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An interview with me and my collegue, Steinar Sturlaugsson, in Finance on Windows abe online banking. See page 30.

An interview with me and my collegue, Steinar Sturlaugsson, in Finance on Windows abe online banking. See page 30.

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  • 1. FINANCE NEWS INTERVIEWS PROFILES FEATURES COMMENTARY ANALYSIS ON WINDOWS AUTUMN 2008 MICROSOFT TECHNOLOGY IN THE FINANCIAL SERVICES INDUSTRY SWIFT VIRTUALISATION AND SURE Pim van der Horst on how KAS Bank is leading CORE BANKING GOVERNANCE, the way in Swift connectivity with Microsoft RISK MANAGEMENT BizTalk Accelerator for Swift AND COMPLIANCE Find out how Microsoft and its partners are working “A well-architected, flexible payments infrastructure will give banks a greater to help integrate governance, risk management and chance of outsourcing success. Microsoft’s Payments Services Factory allows compliance into the organisational DNA. Page 42 different services and applications to coexist with legacy systems.” Colin Kerr, Payments Industry Technology Strategist, Microsoft
  • 2. AUTUMN 2008 FOREWORD Payments processing is high on the agenda for many of the region’s financial institutions as they deal with a growing number of new payment methods and regulations. In this rapidly evolving environment, the need for agile, people- ready technology is greater than ever. KAS Bank was only too aware of this when, as part of its migration from the mainframe to Windows, it decided to streamline its Swift connectivity with Microsoft BizTalk Server and BizTalk Accelerator for Swift. On page 20, KAS Bank’s Pim van der Horst tells us about the project, and how it is helping the bank to direct valuable resources back to improving the customer experience. This is an exciting time for virtualisation, with the latest technologies now extending beyond the data centre to embrace the desktop. For our round table feature on page 26 we gathered a panel of experts to discuss the latest developments, and asked how virtualisation can benefit capital markets firms. As the global credit crunch intensifies, businesses and customers alike face financial uncertainty. Banks need the support of agile IT, but as budget holders tighten their belts, technology renewal can seem a daunting prospect. On page 36, we explore how a phased, strategic approach to core banking renewal can enable banks to improve operations and reduce costs, answering today’s challenges while preparing for future growth. We also have our usual selection of incisive commentary and news from the industry. Don’t forget to visit us at for the latest news updates from across the region. Enjoy the issue. Anders Abrahamsson Managing Director, EMEA Financial Services Microsoft FINANCE ON WINDOWS EDITORIAL MICROSOFT EDITORIAL COMMERCIAL Editor ADVISORY BOARD Partner Managers Jacqui Griffiths Anders Abrahamsson Christian Jones Managing Director EMEA Financial Services Assistant Editor Andreas Drescher Ryan Kenward James Dodd EMEA Partner Manager Gordon Ejsmond-Frey Ben Mayer Group Editor EMEA Industry Director, Insurance Adam Lawrence Marcus Miola Andrew Longstaff Industry Marketing Manager Ricky Popat Editorial Contributors Tony Emerson Freek Oldenhuis Arwert, Microsoft EMEA Industry Director, Banking Amandip Singh Günther Aust, Fujitsu Siemens Computers Ian Warford Mark Bates, RDT EMEA Industry Director, Capital Markets Graham Bright, Financial Tradeware Partner Director James Burns, Microsoft Paul Simpson COVER PHOTOGRAPHY Steve Craggs, Lustratus Research Phil Dawson, Gartner Rohan Van Twest Subscriptions Sheida Hadji-Ashrafi, Microsoft Ewan Campbell Kirk Herrington, GaleForce Solutions Carrie Higbie, Siemon Reprints Pim van der Horst, KAS Bank Stuart Fairbrother Nick Jasper, Apak Arnar Jonsson, Applicon Business Manager Colin Kerr, Microsoft Richard Pepperman John Macaluso, Fiserv CBS Worldwide Publisher John McKee, Financial Objects Toby Ingleton Ian Masters, Double Take Software Leslie Muller, DynamicOps PRODUCTION Barrie Neill, Temenos Michael Nicastro, Open Solutions Creative Director Philippe Nicolas, Brocade Leigh Trowbridge Brian O’Gilvie, HP Designers Sai Sireesh Pachava, Microsoft Bruce Graham Karien Pype, Financial Architects Kelvin Jones Steinar Sturlaugsson, Applicon Paul Robinson Koen Van den Brande, Microsoft Web Site Manager Ian Warford, Microsoft Dan Dore Steve Yatko, Credit Suisse Green IT Advisor Dr Bernd Kosch, Fujitsu Siemens Computers 1
  • 3. AUTUMN 2008 CONTENTS 26 6 48 36 20 42 COVER STORY FEATURES MARKETWATCH COMMENTARY PROFILED SIGN OUT SWIFT AND SURE 20 VIRTUAL WORLDS 26 NEWS DIGEST 6 WILL THE CREDIT CRUNCH 48 TECHNOLOGY IMPLEMENTATIONS 58 VOICE OF EXPERIENCE 64 KAS Bank CIO Pim van der Horst tells us We ask a group of experts about the Including the latest news and research BITE PAYMENTS OPERATIONS? Successful projects at Kaupthing Bank, the Mark Bates, chief executive officer of RDT tells us how the bank is leading the way in Swift technology and trends behind virtualisation from technology providers across the A well-architected, flexible payments London Stock Exchange and HgCapital about his passion for technology connectivity with Microsoft BizTalk Accelerator in the financial industry EMEA region infrastructure will give banks a greater chance of for Swift surviving the credit crunch, says Colin Kerr CURBING THE CRUNCH 36 How a service-oriented approach to core GOVERNANCE, MANAGING A WEALTH 50 systems renewal can help support business RISK MANAGEMENT OF CLIENT INFORMATION agility without breaking the bank AND COMPLIANCE Kirk Herrington looks at how CRM can bring benefits for compliance as well as customers REGIONAL ROUND-UP 42 How Microsoft and its partners are SAFE AND SOUND 50 working to help financial firms ensure Brian O’Gilvie discusses how financial firms can governance, risk management and create a long-term information archiving strategy compliance best practices throughout FULL CIRCLE 54 the business Companies are returning to virtualisation as a solution for data management, says Carrie Higbie BACK TO BASICS 56 A strong and agile technology base makes for superior online banking, say Arnar Jonsson and Steinar Sturlaugsson 3
  • 4. AUGUST 2008 PUBLISHING PARTNERS Finance on Windows is produced as a partnership between Microsoft and Fujitsu Siemens Computers, one of Europe’s leading computer companies, offers one of the selected key organisations from the financial services world’s most complete product and solution portfolios. The company ensures the highest technology sector. These level of customer support with a direct sales force of more than 2,500 IT professionals on the partners are responsible for front lines and over 3,000 sales partners. As a joint venture between Siemens AG and Fujitsu the editorial direction of Limited, Fujitsu Siemens Computers was formed on 1 October 1999. Finance on Windows, and collaborate to provide you with content that covers the key issues facing financial services executives, and technology solutions that can address these issues. Getronics has fifty years' experience in providing solutions for retail banking and insurance companies. Its focus is on branch renewal, on the end-to-end development and management of solutions for the branch, and on designing and implementing multi-channel architectures. Seventeen of the world’s top twenty financial services companies are Getronics clients. FINANCE ON WINDOWS Published by Tudor Rose Tudor House 6 Friar Lane, Leicester LE1 5RA, England Tel: +44 116 222 9900 HP is a technology solutions provider to consumers, businesses and institutions globally. Fax: +44 116 222 9901 The company's offerings span IT infrastructure, personal computing and access devices, global services, imaging and printing. Managing Director: Jon Ingleton ISSN 1473-2173 Finance on Windows is published quarterly and is available via subscription please visit: for more information. The Microsoft vision is to enable every business enterprise to use the Internet to build richer customer experiences. Microsoft sees e-business as more than just transactions Printed in Great Britain by The Manson Group over the Web, it is a means for establishing a closer relationship with customers and Cover photography Rohan Van Twest. trading partners and Microsoft .NET is the evolutionary strategy behind this vision. © 2008 Tudor Rose Holdings Ltd. All rights reserved. No part of this publication may be stored or transmitted or reproduced in any form or by any means, including whether by photocopying, scanning, downloading onto computer or otherwise without the prior written permission from Tudor Rose Holdings Ltd. With more than 600 customers in 60 countries worldwide, SAP for Banking provides Active Directory, BizTalk, Microsoft, Outlook, SharePoint, banking specific (transactional banking, CRM, risk management) and banking relevant Visual Studio and Windows are either registered trademarks or trademarks of Microsoft in the US and/or (financial accounting, human resources management, procurement) services and other countries. The names of actual companies and solutions, created on a single enterprise SOA enabled business process platform. products mentioned herein may be the trademarks of their respective owners. SAP and Microsoft are long term complementary partners as demonstrated by Duet™ software, a jointly developed solution to empower a company’s employees to Views expressed in this magazine are not necessarily those of Microsoft or the publishers. Acceptance of seamlessly access data and SAP enterprise applications within the familiar Microsoft advertisements does not imply official endorsement of Office environment. the products or services concerned. While every care has been taken to ensure accuracy of content, no responsibility can be taken for any errors and/or omissions. Readers should take appropriate professional advice before acting on any issue raised herein. The publisher reserves the right to accept or reject advertising material and editorial contributions. The publisher assumes no liability for the return or safety of unsolicited art, photography or manuscripts. Temenos is a global provider of banking software systems in the Retail, Corporate & Correspondent, Universal, Private, Islamic and Microfinance & Community banking markets. Headquartered in Geneva with 44 offices worldwide, Temenos serves over 600 customers in more than 120 countries. Temenos’ software products provide advanced technology and rich functionality, incorporating best practice processes that leverage Temenos’ experience in over 600 implementations around the globe. 5
