Innovation in Technology and Transaction Banking Awards 2013 - Vendor winners

Anti-Fraud

Winner: SAS 

The fraud department of UK building society Nationwide invested in SAS in 2008, initially to produce regular management information reports (which are now automated). This is how SAS came to be used as a strategic fraud detection system, which today has an 11-strong fraud analytics team at Nationwide using projects that include Base SAS, SAS Enterprise Guide, SAS Enterprise Miner and SAS Enterprise Business Intelligence Server.

Through SAS, Nationwide managed to reduce its fraud losses by 75%. However, although reducing fraud was the main aim of Nationwide’s association with SAS, it also wanted to improve its IT capabilities. One challenge was to monitor payments through the UK’s Chaps system (which offers same-day sterling fund transfers). SAS monitors outbound Chaps payments every 30 minutes, producing an Excel report that auto-uploads to a shared server, which is sent to the investigation team.

Nationwide started using analytics for ad hoc queries after its anti-money laundering team supported a police enquiry into a money launderer who conducted his operations using two branches hundreds of kilometres apart. SAS analysts conducted an investigation to identify other customers who used the same two branches, and within two hours, three more money launderers were identified.

Of the tools SAS uses, Base SAS provides a scalable, integrated software environment specially designed for data access, transformation and reporting. SAS Enterprise Miner streamlines the data-mining process to create accurate predictive and descriptive models based on large volumes of data from across the enterprise, while the SAS Enterprise Business Intelligence Server is a comprehensive, easy-to-use business intelligence software solution that integrates the power of SAS Analytics and SAS Data Management to provide insights and decision-making solutions.

One of SAS’s biggest accomplishments has been the reduction of fraudulent cheques used for credit card accounts. Nationwide saved hundreds of thousands of pounds in the first few weeks of using SAS technology and now has a fraud-specific database that contains different data sources. Through SAS, the building society can customise rule sets and review them automatically. Nationwide’s fraud department has more than 150 fraud analysts who now have access to more than 50 self-service reports. 

ATMs

Winner: Wincor Nixdorf 

German company Wincor Nixdorf, which provides retail banking hardware, software, and services, took the Innovation in Technology award in the ATM category for a number of reasons.

Pride of place among Wincor Nixdorf’s projects, however, goes to the Cineo suite of products, which includes ATMs, automated teller safes and cash recycling systems. Through Cineo, Wincor Nixdorf’s ultimate goal is to optimise the cash processing in retail banking services.

The core element of its cash cycle management portfolio is what Wincor Nixdorf describes as “an innovative banknote storage”. With this concept, so-called end-to-end cassettes enable cash to be exchanged between different cash points in a bank’s branch. This concept enables users to keep the cash in the cycle.

One example of how this system works is the way in which cash that may have been deposited in an automated teller safe at the branch counter can be used to refill ATMs or cash recycling systems in the self-service zone of a branch. Wincor Nixdorf counts its Optical Security Guard, a solution with which it can monitor and protect ATMs, automate teller safes and cash recycling systems from various types of attack, as a key feature of Cineo’s armoury.

Another innovative feature of Cineo is its image recognition capabilities, which help recognise alterations to ATMs or other devices when someone overlays a keypad, tries to use skimming devices or attempts to trap cash.

Among other innovations, Wincor Nixdorf has rolled out in the past year is a mobile phone app that allows users to withdraw cash without using their bankcard. The user instead receives a QR code (square barcodes that can be scanned and serve the same purpose as traditional verification methods) that serves as authentication when it is scanned at an ATM. For banks to use this solution, they need “only a few extensions” to their existing ATMs, according to a statement from Wincor Nixdorf. The company also has a system in place that links the service with banks’ back-end systems. 

Consultancy

Winner: IBM

With the introduction of new regulations such as Basel III and the Dodd-Frank Act, and as technology continues to advance at a rapid pace, banking has become a labyrinth, with countless paths that an institution can or must go down. Finding a consultant that can help steer a financial institution in the right direction is therefore crucial.

IT sits at the heart of these matters, as it can lead to challenges when facing legacy systems that work in silos, as well as unleash opportunities that had not previously existed. In the post-financial crisis environment, there is another challenge financial institutions are facing: cutting costs. For these reasons, this dual challenge – cutting costs and being more efficient – makes IT consumption and carrying out the implementation of it a complex matter. IBM Global Business Services group, which includes IBM’s consulting, systems integration and applications businesses, offers a selection of business consulting services through its financial industry-specific global practice.

IBM has a number of long-term contracts with banks to provide IT assistance. Among them is Singapore-headquartered DBS Bank, which in November 2002 entered a 10-year outsourcing agreement with IBM for the provision of IT infrastructures and the application of management services. The bank’s goal was to increase the diversity of its vendor partners and use best-of-breed infrastructure service providers to enhance its IT resilience. The project with IBM focused on how DBS could structure its other outsourcing contracts to make them more flexible.

