The Banker's Innovation in Technology Awards recognises those who have excelled in times of unparalleled adversity.
Innovation in Delivery Channel Technology
Winner: BBVA Compass
Project: Virtual Banker
In the US, only a licensed or accredited individual may sell certain specialised banking products. Due to the extensive geographical dispersion of branches across some regions of the US, however, it is not cost-effective for each bank branch to provide an on-site specialist or for an executive to travel between branches. BBVA Compass, a subsidiary of BBVA USA, addressed these restrictions through the development of its ‘Virtual Banker’ service, which enables a branch to offer specialist one-on-one advice regardless of the executive’s location.
Using surplus hardware, and existing software and infrastructure, the bank custom developed a high-end video conferencing service, situated within the branch, which allows a remote bank executive to interact with a customer as if they were in the same room. Integrated document sharing functionality allows the executive to simultaneously exchange documents and brochures on screen with the customer, send documents to the local printer at the customer’s station within the branch, and retrieve signed documents from customers using an integrated scanner.
In deploying call-centre technologies in a distributed way, the bank executives remain at their normal desks without being relocated to a centralised call centre. The bank deploys a routing algorithm to send each request for advice to the appropriate executive, based on the necessary skills required and language preference. The judges were impressed by the resourcefulness of the banks’ development team, and the low cost of the project. “BBVA Compass is honoured to receive the award, which acknowledges the commitment and strategic importance across the BBVA Group to constantly innovate – even in today’s complex environment,” says Alvaro Aguilar, executive vice-president, innovation and office of the chairman, BBVA Compass.
Highly Rated: Türk Ekonomi Bankası
Project: Practical IVR
Personalisation of customer products and services is an ever-more important tool by which to improve customer loyalty and increase cross-sell and up-sell rates. Turkish bank Türk Ekonomi Bankası has extended the personalisation philosophy to its phone banking channel by providing a call menu that is tailored to each customer. ‘Practical IVR’ allows the bank to recognise the customer number, search for historical transactions, and offer a call menu based on that customer’s historical preferences.
Innovation in Payments Technology
Winner: GarantiBank
Project: Cardless remittance
Due to the heavy migration of rural workers to urban parts of Turkey, domestic remittances between the city and unbanked areas of the country remain extremely well used among the Turkish population. Traditionally, however, money transfers have been sent and received at the branch level, with the funds being allocated to an unbanked named individual. Under the prevailing branch-based system, money transfer to a named party is highly labour-intensive, resulting in a high transaction fee as well as restricted accessibility.
In order to address this challenge, GarantiBank, Turkey’s second largest private bank, developed a cardless ATM-based remittance application, which also combines the functionality of a mobile phone. Instead of using the branch, customers may transfer funds via the ATM, using the keypad to enter the necessary identification information, none of which relies upon or relates to the recipient’s name. The bank then sends an SMS to the recipient’s mobile phone alerting them to the transfer and informing them of the retrieval PIN. This is then used to withdraw the funds from a local ATM.
“ATM domestic cardless remittance has lowered the costs to the bank which has resulted in decreased cost to the customer,” says Ali Fuat Erbil, executive vice-president of GarantiBank. The service has also increased customer satisfaction by reducing queues in branches and dramatically increasing the availability of the remittance service. Since introducing the ATM-based remittance service, the number of traditional remittance transactions performed in branches has decreased by 85%, while the bank has also enjoyed an upswing in new customers. Small and medium-sized enterprises that encompass multiple cities are also using the service to send money to other employees and companies.
Innovation in Information Security
Winner: BBVA Provincial
Project: Virtual Lock
The rise of credit and debit card fraud, both in the country of the card’s origin and, increasingly, abroad, continues to dog the global banking industry and undermine trust in the payment card mechanism. The industry’s high rate of false positives, whereby banks lock-down customer cards having wrongly detected fraudulent activity, also serves to inconvenience the customer and weaken customer loyalty.
Venezuelan bank BBVA Banco Provincial determined to tackle this growing problem through a highly user-friendly card security mechanism, dubbed ‘Virtual Lock’, which enables customers to take greater control over the security of their debit and credit cards. Developed in house, Virtual Lock provides an easy-to-use phone-based system that allows customers to ‘lock’ and ‘unlock’ their cards at any time of their choosing simply by picking up the phone.