  • 5. M A R K E T WATC H | N E W S M A R K E T WATC H | N E W S IN THIS ISSUE MICROSOFT .NET 8, 10, 12, 13, 14, 18 Active Directory 18 Insurance Value Chain 14 IP Ventures 15 SharePoint 14 Silverlight 15 Solver Foundation 15 SQL database 10 REPORT by Jacqui Griffiths SQL Server 14, 16 Vista 18 PAYMENTS ON ANOTHER LEVEL Windows Mobile Windows Workflow Foundation 16, 18 18 PAYMENTS PROCESSING SYSTEMS ARE MOVING TO THE NEXT LEVEL, SAYS REPORT TECHNOLOGY PARTNERS Accenture 15 Albany Software 13 Apak 10 become increasingly popular, says Craggs: elements as possible of the business Ascentn 8 “With rules-based capabilities, business flows, with all their quirks and subtleties, Business Control Solutions 12 logic is controlled by rules that are are included in order to minimise Devicelock 18 Duck Creek Technologies Europe 18 abstracted from the technology – if you exceptions,” he says. “The winners will be DynamicOps 18 want to give students free banking, for those who can integrate external eMedia Monitor 8 example, you could change a rule that modules, often bought from third parties Financial Objects 13 identifies the payer as a student and sets without affecting the core, while Financial Tradeware 7 their charge to zero – you shouldn’t need to enhancing overall capabilities, especially Finsbury Solutions 14, 16 go in and change the code to achieve that, in exception handling and reporting.” Fiserv CBS Worldwide 16 just alter a clearly presented rule.” Formicary 8 Fujitsu Siemens Computers 14, 18 AN EXPERT’S VIEW GaleForce Solutions 13 For Graham Bright, managing director of Gig Werks 12 Financial Tradeware, the report’s HP 8 suggestions add up. “Payments systems are Insurity 18 at the heart of all bank and financial MBA Systems 8 operations, beating continuously, Moore Stephens 16 “A service-oriented Platform Computing 14 performing their defined, often rigid approach will enable reusable, business- Portrait Software 16 functions with regularity, dependency and differentiated QuantHouse 12 with guarantees of service levels,” he says. components” RDT 16 “Just as an unfit runner becomes overheated Steve Craggs Ridgian 8 and fatigued, so the same issue arises when Lustratus Sword Group 10 the system is stressed as volumes increase, Third Financial Software 14 or when it attempts to deal with the Xenomorph 14 unexpected.” THE REPORT IN BRIEF Zignals 15 Bright points out that many ageing systems find it difficult to cope with In his report, Steve Craggs addresses FINANCIAL SERVICES PROVIDERS exceptions, and this is helping to drive a three key issues. Bloomberg 16 shift toward the next generation of First-generation payments processing Credit Suisse 18 AGEING PAYMENTS SYSTEMS CAN STRUGGLE WITH EXCEPTIONS, PROMPTING A SHIFT TOWARD NEXT-GENERATION TECHNOLOGIES technologies. “Instructions of unusual systems are struggling to cope with the Deutsche Bank 12 format, with incorrect addressing or effects of globalisation, higher volumes 18 Kohlberg Kravis Roberts & Co 16 outside the accepted normality of straight- and increasing competition. They are London Stock Exchange 8 new generation of payments opportunity to innovate and differentiate. beginning to groan under their own through processing as prescribed by IT often not flexible enough, difficult to A processing technology is emerging in response to the “We’re reaching a sea change in payments,” says the report’s author, Steve weight, and as it’s become more difficult to add new functionality, this also departments lead to manual handling,” he points out. “Apart from the risk this customise, and offer limited visibility of payments activity. Rabobank SGAM Alternative Investments Société Générale Asset Management 13 12 12 latest challenges, according to a new Craggs, director at Lustratus. hampers financial firms in differentiating brings in terms of time value, due Second-generation payments Thomson Reuters 18 report from Lustratus Research. “Globalisation has had a massive impact. themselves and responding to change.” diligence and potential interest loss, the processing addresses these issues Towergate 16 The report, 2nd generation payments The Single Euro Payments Area and cross- These issues can be resolved using flip side is that institutions can gain a using modern techniques: VTB24 18 processing systems: payments processing border transactions bring with them all several recent technology developments healthy income from charging punitive • Extensible, pluggable, service- systems move to the next level, observes sorts of issues, and then there is the such as a service-oriented approach, fees for this processing. Today, flexibility oriented approach ANALYSTS AND ASSOCIATIONS that the dramatic impact of globalisation explosion of different payment types to centralised view of business activity and of error and exception handling is the • Centralised, real-time management Apacs 16 on financial operations has generated deal with. Existing systems have been rules-based capabilities, says Craggs. key. Scalability of systems is now more of all payment types Celent 15 increasing competition, changing cost coping as well as they can with “Software has moved on in terms of simple, less costly and managed in • Rules-based functionality and Committee on Payment and Settlement models and surging volumes, while developments over the past 10-15 years, capabilities and styles,” he explains. “A operating systems.” control. Systems 8 regulatory activity has become more but they’re coping in the way they did in service-oriented approach will enable Looking ahead, Bright says that Datamonitor 18 Enterprise Ireland 15 intense. As a result, the report says, the 1980s and 1990s, by delivering a new reusable business-differentiated standardisation of payments messaging In doing so, it brings a wide range of Juniper Research 8 financial firms are looking for ways to program to deal with each new challenge. components, while centralised real-time and formats is only part of the story: “The benefits to payments processing such KRC Research 18 improve internal efficiency, differentiate This has led to an increasingly rigid management of payments gives banks the industry must accept that standardisation as cost-efficiency, agility, consolidated Lustratus Research 6 themselves from the competition, structure in these ‘first generation’ ability to see all of their payments activity of messaging and formats needs to be management and control, internal Securities Industry and Financial Markets maintain profit margins and generate new payments systems, which now comprise together in one place.” available to all institutions, and that it is efficiency and a resilient, scalable Association 16 revenues. Payments processing is a key many different pieces all rigidly locked The third part of this agile payments in fact only one small commoditised platform for innovation. TowerGroup 16 part of the overall financial transaction, together and delivering different pieces of environment, rules-based capability, is a component in the scheme of payments Transaction Performance Council 14 and is now being seen as an area of function. Many of these systems are software industry technique that has processing. It is vital that as many 7
  • 6. M A R K E T WATC H | N E W S IN BRIEF Ascentn has strengthened its position in the European market after agreeing a partnership with Ridgian, a leading UK- based information management solutions provider. The alliance will help Ascentn address demand for its business process management (BPM) solutions. “As a Microsoft Gold Partner and an expert in LSE goes live with SharePoint, .NET, business intelligence and integration, the Ascentn BPM Performance Channels platform will significantly complement our existing portfolio and allow us to The London Stock Exchange (LSE) has these peaks creates additional trading further address the needs of our gone live with Performance Channels, a opportunities. With TradElect and Infolect customers,” said Jason Betteridge, high-speed delivery mechanism for its underpinning our markets, trading managing director at Ridgian. .NET-based Infolect information system. participants can be confident of receiving The Performance Channels service world-leading performance.” ensures that even during the highest peaks Over 40 customers have signed up to the in trading activity, market data is delivered service, with more orders in the pipeline. HP has launched its e-Discovery at high speed. “The introduction of Clients can continue to use the existing Workshop for the financial services Performance Channels sets a new Service Channel configuration whereby industry. The workshops entail a proven benchmark for customers requiring the data peaks are managed during periods of methodology, in which HP experts work lowest latency connectivity to the LSE high trading activity to ensure that client with companies to review their during peak trading periods,” said David systems are not overloaded. Performance information requirements, assess business, Lester, chief information officer at the LSE. Channels is available through 100- regulatory and governance drivers and “The service gives member firms using megabyte Extranex lines, which cut the shape a long-term strategy for algorithmic trading models greater visibility average round-trip network latency within information archiving. To mark the of the spikes and events that occur during the City to below one millisecond. launch, HP is giving away a free workshop periods of high trading activity. The to ten financial firms – simply e-mail immediate delivery of price data during to express an interest in the offer. Knowledge bank Central bankers have recommend a UPWARDLY MOBILE number of actions to address the risk- 41.5 billion mobile financial service transactions will be made by the end of 2011 – transmission channels brought by system driven by high-speed adoption of mobile banking facilities, especially by those interdependencies. The bankers expressed without access to banking their concerns in the Committee on Source: Juniper Research Payment and Settlement Systems report, The interdependencies of payment and settlement systems, which lays out a framework for analysing the risks of interdependencies, along with specific recommendations for the industry to FORMICARY LAUNCHES TVSEER address them. The report recommends that central banks and other authorities Financial services IT consultancy “We have been working with top tier review their policies in light of the Formicary has joined forces with broadcast investment banks to deliver this service, increasingly integrated nature of the monitoring technology firm eMedia based on superior speech recognition global financial infrastructure. Monitor to launch enterprise TV and audio technology, uniquely tailored to the monitoring agent TVSeer. financial services market,” said Philip The service has been designed for Miller, head of intelligent messaging at MBA Systems has launched IB.Net2, the financial professionals who need to know Formicary. “We are pleased to announce latest version of its Internet Broker events that will move or change the global that all information consumers are now in software for online trading. IB.Net2 market landscape, as well as those who are a position to benefit from this innovation.” includes a new front-end database (FED) interested in sector-specific news. facility, a new limit order system, an TVSeer monitors media broadcasts on a enhanced payment utility and an user’s behalf and delivers targeted alert expanded range of tradable instruments, notifications direct to the desktop via providing greater flexibility in use while instant message. Using advanced speech to enhancing account management and text technology, it monitors multiple enabling cost savings. It incorporates an channels in multiple languages 24/7, expanded range of tradable instruments automatically delivering relevant content to include unit trusts and other collective within 15 seconds of transmission. investments and employs straight- Specifically aimed at researchers, analysts through processing and a FIX interface and traders in financial services, TVSeer with EMX, to enable funds to be traded allows users to set up advanced search almost entirely automatically. filters for specified keywords and complex terms. Once triggered, an alert containing the summary is sent to the user, who can then choose to view the original clip.
