape, a 48-page report that lays bare the frauds recorded by the 260 cross-sector CIFAS Members during 2011, in the context of previous years.

Identity Fraud, the use of a fictitious identity and the misuse of another party’s identity details, and Facility Takeover Fraud, the use of data to hijack a victim’s account, accounted for a “staggering” 58% of all the frauds identified in 2011, says CIFAS. Plastic card accounts, bank accounts and communications products were the products that experienced increased attention from fraudsters in 2011, while plastic card accounts remained firm favourites for hijacking by a fraudster, an 18.4% increase from 2010.

The importance of data to the organised fraudster, the methods used to obtain data, the popularity of the internet as a means to commit fraud and the fraudsters’ favoured targets are also comprehensively examined in the report.

In collaboration with the Ordnance Survey, Fraudscape also presents a series of maps revealing where victims were targeted, and where frauds were concentrated in 2011. While London and the South East remained the centre of attention for all frauds, analysis confirms that identity fraud victims are more likely to be targeted for the nature of the locations in which they live (frequently urban areas),

in contrast to account takeover victims who are found proportionately in more sparsely populated areas.

Other areas of interest include: why were Daventry and Monmouthshire locals more likely to fall victim to account takeover fraud? What is significant about the Western Isles in terms of fraud? And, did you know that Coventry, Luton, Peterborough, Glasgow and the Manchester area were also significant fraud hotspots in the UK?

First party fraud – fraud committed by the genuine account holder – remains as potent a problem as identity related crime, and Fraudscape examines this in several ways. Notably, the 13% increase in the fraudulent misuse of accounts (Misuse of Facility Fraud) – was driven as much by the economic climate as the desire to spend funds and retain aspirational accounts/services (e.g. smartphones). Attention is also drawn to the increasing misuse of bank accounts and the ‘money mules’ targeted by organised criminals, as well as the particular issues faced by payday lenders.

The report also shows the range of lies told in applications (such as withholding address and credit history details or false employment details), the differences between home and motor insurance frauds being committed, and how men seem to be more likely to commit fraud but women seem to favour frauds against mail order and communications providers.

Finally, Fraudscape offers an insight into the types of product favoured for specific types of fraud. Bank accounts remain the most frequently targeted


RetaiL: News aNaLysisMArCh 2012

product (up by over 4% from 2010), communications and loan products have experienced surges in fraudulent activity while plastic card accounts experienced more identity related crime than they did in 2010

CIFAS communications manager richard hurley, said: “Fraud is a complex subject, affected by a wide range of factors. however, it is a threat both to organisations and individuals. By examining the ways in which your details can be used, and the lies being told to organisations, CIFAS is able to cast light on the murky realities of the fraud problem and strengthen the call for more public and private organisations to act responsibly and share data to prevent fraud before having to recover losses.”

Nick Mothershaw, director of identity and fraud services at Experian UK & Ireland, said that the report matches his experience. “CIFAS’s report is a timely reminder that fraud continues to be a significant threat to the UK’s financial institutions and their customers. Its findings echo Experian’s fraud data, which has shown big increases in mortgage and current account fraud attempts over the last year. Current accounts are frequently targeted, pointing towards an increasing trend for deposit accounts to be targeted for money laundering purposes or to then be used as a springboard to more lucrative credit products. More than 90% of mortgage fraud tends to originate from genuine individuals misrepresenting their financial situations attempting to buy property that would ordinarily be out of reach.”

Gary Clark, vice president at security firm SafeNet, said: “The reported sharp increase in banking fraud and identity theft raises significant concerns over protecting consumers’ personal data and financial details. As hackers adopt more sophisticated methods to target social data and online transactions, financial organisations need to make sure that their data security strategies are evolving at the same pace, or even faster than the most elaborate hacking threats. There is no excuse for organisations to not adequately protect consumer data as solutions for that are available and proven to work.” BT

Fraud Type 2010 2011 % change

Identity Fraud 102,672 113,259 +10.3%

Facility Takeover Fraud 21,226 25,070 +18.1%

Misuse of Facility Fraud 47,731 53,996 +13.1%

Application Fraud 44,680 43,263 -3.2%

Asset Conversion 539 532 -1.3%

False Insurance Claims 537 396 -26.3%

Total 217,385 236,516 +8.8%

ING has extended its use of Quartet FS’ ActivePivot analytics solution to solve a range of operational business. ING initially deployed ActivePivot to manage market risk (VaR) and P&L validation, but now has plans to roll out the solution to the bank’s credit department where it will be used for collateral management and CVA. The implementation is the first time that ING has used in-memory analytics technology.

The latest version of SAS Anti-Money Laundering includes predictive analytics, an updated regulatory reporting console, and additional risk-based scoring techniques. The updated regulatory reporting console supports multiple forms and languages, and interacts with new electronic filing systems being adopted by global financial intelligence units. An improved user interface speeds investigations by displaying all relevant customer information based on user roles, rights and privileges, to display key performance indicators of the most recent trends. BT

community groups, academics, think-tanks and social media. This enables financial professionals to better track the environmental, social, governance, and reputational risk exposure of companies worldwide and facilitate assessment of ESG information when recommending portfolio constituents for their clients, whilst supporting compliance to the UN Principles for responsible Investment (UNPri) and any ethical internal policies.

“Investors are increasingly sensitive regarding the reputation of companies within their portfolios in terms of their environmental and social responsibility”, says Matthias Paul, global managing director of Interactive Data Managed Solutions. “By adding reprisk information to our data range, we support our customers, such as Swiss Bank Sarasin, who focus on sustainability in their private banking investments. advisors are now able to more effectively and consistently monitor ESG and related reputational risk issues for their clients to help them adjust their decision-making processes accordingly.”

“Interactive Data has taken an important step in providing its users with powerful tools that can be used to identify and monitor environmental, social and governance risks that could potentially lead to outcry from stakeholders, cause reputational damage, and have negative financial impacts”, said Philipp aeby, reprisk chief executive. “The incorporation of reprisk business intelligence will help keep clients abreast of ESG issues. Since the information available from reprisk may significantly differ from the information and views published by the companies in question, critical balance and perspective is added to the ESG risk assessment process, which will help them to make better informed decisions related to their investments and business relationships.”

PrimeTerminal will offer users the flexibility to directly access the reprisk content and tailor it to meet their individual application, needs and interest areas. Users will have the ability to integrate the current reprisk company indicator content with any watch list or portfolio view, sort by reprisk indicator, and compare rep risk proprietary ESG risk scores across peer groups. This may be used, for example, to identify a company with low reputational risk exposure in a specific sector. BT

RISK &REGULATION


March 2012


K inetic Partners, a global professional services firm, has joined forces with UnaVista, the London Stock Exchange Group’s transaction reporting service, to offer a full-service transaction reporting solution.

The partnership will bolster Kinetic’s risk and compliance services offering, used by some 1,200 clients globally.

Kinetic’s team has over 20 years’ experience of working at the Financial Services authority’s Transaction Monitoring Unit, plus audit staff with experience of transaction reporting projects. UnaVista is an approved reporting Mechanism for transaction reporting.

The partnership will offer a solution to both Kinetic Partners and UnaVista’s clients and other MiFID investment firms, including regulatory guidance, audit and operational services, and technical solutions. Under MiFID, all regulated entities executing transactions are obliged to report all transactions in equity and debt-related financial instruments and related derivatives, in order that regulators can effectively monitor for market abuse.

The announcement follows publication of the FSa’s Transaction reporting User Pack Version 3. TrUP 3 provides a more comprehensive definition of ‘execute’ and consequently when firms are obliged to report, greater clarity for portfolio managers regarding advisory transactions, trades on NYSE Liffe and Direct Electronic access and the guidelines around DEa were also expanded for Direct Market access users generally.

This latest guidance reflects the increasing importance that regulators are putting on transaction data, and it is anticipated that the FSa and other competent authorities will continue to fine firms for failing to report accurately, promptly and comprehensively, says Kinetic. The MiFID review will require additional instrument types and data content to be reported.

Monique Melis, a member of Kinetic Partners, said “We are delighted to be joining forces with UnaVista to offer a comprehensive one-stop-shop transaction reporting service. Our unique expertise and unrivalled experience in the transaction reporting space will complement UnaVista’s market leading system to provide the highest standard of regulatory guidance available and effective remedial solutions”.

Mark husler, head of business development at London Stock Exchange Group said: “We are very excited by our new partnership with Kinetic Partners. The London Stock Exchange Group has been offering transaction reporting services for its clients since 1989, a commitment that was reinforced by the recent acquisition of the FSa’s Transaction reporting Service. By combining the technology of our approved reporting Mechanism with the regulatory expertise and remedial services of Kinetic Partners, we now offer our client community of over 500 companies a complete solution with access to a wide range of regulatory compliance advice and consultancy.” BT

Kinetic and UnaVista partner for transaction reporting service

Interactive Data joins with RepRisk for ESG Data on Prime Terminal Professional

Interactive Data and reprisk, a provider of Environmental, Social and Governance business intelligence, to expand the content available via Interactive’s PrimeTerminal Professional real-time financial market data terminal.reprisk’s quantitative reputational risk indicators for individual companies and

sectors, including current and historical data for the past two years, are now available via PrimeTerminal. This information can be displayed in comprehensive overviews, which can be opened by context-sensitive navigation from a stock quote.

Users will also be able to access ESG positions and views published by a wide range of sources, including global, regional and local media, NGOs, government agencies,

FinArch has added Basel III to its Financial Studio finance, risk and performance measurement platform. Basel III introduces new liquidity standards through requirements for liquidity ratios and various other monitoring liquidity risk metrics. Ratios include the liquidity coverage ratio and the net stable funding ratio. FinArch’s Basel III solution supports the measurement of all Basel III requirements and has the flexibility to cope with changes. It also features a data management capability that collects and manages all risk data in a consistent manner, optimises capital and liquidity buffers through adequate capital planning and liquidity stress testing analysis, and incorporates the capital and liquidity cost into pricing decisions in order to manage capital and liquidity against performance objectives.

The vast majority of financial services companies have assessed the impact the London 2012 Olympic and Paralympic Games will have on their business, according to Deloitte, the official professional services provider to London 2012. Respondents are broadly positive about the potential economic boost the Games could generate, but 50% of financial services companies are concerned about security – a higher proportion than any other industry. A significant minority (28%) say they are concerned about a possible drop in demand for services. However, despite financial services companies being more concerned by security than any other industry, they are also least likely to review their business continuity plans. Just 16% intend to do so, compared to 26% of transport companies, 20% of retailers and 18% of companies in the tourism and hospitality industry.

Thomson Reuters is launching a new version of Clear, its public and proprietary records search product. Clear for Enhanced Due Diligence brings together information on people and businesses, showing material associations between businesses and individuals, and highlighting potential risks, in one place. Through a dashboard interface, users can spot potential risk flags on subjects of interest and their associates. It pulls together data streams from sources that include public records, news reports, watchlists and social networks. BT

ING has extended its use of Quartet FS’ ActivePivot analytics solution to solve a range of operational business. ING initially deployed ActivePivot to manage market risk (VaR) and P&L validation, but now has plans to roll out the solution to the bank’s credit department where it will be used for collateral management and CVA. The implementation is the first time that ING has used in-memory analytics technology.

The latest version of SAS Anti-Money Laundering includes predictive analytics, an updated regulatory reporting console, and additional risk-based scoring techniques. The updated regulatory reporting console supports multiple forms and languages, and interacts with new electronic filing systems being adopted by global financial intelligence units. An improved user interface speeds investigations by displaying all relevant customer information based on user roles, rights and privileges, to display key performance indicators of the most recent trends. BT

community groups, academics, think-tanks and social media. This enables financial professionals to better track the environmental, social, governance, and reputational risk exposure of companies worldwide and facilitate assessment of ESG information when recommending portfolio constituents for their clients, whilst supporting compliance to the UN Principles for responsible Investment (UNPri) and any ethical internal policies.

“Investors are increasingly sensitive regarding the reputation of companies within their portfolios in terms of their environmental and social responsibility”, says Matthias Paul, global managing director of Interactive Data Managed Solutions. “By adding reprisk information to our data range, we support our customers, such as Swiss Bank Sarasin, who focus on sustainability in their private banking investments. advisors are now able to more effectively and consistently monitor ESG and related reputational risk issues for their clients to help them adjust their decision-making processes accordingly.”

“Interactive Data has taken an important step in providing its users with powerful tools that can be used to identify and monitor environmental, social and governance risks that could potentially lead to outcry from stakeholders, cause reputational damage, and have negative financial impacts”, said Philipp aeby, reprisk chief executive. “The incorporation of reprisk business intelligence will help keep clients abreast of ESG issues. Since the information available from reprisk may significantly differ from the information and views published by the companies in question, critical balance and perspective is added to the ESG risk assessment process, which will help them to make better informed decisions related to their investments and business relationships.”

PrimeTerminal will offer users the flexibility to directly access the reprisk content and tailor it to meet their individual application, needs and interest areas. Users will have the ability to integrate the current reprisk company indicator content with any watch list or portfolio view, sort by reprisk indicator, and compare rep risk proprietary ESG risk scores across peer groups. This may be used, for example, to identify a company with low reputational risk exposure in a specific sector. BT


IT & OPSMarch 2012

Hybrid IT is transforming IT architectures and the role of IT itself, according to Gartner. hybrid IT is the result of combining internal and external services, usually from a combination of internal and public clouds, in support of a

business outcome. In a report, Hybrid IT: How Internal and External Cloud Services are Transforming IT, Gartner

says hybrid IT relies on new technologies to connect clouds, sophisticated approaches to data classification and identity, and service-oriented architecture, and heralds significant change for IT practitioners.

“Many organisations have now passed the definitional stage of cloud computing and are testing cloud architectures inside and outside the organisation and over time, the cloud will simply become one of the ways that we ‘do’ computing, and workloads will move around in hybrid internal/external IT environments,” said chris howard, managing vice president at Gartner. “as a result, the traditional role of the enterprise IT professional is changing and becoming multifaceted. a hybrid IT model requires internal and external IT professionals to support the business capabilities of the organisation.”

cloud computing’s business model – the ability to rapidly provision IT services without large capital expenditures – is appealing to budget-minded executives. chief executives and cIOs are pressuring IT organisations to lower overheads by offloading services to cloud providers. however, when IT organisations investigate potential cloud services, the market’s volatility reveals that not all cloud services are created equal.

“IT organisations are taking an ‘adopt and go’ strategy to satisfy internal customer IT consumerisation and democratisation requirements,” howard said. “Many IT organisations are adopting public cloud computing for noncritical IT services such as development and test applications, or for turnkey software as a service applications such as Web analytics and customer relationship management that can holistically replace internal applications and enable access for a mobile workforce.”

For critical applications and data, IT organisations have not adopted public cloud computing as quickly. Many IT organisations discover that public cloud service providers cannot meet the security requirements, integrate with an organisation’s management, or guarantee availability necessary to host critical applications. Therefore, organisations continue to own and operate internal IT services that house critical applications and data.

however, the public cloud has affected internal customers. Because of the pervasive growth of public clouds, many business units and internal customers have used and grown accustomed to IT as a service and have built business processes and budget plans with cloud computing in mind.

“IT organisations that do not match the request for IT as a service run the risk of internal customers bypassing the IT organisation and consuming IT services from the external cloud, thereby placing the company at greater risk,” said howard. “IT organisations realise that they not only need to compete with the public cloud consumption model, but also must serve as the intermediary between their internal customers and all IT services – whether internal or external.”