Having assigned the customer a key lock, independent of any other PIN or password, the bank allows customers to lock and unlock their cards by contacting the bank’s call centre and typing in the code. The process takes less than 40 seconds, and requires no operator intervention. Once ‘virtually locked’, the card cannot be used through any channel, including point of sale, ATM and the internet.
The judges were struck by both the innovative thinking behind the service and its simplicity of execution. The service, which took less than a month to develop, allows the customer to take control of their own card activity and security in a highly convenient and accessible way, while also reducing the risk of false positives. The bank’s fraud indicator is well below the Venezuelan national average as a result.
Innovation in Cash and Treasury Technology
Winner: Royal Bank of Scotland
Project: Bankline
The online channel is a critical means by which retail and commercial banks may reduce the cost of servicing customers and clients.
But for Royal Bank of Scotland (RBS), persuading customers to embrace the online channel for their day-to-day business needs historically proved something of a challenge, with some 60% of commercial customers enjoying no electronic banking service in 2006. The bank, meanwhile, faced a host of internal operational challenges: more than 10 software-based electronic banking products were sold across the group, duplicating core functionality and forming a barrier to usage.
RBS undertook a major project to replace the bank’s legacy electronic banking channels and to build out a streamlined, enterprise-wide platform. The bank has deployed a re-usable best-of-breed infrastructure elements of which have been redeployed at the branch level, as well as across the group’s other brands. Realising that the bank needed to boost user-confidence to ensure usage of the channel as well as adoption, it took the unusual move of providing customers with onsite training on the Bankline system free of charge.
Bankline, which is among the largest and most complex projects the organisation has undertaken since the integration of NatWest, has proved transformative: RBS has benefited from major operational efficiency gains, including an 87% reduction in software costs.
“Bankline is playing an ever-increasing role in our drive to develop customer-focused and innovative solutions for our UK clients and we are delighted to have been recognised by The Banker in this year’s awards,” says George Evers, head of information solutions, global transaction services UK for the RBS Group.
Highly Rated: Credit Suisse
Project: Regulatory system migration liquidity
In what the judges regarded as a pioneering response to growing regulatory pressure surrounding liquidity management requirements, Credit Suisse developed its regulatory system migration (RSM) liquidity system. Designed to address the primary goal of implementing a new liquidity calculation and reporting system, the RSM liquidity project saw the bank replace multiple single-entity applications with a global strategic platform, resulting in major cost-savings to the bank. The new liquidity system currently processes and calculates more than 10 million trades and cash flows and will position the bank to cope with ensuing liquidity management and reporting regulation.
Innovation in Eco IT
Winner: Barclays Wealth
Project: Managed print services
It is a little-known fact that the desktop environment, in particular the print-network, contributes significantly to the sizeable carbon footprint of the broader technology stack. At Barclays Wealth, the UK prink network was sprawling out of control: with more than 1400 print, copy and scan and fax devices in use, the print network was costly and time consuming to maintain. Furthermore, its response to the organisation’s sustainability policies was poor at best. The bank decided to explore alternative ways in which to improve customer service and experience, reduce costs, enhance efficiency and respond effectively to environmental pressures. Leveraging practices developed by print specialist Hewlett Packard, including design, procurement, management and lifecycle support, Barclays Wealth successfully implemented a new rationalised print network.
By integrating multi-functional print devices across four regions, the organisation has consolidated the number of print devices on its network by an impressive 70%. In total, the project has resulted in a 25% reduction in direct energy consumption, while 20 million sheets of paper are saved annually through duplex printing and PIN to collect features. This represents a total saving of some 2,400 trees, 7.7 million litres of water and over 500 tonnes of CO2 emissions, while the organisation will save a further 30% in toner usage through the deployment of so-called ‘economode’ printing.
The judges were impressed by the strong behaviour-changing nature of the project and its long-term sustainability, supported by the uncommon but highly successful managed print delivery model. “We are proud to receive this prestigious industry award, which reflects Barclays Group’s overall objective to achieve carbon neutrality and make environmental sustainability part of our day-to-day working practices,” says John Bentley, director at Barclays Wealth Technology.
Highly Rated: UniCredit
Project: Server Consolidation
The energy-hungry data centre remains a persistent problem for banks as their IT-intensive operations continue to demand more and more servers. In the battle to prevent server sprawl and to improve the sustainability of its IT growth, Italian bank UniCredit undertook a large-scale virtualisation project across several of its regional businesses, resulting in a staggering 92% power saving.
