The third edition of The Banker’s Technology Projects of the Year has seen the awards go from strength to strength. The results prove beyond a shadow of a doubt that tech spend is back on banks’ agendas 

The third edition of The Banker’s Technology Projects of the Year has seen the awards go from strength to strength. Congratulations to all of this year’s winners – the competition was tough. 

The winning projects were chosen regardless of their size; instead the focus was more on their innovative and transformative nature within their specific bank, business or country. Many of the concepts are not new per se, but the way in which the technology was applied in each case is. The winners come from across the globe, including Turkey, South Africa and China.

The 2016 results prove beyond a shadow of a doubt that tech spend is back on banks’ agendas. In response to competition arising from the nimble financial technology (fintech) start-up community, incumbents are upping their game and becoming more agile themselves. Many entrants located their specific project within a larger digital strategy, signalling another step along their business transformation journey. 

Impressively, the majority of projects in the 2016 competition exhibited incredibly short timelines from conception to launch – with many coming to market in less than a year. Long gone are the days when bank IT projects came with five-year implementation plans.

While lots of projects focused on improving the end-user experience – another trend inspired by the fintech community – others looked at increasing security, easing the burden of compliance and enhancing risk analytics. Big data also played a major role in many projects, indicative of the recent advances made in this area. 

In recognition of another topic that has dominated headlines over the past year, The Banker added blockchain as a new category in 2016. The potential for distributed ledger technology to transform financial services infrastructure and the number of pilots rumoured to be running leads us to believe that submissions for this category will continue to rise for years to come. 

The most popular category in 2016 was mobile, with more than 40 entries. This illustrates the exponential adoption of smartphones across the world and establishes the important role they will play in the future of banking. 

This year also saw the development of new consortia bringing together the great and the good in banking to solve specific industry problems. Regulatory pressures and the rapid speed of technological change seem to be heralding in a new era of co-operation between industry participants. 

Next month The Banker will publish the Transaction Banking Awards in time for Sibos in Geneva, September 26 to 29.

Global and mobile

Winner: imaginBank

Party involved: CaixaBank

CaixaBank is one of the brightest stars in this year’s Technology Projects of the Year awards as it continues on its digital journey of reinventing many aspects of its business.

One of its biggest achievements in 2016 was the launch of imaginBank, the first mobile-only bank in Spain. Only available via a mobile app or social networks, the new bank provides a range of commission-free products and services, including current accounts, debit cards, consumer loans and personal finance management tools for the domestic market. Customers can use the latest physical digital devices, such as contactless wristbands.

ImaginBank also created ‘imaginPay’, which links physical card attributes to the mobile device’s near-field communication chip. Customers can transfer money between mobiles or by using an e-mail address, as well as withdraw money from ATMs using a code instead of a card.

The new fully digital financial services model “capitalises on the opportunities allowed by new technology and the high rate of smartphone and social network penetration”, according to Juan Alcaraz, chief business officer at CaixaBank. “The project’s goal was to attract clients among the young and millennial generation – so-called digital natives who are less accepting of traditional banking.” 

The imaginBank concept focuses on making customers feel part of a community, which explains the emphasis on social networks. ImaginBank links the mobile app with support services in social networks, such as Twitter, WhatsApp and Facebook, to promote its ‘viralisation’. 

The new bank’s services were designed by and for clients, based on feedback received via WhatsApp and Facebook, as well as user tests. The app, which saw more than 100,000 downloads in the first month, includes continuous improvements suggested by the users themselves. 

CaixaBank is progressively transforming its banking proposition, which is why it also picked up the global accolade this year. For example, its payments subsidiary, CaixaCard, developed an automated risk assessment in order to offer an instant credit limit calculation. If the customer does not meet the minimum credit score for the product they applied for, the platform performs an automated downgrade and offers a more suitable product instead. 

