The second edition of The Banker’s Technology Projects of the Year awards celebrates the most innovative and transformational contributions to financial services technology around the world.

This is the second edition of The Banker’s Technology Projects of the Year awards, which celebrate the most innovative and transformational contributions to financial services technology around the world. Building on the success of 2014’s inaugural issue, the 2015 awards have enjoyed a significant increase in the number of applicants, their geographic distribution, as well as the diversity of project entries. Once again, these awards are a testament to the spirit of innovation and development that is flourishing in today’s global financial services sector.

A number of changes have occurred in this year’s issue to better reflect the diversity of technology development taking place across the industry. This includes opening up the payments category, previously reserved for the retail space, to entries from the wholesale sector. Similarly, last year’s customer data management category has been changed to include a broader scope of data-led developments. 

A new category has also been included in this year’s awards, covering developer application programme interfaces. This reflects the growing importance of the ecosystem of third-party developers that are, in many ways, driving the digital evolution of financial services. 

In all, The Banker received 270 submissions for this year’s awards, building on the 170 entries from 2014. Winners this year hailed from sub-Saharan Africa, western and eastern Europe, as well as the US. Mirroring last year’s edition, many of the winning projects reflected the need of financial institutions to respond to pressures emerging from new regulations, new security dynamics, as well as enhanced data management. 

Moreover, winning projects reflected the work of a diverse range of innovators, from collaborative institutions, to banks, to telecoms providers. The common thread that united these submissions was the transformational nature of their application. Each of the winning entries was deemed by the judges to have the capacity to markedly improve the financial services landscape by addressing long-term problems as well as issues of emerging importance. 

As always, the winning projects were chosen irrespective of their size and include larger scale projects intended to ease the burden of regulatory compliance, to smaller initiatives designed to improve levels of banking customer service. It should be noted, however, that while many of the concepts reflected in these projects are not original, the development and application of the technology underpinning each entry was. 

Keep an eye out for the upcoming Transaction Banking Awards, which will be published in the October issue of The Banker

Global winner

Compliance

Winner: The KYC Registry

Parties involved: Swift, Bank of America Merrill Lynch, Barclays, Citi, Commerzbank, Deutsche Bank, Erste Group, HSBC, ING, JPMorgan, Raiffeisen Bank International, Société Générale, Standard Chartered 

The absence of a standardised and on-demand platform for determining know your customer (KYC) information has long been a source of frustration for the financial services industry. 

Until recently, attempts to determine KYC compliance have typically been characterised by huge inefficiencies, including the duplication of efforts, increasing costs and staggering volumes of document exchange. To address this situation, the Society for Worldwide Interbank Financial Telecommunication (Swift) has developed the KYC Registry to assist banks in their quest to achieve timely, cost-effective and efficient counterparty due diligence through a single source of correspondent banking KYC information. 

“Correspondent banks collectively have more than 1 million individual relationships and [in the past had] no clear, easy way to manage KYC information exchanges. The KYC Registry now enables correspondent banks, fund distributors and custodians to contribute their KYC data to a single entity, which acts as a central, secure source for high-quality KYC information. This facilitates efficiency and transparency and helps institutions to mitigate the cost and risk related to KYC compliance,” says Luc Meurant, head of banking markets and compliance services at Swift. 

Announced in early 2014 before going live in December of the same year, the registry is an important contribution to the area of regulatory compliance for correspondent banks. 

By May 2015, several hundred banks were using the registry from more than 110 different countries. In addition, new Swift user communities, including the Dominican Republic, have also joined the KYC Registry. The strong user take up has been buoyed by commensurate industry support with a core group of the world’s 12 largest correspondent banks working to develop the standards, processes and document specifications during its development phase. 

“[The KYC Registry] has helped to establish a standard set of KYC data and document specifications to address differing regulatory requirements. The rapid take-up demonstrates increasing recognition of the role of the collaborative solutions to help address the challenges of compliance. Swift will continue to enrich its KYC Registry service with the support of its community,” says Mr Meurant. 

In addition, Swift is introducing a number of value-added KYC and customer due diligence services to be offered in conjunction with the registry. These include the ‘Swift Profile’, which offers a unique insight into an institution’s traffic activity on Swift, providing key data and information that can be used as further insight to execute a KYC risk assessment.