IBM specialises in creating benchmarks for critical industry performance indicators, creating business models and enabling growth through innovation. From a financial and risk perspective, it focuses on forecasting and reporting as well as predictive analysis.

Core banking

Winner: Infosys 

For many banks, it is more cost-effective to buy a core banking system from a specialist third-party provider instead of building a proprietary system. When requirements such as regulatory compliance, channel integration, product development and enhanced customer experience all have to be met efficiently and within a reasonable time and expense, it makes sense to go down the third-party route.

The market for such core banking providers is, unsurprisingly, fierce.

Bangalore-based Infosys came joint-first in this category in last year’s awards. This year the competition was no less fierce, but Infosys emerged as the sole winner, driven by its Finacle platform. In the first quarter of 2013 alone, 14 new banks in the Middle East, Africa, Asia and Central America went live on Finacle. Among them was Finacle’s first customer in Mongolia, as well as a core banking implementation in Turkey. 

Another Asia-based client of Finacle is DBS Bank. The Singapore-headquartered bank went live with a new project in November 2012 (it had started in January 2011) with the goal to strengthen its technology and infrastructure platforms as well as improve its product offering. DBS wanted to migrate all of its loan product processes onto Finacle as well as capture limits and collateral information in the Finacle system to make referencing and reporting easier. The scope of the project covered the whole product lifecycle, from the client opening an account through to the bank reporting financial and regulatory requirements.

Peng Khim Ng, managing director for the institutional banking group, technology, at DBS says: “The project has improved the performance of the bank’s specific and general functions.”

These functions include a more streamlined and enhanced data quality for downstream processing – data duplication was eliminated – as well as consolidated credit information into one platform, a standard loan processing approach that has improved customer service and provides more complete and accurate data processing for reporting and analytics.

Data

Winner: Teradata 

The finance industry likes to urge its peers to collect and analyse the vast amounts of data that they generate, something that has become even more important over the past decade or so with the rise of social media networks such as Facebook and Twitter. There has also been a surge in technological innovation that has in some cases broken up what was previously a siloed approach to business, thanks to new products, customers, business expansions into different geographies and new delivery channels. But with so much data, how does an institution go about identifying relevant data, collecting it, analysing it and using it to make their business functions more efficient?

Coupled with these technological challenges is, of course, regulatory pressure to safe-keep data and not to break certain privacy laws, all the while operating in various localities where legislations may vary from country to country.

It is a three-sided battle for financial institutions. First, they need to stay competitive. Second, they need to find a way to understand and interpret relevant data. Third, they need to look after the data.

While this data situation poses a challenge, it also provides opportunities – for instance, in understanding customer behaviour patterns when they make purchases. Such insights and understanding can unveil promotional opportunities for certain products and services that are in demand from certain demographies.

These are the challenges that Teradata takes on to enable clients to integrate and analyse the data they have received more efficiently across their business, which can lead to two positive results: reduced risk and better oversight of data. This result can then be deployed in various channels while keeping an overall focus across all channels.

For instance, when Indonesia-based PT Bank Internasional used Teradata’s enterprise data warehouse and campaign management system (called Aprimo Relationship Management), it resulted in customer acquisition, cross- and up-selling, as well as
customer retention, channel contact management “and ultimately, achieving more cost-effective marketing campaigns”, says PT Bank Internasional’s CIO, YB Hariantono.

Payments Technology

Winner: Fundtech

In March 2013, Swedish clearing house Bankgirot  announced that  it was implementing a new payments system, its first since 1959. This system, it said, would work in real-time and be available on mobile phones and the internet. Its technology partner was Fundtech, which implemented its Global PAYplus Service Platform (GPP-SP), a global platform for high-value, mass and immediate payments.

Through the implementation of GPP-SP, Bankgirot developed a system called Swish in co-operation with Sweden’s six largest banks, among them Handelsbanken, SEB and Swedbank. A Fundtech team developed and tested the system and invested more than 6000 hours of customer support. The solution went live in November 2012 but the Fundtech team stayed on to identify new opportunities both in Scandinavia and worldwide.

The system’s key features are a 24-hour real-time service; the use of the ISO 20222 messaging protocol, which is or will be used elsewhere in the world as well (such as in the Single Euro Payments Area) and thus would ensure streamlined expansion into cross-currency payments; on-boarding of new mobile payments operators; and integration with other standards-based systems.

GPP-SP is based on service-oriented architecture, a software designing method that connects different modules, such as payment services – high-value, mass and immediate payments – in a single consolidated payments hub, thus eliminating legacy and siloed payments operations. This consolidation of  different payment types and multiple systems into one centralised system provides a single view that can lead to reduced costs and also saves time.

Another benefit that GPP-SP offers is risk reduction, thanks to the consolidation of data and systems. This consolidation can enhance decision making as the dashboard shows payments information in one view, enabling easy monitoring and analysis of all aspects of the operation, including payments channels and flows. Also, data is accumulated over time for the analysis of customer behaviour, and then checking for and then alerting the relevant people should any abnormal patterns be identified.