  • 7. M A R K E T WATC H | N E W S BEAMING WITH SUCCESS INTERVIEW: NICK JASPER OF APAK THE PAST YEAR HAS BEEN ANYTHING BUT BUSINESS AS USUAL FOR APAK A year ago, Apak was acquired by Sword market leader in supplying bureau services the front and provide Internet banking Group. We caught up with Nick Jasper, for finance firms, but also recognised the facilities, without having to change their senior business manager at Apak, to find immense potential of both the banking core system. Importantly, Beam Internet out what impact the takeover has had and divisions’ technical platforms in the banking contains a browser based user interface what the future holds. sector. Given that they both operate on a which can be quickly adapted to reflect a Microsoft .NET platform, bringing them bank’s corporate image ensuring What has the acquisition meant to you? together made sense. The synergy between familiarity for existing customers. It’s brought us the kind of opportunities them made the new entity greater than the Many banks are cautious about that are normally available only to larger sum of its two original parts. replacing their core system, due to the companies. As an international company, perceived costs and risks involved. But Sword Group gives companies access to What does that mean in terms of your with Beam they can do this in a modular technical and consultancy expertise on a products? way, for example by introducing the global basis, which isn’t accessible to We previously marketed our Aurius Internet banking element first. They could smaller software companies like Apak, banking system in the UK. But since implement a modern branch system though it was successful in its own right. Beam has an established name in the without changing the core system. Then, We’re getting significant introductions Middle East and Africa, and is expanding later on they could replace the core and we’ve got quite a large footprint now, rapidly into the Pacific Rim, we decided to system almost seamlessly. with encouraging opportunities for cross- create a family of products that could all fertilisation across the Sword Group. talk to one another, under the Beam So what does the future hold? We’ve already been dealing with other heading. As a result, Aurius has become You only have to look at TV and press parts of the group in terms of SharePoint Beam Core, an integrated retail system advertising over the past few months to consultancy, and we’ve introduced Sword which has its own workflow and comes see the new products – such as high rates to some of our customers using the complete with Internet banking facilities and linked accounts – being offered as Microsoft platform for distributed both for private individuals and banks look for more ways to raise funds. I information. businesses. We can also split out Beam dread to think how much those products Workflow as a standalone product. cost to develop on some of the older You’ve undergone some restructuring Beam Branch is a branch system based platforms. Tier-three and tier-four banks, over the past year – tell us about that. on .NET and SQL database, which has with more agile packages like Beam, will Our core wholesale and bureau operation been designed to sit across the front of be able to respond in this kind of business has continued as Apak, but our legacy systems but can also talk to Beam environment a lot more quickly, and that UK-based banking division and its existing Core. It can also be used as a standalone opens up opportunities for us. Watch this Apak Beam subsidiary, based in Dubai, have Internet banking application called Beam space for further announcements! been merged to form a single entity called Internet. So an institution that’s running Sword Banking Solutions. an old legacy system, for example, can Sword recognised that Apak was a UK rapidly implement Beam Internet across
  • 8. M A R K E T WATC H | N E W S M A R K E T WATC H | N E W S IN BRIEF IN BRIEF SGAM Alternative Investments, a A new application from Albany Software wholly-owned subsidiary of Société will allow all sizes of business to take full Générale Asset Management, has selected advantage of electronic payments QuantFactory, the QuantHouse.NET including Faster Payments and Sepa. trading strategies development Albany ePay is integrated with Microsoft framework to develop, back-test and applications and will be available for all execute trading models. The suite of products allows financial firms to Deutsche Bank Financial Objects market sectors. Different versions will cater to individual organisations’ needs rationalise trading strategies and development cycle by using an integrated, rolls out BCS Integrity partners with Rabobank dependent on transaction volumes, internal processes and line of business. .NET-based development environment The solution is fully scaleable, allowing for across the research, development and Deutsche Bank has commenced its global Rabobank has chosen Financial Objects to employing Financial Objects’ proven additional functionality as business needs back-testing execution cycle. rollout of BCS Integrity from Business jointly develop a global counterparty credit migration methodology and experience we evolve. Control Solutions (BCS). risk management system. The three-phase can have a future-proofed system, utilising The first phase of the rollout will see the project will involve the migration of the latest Microsoft technologies, to solution deployed in Deutsche Bank’s Asia- Rabobank’s own Sky credit risk solution to significantly reduce our total cost of GaleForce Solutions is to release an on- Gig Werks has received two awards from Pacific branches, before being extended Microsoft .NET. ownership.” demand version of the full GaleForce Microsoft this year, most recently the across 40 countries, 3,000 users and more Once live, the system will span Michel van Leeuwen, managing director CRM for Financial Services application award for Excellence in Business than two million accounts. Rabobank’s global capital markets for worldwide capital markets at Microsoft suite, including wealth management, Productivity Optimisation in the Best Developed in a Microsoft-focused division. Users will be able to capture, commented: “We expect this project to set asset management, capital markets, Business Intelligence Solutions category at environment, BCS Integrity is a database- monitor and report credit exposure, and the precedent for credit risk management investment banking and retail banking- the Microsoft New York/New Jersey agnostic solution designed to enable better manage collateral operations against global platforms in the banking industry.” specific solutions. GaleForce Online CRM Partner Awards. The company pointed to decision-making for financial institutions limits. “This project will take the foundations of for Financial Services will be generally its Microsoft certifications and subsequent by providing instant visibility across the financial control,” said Nigel Walder, CEO “We wanted to retain the same level of Financial Objects’ award-winning available from GaleForce Solutions and status as a Microsoft Gold Certified Field account substantiation process. Deutsche of BCS. “Moreover, it demonstrates the business functionality available in Sky, and energycredit solution to deliver a selected partners in August 2008. Managed Partner as key achievements Bank chose the solution having been a bank’s commitment to constantly driving a joint development project soon became comparable system to credit risk managers that have helped it gain valuable long-term client of BCS Operational control improvements while reducing the obvious choice,” said Simon Calvert, in the financial services sector,” said Roland experience, boost credibility, increase Control Architecture, which monitors operational costs.” head of risk IT at Rabobank. “We expect to Jones, managing director of the risk revenue, and achieve an annual growth control hotspots and highlights issues as make significant savings compared to the management division at Financial Objects. rate of 50 per cent. they arise. cost of implementing an alternative system “This implementation is testament to from scratch, while retaining what we just how seriously Deutsche Bank takes its consider to be superior functionality. By
  • 9. M A R K E T WATC H | N E W S M A R K E T WATC H | N E W S IN BRIEF IN BRIEF Platform Computing has formed a Over the next three years banks will financial services business unit, following a increasingly use Web 2.0 technology to year of strong growth in the sector. The deliver online wholesale banking services, company, which is a Microsoft partner and according to a report from Celent. Factors specialises in high-performance like the credit crunch are currently computing (HPC) management software, hampering the move to next-generation saw consistent strong growth across all major geographies including North FINSBURY ENHANCES Zignals launches offerings, and it will take 18 months before real progress is made, says the report. America, Europe and Asia, with financial services as a global driver. SPREADSHEET WORKBENCH online investment beta However, Celent says that many banks recognise the need to embrace Web 2.0, which will revolutionise the current Finsbury Solutions has launched the with a wide range of business functions Irish start-up Zignals has launched a beta service and access to powerful yet usable landscape with new systems emphasising A survey by Xenomorph has found that market’s first enterprise-wide spreadsheet including audit, risk and compliance, online service to transform investing for decision-support tools is often cited by customer experience, usability and 79 per cent of financial professionals management solution specifically designed trading, operations, finance plus client and active traders. Zignals will provide retail smaller investors as a key constraint on navigation while allowing users to take believe market data quality is an issue for for implementation on SharePoint 2007. regulatory