Customer service

Winner: Nedbank’s Home Loans Digital Channel Release2

Party involved: Nedbank

Nedbank has become the first of the big four banks in South Africa to offer a fully online mortgage application system. 

Most banks in the country offer an application process including a mixture of offline and online processes. However, with Nedbank Home Loans Digital Channel Release2, the bank’s clients can carry out the mortgage application process from start to finish online from a range of devices (including tablets and mobile devices) and, when using a computer, from all kinds of browsers (Firefox, Google Chrome, Internet Explorer, and so on).

Nedbank first launched this product in 2012, but it only offered mortgage application PDF documents online. The updated version was launched in May 2014 with additions made in February 2015. As of July 2015, Nedbank’s digital channel has generated more than R2bn ($161.7m) in home loans advances.

This new initiative is highly beneficial to Nedbank’s clients. Not needing to visit branches for mortgage applications is highly convenient, while the time spent on home loan requests has been squeezed from a few days to just three hours. 

The practicality of Nedbank’s initiative also lies in the ability to save and retrieve a partially completed application, which, according to the bank, is a unique feature. In addition, applicants can upload and submit supporting documents simultaneously. This means Nedbank’s operations team can work on clients’ submissions straight away. 

The elimination of paper-based documents for home loan applications also makes Nedbank’s project both faster and environmentally friendly.   

As well as benefiting Nedbank’s customers, the Home Loans Digital Channel has also helped the lender optimise costs. Indeed, it reduced costs for the acquisition of the Home Loans sales channel. The initiative also strengthened collaboration between the bank’s business and technology teams.

This new project could help Nedbank develop other types of services. According to the bank, the Nedbank Home Loans Digital Channel technology could be replicable in channels such as motor vehicle finance and other traditional banking products that are currently available online.

This new project was developed in house. It involved different parts of the Nedbank group, including: Nedbank Home Loans Digital, Nedbank Group Technology and Nedbank Business IT Enablement (Home Loans).

Data

Winner: JPMorgan Asset Management’s enterprise data platform interface

Party involved: JPMorgan Asset Management

The financial industry consumes data like few others. Information is its lifeblood, and collating, distributing and analysing it is a mammoth task in its own right. When JPMorgan’s asset management division attempted to streamline these processes, it ran into an internal data maze, with information stored in a vast number of repositories, many of them redundant or simply unused. 

Corralling all this information into one place led to the creation of the Enterprise Data Platform Interface (EDPI), which acts as a centralised storehouse for the division’s critical data that can be accessed by a multitude of business teams. 

“We had many challenges around distributing and consuming the core data that drives our systems. Each area used the same data from many places – growing the data sprawl and making it hard to know how it was used. EDPI created a single, good copy of our core data, exposing it in a way that is useful to our systems,” says Stephen Flaherty, head of architecture and data management at JPMorgan Asset Management. 

The scalable nature of EDPI is a particular strong point. With such a vast array of information contained within it, finding exactly what is required could become challenging, but EDPI can be used for different levels of data requests – periodic extracts of large data sets; up-to-date data for quick queries; and the distrubution of data to multiple locations for further processing. 

As a result, the bank’s business teams can arrive much more quickly at the right decisions. “Projects have a faster time to market, with less effort being spent analysing what data means and how it will be sourced. Our applications can use verified, good-quality data from a highly available system – leaving more time to concentrate on new business features and added value,” says Mr Flaherty. 

The EDPI designers have also taken inspiration from other firms that face particularly hefty data access problems, such as online retailers. “We’ve taken up-to-date technology frameworks and approaches, and used them in spaces where they have not traditionally been applied,” says Mr Flaherty. “The powerful resiliency and scalability techniques seen in companies such as Netflix are solving similar problems, but in a different sector. We wanted to integrate these in a core area of our organisation.” 

Delivery channels

Winner: ING Bank Slaski’s Aleo business-to-business e-commerce platform

Party involved: ING Bank Slaski

E-commerce in the business-to-business segment is a growing market that provides an opportunity to reach the client at the moment of doing business. ING Bank Slaski recognised this opportunity and created Aleo, a comprehensive online platform for business-to-business trade. 