For consumers, the benefits are the ease and speed of the service: the only thing they have to do is link their bank account and their mobile phone number, and the transaction will then clear within a few seconds.

Post-trade

Winner: Misys 

With the influx of post-financial crisis regulation and pending deadlines – such as those set by the Dodd-Frank Act, the Markets in Financial Instruments Directive, the European Market Infrastructure Regulation and the Central Securities Depositories Regulation – the last cycle of securities settlements has come to the fore.

Many central securities depositories are looking at optimising their processes, not least because of market evolution. In Europe, for example, the European Central Bank wants to move securities settlements on to a central platform. Post-trade processing has thus become more and more important, and on all levels: messaging protocols, the technology deployed and the understanding of varying local legislations.

These differences often translate into costs, sometimes through errors, and are also time-consuming. Therefore the global securities settlement market is seeking solutions, itself a very competitive market. Misys specialises in solving these operational risk challenges, as well as focusing on enabling clients to cut costs and contribute to giving clients’ back-office functions a competitive advantage. Misys aims to solve these challenges with products such as its Confirmation Matching Service (CMS).

Its CMS solution facilitates the confirmation process between counterparties that use the messaging formats of the Society for Worldwide Interbank Financial Telecommunication (Swift) and those that do not. This facilitation offers what Misys considers an “unprecedented level of functionality across the broadest possible spectrum of instruments and counterparties”.  

Already, more than 1000 banks, brokers, fund managers and corporate treasurers use the CMS solution throughout the world to make their processes more efficient, and at the same time also reduce risk. Thanks to its global coverage, Misys can offer its financial institution clients, as well as their commercial counterparties, broad geographical coverage, and the company now has a strong reputation for offering a single window for confirmation management requirements.

Risk

Winner: SunGard 

Aggregating risk and consolidating the data for reporting and control purposes is top on the agenda of most, if not all, financial institutions these days. SunGard tackles this challenge with its advanced risk control solution, called Adaptiv Riskbox.

Adaptiv Riskbox offers financial institutions an easy-to-deploy solution for control of both credit and market risk. It covers all market risk and counterparty credit exposure calculations needed for internal model approval and is part of SunGard’s Adaptiv suite of solutions.

Adaptiv Riskbox can support distributed risk models where multiple legal entities create both local and consolidated reporting. As it is an off-the-shelf product, financial institutions can access Adaptiv’s risk analytics range and therefore meet best market practice standards without the complexity of a customised solution, according to SunGard.

Key features of Adaptiv Riskbox include the management of market risk and counterparty credit exposure calculations in a single end-of-day workflow, stress-testing, credit potential future exposure, incremental risk charge, correcting data issues, ‘what-if’ analysis, and interactive risk reports that are available across the organisation from a single data source.

Through integration with another SunGard solution, Riskbox is able to create decentralised risk applications where various sources of results have to be aggregated into a global result, as well as local results being securely delivered back to local entities. Other key benefits include an integrated credit and market risk function, which allows counterparty and market risk exposure to be managed with a single risk engine. It also includes an intra-day correction process and access to Adaptiv’s full analytics range, complete with the advanced risk metrics needed to meet best market practice.

Key features include the processing of more than 90 million risk valuations per second, pricing support, credit valuation adjustment, and more than 250 trade and valuation types across nine asset classes.

Trade

Winner: SunGard 

When it comes to challenges within the capital markets industry, SunGard has identified the following: the ability to drill down into the granular components of trading costs, in real-time and across asset classes, to achieve superior trading results and optimal business decision making. 

Through the addition of its Valdi Trading Analytics global offering, SunGard grew its suite of trading solutions to enable real-time trade execution performance and financial analytics by the front office. The result was an improvement in trading profitability and better management of firm-wide trading expense reconciliation.

Back in 2008, SunGard started working with a leading US bank after the head of capital markets at the bank launched a business and technology consulting project in order to get a true, holistic view of the firm’s cost structure with consolidated information across front-, middle- and back-office systems from multiple data sources. Through the single-vendor relationship, SunGard spent months analysing the bank’s business structures, workflows and data sets and eventually created a new database. This managed to consolidate data for execution costs and trader commission, and issued reports that can be used for trading decisions.

At the middle-office level, the project focused on trade allocations and commission management data and aimed to improve the transparency of the total cost of trades versus revenue. Later, SunGard extended its relationship with the bank to include actual trading revenues along with commissions and expenses to better estimate the true cost of trading opportunities.

The project then expanded into corporate accounting and reconciliation processes, streamlining accounts payable and internal compensation. The bank went live with the full Valdi Trading Analytics solution towards the end of 2012, ultimately delivering a complete audit of the bank’s activity with detailed reports. This has resulted in more accurate and useful reporting allowing the firm to implement changes in behaviour and recognise savings, and has enabled better trading decisions and increased trade and customer profitability.