The bank also rolled out ComerciaBox, which is a free mobile banking application providing real-time transaction dashboard and multiple analysis tools for its small and medium-sized enterprise customers who accept point-of-sale payments. Additionally it launched New Bolsa Abierta in December 2015, which offers a new way to carry out stock market transactions, developed using fintech ‘design thinking’ methodology that prioritises the user experience.


Winner: R3 CEV

Parties involved: R3 CEV and banks: Banco Santander, Bank of America, Barclays, BBVA, BMO Financial Group, BNP Paribas, BNY Mellon, CIBC, Commonwealth Bank of Australia, Citi, Commerzbank, Credit Suisse, Danske Bank, Deutsche Bank, , Goldman Sachs, Hana Financial Group, HSBC, ING Bank, Intesa Sanpaolo, Itaú, JPMorgan, Macquarie Bank, Mitsubishi UFJ Financial Group, Mizuho Financial Group, Morgan Stanley, National Australia Bank, Natixis, Nomura, Nordea, Northern Trust, OP Financial Group, SBI Holdings, Scotiabank, State Street, Sumitomo Mitsui Banking Corporation, Royal Bank of Canada, Royal Bank of Scotland, SEB, Société Générale, TD Bank, UBS, UniCredit, US Bancorp, Wells Fargo and Westpac.
Technology providers: Eris, Microsoft, Ethereum, Intel, IBM, Amazon and Chain

Launched in September 2015, the strength of R3 has been in pulling together the largest global financial institutions to find practical applications for distributed ledger technology (DLT), commonly called blockchain. 

DLT, which grew out of the cryptocurrency world, is envisaged to transform how financial transactions are recorded, reconciled and reported, and in the process add greater security, lower error rates and realise significant cost reductions.

Rather than building a blockchain or DLT in isolation and then taking it to the financial community, R3 decided to work with the banks from the outset to identify specific industry issues and develop solutions accordingly – as well as increase the ‘network effect’. 

“We believe the key to developing these technologies in a way that would be meaningful and efficient was to work in collaboration with the industry, pooling resources rather than spending time focusing on individual projects that would then effectively require to be duplicated across institutions. Our members agreed with that vision and enthusiastically signed on,” says R3 CEO David Rutter.

In January 2016, R3 and 11 consortium members ran their first trial, dubbed Project Zero. They connected on an R3-managed private peer-to-peer distributed ledger, underpinned by Ethereum technology and hosted on a virtual private network in Microsoft Azure in an accelerated development environment. The banks simulated exchanging value, represented by tokenised assets on the distributed ledger without the need for a centralised third party.

Two months later, 40 members traded fixed-income assets across five individual blockchains, using multiple cloud technology providers within R3’s global collaborative lab. Called Project Genesis, the banks connected to R3-managed private DLTs built by Chain, Eris Industries, Ethereum, IBM and Intel. They evaluated the strengths and weaknesses of each technology by running smart contracts programmed to facilitate issuance, secondary trading and redemption of commercial paper.  

In April, the R3 consortium then launched Corda, a prototype financial grade ledger. “Our work to date has highlighted issues around identity, privacy and security, scalability, interoperability and integration with legacy systems as critical to designing real work applications,” says Mr Rutter. R3 has also focused efforts in the field of smart contracts, which he believes will have “broad implications for how solutions are designed across asset classes and markets”.  

Following an initial phase of engagement with more than 40 banks, R3 has now entered into the second phase which will include both banks and non-banks. “We have a lot going on and there is much more to come,” says Mr Rutter. 


Winner: Compliance Operational Store

Parties involved: HSBC

While banks need to detect and deter financial crime, they are up against determined and sophisticated criminals who want to launder money. To increase its success against fraudsters, HSBC set out to gather all the information required to detect financial crime, so that the bank could query, analyse, dissect and discover patterns in the data. Not all of this information is internal to the bank and so it also needed to be able to consume, store and process many types of sources.