Aleo offers buyers and sellers the opportunity to find a business partner and close a deal, supported by a set of ING banking services that make the platform unique. 

“We launched Aleo as an element of our strategy to support business clients in running their operations,” says Małgorzata Kołakowska, chief executive officer at ING Bank Slaski. “Thinking beyond traditional banking allows for the development of new services and business models. Aleo follows the trends we observe around the world, making the online environment a new ground in the business-to-business market.”

ING started working on the implementation of Aleo in 2012, a beta version was launched in late 2013, and in June 2014 the offering of financial products through ING was added. 

“Aleo is a combination of e-commerce, tools supporting procurement processes and a business social platform,” says Ms Kołakowska. “It gives us space to establish new relations with clients and offer financial services supporting transactions made on the platform for companies, such as accounts, payments, lending, and so on.”

Aleo allows ING to build relations with customers long before they reach the need for financial services, broadening the scope of ING’s business activity and creating a competitive advantage as non-ING customers can use the service too.

ING holds a unique position as the facilitator of the online marketplace, offering products such as simple escrow payments to supplier-financing products based on reversed factoring; and allowing smaller vendors to receive financing ahead of the original payment term without having to contact the bank. 

ING has a vision for Aleo to grow to a leading business-to-business e-commerce and procurement platform in Poland – and possibly to an important international service, creating additional opportunities for its users through cross-border trading.

“Aleo makes companies more cost effective and improves their selling capabilities,” says Ms Kołakowska. “It streamlines work and saves time, [making it] suitable for a variety of industry sectors, including the service industry, manufacturing and commerce.”

Developers APIs

Winner: InnovaChallenge MX

Party involved: BBVA

BBVA’s InnovaChallenge MX is impressive for many reasons: its size, the solutions it provided, and the level of participation from the international developer community. What is truly remarkable about BBVA’s initiative, however, is that it represented the first time that a bank had publicly shared its business transaction data through an open application programming interface (API). This gave developers and programmers a unique opportunity to work with data from real-life business transactions from the lender’s Mexican operations, BBVA Bancomer. 

This sensitive data was made available through the provision of an open API designed exclusively for the international contest. The statistical information contained in the dataset was undisclosed, unidentifiable and untraceable to guarantee the anonymity of clients and their data security.

“InnovaChallenge MX has been a great success and generated significant impact worldwide. Thanks to InnovaChallenge MX, BBVA has been able to co-operate with diverse groups of developers and data scientists [and] broaden BBVA’s knowledge on the use of big data,” says José Antonio Gallego Vázquez, BBVA’s head of open innovation. 

“The main goals of InnovaChallenge MX [were] to foster innovation around big data; to promote an open, collaborative culture and a continuous knowledge exchange between BBVA and developer communities worldwide; and to search for the most creative approaches to transform BBVA Bancomer’s commercial transaction data into promising business propositions,” he adds. 

Through its BBVAOpen4u website, the bank received more than 26,000 webpage views after the global hackathon had been launched. A total of 378 developers from 36 countries registered for the challenge and presented 55 projects.

The six cash prizes available to the challenge winners were split between consumer and businesses apps. First place in the consumer category went to a mobile solution that enables the user to pick the best neighbourhood in which to live, comparing potential neighbourhoods with a user’s current home location and adding search criteria such as schools and night life. This app has already been launched in Mexico and Spain. The top business prize went to a solution that allows inexperienced users to design geographic marketing strategies.

Mobile

Winner: M-Shwari mobile banking service

Parties involved: Safaricom, Commercial Bank of Africa

The telecommunications boom in Africa has seen mobile phone coverage spreading to hundreds of millions of people across the continent, often outstripping efforts of local banks to extend savings accounts to the same people. It is therefore no surprise that efforts are being made to use mobile technology to give a boost to banking coverage. 

In Kenya, this drive has been led by mobile network operator Safaricom, in partnership with Commercial Bank of Africa. The project, named M-Shwari (Swahili for ‘making it right’), allows Safaricom customers to access the M-Pesa money transfer platform and open micro savings accounts. As little as one Kenyan shilling can be deposited into these accounts, and interest of up to 5% is earned on even this small amount. 