IT organisations are becoming the broker to a set of IT services that are hosted partially internally and partially externally – hybrid IT architecture. By being the intermediary of IT services, IT organisations can offer internal customers the price, capacity and speed of provisioning of the external cloud while maintaining the security and governance the company requires, and reducing IT service costs.

This model of service delivery challenges both the longstanding practices of IT organisations and the business models of traditional IT vendors. Gartner expects that most organisations will maintain a core set of primary service providers (cloud and non-cloud) extended by an ecosystem of edge providers who fulfil specific solution requirements.

“hybrid IT is the new IT and it is here to stay. While the cloud market matures, IT organisations must adopt a hybrid IT strategy that not only builds internal clouds to house critical IT services and compete with public cSPs, but also utilises the external cloud to house noncritical IT services and data, augment internal capacity, and increase IT agility,” said howard. “hybrid IT creates symmetry between internal and external IT services that will force an IT and business paradigm shift for years to come.” BTwww.gartner.com

Hybrid IT will change everything


SNS moves CRM onto Teradata

SNS Bank in Utrecht has recently moved its customer relationship information into a Teradata data

warehouse. The transition “wasn’t particularly difficult”, said robbert Kok, in charge of the data warehouse programme at the bank, because the bank had a crM system that provides daily uploads to the data warehouse.

although SNS is the result of several mergers of savings banks, it has moved them onto a single platform for retail banking transactions and mortgages.

“The big advantage in our bank is that there is the strategy to use, as much as possible, one single mainframe to store all the products and all the customers of the different labels,” said Kok. “In the last acquisition we also migrated the operational system into our mainframe. This makes it very easy to unload the data to the data warehouse. But of course there are some specific systems for special purposes/processing. But the strategy remains to migrate systems in order to use a minimum number of systems in the back office.”

Kok said the bank’s purpose in using Teradata was to develop interactive marketing including inbound marketing. Getting all the participants working together was a challenge, he added.

“The building of the data warehouse was a difficult process with a lot of stakeholders. Finally we set up a concept that complied with both the IT and business requirements. It is a combination of a Datavault modelling technique with the Financial Services Logical Data Model from Teradata.” Now all the data and models are standardised. The insurance company that SNS bought in 1997, reaal, has its own data warehouse, added Kok. With the data warehouse, the bank has developed an integrated marketing campaign cycle by selecting targeted marketing opportunities.

“We target the customer through different channels – call centre, mail, email, branches and the internet. Every contact is also provisioned to the crM system so responses can be measured. In addition, it links to the internet banking system, so when a customer logs onto his account, he sees personalised offers. If he clicks on an offer, the application is handled with straight-through processing.” BT

Mobile finance raises risksAs mobile payments and banking take off, the security issues around the devices continue to pose risks, and is sparking the development of plenty of proposed solutions, writes Tom Groenfeldt.

The CitiDirect BE Mobile service has handled more than $1 billion in total transactions value since its commercial release in August last year. Working through browsers on laptops and internet-enabled mobile phones or tablets, it is now available in 80 countries.

It has proven a hit with travelling finance executives and their teams, according to Andy Cronin, chief financial officer and head of capital markets at Avolon in Ireland.

“Our executive team operates in a global environment with extensive travel and 24 hour operations. The mobile functionality has proven a reliable and efficient tool offering greatly improved access to our payments system, while preserving control of the matrix of authorities. Having implemented the system in the past months, it is already a core feature of our cash management.”

Tomasz Smilowicz, global head of mobile solutions in Citi’s Global Transaction Services, says the development was driven by customer interest and the bank’s desire to simplify transaction processing, reduce the role of paper and make transactions more convenient for corporate treasury.

“By having this channel enabled, our clients are not tied to staying in front of their computer to interact. They can authorise payments or receive notification of important changes in cash flow while playing golf with customers or participating in a meeting anywhere. Sometimes these transactions – such as tax payments or salaries – are extremely important and clients have to act on them quickly.”

For security, the Citi system requires dynamic passwords generated by tokens, which is one of a range of options that institutions and system vendors are deploying to address the security challenges raised by mobile finance.

On the retail front, Misys has developed GeoGuard, a means by which social media participants can use their online presence to assure their banks that they are indeed in Malaysia trying to use an ATM, even if three days previously they were in London.

Tim Tyler, a solutions manager at the firm, has had those irritating, and costly, 15 minute calls from Singapore back to his London bank trying to get a card unblocked so he can pick up some local currency. A survey of UK bank customers showed that some 10 million had experienced the same problem over the past year. A Tier One

London bank said card blocking was its single biggest complaint.

“Banks are almost too proactive in fraud prevention, and they are reducing fraud at the pain of customer experience,” Tyler says.

Banks even block the cards of customers who have told them in advance they would be travelling to a specific country, says Tyler, who had that conversation with his London bank before flying from Singapore to Tanzania. The bank warned him he would probably have to call in again once he had landed. “These big international banks still have issues with customer mobility.”

With GeoGuard, which works through salesforce.com, customers can allow their banks to see their most recent location information. It does not require any software installation at the bank. It can be used through social networks such as Facebook Places, foursquare, Gowalla and TripIt. GeoGuard can also link to a bank’s e-banking service directly for those customers who avoid social media. Already, says Tyler, 120 million Facebook users are providing their location publicly on a regular basis.

Location information provides a comfortable middle ground where finance and social media can meet – the banks are not at any security risk and customers can offer the information to prevent their debit and credit cards from being blocked when they travel.

Security tokens might work for wholesale banking, but retail bank customers don’t want to use them, Tyler adds. He says GeoGuard will reduce complaints to banks, and some costs – such as reimbursing the costs of his mobile calls from Singapore and Tanzania.

Joe Nocera, a principal at PWC who works on mobile security, says companies are becoming more comfortable with smartphones, especially as they see they aren’t much different from laptops when it comes to security.

“Now it is on everybody’s agenda. In the past we saw organisations dragging their feet, saying no, it was too risky,” he says. “But ultimately customer relationship folks in the field or senior executives were finding ways to use them, so now companies are moving from ‘No’ to ‘Yes, but.’ That usually involves a mobile device management solution that resides on the mobile device and can check its adherence to company security configuration requirements before letting it connect to the network.”

At the company, other software enforces data access policies and monitors user traffic “so if you see something suspicious, you can take action quickly.”

Phones get lost, but so do laptops, he added. “It is simply a new technology and we need to treat it like a typical computing device.” Firms need to understand the information they have and what is allowed on portable devices.

“Does an individual need personal identity information? First you minimise the number of people who have access to it, then you require encryption. Organisations do have trouble getting an inventory of where their information exists, he added. All the major security vendors are offering products for mobile devices, he says.

His advice is to start thinking about security as soon as anyone dreams up a new application for mobile.

“If you hear about a new mobile application, think about the security and use case at that point. The earlier you can find out about it, the lower the cost to implement the security and the more robust security you can put in place,” he says.

Security applications could use GPS to confirm a mobile phone user’s location and perhaps use the camera for a thumb print or facial recognition, he added. Individual employees, especially younger ones, will accept security in return for carrying one device for both work and personal use.

That may become even easier, and more effective, with VMware’s announcement at the Mobile World Congress in Barcelona of a virtualisation platform that will allow one Android phone to run a separate business and personal profiles and applications on one device.

That should present some new challenges, or opportunities for Verivo, formerly Pyxis Mobile. It makes development of mobile applications for the enterprise easier by offering a platform for write once and deploy anywhere – iPhone, Microsoft mobile, Android and BlackBerry. It started developing financial applications but during the financial industry downturn it expanded into other industries to stay alive. One example of a current client – CSX, the major US rail carrier, uses Verivo to build applications for employees, partners and customers so they can track containers. Other clients include the Federal Deposit Insurance Corporation and Constellation Energy Group. BT

Risk & REgulATion: nEws AnAlysisMArCH 2012



IT & OPSMarch 2012

Hybrid IT is transforming IT architectures and the role of IT itself, according to Gartner. hybrid IT is the result of combining internal and external services, usually from a combination of internal and public clouds, in support of a

business outcome. In a report, Hybrid IT: How Internal and External Cloud Services are Transforming IT, Gartner

says hybrid IT relies on new technologies to connect clouds, sophisticated approaches to data classification and identity, and service-oriented architecture, and heralds significant change for IT practitioners.

“Many organisations have now passed the definitional stage of cloud computing and are testing cloud architectures inside and outside the organisation and over time, the cloud will simply become one of the ways that we ‘do’ computing, and workloads will move around in hybrid internal/external IT environments,” said chris howard, managing vice president at Gartner. “as a result, the traditional role of the enterprise IT professional is changing and becoming multifaceted. a hybrid IT model requires internal and external IT professionals to support the business capabilities of the organisation.”

cloud computing’s business model – the ability to rapidly provision IT services without large capital expenditures – is appealing to budget-minded executives. chief executives and cIOs are pressuring IT organisations to lower overheads by offloading services to cloud providers. however, when IT organisations investigate potential cloud services, the market’s volatility reveals that not all cloud services are created equal.

“IT organisations are taking an ‘adopt and go’ strategy to satisfy internal customer IT consumerisation and democratisation requirements,” howard said. “Many IT organisations are adopting public cloud computing for noncritical IT services such as development and test applications, or for turnkey software as a service applications such as Web analytics and customer relationship management that can holistically replace internal applications and enable access for a mobile workforce.”

For critical applications and data, IT organisations have not adopted public cloud computing as quickly. Many IT organisations discover that public cloud service providers cannot meet the security requirements, integrate with an organisation’s management, or guarantee availability necessary to host critical applications. Therefore, organisations continue to own and operate internal IT services that house critical applications and data.

however, the public cloud has affected internal customers. Because of the pervasive growth of public clouds, many business units and internal customers have used and grown accustomed to IT as a service and have built business processes and budget plans with cloud computing in mind.

“IT organisations that do not match the request for IT as a service run the risk of internal customers bypassing the IT organisation and consuming IT services from the external cloud, thereby placing the company at greater risk,” said howard. “IT organisations realise that they not only need to compete with the public cloud consumption model, but also must serve as the intermediary between their internal customers and all IT services – whether internal or external.”

IT organisations are becoming the broker to a set of IT services that are hosted partially internally and partially externally – hybrid IT architecture. By being the intermediary of IT services, IT organisations can offer internal customers the price, capacity and speed of provisioning of the external cloud while maintaining the security and governance the company requires, and reducing IT service costs.

This model of service delivery challenges both the longstanding practices of IT organisations and the business models of traditional IT vendors. Gartner expects that most organisations will maintain a core set of primary service providers (cloud and non-cloud) extended by an ecosystem of edge providers who fulfil specific solution requirements.

“hybrid IT is the new IT and it is here to stay. While the cloud market matures, IT organisations must adopt a hybrid IT strategy that not only builds internal clouds to house critical IT services and compete with public cSPs, but also utilises the external cloud to house noncritical IT services and data, augment internal capacity, and increase IT agility,” said howard. “hybrid IT creates symmetry between internal and external IT services that will force an IT and business paradigm shift for years to come.” BTwww.gartner.com

Hybrid IT will change everything


SNS moves CRM onto Teradata

SNS Bank in Utrecht has recently moved its customer relationship information into a Teradata data

warehouse. The transition “wasn’t particularly difficult”, said robbert Kok, in charge of the data warehouse programme at the bank, because the bank had a crM system that provides daily uploads to the data warehouse.

although SNS is the result of several mergers of savings banks, it has moved them onto a single platform for retail banking transactions and mortgages.

“The big advantage in our bank is that there is the strategy to use, as much as possible, one single mainframe to store all the products and all the customers of the different labels,” said Kok. “In the last acquisition we also migrated the operational system into our mainframe. This makes it very easy to unload the data to the data warehouse. But of course there are some specific systems for special purposes/processing. But the strategy remains to migrate systems in order to use a minimum number of systems in the back office.”

Kok said the bank’s purpose in using Teradata was to develop interactive marketing including inbound marketing. Getting all the participants working together was a challenge, he added.

“The building of the data warehouse was a difficult process with a lot of stakeholders. Finally we set up a concept that complied with both the IT and business requirements. It is a combination of a Datavault modelling technique with the Financial Services Logical Data Model from Teradata.” Now all the data and models are standardised. The insurance company that SNS bought in 1997, reaal, has its own data warehouse, added Kok. With the data warehouse, the bank has developed an integrated marketing campaign cycle by selecting targeted marketing opportunities.

“We target the customer through different channels – call centre, mail, email, branches and the internet. Every contact is also provisioned to the crM system so responses can be measured. In addition, it links to the internet banking system, so when a customer logs onto his account, he sees personalised offers. If he clicks on an offer, the application is handled with straight-through processing.” BT


The Enterprise Data Management Council is a non-profit trade association created by financial industry participants. Its primary purpose is to address the issues and challenges associated with managing data content as a business and operational priority, and the latest management summary of its activities, published at the beginning of this year, give a good sense of how pervasive data issues are in financial services

Among (many) other things, it is working on: Dodd-Frank: The process of translating the legislative objectives of Dodd-Frank and the plethora of EU directives into specific regulatory rules and precise reporting requirements “is difficult for even the regulatory agencies to navigate”. Not only are these reforms unprecedented in their scope but the underlying data infrastructure needed for reporting (i.e. standards to identify products and entities, describe the contractual structure of financial contracts and classify financial instruments for aggregation) is not yet in place. Legal Entity Identification: The industry recommendation for a legal entity identifier is the first of these ‘infrastructure standards’ to be addressed. And while the industry released its recommendation (ISO 17442 with Swift as the Registration Authority) –

it did so before the standard was complete from ISO and before the global governance mechanism was in place to achieve alignment among regulators and market authorities on commercial, competition and operational requirements. There has been significant progress on the LEI standard – and an unparalleled amount of international cooperation on its acceptance – but it is not yet finalised. Commodity Futures Trading Commission: The CFTC’s Technical Advisory Committee (and its Subcommittee on Data Standardisation, of which the EDM Council is a member) have been meeting on a regular basis to provide guidance to the Commission on identifiers and semantics. There is consensus on the use of the proposed LEI standard for the identification of legal entities. There is still no consensus on the best way to represent products/instruments or to describe the contractual structure of complex OTC derivatives. There has been a heated debate on the benefits and drawbacks of semantics versus XML schema as the best way to accomplish these objectives. Regulatory Working Group: a new working group was created under the leadership of Broadridge Financial Solutions. It is in the process of assessing the data management and reporting

implications associated with impending regulation. Financial Industry Business Ontology: The Council and the Object Management Group have been working to complete the FIBO conceptual model, finalise the technical constructs and implement the process for aligning our semantics work with other ongoing initiatives. The first FIBO standard will be for business entities. Semantics Repository: The business conceptual model within the Semantics Repository is substantially complete. Data Management Maturity: Council members “have been meeting three days a week since August” last year to complete the core content for the Data Management Maturity initiative. The DMM is being created in collaboration with the Software Engineering Institute of Carnegie Mellon University and will result in a formal methodology for assessing data management capabilities. The initial draft of the DMM has been successfully used as the basis for two self-assessment pilot projects (one financial institution and one regulatory agency). The core DMM including detailed capability statements and typical work products needed as evidence of compliance is scheduled to be released to the membership in March 2012.

EDM Council: covering all the bases

The good news is that this is being addressed: “lots of people are saying, “let’s do this now’”.