However, sifting through more than 250 million transactions every month is not an easy task. In order to solve this issue, HSBC created a big data solution dubbed Compliance Operational Store, or COPS. It is made up of a Hadoop data lake with a collection of ‘data factories’, where each factory provides the capability to transform, clean, search, categorise and assess the data for the purposes of finding money-laundering activities. This initiative has helped the bank meet the pressures of regulatory compliance, business growth and cost effectiveness.

“COPS is a global collection of data factories that searches, cleans, categorises and transforms data across multiple businesses, to detect financial crime activity such as money laundering,” says Shane Lamont, the global head of anti-money laundering, IT, at HSBC

Importantly, the Hadoop data lake provides the bank with space to keep data that might contain useful insights for much longer. Additionally the data factories can process data in many ways to identify unusual activity. Using COPS, the bank can do this at scale on a daily basis, while storing years of history to build up a picture of what a typical customer activity looks like. By having a history of what normal looks like, the bank’s algorithms and investigators have a better chance of spotting the uncharacteristic activities that conceal financial crime.

HSBC’s main goal for COPS was to enable the “automation of everything”, so that operators spent time on value-added activities such as investigation, rather than data gathering. Since the system went live in October 2015, the system has processed hundreds of millions of customer records (both internal and from payments messages) and billions of transactions including a two-year history that keeps growing. 

If HSBC detects suspicious behaviour, it is possible that this may also be occurring at different banks. However, the privacy laws around sharing this data indicate that this is likely to remain an internal solution for the bank.

While COPS began with anti-money laundering, HSBC has expanded it to provide the analytics environment for cross-product utilities and will extend it further to cover sanctions, screening and serve as the data backbone for all of financial crime compliance applications in the firm.

“Anti-money laundering systems typically comprise a relational database back end, an application server and a web-based front end. We wanted a more flexible, straightforward big data solution,” says Mr Lamont.

“With your entire client portfolio, accounts and transactions in one place, you can answer questions that were previously not possible. Although the original focus of COPS was anti-money laundering, it is now an analytics environment for cross-product utilities and will extend to cover sanctions and screening.”

Customer Service

Winner: Credit Card Intelligent Customer Service

Parties involved: CTBC Bank, Taiwan Credit Card Customer Service Department

Changing retail customer behaviour and expectations has challenged the Taiwanese credit card industry. In response, CTBC Bank launched a series of new credit card services under the umbrella of “intelligent customer service”. The bank wanted to tap into the growing adoption of mobile devices in Taiwan, as well as customers’ desire to access high-quality and personalised services through multiple channels.

“Financial institutions must meet the needs of customers who want to link to products and services via different channels. Customers expect automated and personalised digital services to be available anytime, anywhere,” says Eric Tsai, executive vice-president/division head, Taiwan cards and payment group logistic management division at CTBC Bank.

CTBC Bank’s new credit card services include a social media and instant communication app; 20 new personal self-service features on its existing mobile app; and one-to-one online real-time text interaction customer service. It is the first bank in Taiwan to use social media to provide a personalised customer service channel with real-time interaction, or ‘live chat’ function.

Whereas many banks see social media as a one-way information push, CTBC Bank uses the two-way communication characteristic of social media as a way to provide a more appropriate service for each customer. It combines Facebook and Line Business Connect to provide personalised content and services, such as billing or bonus point inquiry. 

Interestingly, CTBC Bank did not just build the new services and wait for customers to download it; instead it used Line to take the initiative, for example, to remind customers of the credit amount they have used, or proactively warning them of their credit card payment deadlines. 

 The service also records all texts. Using text mining technology, the bank can analyse the complete interaction between the customer and service agent, which could be used as a basis for operational and management decision making. It is a win-win: customers enjoy more suitable services and the bank benefits from greater operating efficiency and lower costs. The banks estimate that the service has saved more than T$2m ($62,500) in operating costs during first year, and expects the savings to rise to an estimated T$47m by 2019.