M-Shwari also allows customers to take out immediate, affordable loans through the service, starting from as little as Ks100 ($0.97). The number of loans provided through this system now totals 1.5 million, equivalent to the total provided by Kenya’s six largest banks. M-Shwari has a net deposit balance of Ks163bn, and Safaricom has its sights on the estimated Ks200bn that remain outside the banking system, stored in homes or deposit boxes all over the country. 

“The goal of launching M-Shwari was to deepen financial inclusion among those at the bottom of the pyramid and also offer dignity in accessing credit otherwise restricted to only salaried workers with a bank account,” says Betty Mwangi, general manager of financial services at Safaricom in Nairobi. 

The service has been running for two-and-a-half years, and so far has about 10 million customers, out of a total national population of 44 million. Some 51% of its customers are women, promoting gender equality in personal finances. The service has also been replicated in neighbouring Tanzania. 

“The level of financial inclusion has grown in the country with the introduction of M-Shwari, with the latest data showing that up to 67% of the bankable population now has access to financial services, a large fraction of it through the mobile phone,” says Ms Mwangi. ‘We will continue to innovate around financial services to offer our customers products that transform their lives.”

Payments

Winner: BNY Mellon’s global payments infrastructure

Parties involved: BNY Mellon, FIS/Clear2Pay

The global payments space is evolving quickly as technological innovation, broadening client demands and growing regulatory requirements, among other factors, all place increasing pressure on existing payments systems. In response to these challenges, BNY Mellon has developed a new global payments infrastructure to transform its existing payments offerings. This new platform will deliver, at a more global level, greater reliability, transparency and efficiency to BNY Mellon’s payments operations. 

This new global payments infrastructure is capable of processing payments in 120 currencies, and has the potential to expand this number in the future. The new infrastructure operates as a single platform geared to process payments regardless of their value, initiation method, settlement mechanism or location. 

“Our new global payments infrastructure enables us to maintain BNY Mellon’s global payments leadership in a rapidly changing global banking environment. Staying ahead of the marketplace’s ‘faster, more efficient, and more data-enriched’ service expectations is a win for us, for the clients whose payments we process, and for our relationships globally with our client banks,” says Michael Bellacosa, managing director and head of global payments for BNY Mellon’s treasury services.

Following a development process that began in 2009, the platform saw a multi-year, multi-phase release with some components still to be introduced in various locations. A standout feature of the new platform is its flexibility. With a core payments hub that works in co-operation with various sub-systems throughout the end-to-end payments process, new services and clearing channels can be introduced to the infrastructure without jeopardising or disrupting the core. In building this new platform, BNY Mellon selected Clear2Pay, a payments technology company, to be the vendor for the global payments infrastructure. 

“The important thing that BNY Mellon has done is it has put a global enterprise payment hub in place that will allow it to adapt and play in that new marketplace with the transparency that the bank needs and its customers deserve. When we started Clear2Pay – now part of FIS – we used the FedEx model: a model whereby any type of parcel, regardless of its destination, could be tracked and traced along the way. In our minds, we should be able to get that same transparency into payments and thus pass it on to [BNY Mellon’s] clients because expectations are becoming higher,” says Doug Gross, general manager of Americas open payments solutions at FIS. 

Risk management

Winner: Citi Cash Account Initiative

Party involved: Citigroup

Citi’s quest to improve the governance, control and management of its cash accounts led to the development of the Citi Cash Account Initiative (CCAI). The aim of CCAI is to centralise cash account reconciliations, automate manual reconciliation processes, segregate account ownership and standardise exception monitoring in order to allow for greater standardisation and accuracy in the oversight of these accounts.

This programme was delivered successfully by leveraging the global reconciliation utility technology infrastructure within Citi’s institutional clients group. This utility was scaled up to serve the needs of this initiative across the bank. Over a short span of 12 to 14 months, data from more than 32 general ledger and product processor systems and four payment gateways consisting of 1 million-plus transactions daily were brought in, normalised and loaded for reconciliation and break management.