The second is more fundamental: “Data isn’t an IT problem; it’s a business issue. IT knows how to plumb it in, but they don’t know what the data is used for.”

The result is that they try to keep everything, but not in a way that is useful. “For instance, pricing data is only of interest if you have a position on that instrument – otherwise why would you care?”

The more you look at data from this joined-up perspective, “the more valuable it becomes”, says Simpson.

Mike Meriton, chief executive of master data management specialist GoldenSource, confirms that people are turning their attention to the data issues, evidenced by the fact that the sector is strong in terms of sales, to both new and existing clients. “Surf’s up!” he says, adding that 10 clients went live with GoldenSource systems in the last quarter of 2011.

At a time when budgets are stretched and projects are on hold across the industry why is this so? “In other parts of the bank, nothing other than ‘must do’ purchases are happening at the moment – why is the activity around the data management issue at an all-time high?” he says. “We believe that data management is not only strategic to the bank, but to the ecosystem around the bank.”

To this end, GoldenSource has been looking at the “exchanges and at the regulators to create value in the

chain” says Meriton. Already it has made some inroads – including a sale to the World Bank – and it expects more regulators to go down this route as vendors offer standard products that minimise the implementation time.

Paul Kennedy, business manager for reference data at Interactive Data, says that data management spans a broad spectrum. At the bottom end is the box that the data is stored on, which requires management at a physical level, and at the top end is the complexity of unstructured data such as the Twitter feeds that are being scanned to see what market sentiment is doing, and the sheer volume of data that is coming out of low-latency market data systems.

On top of that there is the issue of relationships between the data elements – a plain vanilla stock will still have elements other than the price, and once you get to derivatives it can become very complex indeed.

Kennedy sees a third layer, which he says is the most interesting “and the one which is now driving the business purpose” – risk, and the reduction of it in the overall financial system. To a great extent, this aspect is being driven by regulators, with the added complexity that the regulators don’t fully appreciate the complexity of what they are asking the industry to do, which is a fundamental change in the way it operates: “It’s not an unreasonable thing to ask – if you’ve just arrived on the planet,” says Kennedy. BT


Data management means different things to different people, and in financial services that only serves to make a complicated situation even more complicated, says David Bannister.

Getting to gripswith data

There is a school of thought that says banks are effectively dispersed computer networks, and financial transactions are just the messages hurtling around those networks.

Taking that reductionist view a stage further, people are now making a case to say that banks are simply sets of data and banking is merely the management of that data.

Without taking that as some sort of literal truth, it is certainly the case that the management of data in financial services is a very hot topic, from the Big Data proponents to the work that is being done on the minutiae of reference data.

Mark Dunleavy, managing director at Informatica, says that data per se has become one of the key issues for banks. “The industry has changed to the point where we are seeing banks appointing chief data officers, which is a true move towards data management as a discipline in and of itself.”

Dunleavy sees the issues around data in three main areas: Big Data, and the business intelligence that can be gathered from the analysis of unstructured data such as social media; master data management; and information lifecycle management.

On the master data management front, he says that it is not necessary for firms to have multiple instances of datasets – by using dynamic data masking, it is possible to separate development and production data, effectively creating Chinese walls and removing duplication.

This is important, he says, because it is not the complexity of the data that is the issue, it is the complexity of constantly changing data formats.

Another strand he sees is data archiving, where technology can be used to archiving inactive data or retiring legacy applications to free up budgets.

Daniel Simpson, chief executive of data management specialist Cadis, agrees on the issue of changes. Asked if the problems of data management are on-going or simply a phase that has to be gone through to tidy up messes created in the past, he says: “To be honest, it will take forever, because the data is constantly changing.”

Simpson says that much of the problems of data management come down to the organisational complexity of financial institutions, and that the concept of having a single Golden Copy at the centre is flawed.

“To really get the value out of data, it has to be firm-wide and there can’t be a one-size that fits all organisations,” he says. The solution is to have multiple Golden Copies, he says. “Don’t put an enormous data warehouse at the centre of your activities – you still need a data warehouse, but as a downstream repository.”

The Master Data Management approach is simpler than the Enterprise Data Management approach, but it is more limiting, he argues.

Two other factors contribute to the situation. “In boom times IT budgets were skewed towards the front office and the back was neglected,” says Simpson.

IT & OPS: DATA MANAGEMENTMArCh 2012


The Enterprise Data Management Council is a non-profit trade association created by financial industry participants. Its primary purpose is to address the issues and challenges associated with managing data content as a business and operational priority, and the latest management summary of its activities, published at the beginning of this year, give a good sense of how pervasive data issues are in financial services

Among (many) other things, it is working on: Dodd-Frank: The process of translating the legislative objectives of Dodd-Frank and the plethora of EU directives into specific regulatory rules and precise reporting requirements “is difficult for even the regulatory agencies to navigate”. Not only are these reforms unprecedented in their scope but the underlying data infrastructure needed for reporting (i.e. standards to identify products and entities, describe the contractual structure of financial contracts and classify financial instruments for aggregation) is not yet in place. Legal Entity Identification: The industry recommendation for a legal entity identifier is the first of these ‘infrastructure standards’ to be addressed. And while the industry released its recommendation (ISO 17442 with Swift as the Registration Authority) –

it did so before the standard was complete from ISO and before the global governance mechanism was in place to achieve alignment among regulators and market authorities on commercial, competition and operational requirements. There has been significant progress on the LEI standard – and an unparalleled amount of international cooperation on its acceptance – but it is not yet finalised. Commodity Futures Trading Commission: The CFTC’s Technical Advisory Committee (and its Subcommittee on Data Standardisation, of which the EDM Council is a member) have been meeting on a regular basis to provide guidance to the Commission on identifiers and semantics. There is consensus on the use of the proposed LEI standard for the identification of legal entities. There is still no consensus on the best way to represent products/instruments or to describe the contractual structure of complex OTC derivatives. There has been a heated debate on the benefits and drawbacks of semantics versus XML schema as the best way to accomplish these objectives. Regulatory Working Group: a new working group was created under the leadership of Broadridge Financial Solutions. It is in the process of assessing the data management and reporting

implications associated with impending regulation. Financial Industry Business Ontology: The Council and the Object Management Group have been working to complete the FIBO conceptual model, finalise the technical constructs and implement the process for aligning our semantics work with other ongoing initiatives. The first FIBO standard will be for business entities. Semantics Repository: The business conceptual model within the Semantics Repository is substantially complete. Data Management Maturity: Council members “have been meeting three days a week since August” last year to complete the core content for the Data Management Maturity initiative. The DMM is being created in collaboration with the Software Engineering Institute of Carnegie Mellon University and will result in a formal methodology for assessing data management capabilities. The initial draft of the DMM has been successfully used as the basis for two self-assessment pilot projects (one financial institution and one regulatory agency). The core DMM including detailed capability statements and typical work products needed as evidence of compliance is scheduled to be released to the membership in March 2012.

EDM Council: covering all the bases

The good news is that this is being addressed: “lots of people are saying, “let’s do this now’”.

The second is more fundamental: “Data isn’t an IT problem; it’s a business issue. IT knows how to plumb it in, but they don’t know what the data is used for.”

The result is that they try to keep everything, but not in a way that is useful. “For instance, pricing data is only of interest if you have a position on that instrument – otherwise why would you care?”

The more you look at data from this joined-up perspective, “the more valuable it becomes”, says Simpson.

Mike Meriton, chief executive of master data management specialist GoldenSource, confirms that people are turning their attention to the data issues, evidenced by the fact that the sector is strong in terms of sales, to both new and existing clients. “Surf’s up!” he says, adding that 10 clients went live with GoldenSource systems in the last quarter of 2011.

At a time when budgets are stretched and projects are on hold across the industry why is this so? “In other parts of the bank, nothing other than ‘must do’ purchases are happening at the moment – why is the activity around the data management issue at an all-time high?” he says. “We believe that data management is not only strategic to the bank, but to the ecosystem around the bank.”

To this end, GoldenSource has been looking at the “exchanges and at the regulators to create value in the

chain” says Meriton. Already it has made some inroads – including a sale to the World Bank – and it expects more regulators to go down this route as vendors offer standard products that minimise the implementation time.

Paul Kennedy, business manager for reference data at Interactive Data, says that data management spans a broad spectrum. At the bottom end is the box that the data is stored on, which requires management at a physical level, and at the top end is the complexity of unstructured data such as the Twitter feeds that are being scanned to see what market sentiment is doing, and the sheer volume of data that is coming out of low-latency market data systems.

On top of that there is the issue of relationships between the data elements – a plain vanilla stock will still have elements other than the price, and once you get to derivatives it can become very complex indeed.

Kennedy sees a third layer, which he says is the most interesting “and the one which is now driving the business purpose” – risk, and the reduction of it in the overall financial system. To a great extent, this aspect is being driven by regulators, with the added complexity that the regulators don’t fully appreciate the complexity of what they are asking the industry to do, which is a fundamental change in the way it operates: “It’s not an unreasonable thing to ask – if you’ve just arrived on the planet,” says Kennedy. BT

Treasury. The Cabinet Of� ce, where he was executive director of its commercial portfolio, is the department that supports the Prime Minster and the cabinet. As its own website puts it, “the Cabinet Of� ce sits at the very centre of government”.

One of Kamellard’s � rst tasks has been to restore the balance between the interest groups that the Council is meant to represent. “The Payments Council is intended to sit between regulators, industry and consumers,” he says. “It was intended to balance the interests of these stakeholders, and wasn’t intended to be seen as being in the pocket of the industry.”

The fact that it is funded by the industry is not necessarily an obstacle, he says, observing that Ofcom – the UK telecommunications regulator – is also funded by the industry it oversees. “It need not be a problem,” he says.

With the HM Treasury review now underway, and scheduled to make its recommendations later this year, Kamellard says that he “wants to go with the grain” of that. “We know, broadly, what their scope is and want to ensure that when they make recommendations we are well-placed to implement them,” he says.

In the meantime, there is a national payments system to be modernised, and the Council is working through many of the plans outlined in the 2008 National Payments Plan. A second organisational approach instituted by Kamellard is developing a structure “for deciding what projects to pursue”. This, he says, will involve creating a transparent decision-making framework based on tangible criteria – which will also go towards balancing the needs of the stakeholders.

At the heart of this is the Council’s role in delineating the areas in which participants can collaborate, and which are competitive. “In creating the conditions for that collaboration to play out we have to ensure that the structures and processes are right,” he says.

Two particular initiatives show, to some extent, how this cooperation/collaboration will operate. The recent announcement of a pan-industry project to use mobile phones to transfer money between any UK current account (News, page 4) has come about through collaboration, though Barclays’ pre-emptive launch of its Ping-it service shows how competitive the market remains.

Competition is central to the recommendations of the Independent Commission on Banking, and likely will be to the Treasury review currently underway, says Kamellard. The second Payment Council initiative, introduction of the account switching service currently being developed, may have been forced onto the industry, but they are collaborating on its development and several banks are basing competitive plans around it.

What kind of competitive services might they offer?“Who knows? That’s what it’s all about,” says

Kamellard. He adds that part of the role of the Payments Council is to work with all of its interest groups to ensure that they are not disadvantaged, and to this end it is “working with smaller institutions to make sure they are being drawn into the circle”.

On the mobile side, the Council must ensure that it is the interest of the consumer and the integrity of the national payments infrastructure that are protected. “Mobile is very important. We need to

have a wide range of mobile services [that have] to be ubiquitous and accessible,” he says. “There has to be universality, reach and accessibility. We keep focusing on the outcome, which means older phones have to be supported for instance.”

It also means that security and fraud prevention have to step up a level. “Security is key – you won’t need many stories to undermine con� dence – and that means a whole seam of activities around authentication and fraud management,” he says. “It’s really just a function-of real-time payments, and my personal view is that if you move to that world you have to develop systems that are secure and reliable on the � y. We have an alignment of interest, so the ball won’t be dropped, but it will require constant investment.”

Kamellard is enthusiastic about the transformative potential of mobile payments on the wider economy, which takes us back to his self-confessed lack of knowledge about payments when he took over at the end of last year. He has quickly learnt that payments have one thing in common with the projects he was involved with in his previous job at the Cabinet Of� ce – they are, however invisible, part of the fabric of the daily lives of everyone in the country. “The fact is that what we do has wide-ranging effects,” he says. This is clearly illustrated by the fuss over cheque replacement. “If you are dealing with something like cheques, they are very tangible, so other payment systems have to sit alongside and feel as natural,” he says.

On the wider stage, mobile payments could be “signi� cant” in restarting the economy, he says. “For SMEs and micro-businesses it offers real scope to set up small businesses and to have the addition of that payment channel is really important.” BT


Curriculum Vitae: Adrian KamellardNovember 2011–present: chief executive of the Payments Council and UK Payments Administration.

June 2010–November 2011: executive director Cabinet Offi ce As executive director for the commercial portfolio in the UK Cabinet Offi ce, he was responsible for the management of strategic commercial issues and the creation of new commercial structures and businesses in UK central government. This included successfully renegotiation of high value IT service and outsourcing contracts to reduce costs by some £1 billion while maintaining or improving service.

November 2001–June 2010: head of major projects, Partnerships UK In this role that time he and his team designed and led the development of a range of high-value ICT and business process projectsincluding setting up a large pension business; road pricing; identity management; and the redesign of logistics processes. Towards the end of this period of his career Kamellard was seconded as chief executive of Broadband Delivery UK.

July 1997–November 2001: investment director HSBC Investment Bank/Charterhouse Bank

In this role, Kamellard where he provided advice on telecoms projects in the public and private sectors. Prior to this, he led scenario planning at Cable & Wireless, which involved supporting the development and testing of medium term strategies for companies in the C&W Group.

Education: Read Economics at the University of Essex; qualifi ed Chartered Accountant.


INTERVIEW: ADRIAN KAMELLARD MARCH 2012

If anything were needed to serve as a reminder of the extent to which payments affects almost everyone, the controversy that the UK Payments Council found itself in two years ago would be a good place to start.

Founded in 2007 at the instigation of HM Treasury and the Of� ce of Fair Trading, the Payments Council has three core objectives: “to develop a strategic vision for payments and lead the development of co-operative payment services; to demonstrate openness and accountability; and to ensure the operational ef� ciency, effectiveness and integrity of payment services in the UK.”

One of its initial tasks was to create a National Payments Plan, which it duly did. Among other things, it proposed preparing for the abolition of cheques from 2018 in the face of falling use – 90% down since 1990 and predicted to fall a further 40% by 2016, (though that would still mean some 600 million cheques used a year).

The response from consumers was clear: keep cheques. Politicians picked up on this grass-roots view and the Payments Council found itself at the centre of a public row, with MPs calling for its abolition, replacement or regulation.

A hasty U-turn was effected, with the Council saying that it was responding to public consultation and almost everyone else saying it was retreating with a bloodied nose.

One of the more prominent critics was Mark Hoban, Financial Secretary to the Treasury, who wrote to the Treasury in October last year welcoming the decision to retain cheques, but announcing a review of the situation.

“There is one area where the Government believes it may be necessary to go beyond the Committee’s recommendations, if it is to consider bringing the Payments Council within the scope of regulation,” Hoban wrote. “This is because extending regulation here would need to include the relationship between the Payments Council, its members and inter-bank payment systems. I therefore propose to consult on the options, including options for creating a new regulatory structure for the Payments Council and the inter-bank payments regime. The consultation will take place early in 2012. Any reform would take account of the Government’s regulatory reform agenda with a view to not creating signi� cant new regulatory burdens for industry.”