“CTBC Bank’s intelligent customer service has strengthened our brand image as an innovative financial services provider. It has also increased the percentage of customer self-service and sales opportunities, while decreasing our operating costs,” adds Mr Tsai.

Cyber security

Winner: DCVC payment card

Parties involved: Getin Noble Bank, MasterCard

Cyber crime is one of the biggest threats facing the financial services industry today, keeping many chief information security officers awake at night. Every bank realises the importance of taking steps to minimise the ability of cyber criminals to succeed in theft or fraud in online transactions and database hacking. 

Credit card fraud, including skimming, site cloning or triangulation, remains a big risk – despite growing number of protection mechanisms implemented by card companies, merchants and banks.

In order to better protect itself, Getin Bank introduced a new dynamic card verification code (DCVC) on the back of its payment cards in Poland. The DCVC card, developed in co-operation with MasterCard, employs advanced technologies to guarantee the top security level, while providing even more convenient access to online payments. Rolled out to customers in January, it was the first – and as yet only – payment card in Poland with an integrated display showing a dynamic security code.

Using the DCVC card for online transactions is no different from using a regular card with a static three-digit security code. When paying online, the cardholder inputs the requested data and then the verification code, which is displayed in the card’s mini-monitor, into the internet form. The dynamic code is automatically refreshed every hour. 

The solution is intuitive and much faster than other security protocols for securing online transactions such as 3D Secure, which requires a cardholder to enter additional codes sent by SMS on a mobile phone. This results in online payments taking longer to complete.

Getin Bank’s modern payment card has generated interest among customers, media and industry experts. The mechanism used in the card has significantly improved the safety of non-cash transactions. Despite the use of the digital screen, the size and thickness of the card remains the same, which may change the way the industry thinks about built-in protection mechanisms within a card in future.

This is the second card with a mini-digital screen introduced by Getin Bank. In 2013 the bank developed a MasterCard display card with a mini-screen displaying the amount of funds available on an account. This illustrates the different ways in which technology can be used and meet different objectives, effectively changing payment cards into something more than just payment tools and helping them successfully compete with the growing popularity of mobile payments.


Winner: Cockpit

Parties involved: Deutsche Bank, HCL

As the volume and complexity of data that banks need to process grows, so does the demand for faster responses to meet client needs and manage risks. This is doubly important in these times of heightened regulatory and business pressures. 

Deutsche Bank’s Cockpit is a digital dashboard visualisation and report library framework used to develop applications across multiple areas of the organisation, including operations, control, operational risk, technology and regulatory reporting. It has been developed under Wendy Redshaw, chief information officer, knowledge visualisation at Deutsche Bank.

The dashboards present the bank’s information in new ways, using a blend of the latest technologies and development techniques, as well as elements from within the organisation and industry standard aspects. This method leverages and improves the bank’s legacy technology, as well as driving behavioural change – encouraging proactive decision making, data responsibility and greater openness.

“Our goal was to develop a user experience platform, with reusable elements that would speed up time to market. We also wanted to generate actionable intelligence from golden source data in an intuitive way. We succeeded using agile techniques and by engaging users at every stage to play an active part in creating the digital product,” says Ms Redshaw.

The project concept started in the third quarter of 2014 and a prototype was built and demonstrated two quarters later. The agile development of the Cockpit framework continued with multiple dashboard releases throughout 2015. The full dashboard framework was released at the beginning of 2016 and already has thousands of users.

Cockpit has helped to visualise information across other operations areas, including nostro and depot breaks, audit items, foreign exchange confirmations and compliance training. The bank is expecting to employ the framework in human resources, infrastructure monitoring and information security. 

The project has helped to surface information in a way that cuts out manual approaches. It illuminates and encourages correction of deficiencies in data quality and process, presenting information in a timely fashion rather than a ‘look-back’ review perspective. “Cockpit tells me what should keep me awake tonight; I used to get what should have kept me awake last month,” says one user. 