Innovation in Custody and Securities Services
Winner: JPMorgan
Project: DerivClear
The complexity of processing over-the-counter (OTC) derivative trades, from the moment of trade capture through to confirmation and settlement, has become a topical industry problem. The huge growth of the industry in recent years, combined with the increasing complexity of derivatives products, presents a very challenging environment in which to develop technical solutions. For banks such as JPMorgan, which provides OTC derivative trade processing services for its clients, the ability to offer a transparent and automated trade processing platform offers a major point of differentiation.
Following its acquisition of Bear Stearns in March 2008, JPMorgan inherited a hugely complex front-to-back-office project designed to support the former investment bank’s derivative operations. DerivClear is a web-based application that provides full end-to-end OTC trade processing capability for all OTC derivative products, from trade capture to electronic confirmations. Using an application framework provided by Calypso Technologies, DerivClear provides valuation, cashflow generation and settlement, including automated payment matching through the Depository Trust and Clearing Corporation (DTCC). The system also allows users to manage credit and collateral.
Completed in late 2008, the project had to adapt to a fast-changing industry landscape. The judges were impressed not only by the scale and complexity of the project but by the obvious expertise required to execute it successfully in a time of such disruptive transition.
“We are excited to be recognised for creating an innovative product that enables our clients to outsource their OTC derivative trade servicing,” says Thomas Dinneny, chief business technologist for global derivatives services at JP Morgan’.
Innovation in Dealing Technology
Winner: Instinet
Project: Smart Router
During the past two years, the rise of competition in Europe’s cash equities trading landscape has led to the fragmentation of liquidity across an increasingly complex array of new trading venues and liquidity pools. Increasingly, the ability to intelligently seek out liquidity and satisfy the requirements of best execution, as mandated by the Markets in Financial Instruments Directive, serves as a critical competitive advantage. For this reason, smart order routing (SOR) technology – a type of algorithm that automatically routes orders to execution venues according to certain pre-determined parameters – has gained major prominence in recent years, as bulge bracket and agency brokers battle it out to offer the most efficient execution services.
The latest iteration of Instinet’s SOR technology, Smart Router, is able to cope with more than 100 million messages a day across more than 20 different destinations with an internal latency of less than 800 microseconds. Smart Router may also be tailored to each client’s execution, while Instinet has also developed its own in-house market data system in order to ensure that the data feeding the SOR experiences the lowest possible latency critical to optimum execution. The use of so-called ‘fuzzy pegging’ logic also allows Smart Router to seek out orders in the ever increasing number of dark liquidity pools which may otherwise remain undetected.
“By employing smart order routing technology, participants can measurably improve their execution performance by finding better prices and more liquidity,” says Richard Balarkas, CEO of agency broker Instinet. He adds: “We believe that The Banker’s recognition of Instinet Europe’s order routing technology reflects the industry’s appreciation of the importance of using technology to deliver performance to the fund industry.”
Innovation in Clearing and Settlement Technology
Winner: Credit Suisse
Project: OTC documentation
optimisation project
By late 2007, Credit Suisse’s derivatives business was confronting several challenges in its documentation workflow processes for trade confirmations: its existing system was unable to differentiate between confirmable and non-confirmable events or determine the confirmation method to the required degree of accuracy. In addition, the existing back-office source of trade data was incomplete, constraining opportunities to fully automate processes. The business also lacked a consolidated view of the external confirmation status of trades, and the existing system only held records of outstanding confirmations, making it very complex to manage operational risk across the whole portfolio. Meanwhile, the entire legacy system had hit its capacity limit.
In response to these challenges, the bank undertook a programme of work to overhaul its existing documentation platform. Using Thunderhead, an enterprise product for document automation and multi-channel communications, as the critical document generation component of the project, the bank re-engineered its front-to-back business processes and systems.
More efficient documentation and operational risk management processes have delivered major benefits to the derivatives business, including a significant reduction in the headcount required to support the credit DTCC outgoing confirmation process. An impressive 100% of credit DTCC trades now source trade data directly from the strategic front-office system, removing the reliance on two other legacy operations systems for these trades. The bank has experienced a 10% improvement in automation rates, a 50% reduction in DTCC manual workflow corrections, and has dramatically improved its system capacity. The implementation also offers real-time updates to traders and middle-office staff on trade matching through the DTCC, enabling the business to manage operational risk more effectively.