Into this stepped Adrian Kamellard, who took over as chief executive of the Payments Council in November last year.

An economist and accountant by training, Kamellard cheerfully admits that he has no experience or knowledge of the payments industry. This, he says, is an advantage – as, no doubt, will be the fact that his previous employer occupies the building just along Whitehall from HM

Adrian Kamellard took over the hot seat at the UK Payments Council at a time of signifi cant change for the payments industry and its role in the wider economy – not to mention for the organisation he is now running. He told David Bannister how his ignorance of the payments business is to his advantage.

Dull itisn’t

Treasury. The Cabinet Of� ce, where he was executive director of its commercial portfolio, is the department that supports the Prime Minster and the cabinet. As its own website puts it, “the Cabinet Of� ce sits at the very centre of government”.

One of Kamellard’s � rst tasks has been to restore the balance between the interest groups that the Council is meant to represent. “The Payments Council is intended to sit between regulators, industry and consumers,” he says. “It was intended to balance the interests of these stakeholders, and wasn’t intended to be seen as being in the pocket of the industry.”

The fact that it is funded by the industry is not necessarily an obstacle, he says, observing that Ofcom – the UK telecommunications regulator – is also funded by the industry it oversees. “It need not be a problem,” he says.

With the HM Treasury review now underway, and scheduled to make its recommendations later this year, Kamellard says that he “wants to go with the grain” of that. “We know, broadly, what their scope is and want to ensure that when they make recommendations we are well-placed to implement them,” he says.

In the meantime, there is a national payments system to be modernised, and the Council is working through many of the plans outlined in the 2008 National Payments Plan. A second organisational approach instituted by Kamellard is developing a structure “for deciding what projects to pursue”. This, he says, will involve creating a transparent decision-making framework based on tangible criteria – which will also go towards balancing the needs of the stakeholders.

At the heart of this is the Council’s role in delineating the areas in which participants can collaborate, and which are competitive. “In creating the conditions for that collaboration to play out we have to ensure that the structures and processes are right,” he says.

Two particular initiatives show, to some extent, how this cooperation/collaboration will operate. The recent announcement of a pan-industry project to use mobile phones to transfer money between any UK current account (News, page 4) has come about through collaboration, though Barclays’ pre-emptive launch of its Ping-it service shows how competitive the market remains.

Competition is central to the recommendations of the Independent Commission on Banking, and likely will be to the Treasury review currently underway, says Kamellard. The second Payment Council initiative, introduction of the account switching service currently being developed, may have been forced onto the industry, but they are collaborating on its development and several banks are basing competitive plans around it.

What kind of competitive services might they offer?“Who knows? That’s what it’s all about,” says

Kamellard. He adds that part of the role of the Payments Council is to work with all of its interest groups to ensure that they are not disadvantaged, and to this end it is “working with smaller institutions to make sure they are being drawn into the circle”.

On the mobile side, the Council must ensure that it is the interest of the consumer and the integrity of the national payments infrastructure that are protected. “Mobile is very important. We need to

have a wide range of mobile services [that have] to be ubiquitous and accessible,” he says. “There has to be universality, reach and accessibility. We keep focusing on the outcome, which means older phones have to be supported for instance.”

It also means that security and fraud prevention have to step up a level. “Security is key – you won’t need many stories to undermine con� dence – and that means a whole seam of activities around authentication and fraud management,” he says. “It’s really just a function-of real-time payments, and my personal view is that if you move to that world you have to develop systems that are secure and reliable on the � y. We have an alignment of interest, so the ball won’t be dropped, but it will require constant investment.”

Kamellard is enthusiastic about the transformative potential of mobile payments on the wider economy, which takes us back to his self-confessed lack of knowledge about payments when he took over at the end of last year. He has quickly learnt that payments have one thing in common with the projects he was involved with in his previous job at the Cabinet Of� ce – they are, however invisible, part of the fabric of the daily lives of everyone in the country. “The fact is that what we do has wide-ranging effects,” he says. This is clearly illustrated by the fuss over cheque replacement. “If you are dealing with something like cheques, they are very tangible, so other payment systems have to sit alongside and feel as natural,” he says.

On the wider stage, mobile payments could be “signi� cant” in restarting the economy, he says. “For SMEs and micro-businesses it offers real scope to set up small businesses and to have the addition of that payment channel is really important.” BT


Curriculum Vitae: Adrian KamellardNovember 2011–present: chief executive of the Payments Council and UK Payments Administration.

June 2010–November 2011: executive director Cabinet Offi ce As executive director for the commercial portfolio in the UK Cabinet Offi ce, he was responsible for the management of strategic commercial issues and the creation of new commercial structures and businesses in UK central government. This included successfully renegotiation of high value IT service and outsourcing contracts to reduce costs by some £1 billion while maintaining or improving service.

November 2001–June 2010: head of major projects, Partnerships UK In this role that time he and his team designed and led the development of a range of high-value ICT and business process projectsincluding setting up a large pension business; road pricing; identity management; and the redesign of logistics processes. Towards the end of this period of his career Kamellard was seconded as chief executive of Broadband Delivery UK.

July 1997–November 2001: investment director HSBC Investment Bank/Charterhouse Bank

In this role, Kamellard where he provided advice on telecoms projects in the public and private sectors. Prior to this, he led scenario planning at Cable & Wireless, which involved supporting the development and testing of medium term strategies for companies in the C&W Group.

Education: Read Economics at the University of Essex; qualifi ed Chartered Accountant.

of Tokyo-Mitsubishi UFJ, where he held a number of senior roles in London, New York and Tokyo. his more recent roles include general manager of London Branch, general manager of Payment and clearing Services, chief manager of the Securities Investment Division and chief Manager of Funds & Foreign Exchange Division. he has also represented Bank of Tokyo-Mitsubishi UFJ, on the boards of cLS and Swift.

IT consultancy Rule Financial has made a number of hires. In London, Jim Warburton comes in as the global head of the investment banking domain group. his previous roles include senior vice president at citigroup and director at credit Suisse. Jeremy Taylor, who specialises in operational processing and derivatives, will be supporting Warburton in London. he comes from UBS where he was global head of the OTc Derivatives Documentation unit.

Ciaran Henry has been appointed as country manager in the US. he previously held chief technology officer posts at Merrill Lynch and JP Morgan chase and was a managing director at credit Suisse.

rule is also expanding its near-shore operations in Europe by expanding its presences in lodz, Poland to support increased demand for services in Europe.

eDM specialist cadis has hired Donald Weld as director of sales for North america. Weld was previously senior sales director at GoldenSource where he focused on enterprise software sales to Tier 1 sell-side institutions. In his new role at cadis, Weld will continue to focus on sell-side implementations. Before GoldenSource, Weld held the position of vice president of sales and marketing at Open Information Systems.

The National Settlement Depository, russia’s settlement depository, has appointed Andrei Shlyappo as vice president and operations director. he will manage the Department of Depository Operations, the Department of cash Settlements, the client relations Department, the clearing Department and the Service for the Provision of Non-Interruptible Business. Shlyappo worked at MIcEX, starting as an economist in the Depository Services Department and rising to head of the Operations Department in the Depository Services Division. In 2009 he became deputy director general and operations director of NDc, a predecessor of the NSD.

Global electronic payments specialist Ixaris has appointed Andrea McGeachin as commercial director. In this newly-created role, she will report to alex Mifsud, chief executive and be responsible for managing the sales team and taking the company’s payments platform, Ixaris Opn, into new industries and geographies. She was previously commercial director at Ukash, the global e-money voucher company. Prior to that, she was sales and operations director at Pixology where she was responsible for building commercial relationships with Tesco, costco and Walmart.

US market data systems company exegy has strengthened its senior management team with the addition of Will Kennedy as executive vice president, business development. Kennedy will lead the company’s client- facing enterprise business development worldwide. Prior to joining Exegy, Kennedy held senior positions with ITG, reuters, S&P Indices, as well as having his own consultancy practice.

Dovetail, the provider of next generation payment services hubs, has announced three key appointments that will see the company expand into new regions in Europe and North america. In Europe, Pier luca Chiommino joins from Finantix with over 15 years’ experience working with financial services companies. Based in Milan, he will be responsible for driving direct sales in Italy, Greece, Turkey and the former Yugoslavia, as well as helping establish the Dovetail office that will be opening in Milan during 2012. also in Europe, Dovetail has appointed Mike levi to lead expansion in the Nordic region, based in Oslo. In North america, Paul Sullivan joins to service banks in canada, New York city and New England. he has worked at a number of financial software vendors including S1 and acI Worldwide.

DST Global Solutions has hired Fran Thompson as head of client relationships and new business for asia. She will be responsible for the account management of key clients as well as managing the company’s sales and relationship management team in asia, with a focus on developing the relationships with clients. Most recently she was regional account director at SunGard Global Trading and deputy managing director, asia Pacific, at FTSE. BT


events

mArch 12 -15 2012international payments summit, LondonThe 20th annual IPS event will be looking at the effect of the Single Euro Payment Area beyond Europe and features a new expanded exhibition.www.informaglobalevents.com

mArch 25 – 28 2012isitc Annual industry Forum and Vendor show, BostonISITC brings together broker/dealers, custodians, investment managers, vendors/utilities and other industry professionals to develop proposed standards to enhance efficiencies in trade processing and related communications. In 2012 it will be asking – 2020 Vision: Cloudy or Clear?www.isitc.org

mAy 15-16 2012eBAday 2012, edinburghNow running over two days, the EBAday payments event will be held in Scotland.www.ebaday.com

mAy 22-23 2012Financial Data management Forum, AmsterdamA new event intended to deliver new approaches and proven strategies of financial data management to comply with regulatory requirements and minimise systemic risk.http://finance.flemingeurope.com/

mAy 22-23 20129th Annual retail Banking This year’s retail banking event will provide delegates with the latest best-case studies on business strategies and retail banking products in the whole European region.http://finance.flemingeurope.com

June 19-21 2012siFmA Financial services technology Leaders Forum and expo, new yorkThe old SIA Show continues to remodel and rebrand as it regains its former pre-eminence as the event for securities industry technologists.www.sifma.org/events

octoBer 29 – noVemBer 2 sibos, osakaRegistration for Swift’s annual Sibos event is now open with the theme of the conference being “New realities: reshaping our industry through collective engagement”.www.sibos.com


PeoPleMarch 2012

Appointments

compliance and risk specialist Wolters Kluwer Financial Services has appointed Serge Minne as chief executive of its FrSGlobal business unit. he is based in Brussels, Belgium.

he replaces Steve husk, who becomes executive vice president and strategic advisor for the Wolters Kluwer Financial & compliance Services division where he will focus on global growth opportunities for FrSGlobal and Wolters Kluwer Financial Services.

Minne has previously held the positions of chief financial officer and chief operating officer at FrSGlobal. he has over 25 years of experience in financial and business management. Prior to joining FrSGlobal, Minne held senior roles within SITa, Peoplesoft and Sybase.

TRS Group, a provider of predictive, real-time application Performance Monitoring technology has two new non-executive directors, both with

backgrounds at JPMorgan. Richard Berliand most recently ran the Prime Services businesses, and is currently a member of the supervisory board of Deutsche Börse, while Alain Gaudeau had a 20+ year career with JP Morgan where he was most recently the chief technology officer of Equity Derivatives, Equity Prop and cross-IB assets.

The International organisation of Securities Commissions has appointed David Wright as its secretary general. he will be responsible for leading the work of IOScO’s General Secretariat in support of the work of the organisation, and it is expected he will take up his position in March.

Wright has been a senior advisor to the European commission and his most recent position has been as a member of the commission’s Task Force on Greece. he has spent more than 34 years working for the European commission at the highest levels. In this time he has advised

European commission Presidents Delors and Santer, been a member of Sir Leon Brittan’s cabinet and since the end of the 1990’s has been at the forefront of the drive to integrate the European Union’s financial services and capital markets. This included key roles in designing and finding political agreements on the major European securities legislation such as MIFID and the Transparency, Prospectus and Market abuse directives and acting as rapporteur on the De Larosière committee on financial services reform. he has also represented the European commission in international forums such as the FSB and G20, and has played a key role in developing the EU’s bilateral financial services relations.

ClS has appointed Makoto Miyazaki as general manager, asia Pacific, following the retirement of Kiyoshi Morofushi after 12 years with cLS. Based in Tokyo, Miyazaki joins from MST Insurance Service. Prior to MST, he was with Bank

Marion King is to join Mastercard Europe as president of its UK and Ireland business. King left payment services provider VocaLink at the end of last year after nearly 10 years as chief executive.

at the time she said she was seeking “new challenges” following her time at VocaLink, during which she had overseen a major revamp of its platforms and the introduction of the UK Faster Payments Service.

In a statement announcing her appointment, King said: “I’m excited to be joining Mastercard to lead a key market at a time when our industry faces both great opportunities and challenges. I’m looking forward to working with the talented team in the UK to build on their achievements and to deliver the next generation of safe, simple and smart payments that make life easier for consumers.”

according to the statement King will focus on “growing the payments industry and creating a cashless society in the UK” as well as consolidating Mastercard’s position in credit through partnership programmes.

She will join on 12 March, reporting and report to Javier Perez, president of Mastercard Europe.

King was replaced at VocaLink by Western Union veteran David Yates. Yates was president of business development and innovation at Western Union and responsible for overseeing its electronic channels, prepaid, global top-up and loyalty businesses as well as leading its Business Payments Sector. Yates also spent six years at First Data corporation, latterly as president of First Data International. In this role, he had executive management responsibility for all of First Data’s activities outside the US.

hany Fam, who King replaces as president for the UKI business, is moving to a newly-created role heading European market development and strategic partnerships, effective 1 March, also reporting to Perez. Fam will “identify key partnerships, develop enterprise solutions for large multinational and public sector organisations and manage relationships with major acquiring and processing partners”.

Fam has been with Mastercard since 1995 in a variety of senior positions. Prior to his three-year tenure as president of the UK and Ireland business, he was group general manager of European Global accounts, prior to which, he built Mastercard’s relationship with hSBc over a period of seven years, during which he was based in the US. Fam has also held Singapore-based positions including head of marketing and business Development for asia Pacific.

Marion King is to join MasterCard Europe

of Tokyo-Mitsubishi UFJ, where he held a number of senior roles in London, New York and Tokyo. his more recent roles include general manager of London Branch, general manager of Payment and clearing Services, chief manager of the Securities Investment Division and chief Manager of Funds & Foreign Exchange Division. he has also represented Bank of Tokyo-Mitsubishi UFJ, on the boards of cLS and Swift.

IT consultancy Rule Financial has made a number of hires. In London, Jim Warburton comes in as the global head of the investment banking domain group. his previous roles include senior vice president at citigroup and director at credit Suisse. Jeremy Taylor, who specialises in operational processing and derivatives, will be supporting Warburton in London. he comes from UBS where he was global head of the OTc Derivatives Documentation unit.

Ciaran Henry has been appointed as country manager in the US. he previously held chief technology officer posts at Merrill Lynch and JP Morgan chase and was a managing director at credit Suisse.

rule is also expanding its near-shore operations in Europe by expanding its presences in lodz, Poland to support increased demand for services in Europe.

eDM specialist cadis has hired Donald Weld as director of sales for North america. Weld was previously senior sales director at GoldenSource where he focused on enterprise software sales to Tier 1 sell-side institutions. In his new role at cadis, Weld will continue to focus on sell-side implementations. Before GoldenSource, Weld held the position of vice president of sales and marketing at Open Information Systems.