The Cockpit concept has the potential to transform the market and, ultimately, the industry, according to Deutsche Bank, with regulators gaining immediate and transparent access into an organisation. “It increases openness by offering a digital window into the organisation. This is a powerful tool in building trust, and such transparency has the potential to be a game changer for the industry,” says Ms Redshaw.

Delivery channels

Winner: HDFC Bank WatchBanking

Parties involved: HDFC Bank, IBM, Apple

With the launch of wearable devices, consumers are highly likely to add yet another digital interface to their current portfolio of devices – particularly in India, according to recent research. “With 46% of Indian consumers keen on buying a wearable device, we realised the future potential of wearables and decided to offer our customers the convenience of banking services through the Apple Watch,” says Nitin Chugh, country head of digital banking at HDFC Bank.

The bank was the first in India to offer financial services on the Apple Watch, thus initiating a new channel within digital banking. The launch of WatchBanking has bolstered HDFC Bank’s reputation for being at the forefront of digital innovation. “We have redefined accessibility and convenience. With WatchBanking, we are literally at an arm’s length from our customers,” says Mr Chugh.

There was no precedence for developing a smartwatch app when the ‘Watchkit’ was released to external developers, let alone an app for banking. HDFC Bank worked quickly – launching the new service within six months. The main challenges were in understanding the inherent capabilities of the device, identifying the most used services of the bank and fitting them into such a small interface.

Testing also posed a challenge, as the device was not yet available at retail outlets. Through its partnership with IBM and Apple, HDFC Bank gained access to Apple’s labs to test before making WatchBanking available to customers.

WatchBanking allows customers to access their bank account from their Apple Watch and perform 10 specific actions, such as view account information, recharge their mobile, block lost cards and locate nearest ATMs. It offers interactive location-based offer notifications and bill payment alerts with one-tap payments. This redefines the customer convenience as there is no need to take out a mobile phone to access the bank – a truly ‘bank on the wrist’ experience.

The low sales of Apple Watch and other smartwatches have not discouraged the bank and it is currently focusing on revamping the smartwatch experience with a new app under development, as well as adding more platforms such as Android and Tizen. 

In addition, research suggests that the primary use of a wearable device will be for health and fitness. “WatchBanking 2.0 aims to keep health and fitness at the centre of HDFC’s service offering through customisation of insurance, offers and incentives that encourage healthy lifestyles, thus making the bank relevant for our customers in yet another area of life – health,” says Mr Chugh.

Developer APIs

Winner: API Initiative for Open Banking

Parties involved: Akbank, CA Technologies

Application program interfaces (APIs) are disrupting the banking world. Turkey’s Akbank sees them as a core plank of its digital transformation strategy and is a proponent of ‘open banking’, which allows the bank to reach out beyond traditional partners to external developers and start-ups to create a new business ecosystem.

In line with this vision, the Akbank API Developer Portal is a forward-looking technology investment that focuses on open banking and digitalisation. The portal, a public web API platform for third-party developers, enables Akbank to open up the bank’s core systems and data to the external world.

“Akbank is the first bank in Turkey to outline an open banking strategy and launch an API portal for the developers,” says Turgut Güney, chief information officer at Akbank. Although the portal was only launched in April, 300 developers have registered and there are a lot of positive responses and creative ideas, according to Mr Güney. For example, one developer has an idea to use the bank’s ‘Find ATM’ service in their chatbot app.

The bank’s success is despite a highly regulated domestic environment. Furthermore, the Turkish government and regulatory bodies have not yet provided open banking API standards. Therefore Akbank could not learn best practices from early adopters that had already implemented an open banking strategy in Turkey. As a result, it was challenging for the bank to invest in this new technology, build the infrastructure and define processes.