reporting.” investors with state-of-the-art decision- improving the performance of their care of their core banking requirements. their organisations. More than half of The company has architected its flagship The solution features enhanced support tools and access to a financially investment decisions,” said Pat Brazel, respondents at the SIFMA event in June spreadsheet management system, functionality including a spreadsheet savvy online network that shares its own CEO of Zignals. “This is where we plan to said they spend significant amounts of Spreadsheet Workbench, to integrate management portal for rapid and remote independently rated investment strategies. change the status quo. Zignals responds to Accenture has opened the Accenture time validating data rather than on seamlessly with SharePoint, and offer deployment; a high-performance The beta launch of Zignals will focus on this need by democratising trading for the Payments Innovation Showcase facility at productive analysis to gain competitive enhanced functionality for improved spreadsheet comparison and analytic personalised services for the investor – online investor. its research and development technology advantage. In addition, 20 per cent of asset spreadsheet control, risk management and server; spreadsheet key performance easy-to-use alerts that can be tested, “Microsoft has provided the resources lab in France. The facility focuses on managers, investment bankers and hedge compliance across organisations. indicators, and high-availability tailored and delivered directly to any e-mail and the technology to develop original research and development in all fund professionals spend between 25 per “Microsoft SharePoint is the system of deployment options to provide increased address, PDA or mobile device; intuitive personalised communication services and facets of the payments business, including cent and 50 per cent of their time choice for enterprise document resilience and disaster recovery capabilities charting; and technical analysis – all optimise trading strategies using the yet-to- mobile communications and other point- validating data. management and collaboration,” said for critical spreadsheet applications. developed using the latest Microsoft be-launched Microsoft Solver Foundation of-sale technology, bank-to-corporate Jeremy Wood, director and co-founder of “Spreadsheet Workbench provides a technologies, such as Silverlight. technology. The highly intuitive services connectivity, processing, process models, Finsbury Solutions. “By enhancing scalable solution with powerful analytic Zignals was created through the we are building will open up a whole new biometrics, regulation such as the Single Microsoft has released its Insurance Value Spreadsheet Workbench to seamlessly and monitoring capabilities that collaboration of the Microsoft IP Ventures world for retail investors who want to Euro Payments Area (Sepa) initiative, and Chain (IVC) Software Factory for Acord extend SharePoint’s spreadsheet complement SharePoint Server 2007 and team, Enterprise Ireland, entrepreneurs Pat maximise the effectiveness of their security. Standards at the Acord Loma Insurance functionality, we have created a powerful allow organisations to manage detailed Brazel and Scott Tattersall, Manresa investment efforts without spending every Systems Forum 2008. The new solution solution for the management and control and complex spreadsheets,” said Bruce Partners, and angel investors. waking hour peering at screens.” comprises a set of development tools and of business critical spreadsheets, from a McKee, industry partner manager at “The complete absence of personalised assets that use the Microsoft .NET single environment. It enables Microsoft Financial Services. Framework to aid insurance firms and organisations to reduce manually intensive software vendors in the integration of spreadsheet-based processes and assists existing applications and business logic with Acord Web services. Targeting the property and casualty, and life and annuity businesses, the IVC Software Factory is an extension of Microsoft’s broader IVC Primergy sets OLTP efficiency record Architecture Framework. Fujitsu Siemens Computers’ Primergy Computers. “Our focus on fine-tuning TX300 server has set a new world record systems ensures that Primergy servers for efficiency in online transaction deliver their best performance in the real Third Financial Software has acquired processing (OLTP). The server shaved 25 world. The new TPC benchmark provides the rights to a unique proactive alerts per cent off the industry standard independent validation of our leadership technology. Following a period of joint benchmark for OLTP in the efficiency in an area that is very important to data development, the new technology has bracket. centre managers and financial controllers been launched specifically to meet the The TPC Benchmark E (TPC-E) is a new alike: the industry’s best price-per- compliance and regulatory needs of the OLTP workload developed by the transaction figures.” wealth management community. Fully Transaction Performance Council (TPC), a integrated into tercero, Third Financial non-profit corporation founded to define Software’s wealth management platform, transaction processing and database the technology provides wealth managers benchmarks. The test is based on with a solution for compliance, risk and portraying the activity of a brokerage firm, portfolio monitoring. The new module, with workload centred on the activity of tercero Alerts is already being processing brokerage trades. implemented at Third Financial Software’s The new record is one of the first early adopters and advisory clients. benchmarks to be achieved using Microsoft SQL Server 2008 – available from 30 August 2008 – with the Primergy TX300 S4. Lab results validate the server’s performance when coupled with SQL Server 2008, putting the industry-standard server straight into the top spot in the TPC-E price/performance tables. “Our customers benefit directly from our investment in extensive testing in our benchmarking laboratories,” said Jens- Peter Seick, vice president of the enterprise server business at Fujitsu Siemens THE TX300’S EFFICEINCY IS RECORD BREAKING
  • 10. M A R K E T WATC H | N E W S IN BRIEF RDT and Moore Stephens have helped Towergate to increase its competitive advantage by standardising on a core underwriting system underpinned by a robust data warehouse. Towergate Underwriting is currently consolidating on the RDT Landscape core underwriting system, while Moore Stephens has created Bloomberg available the underwriting data warehouse. This completed ahead of schedule and on Windows Mobile aggregates business data from several sources. Microsoft has announced the broad news is critical for Bloomberg users, availability of Bloomberg’s real-time who are the financial professionals with services for Windows Mobile-based the most at stake,” said John Waanders phones. of Bloomberg. “Bloomberg on Microsoft The move, announced at the will further empower our global Apacs has revealed that the security of Securities Industry and Financial customer base to access Bloomberg many banks’ systems is driving criminals Markets Association (SIFMA) functions via one of the world’s most toward customers. In the UK, online conference, is in response to increased recognisable mobile platforms.” banking fraud dropped 33 per cent year- demands from financial professionals “Mobile access to news, data and on-year for 2007, but phishing attacks for on-the-go access to critical market other types of market information is no have become more frequent as criminals news, data and other resources. longer a luxury for today’s financial continue to target online banking Bloomberg's real-time financial services professionals, who need to be customers because the banks’ own information network provides business connected with real-time information systems have proved difficult to attack. and financial professionals with where their work takes them,” said More than 20,000 phishing incidents were comprehensive tools and data on the Craig Saint-Amour, director of US reported in the first half of 2008, an all-inclusive Bloomberg Professional capital markets industry solutions at increase of more than 180 per cent from service. Users will now be able to access Microsoft. “Through our collaboration, the same period last year. economic data, pricing, the latest Microsoft is able to provide Bloomberg financial and world news, Bloomberg on Windows Mobile phones, giving messaging, alerts, personalised market users real-time, productivity-enhancing Leading global alternative asset manager monitors and other functions from information services while they are Kohlberg Kravis Roberts & Co has virtually any phone running Windows away from their desktops and laptops.” implemented Finsbury Solutions’ Mobile 6. advanced Spreadsheet Workbench “Access to market information and software system. Based on the latest Microsoft technologies, the system provides finance, risk and audit Knowledge bank departments with enhanced transparency and control over the financial reporting CREDIT WHERE IT’S DUE process in accordance with the latest Global adoption of Islamic credit cards is expected to grow rapidly from its current financial legislation such as Sarbanes- base of less than one million accounts, reaching up to six million accounts by 2012 Oxley. Source: TowerGroup Portrait Software has launched Portrait New Business solution, to speed up policy issue and reduce risk exposure for life insurance providers. Designed to integrate Scalability milestone for Fiserv seamlessly with existing systems, the Fiserv CBS Worldwide has exceeded its Aperio. “We’ve consistently found that solution handles the entire new business performance goal of 10,000 concurrent SQL Server provides a solid, reliable acquisition process, from initial contact users for its Aperio customer interaction platform that scales up very well. It is an through to policy issue, based on management solution. excellent environment in which to underwriting best practice. By providing The testing was carried out jointly by work.” end-to-end process transparency, Fiserv, Microsoft and Portrait Software, “The results of this project traceability and reporting it reduces and involved multiple complex business demonstrate that systems based on bottlenecks and sales leakage and is both processes emulating deployment for Microsoft technology are scalable, compliant and auditable. major institutions. The results prove reliable and secure enough to handle that Aperio, which was created using large volumes of data at the heart of a the Microsoft Application Platform bank’s transaction processing including SQL Server 2005 Enterprise environment, and that they serve Edition (64-bit) database software, can mission-critical needs of our customers handle the demands of tier one, two and in the financial services industry,” said three banks with diverse deployment Kim Saunders, senior director of SQL requirements. Server marketing at Microsoft. “We’ve always been impressed by the scalability of SQL Server,” said David Saunders, technical architect at Portrait Software, whose framework underlies