The National Settlement Depository, russia’s settlement depository, has appointed Andrei Shlyappo as vice president and operations director. he will manage the Department of Depository Operations, the Department of cash Settlements, the client relations Department, the clearing Department and the Service for the Provision of Non-Interruptible Business. Shlyappo worked at MIcEX, starting as an economist in the Depository Services Department and rising to head of the Operations Department in the Depository Services Division. In 2009 he became deputy director general and operations director of NDc, a predecessor of the NSD.

Global electronic payments specialist Ixaris has appointed Andrea McGeachin as commercial director. In this newly-created role, she will report to alex Mifsud, chief executive and be responsible for managing the sales team and taking the company’s payments platform, Ixaris Opn, into new industries and geographies. She was previously commercial director at Ukash, the global e-money voucher company. Prior to that, she was sales and operations director at Pixology where she was responsible for building commercial relationships with Tesco, costco and Walmart.

US market data systems company exegy has strengthened its senior management team with the addition of Will Kennedy as executive vice president, business development. Kennedy will lead the company’s client- facing enterprise business development worldwide. Prior to joining Exegy, Kennedy held senior positions with ITG, reuters, S&P Indices, as well as having his own consultancy practice.

Dovetail, the provider of next generation payment services hubs, has announced three key appointments that will see the company expand into new regions in Europe and North america. In Europe, Pier luca Chiommino joins from Finantix with over 15 years’ experience working with financial services companies. Based in Milan, he will be responsible for driving direct sales in Italy, Greece, Turkey and the former Yugoslavia, as well as helping establish the Dovetail office that will be opening in Milan during 2012. also in Europe, Dovetail has appointed Mike levi to lead expansion in the Nordic region, based in Oslo. In North america, Paul Sullivan joins to service banks in canada, New York city and New England. he has worked at a number of financial software vendors including S1 and acI Worldwide.

DST Global Solutions has hired Fran Thompson as head of client relationships and new business for asia. She will be responsible for the account management of key clients as well as managing the company’s sales and relationship management team in asia, with a focus on developing the relationships with clients. Most recently she was regional account director at SunGard Global Trading and deputy managing director, asia Pacific, at FTSE. BT


events

mArch 12 -15 2012international payments summit, LondonThe 20th annual IPS event will be looking at the effect of the Single Euro Payment Area beyond Europe and features a new expanded exhibition.www.informaglobalevents.com

mArch 25 – 28 2012isitc Annual industry Forum and Vendor show, BostonISITC brings together broker/dealers, custodians, investment managers, vendors/utilities and other industry professionals to develop proposed standards to enhance efficiencies in trade processing and related communications. In 2012 it will be asking – 2020 Vision: Cloudy or Clear?www.isitc.org

mAy 15-16 2012eBAday 2012, edinburghNow running over two days, the EBAday payments event will be held in Scotland.www.ebaday.com

mAy 22-23 2012Financial Data management Forum, AmsterdamA new event intended to deliver new approaches and proven strategies of financial data management to comply with regulatory requirements and minimise systemic risk.http://finance.flemingeurope.com/

mAy 22-23 20129th Annual retail Banking This year’s retail banking event will provide delegates with the latest best-case studies on business strategies and retail banking products in the whole European region.http://finance.flemingeurope.com

June 19-21 2012siFmA Financial services technology Leaders Forum and expo, new yorkThe old SIA Show continues to remodel and rebrand as it regains its former pre-eminence as the event for securities industry technologists.www.sifma.org/events

octoBer 29 – noVemBer 2 sibos, osakaRegistration for Swift’s annual Sibos event is now open with the theme of the conference being “New realities: reshaping our industry through collective engagement”.www.sibos.com

STANDARDS FOCUSMARCH 2012


Embracing my inner geek, I have become involved in a number of standards-related events and conferences over the past few years, generally around the Standards Forum activities of Swift.

But that has rekindled a passing interest that goes back to my days as a reporter on Electronics Weekly in the late 1970s, where the annual mil-spec report was pored over by everyone in the UK defence technology sector – not standard? no sale ...

As what we now call IT started to take shape as a completely separate industry, standards were also where the news was – the announcement by Digital Equipment, Intel and Xerox of a “standard” called Ethernet has had a profound and lasting effect on the world we live in.

Similarly, when the FIX Protocol was � rst announced in London, I toddled along with a sharp pencil and was rewarded by walking into a room containing 200 bank technologists all wanting to talk about this new thing.

And I have to admit that some of the most interesting and fun things I’ve been involved in since joining Banking Technology have revolved around standards.

Looking back, I see that all of those have involved collaboration between organisations that might otherwise have been competitors, and that is what I see most at the moment: Swift, DTCC, Sifma, and others, working through the Legal Entity Identi� er speci� cation, for instance.

Over the rest of this year, therefore, we plan to carry a regular series of features tracking activities and issues in this area, reporting on the many initiatives that are starting to bear fruit and on new ideas bubbling under the surface.

Along the way, we’ll be introducing the many characters that inhabit the world of standards development – importantly, we will also be looking at how standards are deployed in the real world, and how they are of practical importance in improving the way the industry operates.

Of these, one of the � rst on the radar will be the Legal Entity Identi� er. This, says Tim Lind, global head of strategy, enterprise content, at Thomson Reuters, has the potential to create new opportunities, as well as increase operational ef� ciencies.

But � rst there are some details to be sorted out.“The priorities follow the original objective, which it

to increase transparency of Credit Default and Interest Rate Swaps trades, therefore it makes sense to use the DTCC Trade Information Warehouse, which is where that is collected. Many of the entities are actually funds, and a fund is really a relationship between a trustee and a trustor, so the SIFMA working groups are bringing clarity in how funds will be identi� ed,” says Lind, adding that the fact that the work is being done

The past few years have seen a surge in interest in standards across the fi nancial services sector as effi ciency and cost pressures have increased. In the fi rst of a regular series of features on the topic, David Bannister says that 2012 is likely to see this trend accelerate as different organisations start to collaborate more closely.

Going beyond standards

›Standards: the inventoryOne of the most common things said of the standards world is “we love standards – that’s why we have so many of them”. This is true, but inevitable as different processes and operations require different defi nitions.

A short guide to the alphabet soup of the standards world would probably include the following – though purists will argue that some of these, like FIX, aren’t standards in the true sense, and there are some omissions that others might want to have included.AMQP – Advanced Message Queuing Protocol: an open middleware approach that allows applications to send and receive messages, but also to intelligently handle messages through dynamically altering parameters such as performance and security. Deutsche Börse uses AMPQ as the transport mechanism for its FIXML messages in the Eurex system. JPMorgan sends 1 billion AMQP messages every day.BIAN – Banking Industry Architecture Network: A collaboration between vendors and banks to set a common framework for banking interoperability using a Service Oriented Architecture approach. It is working with the Object Management Group and the International Financial eXchange Forum and, most recently, The Open Group.FIBO – Financial Industry Business Ontology: a standardisation, by the OMG, of the content of the Enterprise Data Management Council Semantics Repository, which is a repository of ontologies of fi nancial instruments – primarily securities instruments. The goal is to standardise

Q. Why do standards matter to you as a supplier?Our business is built on implementing message standards. This means applying message standards to solve a business problem. Since a message standard only has meaning when implemented, and only delivers value when part of an integrated � ow, then a given published standard has to be integrated with client systems and that area causes pain for most organisations.

Q. Why? Where are the pain points?Traditionally this integration has been viewed as a technical task and wrapped up with general middleware issues such as protocols, connectivity and monitoring. This means purchasing decisions for solutions that work with standards have been taken by staff whose primary focus is technical and who, in many cases, are unaware of the challenges presented by implementing standards.

This has resulted in many organisations evolving ever more complex infrastructures that have become dif� cult to change and dif� cult to test. We have spent many years assisting customers with their messaging. Connectivity has become more and more a standard commodity (FTP, MQ, TCP and so forth) and subject to infrequent change; whereas message standards have become more complex and ubiquitous.

More business services rely on messaging and involve more and more parties. As the needs of more parties are accommodated then the complexity of the standard and hence implementation gets more involved. Add in year-on-year change driven by business needs, regulatory requirement or standards revisions, and organisations start to struggle with their complex infrastructures. This is the problem space we address.

Historically the move to ‘middleware’ and associated messaging mushroomed in the mid-1990s. Before that payments had been automated but securities automation lagged behind. In the UK the Crest initiative (let’s ignore the scarring experience of Taurus) forced messaging as a settlement method and moved � nancial institutions to consider the general issue of middleware solutions.

The technology was already addressed in the US healthcare market where the need was established to link up giving someone an aspirin with sending an invoice and making an insurance claim. Hence many of these solutions were migrated from the US healthcare


market to the � nance industry.

Q. How do standards help you address the needs of your clients?For our clients agreeing to use a particular standard is akin to agreeing which language to use; it enables communication and standards become the language of business. Markets have become international and the adoption of standards facilitates trading and settling any instrument, in any market anywhere.

Of course, this also means things can get out of control more quickly, as in the recent scenario with sub-prime debt being packaged and sold and leaving organisations unsure of precise exposure. There again, it is standards that will be the tool used by regulators to establish central reporting and monitoring of trading activities.

It doesn’t matter whether our clients are looking to trade internationally, seamlessly and quickly or comply with regulatory authorities; all these functions require a language and communication and hence a standard. The challenge for the client is � uency – how quickly can it adapt, implement and integrate standards? An organisation with a high level of � uency will be able to support new services with minimum effort; integrate them with existing processes and systems as well as deal with on-going change as standards and processes evolve.

Q. Quite a complex relationship, then?As time passes no standard gets simpler. They involve more messages, each message involves more data and the data items get more complex. Compare, for example, the number of messages in FIX 4.1 with FIX 4.4; look at the number of parties on, say, the Notice of Execution message in each version and � nally compare the complexity of de� nition of a party. At every level complexity has increased as the needs of more and more parties are accommodated. This helps clients with a more functionally complete, and viable, solution but presents a challenge in coping with the complexity. It results in a love-hate relationship between clients and standards but it is not one that is going away.

Q. Are there particular standards or issues around standards that are currently of concern?Every standard has its issues but they vary greatly from one to the next. They also cover different ground. For example Swift is a message standard but it is also a network and generally client issues are how to

At the Swift Standards Forum event in Paris at the end of last year, Banking Technology caught up with John Murphy, managing director of Trace Financial, to discuss why the company was involved in the event and what issues it is addressing through the use of standards.

Why standardsmatter

›



in Europe and the US is a delaying factor. “SIFMA is working on the concerns, and the Financial Stability Board is working on it in Europe, but the bottom line is that there is no formal mechanism to co-ordinate across the Atlantic, so the LEI is a microcosm of that challenge and highlights the need for communication and patience.”

Does this mean that the project is on hold in some way? Not at all, he says: “In terms of the ISO 17442, without formal FSB endorsement it might be imprudent to formally ratify the standard until the FSB draws its own conclusion, but we are moving forward with LEI as though it were a foregone conclusion. For Thomson Reuters, LEI is a key that we use to not just identify an entity but link it with value-added information, so it will be much more precise to map and join data sets instead of relying on textual descriptions.”

Also making headway is the Banking Industry Architecture Network, which recently announced a partnership with The Open Group to integrate their

the terms and defi nitions of all reference data attributes stored in the master fi les of fi nancial institutions and passed among supply chain partners.FIX Protocol – Financial Information eXchange Protocol: a messaging standard developed for the real-time exchange of securities information, widely used in trading systems. It has spawned a number of offshoots, including the FAST Protocol – FIX Adapted for Streaming – used to support high-throughput, low-latency data communications between fi nancial institutions, particularly for the transport of high-volume market data feeds and ultra low latency applications.FPmL – Financial products Markup Language: Managed by ISDA, FpML was developed for the OTC derivatives market by JP Morgan. Like FIX, it is a very widely used de facto standard.ISO 20022 – As the ISO puts it: “A universal fi nancial industry message scheme is the international standard that defi nes the ISO platform for the development of fi nancial message standards. Its business modelling approach allows users and developers to represent fi nancial business processes and underlying transactions in a formal but syntax-independent notation. These business transaction models are the real business standards. They can be converted into physical messages in the desired syntax. At the time ISO 20022 was developed, XML (eXtensible Mark-up Language) was already the preferred syntax for e-communication. Therefore, the fi rst edition of ISO 20022 proposes a standardized XML-based syntax for messages.”LEI – Legal Entity Identifi er: Under post-crisis pressure from regulators, international industry bodies including Swift, Sifma, the DTCC and others are working to create a useable standard to identify parties in trades. It is expected that this will become an ISO standard – ISO 17442, in fact.MDDL – Market Data Defi nition Language: is an XML-based messaging format for exchanging information related to Financial Instruments, corporate actions and market-related data. MDDL was developed by the Financial Information Services Division of the Software & Information Industry Association. XBRL – eXtensible Business Reporting Language: an XML-based standard that tags information in business documents – such as annual reports – in such a way that they can be processed automatically.

Continued from page 43 individual industry frameworks for speci� c use in the banking industry. Mapping together these frameworks will accelerate project delivery, while dramatically reducing IT integration costs.

The pair have collaborated to produce a white paper, in which the core elements of the two individual frameworks have been projected onto each other.

Hans Tesselaar, executive director of BIAN, said: “The Open Group is a serious heavyweight in architectural standards. With its project approach and ability to deliver – not to mention its reputation as the anchor point of the standards industry – The Open Group adds much value to the BIAN open standards mission. We expect banks, which have already adopted TOGAF, will also adopt the BIAN standard, and the banking industry can take another step towards interoperability.”

BIAN originally started as a vendor group – you could argue that it really started as a SAP project, though it now has a number of bank people in key positions (Tesselaar works for ING).

On the bank front, BIAN has ABN Amro, Banco Galicia, Commonwealth Bank of Australia, Credit Suisse, Deutsche Bank, Deutsche Postbank, ING, Kutxa, Rabobank, Scotiabank Group, Standard Bank of South Africa, UniCredit Group, and Zürcher Kantonalbank as members. On the supplier side, it currently lists Callataÿ & Wouters, Capital Banking Solutions, CGI, Coretransform, Fernbach, HCL Axon, IBM, IFB group, IKOR, Infosys, Innobis, Microsoft, SAB, SAP, SunGard, Swift, and Temenos.

One vendor that isn’t a member of BIAN is Misys. Barry Kislingbury, global solutions manager for payments and messaging at the vendor, says that Misys is indeed interested and monitors progress – “I’ve been to a few BIAN meetings,” he says – but “membership is not inexpensive and to gain the full bene� ts considerable time needs to be committed”.

Kislingbury also questions where the boundaries are to be drawn in the competition/collaboration debate.

“Swift is a great standards body: the Standards Developers Kit is extremely good and we completely support what they are trying to do with it, but in many areas now Swift are actively competing with their partners,” he says.

Swift itself has a broad range of Standards related announcements up its sleeve, which we will be returning to in the next issue and following in the run-up to Sibos in October.

“As an organisation that both develops and deploys standards, we know how they can practically contribute to not only enabling automation and reducing costs but also fostering innovation, by doing things in a simpler and more ef� cient way,” says Juliette Kennel, head of standards at Swift. “I am convinced that standards and innovation go hand in hand, so am looking forward to reading the articles that Banking Technology has planned in future issues.” BT

“We know how standards can practically contribute to not only enabling automation and reducing costs but also fostering innovation, by doing things in a simpler and more effi cient way.”