Akbank identified three main reasons for developing an open banking strategy: in order to rapidly adopt new technologies through third-party applications; to deliver a broad and diversified applications portfolio to its customers; and to continue to be a leading bank in Turkey by accelerating and enabling the development of small entrepreneurs.

The bank started the project in the first quarter of 2015, initially by evaluating API gateway solutions. It then began developing its open banking architecture infrastructure in the third quarter of 2015 and was ready to test in the final quarter of that year. Before going public, Akbank tested the APIs internally and refined them in a safe environment. After tests were completed, the portal went live in February 2016 and officially launched in April.

“The portal will help Akbank design compelling new products and services, achieve competitive advantage, accelerate the rollout of new channel applications and enlarge our customer base,” says Mr Güney.


Winner: Pockets – Touch & Pay

Parties involved: ICICI Bank, Mahindra Comviva

With the number of smartphone users in India estimated to be 239 million at the end of 2015 – surpassing the US figures for the first time – it is no wonder that ICICI Bank is expanding its mobile payments offering. 

In April 2016, it launched India’s first contactless mobile payment solution, dubbed ‘Pockets – Touch & Pay’. 

The latest release builds on the bank’s mobile wallet ‘Pockets’, which allows customers to make cashless payments from their smartphones using their debit card by simply scanning a mVisa quick response code at a merchant location without swiping the card at an electronic data capture machine.

Pockets – Touch & Pay goes further and enables credit card and debit card purchases by tapping the near-field communication-enabled Android smartphone at point-of-sale terminals, thereby eliminating the need to carry cash or physical plastic cards. 

It works by creating a virtual card, which is stored on ICICI Bank’s cloud server, not on the customer’s mobile phone. For each payment via the virtual card, a one-time unique token number is created by the bank’s server, which is encrypted and sent to the merchant’s terminal, without disclosing any card information.

The solution’s key advantages are speed, simplicity and security. The speed of transactions will add momentum to the switch to cashless payments. At the same time, it will herald a shift from low-value cash payments to electronic payments at physical stores, including quick-service restaurants and shopping marts where quick transactions are required. 

Also, the level of security is higher as the card details are not shared during the transaction process. The smartphone display of the card shows only the last four digits of the virtual card. Therefore even if a customer loses their mobile phone, they will not lose any confidential information about their original and virtual card.

According to the bank, this will not only help in attracting new customers but will also strengthen its existing customer base. Such a system will infuse greater reliance and confidence in the bank’s products and services based on analysis of customer usage data. The bank also plans to use the payment solution to build a new roadmap for contactless mobile payments.

ICICI Bank predicts that Pockets – Touch & Pay will be a big game changer in the Indian payment industry, as it will transform the smartphone into a virtual wallet.

Risk management

Winner: Trade Alerts

Parties involved: DBS, Agency for Science, Technology and Research (A*Star) – Institute for Infocomm Research (I2R)

With global trade set to double by 2020 and banks facing an increased regulatory burden relating to anti-money laundering (AML) and fraud prevention, DBS Bank in Singapore decided to take a proactive approach in enhancing its current risk management processes, according to Yang Ping Choong, the bank’s managing director of technology and operations.

Trade remains a paper-intensive industry involving manual processes. Traditionally, trade finance controls have also centred on the bank’s understanding of its clients, the nature of the transaction, documentary financing and credit monitoring. 

In line with DBS’s strategic priority of embracing digital, the Trade Alerts project set out to develop an analytics model to further enhance existing controls by screening broader based transactions. The bank wanted to be able to identify potentially irregular transactional behaviours or fraudulent transactions, in order to trigger additional attention and tighter controls, if necessary.

The model uses the bank’s internal transactional data and external data on global vessel information, in order to elaborate on the ‘red flags’ recommended by various global financial regulators. Each individual red flag was deliberated and designed based on the collective knowledge and experience of the bank’s internal stakeholders.