  • 11. M A R K E T WATC H | N E W S IN BRIEF Fujitsu Siemens Computers has won two categories in the Microsoft Partner of the Year Awards, with its Mobile Broadband embedded notebook customisation and offering taking the prize for OEM Hardware Solutions, System Building. “Developing products, solutions and services which directly VTB24 chooses DeviceLock address our customers’ needs and adapt to a changing marketplace is the basis of VTB24, one of Russia’s largest retail provides flexible control over a our strategy,” said Dr Bernd Kosch, vice banks, has chosen DeviceLock 6.3 to computer’s local ports and devices, thus president for strategic alliances at Fujitsu ensure end-point security for servers and addressing one of our most significant Siemens Computers. “These awards from desktop computers across its entire IT information security problems.” Microsoft confirm the added value our infrastructure, a distributed DeviceLock 6.3 features solutions bring.” heterogeneous system including comprehensive central management Windows and other operating systems. natively integrated with Microsoft Active “With the proliferation of high- Directory and Windows support, from Insurity and Microsoft have released a capacity removable storage devices NT to Vista. Users can control, log, survey detailing the role of technology available today, there is a much greater shadow-copy and audit end-user access for insurance firms recruiting ‘millennial threat of information leaks from the to any type of computer’s ports and generation’ (those born between 1981 bank’s IT system, as well as infiltration peripheral devices. The product includes and 2000) employees and customers. by destructive malware elements,” said presence detection and access control to The Millennials in Insurance Survey 2008, Anatoly Bragin, chief of VTB24’s local, network and virtual printers as well conducted by KRC Research, found that Information Security department. as Windows Mobile and Palm-based millennials want to use newer, more “DeviceLock is the software product that personal mobile devices. innovative technologies in the workplace can most effectively help us to fight such and also have heightened expectations threats. We used a previous version of as to how insurance companies should DeviceLock and found it a highly interact with them as consumers. Around functional and reliable product. It 91 per cent said that being able to work with ‘newer, innovative technologies’ in the workplace would make them more Knowledge bank likely to consider a potential job opportunity. GREEN SHOOTS Over 25 per cent of life insurers and 20 per cent of non-life insurers do not consider environmental impact when making IT decisions – however, insurers do emphasise performance metrics and products that help promote a green economy Thomson Reuters has extended its Source: Datamonitor mobile market information, economic data and news service to Windows Mobile devices, enabling it to access a much wider customer base. The development will allow financial professionals using Windows Mobile CREDIT SUISSE phones to have immediate access to the latest market information such as stock LAUNCHES DYNAMICOPS quotes, breaking news, alerts and personal market monitors, from virtually Credit Suisse has launched DynamicOps, company’s unique environments. anywhere. an independent company to market its “In the case where self-provisioning for Virtual Resource Manager (VRM), a virtualised servers has been deployed, virtual infrastructure management VRM enabled us to reduce our Dutch insurer has chosen application. provisioning lead times from weeks to the Example Platform from Duck Creek Credit Suisse first deployed a virtual minutes,” said Stephen Hilton, managing Technologies Europe, to provide direct- infrastructure in 2005, and realised that director for enterprise servers and storage to-insured private motor quotations and while virtualisation improved resource at Credit Suisse. “This has resulted in underwriting transactions. Based on utilisation and business agility, it also more efficient server utilisation and lower Microsoft .NET, the platform will deliver increased operational complexity. VRM capital costs. An additional benefit is the’s policy application and was initially developed by the Credit dramatic improvement in our ability to quote process, enabling the company to Suisse Global Research and Development respond rapidly to business needs.” develop and deploy products quickly Group. It has been in production for while effectively scaling the business. more than two years and manages Steve Yatko of Credit Suisse and Leslie thousands of virtual desktops and Muller of DynamicOps give their views servers at multiple Credit Suisse data on virtualisation in our round table centres in four locations worldwide. discussion on page 26. Based on open technologies like Web services, Microsoft .NET Framework 3.0, and Windows Workflow Foundation, VRM provides out-of-the-box policies, workflows and provisioning templates which can be customised to each
  • 12. COVER STORY: KAS BANK ayments systems are critical to the P standards, operations of any bank. As the global payments picture develops to include new regulations, new increasing numbers of international transactions and innovative methods of payment, banks are under increasing pressure to ensure that their IT can support them in terms of workload, compliance and competition. As a supplier of investment management, custody, clearing and settlement services KAS Bank understood these issues only too well. Based in Amsterdam and with 200 years of banking history, KAS Bank is among the top 100 Swift users, with over 95 per cent of its transaction messaging being carried over the Swift network. The company values both past experience and forward-looking innovation, an attitude that is amply illustrated by major IT projects such as its implementation of Microsoft BizTalk Server and BizTalk Accelerator for Swift (A4Swift), a product extension that enables message formatting and connectivity to the Swift network. The strategic migration of all its banking applications from a mainframe environment onto Microsoft .NET gave KAS Bank the SWIFT “ WE WANTED TO BE SURE THAT THE NEW ENVIRONMENT WAS ABLE TO HANDLE A HIGH AND TRANSACTION LOAD. MICROSOFT SURPASSED THE OTHERS IN TERMS OF BOTH PERFORMANCE AND COST ” SURE KAS BANK IS LEADING THE WAY IN SWIFT PIM VAN DER HORST, CONNECTIVITY WITH THE IMPLEMENTATION CIO AND DIRECTOR OF ICT, KAS BANK OF MICROSOFT BIZTALK ACCELERATOR FOR SWIFT. JACQUI GRIFFITHS FOUND OUT HOW THE PROJECT IS ALREADY DELIVERING SIGNIFICANT BENEFITS 21
  • 13. COVER STORY: KAS BANK “ KAS BANK NOT ONLY HAS NEW TECHNOLOGY; IT ALSO HAS A MUCH MORE DYNAMIC ENVIRONMENT - MORE OPEN AND FLEXIBLE ” FREEK OLDENHUIS ARWERT, BUSINESS MANAGER, MICROSOFT opportunity to optimise its Swift connectivity. “For Arwert. “During the selection process, we built the strong partnership with KAS Bank,” says Oldenhuis support agreement with Microsoft, and we’re also 20-30 years, we were based on an IBM mainframe,” solution in one day, while other parties didn’t finish Arwert. “For the payments project we have a core team taking part in the rapid deployment programme,” says explains Pim van der Horst, chief information officer at all.” on site at the bank, consisting of a strategy consultant, van der Horst. “We also get high-level support because and director of ICT at KAS Bank. “We developed “Performance and cost were both taken into an application architect and an infrastructure we’re now running on Vista – we were the first quite substantial functionality on that mainframe in consideration in the decision,” says van der Horst. architect. A close relationship is important because financial institution in the Netherlands to implement an Adabas/Natural environment. However, we “We had a high volume of Swift messages, handling every organisation is different, with different rules Vista across the organisation. In addition, our wanted to be more agile towards our customers. We 100,000-150,000 per day. This puts us among the around their workflow. With A4Swift, some of the enterprise licensing agreement with Microsoft helps wanted to offer them more services, faster, and with top 100 Swift users, which is quite an achievement workflow is tailor-made for them, so of course we us to minimise costs.” 