Security

Winner: Elliptic Vault

Party involved: Elliptic

Blockchain technology, such as that used by Bitcoin, is offering financial markets innovative and cost-effective ways to carry out services such as international remittances or micropayments. However, some market participants remain doubtful as to the security of this new technology. As of July 2015, at least 5% of Bitcoin’s virtual currency has been lost or stolen.

Sound storage and management of blockchain technology has become imperative in today’s market. Elliptic’s technology project, Elliptic Vault, addresses these key security issues. 

Elliptic Vault is a custodian banking service aiming to change the way in which blockchain technology is stored and managed. “Bitcoin and other blockchain-based assets operate as bearer instruments – if you lose the key, you lose control of the asset. It is therefore essential that companies using this technology protect their keys in the most secure way possible. Elliptic Vault provides that enterprise-grade security, giving the user confidence that their blockchain assets are safe,” says James Smith, CEO and co-founder at Elliptic.

Elliptic Vault is now the trusted custodian for institutions representing more than $3bn in market capitalisation, making it the most trusted custodian solution worldwide. It is also the first of its kind to be insured by a Fortune 100 insurer and the first in the UK to have received venture capital funding. KPMG also granted it international accreditation.

Projects such as Elliptic Vault could help make Bitcoin more attractive to relatively conventional or conservative financial institutions that still shy away from this new technology and its security issues. 

“Elliptic Vault solves one of the problems blocking larger institutions from entering the Bitcoin market; they can now be confident that their assets are secure. The Vault was the first in a suite of products aimed at servicing companies who make use of Bitcoin and the blockchain,” says Mr Smith.

The project is also addressing the issue of money laundering that is associated with blockchain technology. “Another issue that needs to be addressed is the perceived money laundering risk. For this reason, we have launched a Bitcoin transaction monitoring tool which identifies suspicious activity, raising comfort levels for institutional clients,” says Mr Smith.

With this additional feature, Elliptic Vault addresses both the asset security and asset monitoring questions – two key issues facing enterprise customers, says Mr Smith. “We will continue to innovate in these key areas, and will be adding more blockchain intelligence services in the coming months,” he adds.

Social Media

Winner: OTP Bank’s Card Calendar Facebook app 

Parties involved: OTP Bank, Mito Social 

Card Calendar is OTP Bank’s playful answer to making customers more card aware. In a country with a low number of average monthly card transactions per capita, Hungary’s largest bank saw an opportunity to increase transactions through the creation of a fun game-based Facebook app.

Antal Kovács, deputy chief executive officer in the retail division at OTP Bank, says that the bank has had four years’ worth of experience working with new banking solutions on Facebook, which was why the bank picked the social media site to launch its Card Calendar in late August 2014, just over two months after a brainstorming session regarding the concept. 

“Facebook is a mainstream channel to both our prospects and clients, and it proved to be a great platform to test how gamification and everyday banking can be combined,” says Mr Kovács.

The idea behind Card Calendar, a six-week long project, was to educate users about card payments and motivate them to increase their card usage, while boosting their engagement through the playful game. 

“According to our studies, users doubled their transactions during the game and sent us plenty of enthusiastic feedback,” says Mr Kovács.

Through the challenges the game posed, players discovered that they can use their bank cards for small payments or to make transactions online, underlining that card payments can be a safer, more developed payment solution when compared with cash. 

OTP gave out hundreds of small gifts to its players, such as cinema vouchers, and a Ft1m ($3550) first prize that contributed to the positive responses among the bank’s followers, while rewards were only given to customers who used their cards more times than the bank’s monthly average.

“We have developed an entertaining way of teaching our clients what smart card usage means today,” says Mr Kovács.

The winner used his card 314 times during the six-week period of the game, compared with 46 times in the previous month.

OTP hopes that the project – with its focus on card payments – helped to establish a long-term habit and attitude towards daily card usage.

“The project proved that our target group is willing to play transaction-based games, and provided us with useful insight about user habits,” says Mr Kovács.

Following Card Calendar’s success, OTP expects to see other industries turning to gamification to learn more about their customers’ habits.