Juliette Kennel, head of standards, Swift


Q. Why do standards matter to you as a supplier?Our business is built on implementing message standards. This means applying message standards to solve a business problem. Since a message standard only has meaning when implemented, and only delivers value when part of an integrated � ow, then a given published standard has to be integrated with client systems and that area causes pain for most organisations.

Q. Why? Where are the pain points?Traditionally this integration has been viewed as a technical task and wrapped up with general middleware issues such as protocols, connectivity and monitoring. This means purchasing decisions for solutions that work with standards have been taken by staff whose primary focus is technical and who, in many cases, are unaware of the challenges presented by implementing standards.

This has resulted in many organisations evolving ever more complex infrastructures that have become dif� cult to change and dif� cult to test. We have spent many years assisting customers with their messaging. Connectivity has become more and more a standard commodity (FTP, MQ, TCP and so forth) and subject to infrequent change; whereas message standards have become more complex and ubiquitous.

More business services rely on messaging and involve more and more parties. As the needs of more parties are accommodated then the complexity of the standard and hence implementation gets more involved. Add in year-on-year change driven by business needs, regulatory requirement or standards revisions, and organisations start to struggle with their complex infrastructures. This is the problem space we address.

Historically the move to ‘middleware’ and associated messaging mushroomed in the mid-1990s. Before that payments had been automated but securities automation lagged behind. In the UK the Crest initiative (let’s ignore the scarring experience of Taurus) forced messaging as a settlement method and moved � nancial institutions to consider the general issue of middleware solutions.

The technology was already addressed in the US healthcare market where the need was established to link up giving someone an aspirin with sending an invoice and making an insurance claim. Hence many of these solutions were migrated from the US healthcare


market to the � nance industry.

Q. How do standards help you address the needs of your clients?For our clients agreeing to use a particular standard is akin to agreeing which language to use; it enables communication and standards become the language of business. Markets have become international and the adoption of standards facilitates trading and settling any instrument, in any market anywhere.

Of course, this also means things can get out of control more quickly, as in the recent scenario with sub-prime debt being packaged and sold and leaving organisations unsure of precise exposure. There again, it is standards that will be the tool used by regulators to establish central reporting and monitoring of trading activities.

It doesn’t matter whether our clients are looking to trade internationally, seamlessly and quickly or comply with regulatory authorities; all these functions require a language and communication and hence a standard. The challenge for the client is � uency – how quickly can it adapt, implement and integrate standards? An organisation with a high level of � uency will be able to support new services with minimum effort; integrate them with existing processes and systems as well as deal with on-going change as standards and processes evolve.

Q. Quite a complex relationship, then?As time passes no standard gets simpler. They involve more messages, each message involves more data and the data items get more complex. Compare, for example, the number of messages in FIX 4.1 with FIX 4.4; look at the number of parties on, say, the Notice of Execution message in each version and � nally compare the complexity of de� nition of a party. At every level complexity has increased as the needs of more and more parties are accommodated. This helps clients with a more functionally complete, and viable, solution but presents a challenge in coping with the complexity. It results in a love-hate relationship between clients and standards but it is not one that is going away.

Q. Are there particular standards or issues around standards that are currently of concern?Every standard has its issues but they vary greatly from one to the next. They also cover different ground. For example Swift is a message standard but it is also a network and generally client issues are how to

At the Swift Standards Forum event in Paris at the end of last year, Banking Technology caught up with John Murphy, managing director of Trace Financial, to discuss why the company was involved in the event and what issues it is addressing through the use of standards.

Why standardsmatter

›


However, banks can profit from payments through prudent cost management, choosing the right mix of suppliers and continual innovation. These three components are not mutually exclusive: indeed, successful payment providers will be those who pursue all three in parallel.

Cost management is a vital ingredient of any successful payments strategy, along with processing scale to justify the continual investment in technology that is necessary to support new banking channels and payment types. In the absence of significant scale, banks must cut costs and streamline infrastructures to remain viable in the payments business. This is challenging in a time of increasing regulatory pressure.

Banks need to build a detailed understanding of their payments cost structures. Indeed, many will need to explore new operating models in order to cut costs and reposition for growth. This can be achieved through careful supplier selection.

Collaboration can play an important role in building a successful payments business. Flexible collaboration, based on mutual benefits and sound commercial principles, can help banks reduce capital spending and operational costs.

Banks need to collaborate with each other and with technology suppliers to establish connectivity and maintain payment standards. Payments themselves are not a sustainable source of competitive advantage, so banks with lower processing volumes can achieve economies of scale by working together to develop processing infrastructures that offer economies of scale to all participants.

The successful banks of the future will be those that find innovative ways to add

value to their basic payments proposition. Here are some options:■ Electronic Bank Account Management – Electronic bank account management offers clear visibility over current signatory details and provides an audit trail of all account management activities. At a simple level, it offers a single version of the truth in relation to bank account records. It synchronises bank records with corporate records and makes them accessible online. The benefits of eBAM are most apparent to multinational corporates with many bank accounts over disparate geographies. Innovations such as eBAM create client loyalty by adding real value for which corporates are willing to pay.■ Online Shared Services – Many banks can do more to offer corporates a truly integrated online experience, including access to an integrated range of financial products and tools within a single portal. These days, treasurers want to view and access cash quickly and easily, and they need to be able to execute transactions faster and more efficiently. Banks can help treasurers take control of liquidity by offering a range of tools that are available 24/7.■ Automated FX – Banks can add value and increase clients’ convenience by adding an automated FX service. This enables clients to use nominated bank accounts without the need to contact an FX desk to book a rate. Automated FX can also help streamline client operations and increase efficiency as payments can be made in a wide range of currencies without managing additional accounts.

So while payments services may never be quite as glamorous as M&A, it is essential that banks continue to innovate in order to provide the services that add real value to their clients. This is done by enriching core payment propositions and by delivering existing services in new ways that increase flexibility and client convenience. Overall, as bankers, we can add more value to our core payment propositions by offering services that facilitate interoperability between banks and increase client convenience. Collaborate. Innovate. Advise – the new role of banks.

Paul Taylor is head of FI Sales, GTS EMEA, at Bank of America Merrill Lynch

Should payments pay? Paul Taylor, Bank of America Merrill Lynch

Making payments is a basic banking function, practically as old as banking itself. Few would doubt that payments matter, but it has seldom been seen as a glamorous area of banking. However, that view is beginning to change.

Curiosity in payments is steadily increasing and for several good reasons. The current financial climate favours banking activities that are predictable, transparent and client-centric and payment services meet all three criteria.

Better still, payment services is a growth industry: total wholesale payments revenues are forecast to increase over the next decade from $169 billion in 2010 to $471 billion by 2020. Worldwide payments are growing faster than global GDP, which makes for an attractive industry dynamic.

As a result, the payments landscape is changing fast. A combination of new technologies, legislation, economic conditions and competitive pressure is transforming the entire payments value chain. The creation of new banking channels, such as mobile and internet, have enabled the development of innovative payment types, such as real-time. Banks have responded with innovative payment services that are better at serving clients’ needs.

Payments are an intrinsic component of any bank’s service portfolio and part of a bank’s brand promise: a manifestation that a transaction is complete and that all parties have fulfilled their obligations. This creates challenges as well as opportunities. All banks must provide payment services and these are often bundled with other services, such as treasury and cash management. In practice it is often impossible to define the precise contribution of individual service components. So, although all banks provide payment services, few profit from them.

Profiting from a payments service offering is an issue all banks grapple with – and is no trivial task. Providing payment services calls for substantial regular investment and the margins are continually squeezed by competition and limited by legislation. Add to this the fact that at a global level payments are becoming increasingly commoditised. Time and distance are no longer reliable measures of payment efficiency, so payment services alone are not a source of competitive advantage.

“Worldwide payments are growing faster than

global GDP, which makes for an attractive industry

dynamic.”

COMMEnTMArCH 2012


create the message, how to test it complies with all standards in the User Handbook and how to transport the message to and from the Swift network.

For Crest there is a message standard and a network but also a business service for settlement and clearing; so the client issues are how to create the message, test it complies with the DEX, transport it on the relevant network and then track the on-going status of transactions by requesting status updates and responding accordingly.

With FpML there are multiple standards, no network and clients mutually agree how to adapt standards for their own needs – no one uses a vanilla version of any of the FpML standards.

There are also numerous ‘standards’ without any critical mass of users that would lend credibility in spite of lots of committed – often voluntary – effort by intelligent people to de� ne the standard. If it is dif� cult to see the connection between the spend on implementing a standard and an associated business bene� t, the project will never get to the top of the pile and attract focus and funding. In the Swift world it is not surprising that established users resist migrating from ISO15022 because it is doing a good job for them; meanwhile new users would prefer an ISO20022 and XML-based standard.

Q. � ere are also perception issues, aren’t there?There are some myths or general misconceptions around standards and these generally come down to an expectation that standards should simplify messaging. The fact is that a complex transaction implies any message model also has to be complex. And if that model tries to accommodate the needs of multiple parties to allow widespread usefulness then the level of complexity will increase. We call this the Standards Paradox: as you accommodate more needs complexity grows. This is neither good nor bad – just a fact of messaging life.

Another common misconception is that XML is in some way a strategy for messaging and that XML will also simplify messaging – neither is true. Try representing Einstein’s Theory of Relativity or James Joyce’s Ulysses in XML and they will not suddenly

become simple. Of course there are many tools to facilitate working with XML but standard open tools working with complex structures and rules combined with the need to integrate with lots of non-XML in-house systems does not lead to messaging � uency.

Testing is another signi� cant issue area. To test that a message is consistent with a given standard in a development environment is beyond the majority of � nancial institutions. It is impossible to look at a message instance and determine whether all mandatory � elds, data formats, options and market practice rules have been adhered to. Standards bodies vary greatly in terms of testing facilities that are available and they tend to vary from none at all to being available at certain times subject to booking etc. From a project perspective ef� ciency is greatest when testing is integrated with the development cycle and for that an electronic version of the standards that encapsulates all rules is required.

There are numerous other issues like the way standards are de� ned, documented and published; how changes (delta) are tracked and documented, how one assesses the areas of an implementation affected by a given change. The way that rules are de� ned and local market practice encapsulated. The way some standards are imprecise or vague and cannot be precisely implemented electronically – i.e. they are guidelines rather than anything more speci� c. But the above is probably suf� cient for now.

Q. What are your current areas of focus and how do you see that changing in the medium- to long-term?Our current area of focus remains providing Transformer that makes the implementation of standards faster, cheaper, higher quality and more adaptable. We do also provide targeted messaging solutions where a message standard is integrated with a set of business rules and transaction � ows to deliver a targeted messaging solution for a speci� c business process. There is huge room for improvement in the level of � uency with messaging standards in most � nancial organisations and recent history suggests this situation will persist so we see lots of opportunities to solve client issues and improve existing infrastructures. BT

In one of the Swift Standards Forum sessions at Sibos in Toronto last year, one session addressed the question of why the technical plumbing issues of messaging standards should be of any interest to senior people working on the business side of the institution.

The answer of one participant was straightforward: “They help us to make money.”

It’s a view that is echoed by Ian Chittick of Lloyds Banking Group. “The reason that it is so important to a non-technical business person is that once you get into the exchange of fi nancial information, the standards facilitate the business.”

Chittick says: “the problem with standards is the second s – there are too many of them. This is true across technology, he adds – the proliferation of browser versions complicates the provision of internet banking services, for instance.

He adds that the provenance of standards is important. “Swift has done a great job, but is has always been a bank

approach. We don’t even have to think about how we have to talk to another bank, but when it comes to corporates, the situation is different and we need to be more fl exible.”

Ultimately, however, standards are there to facilitate the business. “One of the interesting things is the value of bureaux: as a bank, it is not our core business to map and translate between data formats – we don’t want to differentiate on the ability to accept fi le-based transactions; we want to differentiate on the quality of our services and products.”

Chittick distances himself from the standards making process. “Intellectually, some people do get a buzz out of it. But for me it is about getting interoperability to the point where you are facilitating the interesting parts of the business.”

Ian Chittick is head of the Global Channels team within the Transaction Banking division of Lloyds Banking Group.


View from a bank: Ian Chittick, Lloyds Banking Group


However, banks can profit from payments through prudent cost management, choosing the right mix of suppliers and continual innovation. These three components are not mutually exclusive: indeed, successful payment providers will be those who pursue all three in parallel.

Cost management is a vital ingredient of any successful payments strategy, along with processing scale to justify the continual investment in technology that is necessary to support new banking channels and payment types. In the absence of significant scale, banks must cut costs and streamline infrastructures to remain viable in the payments business. This is challenging in a time of increasing regulatory pressure.

Banks need to build a detailed understanding of their payments cost structures. Indeed, many will need to explore new operating models in order to cut costs and reposition for growth. This can be achieved through careful supplier selection.

Collaboration can play an important role in building a successful payments business. Flexible collaboration, based on mutual benefits and sound commercial principles, can help banks reduce capital spending and operational costs.

Banks need to collaborate with each other and with technology suppliers to establish connectivity and maintain payment standards. Payments themselves are not a sustainable source of competitive advantage, so banks with lower processing volumes can achieve economies of scale by working together to develop processing infrastructures that offer economies of scale to all participants.

The successful banks of the future will be those that find innovative ways to add

value to their basic payments proposition. Here are some options:■ Electronic Bank Account Management – Electronic bank account management offers clear visibility over current signatory details and provides an audit trail of all account management activities. At a simple level, it offers a single version of the truth in relation to bank account records. It synchronises bank records with corporate records and makes them accessible online. The benefits of eBAM are most apparent to multinational corporates with many bank accounts over disparate geographies. Innovations such as eBAM create client loyalty by adding real value for which corporates are willing to pay.■ Online Shared Services – Many banks can do more to offer corporates a truly integrated online experience, including access to an integrated range of financial products and tools within a single portal. These days, treasurers want to view and access cash quickly and easily, and they need to be able to execute transactions faster and more efficiently. Banks can help treasurers take control of liquidity by offering a range of tools that are available 24/7.■ Automated FX – Banks can add value and increase clients’ convenience by adding an automated FX service. This enables clients to use nominated bank accounts without the need to contact an FX desk to book a rate. Automated FX can also help streamline client operations and increase efficiency as payments can be made in a wide range of currencies without managing additional accounts.

So while payments services may never be quite as glamorous as M&A, it is essential that banks continue to innovate in order to provide the services that add real value to their clients. This is done by enriching core payment propositions and by delivering existing services in new ways that increase flexibility and client convenience. Overall, as bankers, we can add more value to our core payment propositions by offering services that facilitate interoperability between banks and increase client convenience. Collaborate. Innovate. Advise – the new role of banks.

Paul Taylor is head of FI Sales, GTS EMEA, at Bank of America Merrill Lynch

Should payments pay? Paul Taylor, Bank of America Merrill Lynch

Making payments is a basic banking function, practically as old as banking itself. Few would doubt that payments matter, but it has seldom been seen as a glamorous area of banking. However, that view is beginning to change.

Curiosity in payments is steadily increasing and for several good reasons. The current financial climate favours banking activities that are predictable, transparent and client-centric and payment services meet all three criteria.

Better still, payment services is a growth industry: total wholesale payments revenues are forecast to increase over the next decade from $169 billion in 2010 to $471 billion by 2020. Worldwide payments are growing faster than global GDP, which makes for an attractive industry dynamic.