24/7 availability. In addition, we wanted to achieve a for a small bank like KAS Bank. Because of this, we work closely together to do that.” KAS Bank has taken the time to ensure it achieves shorter time to market for new product wanted to be sure that the new environment was “Two years ago we didn’t have any Microsoft the results it wants, as van der Horst explains: “The development. This was not possible with our actual able to handle such a high transaction load. We also knowledge in-house, only mainframe specialists,” broader migration to Windows is likely to continue mainframe infrastructure, so we looked for calculated what it would cost to develop functions adds van der Horst. “The role of Microsoft both as a until 2010, as we don’t have a big-bang strategy for it. alternative technologies.” within the different environments. Microsoft facilitator and as a trainer of our people on the job is We’re moving gradually, so we’ll phase down our use As part of the migration project, KAS Bank chose surpassed the others in terms of both performance very important. They provide very specialist of the mainframe and build up our use of Intel and A4Swift. “The Swift project was part of the whole and cost.” knowledge on the project, and we also use Microsoft Microsoft-based platforms simultaneously. In phasing mainframe migration,” says Freek Oldenhuis Arwert, A further concern for KAS Bank was the availability partners to help us do the hands-on work. It’s clear out the mainframe, we’re following several strategies. business manager for the Enterprise and Partner of developers for its new environment, but Microsoft that our success in this project is also the success of We’re rebuilding functionality ourselves and Group at Microsoft in the Netherlands. “It was a big has a very extensive certified partner network Microsoft, and vice versa, so we have a common developing it in the .NET environment. We may also decision for KAS Bank. Their first choice had been a throughout the world. “.NET developers are more interest in achieving tremendous results with what automate aspects of the migration directly from new mainframe, and they embarked on an extensive available than Java or Oracle specialists,” says van der we’re doing at KAS Bank.” Adabas/Natural to C# using a conversion tool. selection process involving different technology Horst. “In addition, developers for those other “The project has already led to more interest from “The Swift project has entailed several phases, platforms.” environments are much more expensive than .NET other parties,” says Oldenhuis Arwert. “Working with because we had a rather complicated architecture and KAS Bank considered technologies from IBM, developers.” KAS Bank has been enjoyable and informative. The infrastructure. We had to source out the mainframe Oracle and Microsoft. After extensive benchmark KAS Bank team is always willing to engage in applications and gradually build up the Microsoft testing at an independent technology institute, A WINNING TEAM discussions with us, and to explore other alternatives environment. Now we’re at the stage where we’re Microsoft .NET came out as the winner on both A strong working relationship is essential to any major with Microsoft technology.” about to go live, and we’ve already phased out some performance and cost. “Microsoft was the fastest at IT project, particularly for such a mission critical area, For KAS Bank, the relationship is enhanced by the mainframe applications.” developing new software,” continues Oldenhuis and this is clearly evident at KAS Bank. “We have a support structure Microsoft offers. “We have a premier RAPID RESULTS Prior to fully going live with the A4Swift system, KAS Bank is using two channels for its Swift messaging. “At this point, not every transaction is going through Microsoft, as we have a mapping issue,” says van der Horst. “We’re putting them onto the new architecture message type by message type.” Nevertheless, KAS Bank has already started to see the benefits of its Swift agreement. Over the past 12 months, the performance of the system has exceeded expectations. “The system can handle a large message load,” says van der Horst. “We’re very pleased, even a little surprised by its capability. It’s also very stable. The configuration we had on the mainframe, with a lot of packages talking together, caused me a lot of headaches, because the environment was not very stable. With A4Swift, we have much more stability.” When it comes to saving time and costs, KAS Bank has found A4Swift very rewarding. “One big advantage is that the cost of maintaining the system goes down enormously,” says van der Horst. “Another is that Swift’s November Changes are no longer a headache for us. Before, we had to implement all the changes in different systems; we had to be sure we were complete, and had done every modification necessary, and then we had to test it, which was a lot of work. Now, Swift and Microsoft have taken care of that – we get a new version of A4Swift that contains all the Swift changes. That’s saved us a lot of time, and also reduces operational risk because we only have to test the upgrades against some forms from Microsoft.” Management savings such as these are also
  • 14. COVER STORY: KAS BANK “ THE COST OF MAINTAINING THE SYSTEM GOES DOWN ENORMOUSLY. SWIFT’S NOVEMBER CHANGES ARE NO LONGER A HEADACHE FOR US - SWIFT AND MICROSOFT HAVE TAKEN CARE OF THAT ” PIM VAN DER HORST, CHIEF INFORMATION OFFICER AND DIRECTOR OF ICT, KAS BANK beneficial in terms of compliance. “The environment project – it has created a buzz in the market, for both gives us a more flexible reporting infrastructure,” says Microsoft and KAS Bank.” van der Horst. “The Swift environment now integrates “Microsoft is looking forward to building on the its reporting services, so we can get a lot of reports on success of this SwiftNet integration and supporting the status of messages out of the system – another KAS Bank in its ongoing reengineering efforts process that previously required a lot of work. We’re throughout its infrastructure,” says Sheida Hadji- working on making that functionality available to Ashrafi, worldwide industry manager for payments at customers, possibly through SharePoint Portal.” Microsoft. “KAS Bank’s work goes to show that a cost- In fact, van der Horst explains, the project has effective integration platform can be the foundation of resulted in significant simplification in KAS Bank’s technology renewal programme. SwiftNet integration back office: “When a customer calls to ask where their is a vital component of this.” F payment or settlement is, it is now much easier to handle the enquiry yourself, because all the transactions are stored on a SQL Server database, and we can use Microsoft reporting tools.” A PICTURE OF THE That stability has resulted in a notable - and PAYMENTS INDUSTRY welcome - silence in one aspect of KAS Bank’s customer relationships. “One thing about Swift “At Microsoft we see quite an upheaval in messaging is that customers simply expect it to work. the payments industry, especially in Europe,” So when you get it right, nobody really tells you so,” says Sheida Hadji-Ashrafi, worldwide says van der Horst. “But they do complain when you industry manager for payments at Microsoft. get it wrong. So far, we’ve found that with A4Swift, we “New regulations such as the Payments don’t receive any complaints!” Services Directive are causing legal and product changes throughout European MOVING FORWARD banks, and that is resulting in technology Moving from the mainframe can prove challenging for challenges as well. New credit and debit banks in terms of organisational change, says transfer products created under the Single Oldenhuis Arwert: “KAS Bank not only has new Euro Payments Area (Sepa) require the technology,” he explains. “It also has a much more adoption of XML messages that many dynamic environment than it was used to – more legacy systems cannot support. As a result, open and more flexible.” banks are faced with complying with Sepa However, at KAS Bank, the system has not simply while, at the same time, working out how to gained acceptance from users; it is also building adapt the ageing technology platforms that excitement for the future. “Our IT people are quite connect to domestic systems.” excited by the system,” says van der Horst. “Coming Swift integration is one example of this, from decades on the mainframe, they were initially a says Hadji-Ashrafi: “In the foreseeable little wary of the new technology, but in fact they have future Swift FIN MT message types will found it easy to learn and to adapt.” most likely be retired, and will be gradually The relationship between KAS Bank and Microsoft replaced by the new MX XML messages looks set to deliver ongoing benefits in terms of cost, based on ISO 20022. This raises additional performance and scalability. “As a medium-sized bank, complexity for banks as they Swift it’s in our interest to standardise on one platform in infrastructure must support both MT and order to achieve the lowest possible total cost of MX message types simultaneously. ownership,” says van der Horst. “We now have a new “Microsoft sees many banking Swift infrastructure in place, and we’re investigating customers adopting the Swift integration opportunities to use other Microsoft tools to increase platform as a first step to a wider the performance and visibility of that environment. technology renewal effort. At the core of We want to use System Center Operations Manager to this challenge is application integration, monitor the infrastructure, and we’re looking at coupled with business process working with Swift and Microsoft to develop an management. Once a bank realises success adapter for that. We can also use reporting tools from in implementing a mission-critical process Microsoft, as well as SharePoint, to give us a for Swift connectivity, the significant effort dashboard on the performance of the environment.” previously associated with expanding the The project has also created a stir outside of KAS technology renewal programme to the Bank’s organisation, says Oldenhuis Arwert: “KAS entire solution stack really does become a Bank is among the top three banks for Swift in the far less daunting proposition.” Netherlands,” he says. “Other organisations have already contacted them about the Swift migration