With millions of trade transactions and customer records, the bank leveraged a big data platform – Hadoop – to reduce storage costs while taking advantage of its processing power. The bank also embraced open source analytic tools, such as ‘R’, which specialises in numerical analysis and machine learning for data processing. A big advantage of R is its community-driven ecosystem, which includes statistical libraries that enable graphic and charting capabilities, as well as machine learning algorithms created by academia.

The results of the model are then integrated into a data visualisation layer through Qlikview, which lets DBS employees move away from traditional static reports to a self-service interactive dashboard.

“With this new trade alerts tool, we will be able to detect anomalies through transactional and behavioural trends instead of relying on checks on singular transactions,” says Ms Choong. “The bank is now able to use the big data to manage the overall transactional trends within the group.”

In the future the model can be expanded to include other institutional and corporate banking products, such as cash management, as well as potentially from a client on-boarding perspective. These would add key dimensions and new capabilities in identifying suspicious transactions.

With this project, the paradigm is shifting from reactive solutions (putting in mitigating controls after an event) to proactive prevention (anticipating a potential event and have preventive controls in place before it happens).

Social media

Winner: Absa Chat Banking on Twitter

Party involved: Absa

Markets across the African continent are becoming increasingly digitally savvy and are demanding a different approach to banking. “Traditional banking channels fall short of customers’ expectations and the conversation must evolve. Consumers no longer have the time nor wish to spend their time coming to the bank – instead they need the bank and their finances to come to them,” says Ashley Veasey, group chief information officer and retail and business bank chief digital officer for Barclays Africa Group, trading as Absa Bank in South Africa.

In order to bridge this gap, in May Absa launched ChatBanking, which allows customers to converse directly with the bank. Clients are able to request and receive simple banking services via a social media platform of their choice. 

Customers can type words or phrases into ChatBanking to request a required service, such as ‘bal’ to receive a message with an account balance statement. Other services on offer include access to the last three account transactions, make a payment or purchase prepaid data or airtime.

In the background, ChatBanking is a simple, learning bot that is continuously contributing to its own natural language processing database over time, allowing it to accommodate more complicated customer queries and requests through a specially built platform. The bot integrates with Absa’s Express banking platform, which in turn allows access to the same systems that service its mobile banking application.

ChatBanking is not an application – the bot is integrated with the private chat function of social media. Consequently the customer experiences the service as a seamless interaction with their social media channel.

The bank decided to build a sensible working bot, instead of a complex one with many bells and whistles. Mr Veasey says: “The project aimed to quickly develop and bring to market the concept of social media transactional banking – which works in a beautifully simple and elegant way. We achieved our immediate goal with the launch of ChatBanking on Twitter and have followed quickly with Facebook Messenger and other functionalities.”

According to the bank, ChatBanking will help increase the adoption of its mobile and online banking platforms. It recognised the need for a gateway product that could assist with building trust in Absa digital banking, while reducing costs at branch level and providing opportunities to introduce customers to higher level digital banking platforms to perform more sophisticated tasks in time.

Strategic transformation

Winner: AcadiaSoft Collateral Hub

Parties involved: AcadiaSoft, ICAP, DTCC, Euroclear, Bank of America Merrill Lynch, Barclays, BNP Paribas, Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JPMorgan, Morgan Stanley, Société Générale, State Street and UBS. Plus 15 additional banks are in scope for the upcoming non-cleared margin rules in September 2016

With new collateral requirements for over-the-counter (OTC) derivatives coming into effect on September 1, 2016, AcadiaSoft felt the industry needed to have a standardised, automated central margining platform. 

The regulations require the posting and collection of initial and variation margin, standardisation of collateral terms and timely resolution of disputes. These changes are expected to introduce substantial changes to the margin process, as well as bring about a rise in margin activity and collateral movements – estimated at a three to 10 times increase – that will overwhelm the margin processing solutions now in use.

