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TechvisionJuly 1 2013

RBS remains committed to channel integration

Global head of channels and distribution in transaction services at Royal Bank of Scotland’s international banking unit, Ken Deveaux, talks about the bank’s efforts to consolidate its channels and build an integrated systems architecture.
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RBS remains committed to channel integration

Ken Deveaux was appointed global head of channels and distribution in transaction services at Royal Bank of Scotland’s (RBS) international banking unit in January 2013. In this role, he has been tasked with creating an integrated systems architecture to enable a holistic view of corporate clients.

“Getting the channels proposition right for our clients, who operate large, complex, global enterprises themselves, is no easy task,” he says. “But it is one that is central to our business strategy – and one that I am committed to delivering.”

Mr Deveaux has been in the transaction services business for more than 25 years, starting in the operations division at a mid-sized regional bank in New England in the US, which he says was “a terrific way to learn how a bank really works”. He says that the dynamic of transaction banking business, driven by technological innovation and regulation, “has provided plenty of interesting challenges", many of which he thinks will help him in the future at RBS.

“In many ways, managing global channels for RBS leverages many of the experiences and challenges I have taken on in this business over the years – from running a small strategy management team to leading a global business, and incorporating functional disciplines such as product management, new technology assessment and deployment, P&L [profit and loss] management, and, above all, delivering against client needs.”  

Streamlining channels

Perhaps, Mr Deveaux's biggest challenge may occur if RBS has to split its toxic loans from the rest of the bank to create a ‘good’ and ‘bad’ bank, a suggestion put forward by the UK chancellor of exchequer, George Osborne. Mr Deveaux will not be drawn to speculate on RBS’s future in light of this possible break-up, or how it would affect his side of the business. But he does emphasise “that transaction services is very attractive business for RBS” as it serves a core need for companies and carries lower risk than other financial services.

“While a restructuring could take us in any number of directions, our strategy keeps us focused on delivering an important set of services for our clients and their evolving needs,” he says.

The investment banking division’s plans are closely aligned to RBS’s five-year investment plan, which includes a 22.5% increase (£450m, or $256.9m) in the bank’s IT budget, to deliver an efficient, integrated systems architecture to support the core international banking product offering.

The near-term investment in integrated systems architecture is aimed at building a platform with a single, integrated client channel. Duplicate, fragmented and overlapping features will be removed in favour of a consolidated trade and supply chain finance platform, says Mr Deveaux.

The consolidation of channels will “make them simpler to use for clients and more easily maintained on our side”, Mr Deveaux says. “Functions such as security, authentication, user entitlement and reporting all have common features across our different channels, so leveraging these in a consistent way across our products and services will deliver a better experience for our clients.”

To do this, channels will need to become less proprietary and more collaborative. “We use the term ‘bank-agnostic’ to describe a channels environment in which our client can interact seamlessly with all of their banks,” says Mr Deveaux. In this regard, RBS has been involved alongside other banks with the Society for Worldwide Interbank Financial Telecommunication to develop global standards for trade transactions.

Alternative routes

Underlying this transformation is a the second change. Bank channels will need to be less about point-to-point, bilateral exchanges between bank and clients, and more about supporting the flows of information a company drives in the course of managing its working capital.

“Our primary aim for channel integration is to [integrate] our clients’ operating environment, including their ERP [enterprise resource planning] platforms [which aggregate information from different business operations] and processes, as well as other components of their working capital cycle,” says Mr Deveaux. He expects that this will improve working capital management.

“Between our client’s ERP system and our back office platforms, there is an incredibly complex array of public and private infrastructure components that could fail. Good channels build in the redundancy and resiliency necessary to ensure that data can still flow despite a failure. Going forward, we will continue to develop alternative connectivity options to support our clients regardless of where the fault occurs,” he says.

Therefore, if communication between some channels, either internal or between bank, corporate and clearing system, for instance, fails, there will be an alternative route.

Keeping pace

Most of Mr Deveaux's team’s time and attention is spent supporting strategically important initiatives driven by the payments, liquidity, trade and supply chain finance teams.

“[They] develop the products and services our clients need, the channels team makes sure we can deliver those services in a manner best suited to our clients and how they operate their treasury and finance functions. This can range from reviewing daily position reports through a secure browser to sending us thousands of payment instructions to pay their suppliers around the world via bulk data transmission,” he says.

Of top priority at the moment is the Single Euro Payments Area, a regulatory initiative to create common payments standards across Europe that is nearing its deadline in 2014.

“We’ve invested significantly in making sure that the new formats and operating rules are incorporated into our online and direct channels,” he says. Another focus is on its online trade and supply chain finance platform MaxTrad, on which the bank is adding more supply chain finance features for both buyers and sellers.

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