  • 15. VIRTUALISATION JACQUI GRIFFITHS ASKED THE EXPERTS ABOUT THE TECHNOLOGY AND TRENDS BEHIND VIRTUALISATION IN THE FINANCIAL INDUSTRY irtualisation is today’s hot topic, mature. But really it’s been waiting in the V and the latest developments in technology and business demands mean that it’s likely to see phenomenal growth. But this is not a new wings for the past four years or so. A lot of companies, especially in the financial industry, have been looking for ways to become more dynamic in managing their data concept, having been around since the centres. As well as cost issues, their main mainframe – so why are we now seeing concern is about being able to respond to renewed interest in it, from financial firms market events much quicker, utilising their and vendors alike? We gathered some of the vast compute resources more efficiently. This industry’s top experts to discuss the move towards ‘data centre 2.0’ is completely development of virtualisation, and what it underpinned by virtualisation technologies – means for financial firms. not just hypervisors, but also virtualisation at the storage, network and operating system Why is virtualisation getting so much level. A lot of things have come together now, attention now? and it’s really starting to enable people to Leslie Muller, DynamicOps: One reason is move toward that vision of the dynamic data that a lot of the technologies are starting to centre. It’s just the right time to do that. 27
  • 16. VIRTUALISATION “ AT GARTNER, WE THINK PENETRATION OFAS A MARKET IS ABOUT SIX TO SEVEN PER CENT VIRTUALISATION SERVERS TODAY, AND THAT WILL GROW TO AROUND 15 PER CENT BY ABOUT 2010-2011 ” PHIL DAWSON, GARTNER Ian Warford, Microsoft: Virtual machine technology for time- sharing on mainframes has been around since the 1960s, but it’s been pushed to the top of the business mind because these technologies now Ian Masters, span the entire stack. Businesses of all kinds are Double Take Software: facing challenging demands, and they need to be Companies are seeing that IT can able to respond in a dynamic way. The expansion deliver now, and they’re enabling themselves to of virtualisation has come at the right time to offer additional or enhanced services. The answer those business needs. underlying technology wasn’t necessarily there before. Now it is, and it’s giving people the ability Steve Yatko, Credit Suisse: People are recognising to try something new. that virtualisation is no longer about a pure technology. It’s more about a paradigm shift in Phil Dawson, Gartner: There are two levels of terms of data centre capability and business virtualisation. Many virtualisation projects are capability. The true value of virtualisation is far about consolidation of existing technology and beyond server and desktop virtualisation – optimising utilisation, and in that sense they’re ultimately it’s the ability to layer on top of retrospective and represent an IT benefit. Now, virtualisation, to deliver new capabilities that help though, a growing proportion of virtualisation achieve unprecedented advances in time to market. projects are about improving service levels, workload management and availability. These How can capital markets firms benefit from projects are about the virtualisation of new virtualisation? workloads, which is a very different business case. LM: Virtualisation allows you to do a lot of consolidation, driving up utilisation levels and Günther Aust, Fujitsu Siemens Computers: Today’s lowering capital costs, or utilising the money server systems offer an increasing amount of you’ve put into your data centre much better. For performance, and right now there is a clear trend: many capital markets firms, the big issue is more companies are trying to move away from retasking – having virtual machines running proprietary Unix systems, and they’re increasingly different types of systems allows you to do risk entering the open server or industry standard calculations and in-depth analyses during the day server market – Intel and AMD based systems. while at night you may be using the same systems The first motivation for virtualisation was to to do settlement or other back-office operations. consolidate under-utilised servers and to do more It’s about being able to be a lot more adaptable. with less. But virtualisation doesn’t just support We’ve seen the need for this in the past consolidation – because of the hardware and few months as events have unfolded software independence it creates, it also offers the in the financial industry. As opportunity to create infrastructures that provide some institutions more high-availability, flexibility and agility start to struggle without using complex cluster systems. and it becomes public, Philippe Nicolas, Brocade: Virtualisation represents their a cost killer enabler. When you virtualise applications, server, network or storage, you decouple the logical layer and the physical components – you make incompatible things compatible, with no downtime and no impact on business. This is a much better utilisation of resources and leverages existing assets, so the total cost of ownership (TCO) is improved.
  • 17. VIRTUALISATION “ THE IT WORLD IS SHIFTING FROMWORLD TOWARDS DATA, SERVER, STORAGE OR NETWORK CENTRIC AN APPLICATION, A VIRTUALISED CENTRIC APPROACH WHERE ALL THE OTHERS ARE EMBEDDED ” PHILIPPE NICOLAS, BROCADE clients sometimes leave them and move to other under the desk and the same amount of screens financial firms, which then have to rapidly increase above it, and they skip around the different their capability around some product offerings. applications for the information they need to take From one day to the next, they might literally have decisions. Their problem is not only the amount of to increase their volumes three times or more, and physical workstations they need, but also that the you can’t do that with physical environments. data they deal with is very sensitive. They would Having your applications and systems run inside like to store sensitive data and applications in a virtual machines allows you to grow a particular hosted data centre environment, but traditional product or business unit overnight, to deal with approaches like terminal services are not allowed the extra volume that accompanies market events. in that area due to legal restrictions. For those That’s been absolutely critical for some companies. scenarios, financial firms are looking to things like desktop virtualisation to keep the individual PN: We see many virtualisation technologies systems separated in virtual machines, while deployed for consolidation projects, as people consolidating and centralising them into a hosted realise that this improves their IT utilisation and data centre for security reasons. reduces global cost for things like power consumption and operational expenditure. Are there any potential issues raised by Financial companies have to react to a fast virtualisation in the capital markets? How are changing world and they need agility in both their companies addressing these? business and the IT that sustains it. PD: With capital markets, as with any financial In financial simulation, many firms use grid services company, you have IT-centric applications computing based on commodity hardware. The like internal IT processes and HR systems, and goal is to deliver fast results, and virtualisation then the business IT services. Virtualising and allows easy and transparent provisioning without consolidating the core IT is similar to any other any impact on users or applications. Then, for business, but when you get down to the specific usage, some departments select vertical transactional and call centre systems, it’s very applications on dedicated platforms, which cost much down to the applications. If you’ve got more than traditional ones. The effect of independent software vendor (ISV) enterprise virtualisation here is to standardise key core resource planning (ERP) systems, that’s like any functions like resource management, data other application, but if they’re in-house protection and business continuity by using the applications it can be much more complex. same horizontal open layer across server, storage and various IT units. IM: One big reason for virtualisation is to get more out of less, but from a workload point of view, some GA: Some key benefits that also relate to capital applications are really only going to deliver the right markets firms can be seen in Fujitsu Siemens performance when they’re hardware hosted. It’s Computers’ recent work for HypoVereinsbank in down to specific application needs – if you have a Munich. The company’s IT team started to evaluate large application that will really only deliver the virtualisation technology very early on. Initially, right performance on hosted hardware, then you their main focus was consolidation, and we need to think about whether virtualisation is consolidated 650 physical servers in their data suitable. But as long as virtualisation is managed centre onto 43 Fujitsu Siemens blade systems. This correctly in terms of things like security, saved the bank around 1.6m KwH (€180,000 in performance, and data protection, it can offer energy costs) per year in the data centre, and significant benefits. enabled it to stay in its existing data centre environment in Munich. That kind of saving is very IW: That’s one area where partnering with IT significant to any business with high reliance on IT specialists can pay dividends – as virtualisation resources. technologies continue to develop, financial firms We’re still working with HypoVereinsbank, this need to know how to structure their virtual time on desktop virtualisation in the data centre, environment, and also to simplify its management and this is a key area where capital markets firms to ensure compliance as well as agility. For capital can benefit – we’ve had a lot of requests for markets firms, where successful trades can depend application scenarios for brokers, who have to on split-second timing, it is crucial to ensure that work with multiple systems at the same time. They resource-intensive business-critical applications are normally have six to ten dedicated workstations performing at optimal levels.