“We are delighted to receive this award,” says Stuart Mangan, director and global head of OTC confirmations at Credit Suisse. “It acknowledges the technical innovation and tangible business impact of the OTC documentation optimisation project. In addition to being delivered on time and on budget, the project has already reduced processing costs and operational risk noticeably. It has improved client service and has made our application infrastructure more agile and therefore better able to cope with changing business needs.”
Innovation in Risk Management
Winner: JPMorgan
Project: Credit Risk Infrastructure
In 2003, JPMorgan determined to review its credit risk management technology, which, by this time, had become unsustainably fragmented: as a result of many mergers, business processes, controls and tools were not designed coherently and could not share data effectively. Reporting was performed from many disparate databases, using inconsistent metrics and reference data. As a result, staff found it extremely challenging to gather exposure figures at any level of aggregation, without intensive manual effort.
The firm committed to building a comprehensive and highly reliable infrastructure that would completely replace the existing platform. The scope was particularly challenging due to the breadth of business processes, products and multiple lines of business covered. The new infrastructure was designed as a flexible component-based architecture based on a set of shared data stores. During the mammoth five-year project, the bank built out 30 new business components, 20 new services and decommissioned 25 legacy applications.
“The delivery of this project could not have been more timely,” says Barry Zubrow, chief risk officer for JPMorgan Chase. “The infrastructure has been tested at the height of the financial crisis, proven to be scalable, and has supported the acquisitions of Bear Stearns and Washington Mutual.” Other benefits of this initiative include improved risk measures, workflow and operational efficiencies.
“The programme has had many successes,” says Brian Fay, chief technology officer for risk technology at JP Morgan. “But the most critical factor has been the engagement and support of the business at all levels throughout the programme.”
Highly Rated: Chinatrust
Commercial Bank
Project: Collection Auto Speech
Recognition (CASR)
In response to the deteriorating consumer credit conditions in Taiwan, Chinatrust Commercial Bank (CCB), among the country’s largest private banks, has developed artificial intelligence tools to automate the credit card collections process. The CASR system reminds customers to repay their debts prior to or in the early stages of delinquency over the phone, using natural language identification technology that closely replicates the natural rhythm of human conversation. The system has reduced the manpower dedicated to chasing collections by 60% and will allow CCB to focus on high-risk customers.
Innovation in Data Management
Winner: JPMorgan
Project: Event Workstation
The longevity of derivatives trades presents several operational challenges, not the least of which is the process of capturing and processing all events related to that trade. During the lifetime of a derivative trade a series of events will arise, all of which must be detected in an accurate and timely manner, processed within short time frames and, in many cases, formally reported to a variety of different parties.
As a logical extension of its real-time risk management processes, JPMorgan built and deployed a new system, dubbed the Event Workstation, in order to capture the full event lifecycle of a derivative trade across its entire range of equity derivative products. Combining a broad range of technologies, JPMorgan built and deployed the Event Workstation in less than 12 months. The new platform features real-time event detection, the easy integration of new products and the control-workflow required to minimise business risk and meet all regulatory requirements.
“The breakthrough for this tool came when we decided to put the event detection logic into our pricing models,” explains Derek Joyce, chief business technologist for equity derivatives in JPMorgan’s investment bank. “That allowed us to build the Event Workstation on top of our pricing technology platform – giving us the required performance and allowing fast integration of new products.”
The Event Workstation platform has allowed the bank’s equity derivative business to dramatically increase the coverage of products that are eligible for event detection, while the superior capacity and speed of the platform allows complex queries to be completed in a matter of seconds. The judges were impressed by the innovation of the project’s design, technology, and development methodology, which deployed so-called ‘Agile’ software development techniques.
Highly Rated: Citi Private Bank
Project: One Source
Due to the limited integration of data, processes and technology across Citi Private Bank’s applications, the process of on-boarding new clients, in particular the activities associated with Know Your Customer, investment objective setting and account opening, proved extremely time-consuming. By integrating all the on-boarding functionality into one unified desktop application and streamlining electronic and approval workflow, Citi Private Bank’s Once Source project has reduced the length of the customer on-boarding process by 50%.