To solve this issue, AcadiaSoft teamed up with 13 major global banks and three financial infrastructure providers to launch AcadiaSoft Collateral Hub within just six months. The hub provides the non-cleared OTC derivative market with a central margining platform that standardises and integrates margin calculation, reconciliation, communication and disputes management for market participants. 

The single framework helps banks identify and minimise disputes at the input level before issuing margin calls. In this way, banks can avoid collateral disputes that will subject them to substantial additional capital requirements under the new regulations. Since its launch in February, nearly 300 derivatives market participants from AcadiaSoft’s client community have migrated to the hub.

According to Chris Walsh, the CEO at AcadiaSoft, the main aim was to create a central margining platform that could deliver operational efficiencies through a single electronic, lower cost solution. “It was also important to bring this product to market well before the regulations took effect so that firms could prepare in advance. We met both of these goals by collaborating across the industry through a number of working groups and creating a product plan with numerous checkpoints – and with a relentless focus on quality,” he says.

In the process, AcadiaSoft needed to transform into an industry-driven, commercially motivated consortium designed for industry participants to create shared solutions for common aspects of their businesses. Financial institutions now have the opportunity to transform themselves, and reduce cost and risk by mutualising development efforts and standardising common processes. 

While AcadiaSoft’s initiative was important to the large OTC derivatives market due to the upcoming regulations, the hub is now being extended to address the full post-trade risk lifecycle in the OTC, cleared, repos, to-be-announced and loan markets.  

Trading platforms

Winner: Credit Algo Trading 

Party involved: Credit Suisse

Credit Suisse was looking to solve a specific problem and as a result increased its US corporate bond desk’s capacity to respond to pricing inquiries by approximately 30%.

The investment bank receives thousands of corporate bond pricing inquiries on a daily basis. Although price requests are aggregated for the trader, the sheer volume makes it challenging to provide a market price for every inquiry. Historically, traders focused on electronic inquiries for larger ticket sizes and ‘passed on’ the pricing of smaller tickets. 

However, this practice often goes against a client’s needs to derisk excess balance sheet inventory or service their retail customers, who trade in smaller sizes. Credit Suisse also observed that not servicing the odd lots hinders the institutional flow business and results in lower execution volumes.

To solve theses issues, the bank developed a corporate bond algorithmic trading system. The credit algo has succeeded in improving Credit Suisse rankings in electronic market places, strengthening client relationships with the bank, and automating pricing and execution of small transactions sizes, allowing the desk to focus on larger, bespoke lot sizes.

“Tickets that would have been passed or ignored by a trader are now routed to the algo for pricing and execution. It will always respond to the client with a price. The routing to a trader or the algo can be configured by notional, instrument, client, and other parameters, providing maximum flexibility for the trading desk,” says Steve Hook, managing director, head of global markets technology, at Credit Suisse.

The algorithm uses relevant local market data, electronic offerings, axes and positions to compute a market price. When an odd lot inquiry comes in from a client through any electric communication network, it is systematically priced and auto-executed by the algorithm. If the client is happy with the price, the algorithm will automatically complete the execution and straight-through process the trade. Importantly, if a client comes in on a larger ticket size or a less liquid bond, they will be routed to the voice trading desk for an appropriate bespoke price. 

The algorithm is able to manage its own position and derisk itself on the retail markets, maintaining a flat to minimal inventory. It also gives traders a vehicle for cleaning up their own books by automatically derisking on the retail venues (central limit order book markets). Looking long term, the algorithm is considered a hedge towards further electronic trading advancements, specifically if the market moves towards CLOB trading (the all-to-all order driven market). 


All fields are mandatory

The Banker is a service from the Financial Times. The Financial Times Ltd takes your privacy seriously.

Choose how you want us to contact you.

Invites and Offers from The Banker

Receive exclusive personalised event invitations, carefully curated offers and promotions from The Banker

For more information about how we use your data, please refer to our privacy and cookie policies.

Terms and conditions

Request a demonstration to The Banker Database

Join our community

The Banker on Twitter