As a result, the payments landscape is changing fast. A combination of new technologies, legislation, economic conditions and competitive pressure is transforming the entire payments value chain. The creation of new banking channels, such as mobile and internet, have enabled the development of innovative payment types, such as real-time. Banks have responded with innovative payment services that are better at serving clients’ needs.

Payments are an intrinsic component of any bank’s service portfolio and part of a bank’s brand promise: a manifestation that a transaction is complete and that all parties have fulfilled their obligations. This creates challenges as well as opportunities. All banks must provide payment services and these are often bundled with other services, such as treasury and cash management. In practice it is often impossible to define the precise contribution of individual service components. So, although all banks provide payment services, few profit from them.

Profiting from a payments service offering is an issue all banks grapple with – and is no trivial task. Providing payment services calls for substantial regular investment and the margins are continually squeezed by competition and limited by legislation. Add to this the fact that at a global level payments are becoming increasingly commoditised. Time and distance are no longer reliable measures of payment efficiency, so payment services alone are not a source of competitive advantage.

“Worldwide payments are growing faster than

global GDP, which makes for an attractive industry

dynamic.”

COMMEnTMArCH 2012



COMMEnTMArCH 2012

with almost all users selecting either BT SettleNET or Swift as secure messaging services to link to the settlement platform.

With the move to a single settlement platform for the EU, the ECB has also decided on a competitive approach for access by its users. Initially consideration was given only to taking a similar

approach to Euroclear UK & Ireland. However, during that process some of the major actors in the European settlement sector indicated that, as technology has changed considerably in recent years, they might prefer to connect directly to the T2S system rather than using a third-party messaging service provider as an intermediary. This led to a review by the ECB of its communications plans and a change to its specifications and overall requirements.

As a result, the ECB is planning for two types of access method for direct users of T2S:■ Dedicated Link connectivity to the ECB’s CoreNet network■ via Network Service Providers of secure messaging services.

This is an example where terminology can be misleading. “Network Service Providers” are not those that already provide the ECB’s CoreNet network which securely interlinks the European System of Central Banks.

Looking more closely at this scenario and plugging together different relevant bits of information about the securities market, there’s the potential for a truly service-oriented approach that has the flexibility to meet the different needs of different sizes of investment firms across the EU as a whole. One can quickly see that as the major actors have been the ones that have indicated to the ECB that they would like a direct connectivity option,

and as somewhere around 40 investment firms in the EU are responsible for around 80% of securities trading volume, the ECB’s Dedicated Link approach is likely to be carrying the vast majority of settlement message traffic.

CSDs with lower volumes are more likely to be willing to pay for an added-

cost messaging service from one of the selected “Network Service Providers” in order to communicate with T2S, but even in aggregate these would only be carrying a minority of T2S message traffic.

Announcements have been made recently about the two Network Services Providers that the ECB has selected, but nothing has yet been said about the provision of Dedicated Link connectivity.

With Dedicated Link connectivity, investment firms, CSDs and central banks would still need to exchange messages with T2S, and it is clearly hoped that all messaging will be based on open and freely-available standards based on the ISO 20022 methodology. This approach would allow users to benefit further from their existing investment in implementing ISO 20022-based standards, as well as allowing the ECB to use the same message formats irrespective of how any user links to T2S. This in turn would help to improve the cost-efficiency of clearing and settlement across the EU by addressing Barrier 1 of the Giovannini Group recommendations – the barrier to efficiency due to national differences in information technology and interfaces.

This approach would also be a further and highly practical demonstration of the network-independence of open industry standards such as ISO 20022 that industry participants have been developing for years. It’s now 10 years since the Giovannini Group issued its first report in 2011. By the time that it’s ten years after the Giovannini Group’s second report – in 2013 – major actors in the market will be working practically and actively on addressing that Barrier 1 in relation to T2S.

Chris Pickles is head of industry initiatives, Global Banking and Financial Markets, BT Global Services.

T2S: next steps for connecting up Chris Pickles,

BT Global Services

The Target2Securities timetable is rolling along, with acceptance testing due to begin in 2014. For the European Central Bank, much of this year’s work will be about its own internal planning, the definition of the multiple waves of migration to T2S, and addressing the network connectivity approaches that it has decided upon. The ECB has selected ways of linking up users that are perhaps even more competitive than many current settlement providers.

For many years and in many countries a national central securities depository was a separate organisation from the domestic stock exchange, and frequently these two types of infrastructure were accessed via separate network approaches. From the early 1990s this situation started to change, though not in the same way in each country. In Germany, Deutsche Börse recognised how much volume in the trading of domestic exchange-listed equities and bonds was already slipping past its trading systems – 30% of equities trading and 70% of bonds trading. The national DKV/AKV settlement organisation was quickly brought inside Deutsche Börse Group, and Cedel was also later added and integrated to create today’s Clearstream organisation, one of the world’s two international CSDs. This allowed a vertical stack of securities and derivatives services to be delivered to investment firms by Deutsche Börse over its own closed network infrastructure.

The UK started from the opposite end of the spectrum. The UK settlement system – Talisman – had been operated for many years by London Stock Exchange, whose lack of success in implementing an upgraded replacement system – to be called Taurus – led to the Bank of England stepping in and implementing a competing settlement system called Crest. Both Talisman and Taurus were dropped and replaced by Crest as the national settlement system. An innovative approach to promote competition was adopted by CrestCo, its operating company, allowing members to choose between multiple competing connectivity providers. All of this has now become part of Euroclear UK & Ireland,

“This is an example where terminology can be misleading. “Network Service Providers” are not those that already provide

the ECB’s CoreNet network that securely interlinks the European

System of Central Banks.”

For more insight into the topic of customer service in the cloud, check out SunGard’s 20:20 webinar programme – a series of 20-minute expert panel discussions around key cloud infrastructure themes. Visit www.2020webinars.com for more information.

As consumers, we’re growing accustomed to using online banking to manage our personal finances 24/7. Similarly, cloud infrastructure is changing the way IT delivers services to the business by moving from traditional project management and procurement processes to something much more dynamic.

Many cloud infrastructure providers offer a turnkey, virtualised environment behind a firewall that enables self-service provisioning within a framework of business rules. Authorised users are granted access to a browser-based customer portal that enables them to monitor usage and turn capacity up or down as required by the business.

Self-service can help to achieve the efficiencies promised by the cloud, but typically means fewer interactions with the infrastructure provider on a day-to-day basis. So what impact does this automation have on the traditional values of customer service?

Crucial service differentiatorsThe answer is, banks can still – and should – demand a high level of customer service from their infrastructure provider. The key issue is not to confuse a level of automation with a lack of support.

Certainly, the self-service portal concept offers a slick, convenient mechanism through which to provision resource, manage changes, and track the requisition to completion. But the reality of the more complex remote provisioning isn’t some anonymous digital process that flicks switches according to complex algorithms. It’s a demanding series of activities executed by a human implementation team behind the scenes – people, not robots, who walk the data centre floors and look after the tin – an especially important distinction for mid-sized to enterprise organisations.

The difference when working with an enterprise-class infrastructure partner like SunGard is that all wholesale

changes made by customers are monitored across shared infrastructure – this prevents anyone from inadvertently introducing a fault that could bring down the whole environment. Instead, there is a team of dedicated experts analysing the requests submitted via the customer portal, interpreting and interrogating each requirement as part of a managed workflow. A crucial element of common sense and deep experience is overlaid on the process, rather than simply verifying and authorising a request against a generic checklist of preconditions.

Some cloud providers prioritise automation over human interaction, but in the event that anything goes wrong, it may prove difficult to reach someone accountable. A provider worth their salt should offer enterprise-class SLAs and simplify customer relationships with a dedicated team of service delivery managers and round-the-clock support to build trusted partnerships. That means advice or resolution should never be more than a phone call away, with requests escalated to the right level immediately.

A time and a place for automationWhen it comes to cloud computing, self-service shouldn’t mean wholesale automation, or abandonment by the very provider that was so attentive in the courtship phase of the relationship.

A customer portal offers businesses an agile and convenient way to provision compute resource and manage and report changes to their cloud. It’s not dissimilar to the way we might preferentially use online and phone banking and, increasingly, mobile apps, to manage our money. But on other occasions, when we have a more complex transaction, need advice or want to apply for a new financial product, we value and appreciate the personal engagement that comes with a banking relationship.

The bottom line is that it pays to ensure your Infrastructure as a Service provider offers the “service” as well as the “infrastructure”.

Infrastructure as a (self) Service?

SponSored CommentMArCh 2012


COMMEnTMArCH 2012

with almost all users selecting either BT SettleNET or Swift as secure messaging services to link to the settlement platform.

With the move to a single settlement platform for the EU, the ECB has also decided on a competitive approach for access by its users. Initially consideration was given only to taking a similar

approach to Euroclear UK & Ireland. However, during that process some of the major actors in the European settlement sector indicated that, as technology has changed considerably in recent years, they might prefer to connect directly to the T2S system rather than using a third-party messaging service provider as an intermediary. This led to a review by the ECB of its communications plans and a change to its specifications and overall requirements.

As a result, the ECB is planning for two types of access method for direct users of T2S:■ Dedicated Link connectivity to the ECB’s CoreNet network■ via Network Service Providers of secure messaging services.

This is an example where terminology can be misleading. “Network Service Providers” are not those that already provide the ECB’s CoreNet network which securely interlinks the European System of Central Banks.

Looking more closely at this scenario and plugging together different relevant bits of information about the securities market, there’s the potential for a truly service-oriented approach that has the flexibility to meet the different needs of different sizes of investment firms across the EU as a whole. One can quickly see that as the major actors have been the ones that have indicated to the ECB that they would like a direct connectivity option,

and as somewhere around 40 investment firms in the EU are responsible for around 80% of securities trading volume, the ECB’s Dedicated Link approach is likely to be carrying the vast majority of settlement message traffic.

CSDs with lower volumes are more likely to be willing to pay for an added-

cost messaging service from one of the selected “Network Service Providers” in order to communicate with T2S, but even in aggregate these would only be carrying a minority of T2S message traffic.

Announcements have been made recently about the two Network Services Providers that the ECB has selected, but nothing has yet been said about the provision of Dedicated Link connectivity.

With Dedicated Link connectivity, investment firms, CSDs and central banks would still need to exchange messages with T2S, and it is clearly hoped that all messaging will be based on open and freely-available standards based on the ISO 20022 methodology. This approach would allow users to benefit further from their existing investment in implementing ISO 20022-based standards, as well as allowing the ECB to use the same message formats irrespective of how any user links to T2S. This in turn would help to improve the cost-efficiency of clearing and settlement across the EU by addressing Barrier 1 of the Giovannini Group recommendations – the barrier to efficiency due to national differences in information technology and interfaces.

This approach would also be a further and highly practical demonstration of the network-independence of open industry standards such as ISO 20022 that industry participants have been developing for years. It’s now 10 years since the Giovannini Group issued its first report in 2011. By the time that it’s ten years after the Giovannini Group’s second report – in 2013 – major actors in the market will be working practically and actively on addressing that Barrier 1 in relation to T2S.

Chris Pickles is head of industry initiatives, Global Banking and Financial Markets, BT Global Services.

T2S: next steps for connecting up Chris Pickles,

BT Global Services

The Target2Securities timetable is rolling along, with acceptance testing due to begin in 2014. For the European Central Bank, much of this year’s work will be about its own internal planning, the definition of the multiple waves of migration to T2S, and addressing the network connectivity approaches that it has decided upon. The ECB has selected ways of linking up users that are perhaps even more competitive than many current settlement providers.

For many years and in many countries a national central securities depository was a separate organisation from the domestic stock exchange, and frequently these two types of infrastructure were accessed via separate network approaches. From the early 1990s this situation started to change, though not in the same way in each country. In Germany, Deutsche Börse recognised how much volume in the trading of domestic exchange-listed equities and bonds was already slipping past its trading systems – 30% of equities trading and 70% of bonds trading. The national DKV/AKV settlement organisation was quickly brought inside Deutsche Börse Group, and Cedel was also later added and integrated to create today’s Clearstream organisation, one of the world’s two international CSDs. This allowed a vertical stack of securities and derivatives services to be delivered to investment firms by Deutsche Börse over its own closed network infrastructure.

The UK started from the opposite end of the spectrum. The UK settlement system – Talisman – had been operated for many years by London Stock Exchange, whose lack of success in implementing an upgraded replacement system – to be called Taurus – led to the Bank of England stepping in and implementing a competing settlement system called Crest. Both Talisman and Taurus were dropped and replaced by Crest as the national settlement system. An innovative approach to promote competition was adopted by CrestCo, its operating company, allowing members to choose between multiple competing connectivity providers. All of this has now become part of Euroclear UK & Ireland,

“This is an example where terminology can be misleading. “Network Service Providers” are not those that already provide

the ECB’s CoreNet network that securely interlinks the European

System of Central Banks.”

smArtstreAm technoloGies

smartstream technologies delivers operational advantage to clients through enterprise-wide, real-time Transaction Lifecycle Management (TLM®) solutions that automate, track and control financial transactions and processes within and beyond the enterprise.

Built on SmartStream’s TLM Enterprise Control Architecture, TLM solutions provide greater transaction visibility to create exceptions-based operations capable of automating complex and high volume transaction flows. Operational risk and cost is reduced, while customer service levels are improved.

SmartStream is owned by Dubai International Financial Centre (DIFC) and has global operations supporting over 1,000 clients, including more than 75 of the world’s top 100 banks.

contActs:neil hartley on +44 (0) 203 377 5385 or email: [email protected]

leon thomson on +44 (0) 203 377 3493 or email: [email protected]

tieto

tieto is an IT service company providing IT, R&D and consulting services. With approximately 16 000 experts, we are among the leading IT service companies in Northern Europe and the global leader in selected segments. We specialize in areas where we have the deepest understanding of our customers’ businesses and needs. Our superior customer centricity and Nordic expertise set us apart from our competitors.

Tieto Financial Services offers services, solutions and products to financial institutions throughout Europe. Our customers include major banks and financial institutions that have chosen us for our capability to take total responsibility for any assignment.

We enable Financial Institutions to utilize their business potential by combining our technology skills and deep financial industry knowledge with advanced Nordic customer behavior. Working with Tieto you get a reliable, committed long-term partner that helps you to industrialize your day-to-day IT-operations and get the most out of your IT investments.

tcs finAnciAl solutions

tcs financial solutions, a strategic business unit of Tata Consultancy Services, enables transformation in financial services through a holistic suite of solutions for firms in banking, capital markets and insurance, and diversified financial institutions. Each solution in the TCS BαNCS family runs as a scalable and robust service, integrated with existing enterprise infrastructures and technology architectures.

Our mission is to provide best of breed solutions that drive growth, reduce costs, mitigate risk and offer faster speed to market for 240+ institutions in over 80 countries.

TCS BαNCS is an integrated financial services platform. Its embedded transformation intelligence enables flexible, open and collaborative deployment and distribution of financial products and services.

TCS BαNCS aspires to be better than established benchmarks, which is why we’ve embedded an Alpha (“α”) consciously within our brand, to remind ourselves of the superior returns that we strive to deliver. Our ability to foster rapid time-to-market with new products allows organisations to transform themselves into nimble competitors with scalable offerings.

Our Co-Innovation Network is a true partnership for sharing best practices and innovation, and our ‘Experience Certainty’ mindset ensures the brightest of futures for all our customers.