Strategic transformation

Winner: BBVA data processing centres

Parties involved: BBVA, Aguilera Ingenieros, Arbau, Arquetipo, Bovis, Commtech, Comsa Emte, Grupo Cobra-Cofely, Grupo Cobra, HP, Jones Lang LaSalle, Skidmore, Owings & Merrill, San Martin

BBVA’s clear digital vision has resulted in the creation of four new data processing centres (DPCs) that respond to the challenges of new regulation, cyber attacks and the future expansion of the business across geographies, business areas and legal environments. The four centres, two in Spain and two in Mexico, are the basis of BBVA’s private cloud architecture, which serves all of the bank’s operations in 31 countries, 7360 bank branches, 22,595 ATMs and 51 million customers worldwide. 

The DPCs process 400 million transactions daily in real time, more than 10,000 operations per second, and have the capacity to reach 1 billion transactions daily in the very near future, as the bank proudly points out. Furthermore, by grouping all data and information relative to a customer in one single place, BBVA has overcome issues related to information silos that have been experienced by others in the financial industry. 

“Having a state-of-the-art infrastructure of four new DPCs in Spain and Mexico allows BBVA to accelerate its digital transformation process. The DPCs are crucial for BBVA to anticipate regulatory changes, growing security demands and further international growth,” says Sergio Salvador, BBVA’s technology and security manager. 

“The data centres have been designed and built to obtain the highest certifications in operational reliability, availability and sustainability. They will be able to provide intercontinental service support and back up for all of BBVA’s core activities worldwide. Within two years of the DPCs’ construction, the bank has experienced 100% growth in processing capability [and can now] complete 400 million transactions daily in real time.” 

Furthermore, the physical complexes that host the DPCs are built to be hazard resistant. They all have a dual-protection system that can ensure operations are carried out uninterrupted, regardless of any unexpected event or accident at the site. In the event of an electricity outage, for example, self-powering energy systems activate and allow the DPC to be self-sufficient for up to 95 hours. The buildings are also designed with environmental and energy-saving factors in mind. The hot air generated by machines is recycled for heating purposes in the complex. Solar panels are also installed at the centres to increase energy savings.

Trading

Winner: ParFX Prime

Parties involved: Tradition, Traiana, Citi, Deutsche Bank, GSA Capital, Virtu Financial

Over the past few years, regulators have lifted the lid on the foreign exchange spot market and have been exceptionally displeased at what they have found. Accusations of benchmark fixing led to a year-long investigation involving multiple countries and many major banks, culminating in whopping fines ladled out to some of the biggest names in the market. There are also concerns over ‘last look’, a trading practice employed by some banks that many believe uses sophisticated latency controls to disadvantage buyside users. 

The spot market has therefore been crying out for greater transparency, something that trading platform ParFX was designed to provide when set up for large dealers in 2014. It won The Banker’s Trading Technology Award in 2014 on the basis of its commitment to weeding out disruptive, high-frequency trading and the introduction latency controls to create a fairer playing field. 

This year the trick has been repeated with the creation of ParFX Prime, a prime brokerage spot trading service for non-bank and second- and third-tier bank participants. “ParFX Prime is an extension of the ParFX model and was developed to reform a trading environment in which disruptive low-latency-based strategies are allowed to flourish. The platform also addresses the issues of widespread anonymity in today’s prime brokerage model, by ensuring post-trade name give-up on both sides of a trade,” says Dan Marcus, ParFX’s chief executive.

‘Name give-up’ applies to everyone involved with the trade – executing broker, prime bank and prime client. This is a first for a spot FX platform, and ParFX hopes it will prove a robust deterrent to participants using abusive or disruptive trading strategies. There are a number of other unique features that the firm hopes will be attractive to users. 

“ParFX’s prime brokerage model applies a number of principles designed to provide all participants with equal trading opportunities, something that continues to differentiate our offering and benefit users: randomised order matching, full post-trade transparency, free market data and equal trading costs for all participants,” says Mr Marcus. 

“We have continued to focus on participation and this has helped ensure a healthy pipeline of new participants who understand our guiding principles of equality for all participants on the platform. Furthermore, we will look to increase our currency coverage, introducing the ParFX principles to some targeted growth markets.”

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