For more information, visit www.tcs.com/bancs or contact us at [email protected]

About tata consultancy servicesTata Consultancy Services is an IT services, business solutions and outsourcing organisation with over 143,000 IT consultants located across the world delivering real results to global businesses through its unique Global Network Delivery ModelTM.

SmartStream TechnologiesSt Helen’s 1 Undershaft London EC3A 8EEUnited KingdomTel: +44 (0)20 7898 0600Email: [email protected]: www.smartstream-stp.com

TietoKutojantie 6-802630 EspooFinlandTel: +3582072010Fax: [email protected]/financialservices

TCS Financial SolutionsWeb: www.tcs.com

sunGArD

About sunGardWith annual revenue of $5 billion, SunGard is a global leader in software and processing solutions for financial services, higher education and the public sector. Visit SunGard at www.sungard.com Adaptiv SunGard’s Adaptiv provides enterprise-wide credit and market risk management and operations solutions for financial services institutions. Adaptiv assists institutions of varying size and complexity to deploy technology to meet both internal and regulatory requirements for risk management and operational control. Adaptiv helps financial services institutions from the banking, hedge fund, asset management, insurance and corporate sectors with its deep understanding of risk management and operational processes. www.sungard.com/adaptiv. front ArenaA trading solution serving a range of financial institutions, SunGard’s Front Arena solution provides straight-through processing by integrating sales and distribution functions, trading capabilities and risk management. Institutional asset managers and brokers, traders, and market makers use Front Arena to trade equities, fixed-income, interest rate derivatives, and credit. For more information, visit www.sungard.com/frontarena securities financeAround the world, $11 trillion in securities financing is managed on SunGard’s proven solutions for international and U.S. domestic securities lending and repo for over 250 clients. Through our Loanet, Global One, Martini and Astec Analytics products and services, we provide comprehensive business solutions and information with worldwide reach for equities or fixed income securities financing Contact: [email protected]

call a sunGard expert today: 0044 (0)208 081 2779

Email: [email protected]: +44 (0)208 081 2779Fax: +44 (0)208 081 2001

www.bankingtech.com

Directory of service

Accuity is the world’s leading provider of international payment routing data and AML screening software enabling banks and corporations to maximise payment efficiency and ensure AML compliance.

Our Payment solutions help maximise rates of payment STP and with our recent acquisition of CBNet, we are now the only company to source all payment data, including SSI’s, SWIFT/BICs and National Bank Codes directly from the authoritative sources.

Our compliance suite includes the world’s first compliance filtering engine, introduced in 1994, as well as a range of caution lists and screening solutions that provide a prime defence against participation in illicit financial activities, such as money laundering.

Our strategic services Group provides deployment, consulting, training and integration services. We are experts in reducing False Positive rates and helping improve rates of Payment STP.

visit www.Accuitysolutions.com/bankingtech to sign up for a free trial of any of our industry-leading solutions.

Accuity

PeterevAns

peterevans is a leading independent provider of front to back office solutions for the financial services sector. Clearly focused on the securities and investment market petervans has more than 23 years of experience of providing solutions to this sector.

xanite, peterevans new suite of products, offers a configurable, fully integrated, browser based, comprehensive front to back solution that can be either deployed as a single application or integrated as components into your existing platform. Each of the xanite modules can de delivered via an ASP or self-hosted. Covering wealth management, custody, corporate actions, clearing and settlement, private client and on-line stock broking with full operational and administrative support for the front, middle and back office. xanite gives full but controlled access to clients, portfolio, fund and relationship managers, brokers, middle and back office staff – on line anywhere in the world and provides a modern and flexible platform for expanding future business and revenues.

Accuity1 Quality CourtChancery LaneLondon WC2A 1HRUnited KingdomTel: +44 20 7014 3480Fax: +44 20 7061 [email protected]/bankingtech

cleAr2PAy

clear2Pay is a payments modernisation company that actively supports global financial institutions to meet their payments unification goals through its pure SOA Open Payment Framework (OPF). The company facilitates financial organisations in their provision of payments services across the entire value and process chain: Card, ACH, Branch, Bulk, High Care and International Payments. Clear2Pay also offers solutions and services such as e-Banking, the Open Test Platform, ChargeBack, Consultancy and Training. Clients include financial institutions such as ING, Banco Santander, Crédit Agricole, VISA, MasterCard, BNP Paribas, The Federal Reserve, NETS (Denmark), The People Bank of China (PBOC), Rabobank, The Co-operative Financial Services and Commonwealth Bank. Clear2Pay operates out of 14 countries and employs over 650 staff. In 2011 the company won the XCelent Customer Base 2010 award. For more information, please visit www.clear2pay.com.

Clear2Pay NV SASchaliënhoevedreef 20A2800 Mechelen, BelgiumTel: +32 15 79 52 00Fax: +32 15 79 52 01Jean de Crane, GM EMEAEmail: [email protected]

New Broad Street House35 New Broad StreetLondonUnited KingdomEC2M 1NHEmail: [email protected]: +44 (0) 2920 402200Web: www.peterevans.com

orc softwAre

About orc softwareOrc software (SSE: ORC) is the leading global provider of powerful solutions for the worldwide financial industry in the critical areas of advanced trading and low latency connectivity. Orc’s customers include leading banks, trading and market-making firms, exchanges, brokerage houses, institutional investors and hedge funds. solution DescriptionOrc Trading and Orc Connect provide the tools for making the best trading and connectivity decisions with strong analytics, unmatched market access, powerful automated trading functionality, high performance futures and options trading capabilities, ultra-low latency and risk management.

Advanced trading solutionsorc trading applications■ Orc Trading for algorithmic trading■ Orc Trading for arbitrage■ Orc Trading for market making■ Orc Trading for risk management■ Orc Trading for warrants market making■ Orc Trading for volatility trading

orc connect applications■ Orc CameronFIX for FIX to FIX routing■ Orc CameronFIX for FIX integration

Orc SoftwareAmericas: +1 312 327 8555Asia Pacific: +852 2167 1950EMEA: +46 8 506 477 00Email: [email protected]: www.orcsoftware.com

fiDessA GrouP

Exceptional trading, investment and information solutions for the world’s financial community. 85% of the world’s premier financial institutions trust Fidessa to provide them with their multi-asset

trading and investment infrastructure, their market data and analysis, and their decision making and workflow technology. $10 trillion worth of transactions flow across our global connectivity network each year. We offer unique access to the world’s largest and most valuable trading community of buy-side and sell-side professionals, from global institutions and investment banks to boutique brokers and niche hedge funds.

A global business with scale, resilience and expertise, we’ve delivered around 30% compound growth since our stock market listing in 1997 and we’re recognised as the thought leader in our space. We set the benchmark with our unrivalled set of mission-critical products and services and, uniquely, serve both the buy-side and sell-side communities. Ongoing investment in our leading-edge solutions ensures Fidessa remains the industry’s number one choice.

FidessaOne Old Jewry London EC2R 8DNTel:+44 (0)20 7105 1000Fax:+44 (0)20 7105 1001Email: [email protected] Web: www.fidessa.com

www.bankingtech.com

smArtstreAm technoloGies

smartstream technologies delivers operational advantage to clients through enterprise-wide, real-time Transaction Lifecycle Management (TLM®) solutions that automate, track and control financial transactions and processes within and beyond the enterprise.

Built on SmartStream’s TLM Enterprise Control Architecture, TLM solutions provide greater transaction visibility to create exceptions-based operations capable of automating complex and high volume transaction flows. Operational risk and cost is reduced, while customer service levels are improved.

SmartStream is owned by Dubai International Financial Centre (DIFC) and has global operations supporting over 1,000 clients, including more than 75 of the world’s top 100 banks.

contActs:neil hartley on +44 (0) 203 377 5385 or email: [email protected]

leon thomson on +44 (0) 203 377 3493 or email: [email protected]

tieto

tieto is an IT service company providing IT, R&D and consulting services. With approximately 16 000 experts, we are among the leading IT service companies in Northern Europe and the global leader in selected segments. We specialize in areas where we have the deepest understanding of our customers’ businesses and needs. Our superior customer centricity and Nordic expertise set us apart from our competitors.

Tieto Financial Services offers services, solutions and products to financial institutions throughout Europe. Our customers include major banks and financial institutions that have chosen us for our capability to take total responsibility for any assignment.

We enable Financial Institutions to utilize their business potential by combining our technology skills and deep financial industry knowledge with advanced Nordic customer behavior. Working with Tieto you get a reliable, committed long-term partner that helps you to industrialize your day-to-day IT-operations and get the most out of your IT investments.

tcs finAnciAl solutions

tcs financial solutions, a strategic business unit of Tata Consultancy Services, enables transformation in financial services through a holistic suite of solutions for firms in banking, capital markets and insurance, and diversified financial institutions. Each solution in the TCS BαNCS family runs as a scalable and robust service, integrated with existing enterprise infrastructures and technology architectures.

Our mission is to provide best of breed solutions that drive growth, reduce costs, mitigate risk and offer faster speed to market for 240+ institutions in over 80 countries.

TCS BαNCS is an integrated financial services platform. Its embedded transformation intelligence enables flexible, open and collaborative deployment and distribution of financial products and services.

TCS BαNCS aspires to be better than established benchmarks, which is why we’ve embedded an Alpha (“α”) consciously within our brand, to remind ourselves of the superior returns that we strive to deliver. Our ability to foster rapid time-to-market with new products allows organisations to transform themselves into nimble competitors with scalable offerings.

Our Co-Innovation Network is a true partnership for sharing best practices and innovation, and our ‘Experience Certainty’ mindset ensures the brightest of futures for all our customers.

For more information, visit www.tcs.com/bancs or contact us at [email protected]

About tata consultancy servicesTata Consultancy Services is an IT services, business solutions and outsourcing organisation with over 143,000 IT consultants located across the world delivering real results to global businesses through its unique Global Network Delivery ModelTM.

SmartStream TechnologiesSt Helen’s 1 Undershaft London EC3A 8EEUnited KingdomTel: +44 (0)20 7898 0600Email: [email protected]: www.smartstream-stp.com

TietoKutojantie 6-802630 EspooFinlandTel: +3582072010Fax: [email protected]/financialservices

TCS Financial SolutionsWeb: www.tcs.com

sunGArD

About sunGardWith annual revenue of $5 billion, SunGard is a global leader in software and processing solutions for financial services, higher education and the public sector. Visit SunGard at www.sungard.com Adaptiv SunGard’s Adaptiv provides enterprise-wide credit and market risk management and operations solutions for financial services institutions. Adaptiv assists institutions of varying size and complexity to deploy technology to meet both internal and regulatory requirements for risk management and operational control. Adaptiv helps financial services institutions from the banking, hedge fund, asset management, insurance and corporate sectors with its deep understanding of risk management and operational processes. www.sungard.com/adaptiv. front ArenaA trading solution serving a range of financial institutions, SunGard’s Front Arena solution provides straight-through processing by integrating sales and distribution functions, trading capabilities and risk management. Institutional asset managers and brokers, traders, and market makers use Front Arena to trade equities, fixed-income, interest rate derivatives, and credit. For more information, visit www.sungard.com/frontarena securities financeAround the world, $11 trillion in securities financing is managed on SunGard’s proven solutions for international and U.S. domestic securities lending and repo for over 250 clients. Through our Loanet, Global One, Martini and Astec Analytics products and services, we provide comprehensive business solutions and information with worldwide reach for equities or fixed income securities financing Contact: [email protected]

call a sunGard expert today: 0044 (0)208 081 2779

Email: [email protected]: +44 (0)208 081 2779Fax: +44 (0)208 081 2001

www.bankingtech.com


MARCH 2012

OUT OF OFFICE

Remote workingYou know what it’s like, you see an RFP for a system required by a small bank on a small island in the Atlantic, and your mind � lls with names beginning with B – Barbados, Bermuda, Bahamas ... a site visit is surely called for ... followed by a range of in-depth training sessions ... yes, yes, you know they’re in the Caribbean, but that’s just geography, isn’t it?

Alas, no. St Helena, as any fule kno, or at least used to, is a small island in the South Atlantic where the imperialist heroic British forcibly imprisoned Napoleon, the liberator dictator of mainland Europe following their � ukey rampant victory at Waterloo in 1815. He was killed by English wallpaper, which shows a more sensitive side to Bonaparte than many had hitherto suspected him of possessing.

These days, the Napoleon tourist industry and selling postage stamps to international collectors are pretty much all that is going on down there, sad to say.

However, they do have a bank, and that bank recently decided to upgrade its iFinancial BankWare core banking system to the latest version of the software for its branch in St Helena and the one on nearby (800 miles) Ascension Island.

Unusually for a bank on a remote British-administered island, the Bank of St Helena concerns itself primarily with offering “a full cashier’s service to the island's inhabitants and an extensive range of savings and lending products”.

As a result of the distance, and dif� culties, of getting to St Helena and Ascension Island the implementation plan was somewhat complicated. Initially the bank's staff came to iFinancial's of� ces in London for training in BankWare.net. Their data was automatically converted and they did test implementations and pseudo-parallel running at iFinancial's of� ces. BT

Are you one of those people who threw The Da Vinci Code across the room when the dodgy cardinal’s cellphone started ringing 35,000 feet over the Atlantic? In 2004, or whenever it was? C’mon, really?

We had an instant sense of déjà vu with our response to a press release from Saxo Bank about its new market information and trading app for iPhone and Android mobiles.

According to the announcement: “The app was � rst used when a professional BASE jumper executed a FX trade whilst performing a jump in Hutchinson Peak in the Hottentot Hollands Mountain Range outside of Cape Town, South Africa. The jumper bought 1,000,000 EUR/USD Spot at a price of 1.26969. The trade was con� rmed when he was still in mid-air.”

Presumably just after he’d taken a secret call from the Vatican’s FX sales desk punting some crazy theory about the currency markets being in freefall.

Of course, with all those people making payments on their mobile phones, South Africa probably has pretty good cellular phone reception, even half way up (or down) a mountain, but we’re still sceptical. Here in Fleet Street we couldn’t get enough of a signal to download the app, but that’s possibly because the local base stations are saturated with traf� c generated by the international press corps � ling copy from the Levenson Inquiry into press telephone hacking that is being held just up the road. BT

■ A four minute video of the event is available:www.saxobank.com/mobile/saxotrader-anytime-anywhere

Incoming VocaLink chief executive David Yates, a former Western Union man, has made some noticeable changes around the processing � rm’s of� ces in London and Rickmansworth, report visitors.

Gone is the hot-desking approach that some staff found irksome, while others have been regrouped to form a sort of ad hoc task force to brainstorm ideas for the future, or some such – they are probably doing some blue-sky thinking outside the box or similar.

A more noticeable change was the arrival of a man with a scraper, whose task was to remove the adhesive frosting that had previously rendered the glass on Yates’ new of� ce opaque and invisible to staff.

Cue inevitable jokes about transparency and clear leadership ... BT

The FX Code

When I’m cleaning windows ...

From the Archive

T+1 settlement goals fade as straight-through processing slips in list of priorities for banks ... Swift sidesteps failure of telecoms partner Global Crossing ... JP Morgan builds research tool to track economic surprises for FX markets ... ICP extends electronic broking into Eurobond market ... Continuous Linked Settlement gets set to go live ...

Swift steps up securities activities ... Chicago futures exchanges make progress on combined clearing operations ... Europe takes the plunge on digital IDs ... Sainsbury’s Bank get banking licence as Tesco switches partners from NatWest to Royal Bank of Scotland ... banks approach corporates on easing transition to the euro ... banks re-entering the merchant processing fray ...

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