  • 18. VIRTUALISATION “ IT WILL BEDEVELOP THEIRTO SEE IF MANUFACTURERS CONTINUE TO TRY AND INTERESTING PRODUCTS TO FIT IN WITH VIRTUALISATION OR WHETHER VIRTUALISATION WILL HAVE TO FIT IN WITH THE HARDWARE DEVELOPMENTS ” IAN MASTERS, DOUBLE TAKE SOFTWARE How important is the management of virtualised might mean that the underlying environment is environments in this arena? running at almost 100 per cent, but as long as your LM: In the past, you had one application tied to a business system is meeting your SLAs to internal server, and business units would not share those and external customers, there’s nothing wrong physical platforms. With virtualisation you share with that. The challenge is really that mind shift, computer platforms and physical machines with for operations people and for the development multiple applications, sometimes across business community within the financial industry. units. It’s important to be aware of the end-to-end process, from the desktop right through to the SY: Virtualisation is becoming more natively back-end system and the market, and make sure embedded in operating systems, enabling the you understand the impact. ubiquity and pervasiveness that drive value across For example, traditionally in a data centre we the IT landscape and deliver the beginnings of worry about how busy the CPU is, or how full the transparent capability. On top of that are layers of memory is. We really have to move beyond that virtual management which can create highly and start understanding the service level available virtual environments that satisfy agreements (SLAs) of traditional, physical high availability as well as that application disaster recovery and business continuity plans – or system. factors that are critical to capital markets That organisations. The additional aspect is really about seamless access to the whole lifecycle of the virtual environment management layer. This is why Credit Suisse developed DynamicOps. We wanted to extend the value of our existing suppliers and technologies – to add value on top of that. PD: Rationalisation can help reduce complexity and cost. If you look at a typical virtualisation process, taking a thousand workloads to a hundred servers on a ten-to-one ratio is the saving. But if you rationalise them down to 800 workloads on 80 servers, you’ll get even bigger savings. The process of balancing consolidation, rationalisation and virtual- isation is absolutely key. What benefits can Microsoft offer? PN: Microsoft is playing a key role in virtualisation by leveraging Windows’ core functions to enable the dynamic data centre. It confirms that software is the key enabler for virtualised infrastructures that offer greater flexibility. In many directions, such as servers with Hyper-V or storage with a file storage approach based on CIFS (the standard file sharing protocol for Windows) and distributed
  • 19. VIRTUALISATION “ VIRTUALISATION OFFERS THE OPPORTUNITY TO CREATE INFRASTRUCTURES THAT PROVIDE MORE HIGH-AVAILABILITY, FLEXIBILITY AND AGILITY WITHOUT USING COMPLEX CLUSTERS ” GÜNTHER AUST, FUJITSU SIEMENS COMPUTERS file system (DFS), Microsoft has set new de facto seen with and through this virtualisation standards that help users define new and better IT technology. The IT world is shifting from an usage. In fact, when people select Microsoft application, data, server, storage or network centric components in financial arenas, they continue to world towards a virtualised centric approach where use these elements with recent Microsoft all the others are embedded. virtualisation technologies. It helps them maintain and augment the life of their IT resources, PD: I think we’ll see sedimentation in terms of the drastically influencing the TCO. hardware, and real differentiation will come from availability suites and systems management. IM: Hyper-V is going to be a very valuable alternative for customers in the capital markets and IM: In the future, we’ll see even more cores. There others. Companies that already standardise on will be hardware developments in conjunction Microsoft will find it even more appealing from a with virtualisation developments that allow even support perspective, because they’re so familiar better use of the CPU in a machine, being able to with the Microsoft operating system. thread it properly and having multi-core processors that can deliver performance on an almost LM: When the Hyper-V becomes fully available individual virtual machine basis. We could also see later this year, it will attract significant interest. modularised applications that can spin off a new Microsoft has put significant amount of investment virtual machine to add capacity as they hit a into this space, and I believe it will become a major workload state or threshold, and then spin it down player in the next couple of months. In developing again when it isn’t required. DynamicOps, it was key that we utilised Microsoft Obviously everyone’s use of a particular technology, specifically its workflow and rules application is different, so it will be interesting to engine technologies. We worked with Microsoft see if hardware and storage manufacturers from day one, and got a fantastic product out of it. continue to try and develop their products to fit in with virtualisation or whether virtualisation will PD: At Gartner, we think virtualisation as a market have to fit in with the hardware developments that is about six to seven per cent penetration of servers are occurring anyway. today, and that will grow to around 15 per cent by about 2010-2011. As it goes over 15 per cent that GA: Fujitsu Siemens Computers’ dynamic data starts affecting the volumes of shipments for the centre strategy is based on three main pillars: systems – as systems get bigger, their value goes virtualisation, automation and integration. up, but units may go down. Vendors will compete Virtualisation as we see it is not simply a concept; more on the management and tools around it’s a set of capabilities provided by that concept. virtualisation than on virtualisation itself. Accordingly, while hypervisors are an important building block in the overall virtualisation strategy GA: Microsoft has done an excellent job in of a company, there are other things, like a uniform expanding its management suite with a new management of real and virtualized environments, strategic pillar, the System Center Virtual Machine to take into consideration. It’s becoming a much Manager. It has been very clever in identifying the broader landscape. importance of management – it had a management product before it had an enterprise ready LM: The data centre is going to require a very good virtualisation product. management platform with workflow engines, rules engines, policy controls and so on, to enable How do you think the industry will develop next? it to deal with a very complex dynamic situation. PN: It’s all about partnerships and features This is the end state that DynamicOps has in mind. integration. Users are waiting for global data centre It’s a vision that Credit Suisse shares with solutions with application, server, network and Microsoft, and with a lot of financial companies. storage to control and manage. They want to use Microsoft understands what the data centre is commodity hardware with intelligent software, and going to look like, and is on the technology space, that software will make the difference. solving issues in critical areas of the real Standards are also important, as they contribute virtualisation space, from interfaces to hardware. to reducing cost, and best practice legislation like Complementing that endeavour, companies like ITIL is key for a broader adoption. One fact to DynamicOps will offer solutions to deal with the remember is that IT is managed, controlled and complexity at a higher level. F
  • 20. CORE BANKING URBING THE CRUNCH IN THE CURRENT FINANCIAL CLIMATE IT IS CRUCIAL THAT BANKS RETAIN CUSTOMERS BY PROVIDING THE SERVICES THEY DEMAND – BUT THIS CAN PROVE DIFFICULT AND COSTLY TO RECONCILE WITH TRADITIONAL CORE BANKING SYSTEMS. JAMES DODD FINDS OUT THAT A SERVICE-ORIENTED ARCHITECTURE CAN HELP ith the credit crunch currently systems and general ledgers. But in a sense W on everybody’s lips, it seems impossible to escape exposure to it and its ramifications – no matter where you are in the world. this represents the theoretical side of core banking. In reality the industry sees it as an increasingly relative and fragmented idea. “From the bank’s point of view it depends Obviously the finance sector is taking the on what sort of business they’re in – retail, brunt of this, and possibly on the very wholesale or private banking,” says Koen frontline is banking. Van den Brande, worldwide industry The credit crunch has prompted manager for core banking at Microsoft. “It is customers to call into question the also very likely that different parts of the fundamental services banks provide them. bank will consider different elements of Are they efficient, flexible and easy to use? their back-office systems to be core.” The Now, more than ever, it is important for same relativity is prevalent among the banks to excel in this area of basic services, industry vendors, who tend to see core which is ultimately traceable to core banking banking as whatever it is they sell. systems. Customers want quality in existing With such a plethora of interpretations services, as well as the option of new ones, it’s easy to understand why Microsoft takes a and they want multi-channel access to these liberal view of the concept: “Our approach offerings. For banks, the challenge lies in tends to accept a very broad description of making such improvements viable in terms core banking,” says Van den Brande. of cost and risk – any changes to the core “Roughly, we see it as being constituted of system must result in operational efficiency, most things that happen in the back office.” with minimal disruption to the business. Clearly, such a flexible approach is primarily With core banking at the root of the concerned with the evolving nature of core challenge it seems pertinent to first ask, banking systems. what is actually meant by the term? In fact, Van den Brande suggests that the Naturally, it depends on whom you ask. future may have limited room for core Typically, industry analysts have quite a banking systems as we know them today: narrow definition focused on the retail “We may find that in the future, as people context and incorporating current savings start to break apart traditional core banking accounts, lending, customer information systems, we have a collection of core 37
  • 21. CORE BANKING “ IT’S BANKS REQUIRE, HOWBIG PICTURE FIRST – WHATINTO THE SERVICES DO ABOUT GETTING THE DO WE TRANSLATE THIS COMPETENCIES LANDSCAPE, AND WHICH SERVICES SHOULD WE FOCUS ON? ” JOHN MCKEE, MANAGING DIRECTOR OF THE BANKING DIVISION, FINANCIAL OBJECTS banking services.” But why this move from the replacement are not the result of the current economic monolithic, universal systems of old to a more service- downturn, because they are rooted in the past,” he oriented approach (SOA)? Some would argue, ‘if it’s says. “Neither are those issues going to disappear as a not broken; don’t fix it’. But maybe a few cracks are result of the current economic climate. The need for starting to show. scalable and open systems that can cope with the “The current climate illustrates how rapidly demands of growth through merger or acquisition may business priorities must change and, subsequently, have diminished, but the need for flexibility, openness, how agility is key to a bank’s survival,” says John scale and agility remains.” McKee, managing director of the banking division at The ability to reuse resources is also becoming Financial Objects. “The Internet and mobile banking increasingly important. “SOA has become a key have lowered barriers to entry substantially, and if a differentiator in the financial services industry in that it bank’s current core system cannot support rapid allows banks the flexibility and opportunity to reuse channel deployment, it will lose assets or market share technology assets,” says John Macaluso, senior vice to more agile institutions.” president and chief technology officer at Fiserv CBS However, Barrie Neill, retail banking strategy Worldwide. “Choosing a flexible and customisable manager at Temenos, is keen to point out that such system can also help mitigate the risk of replacement issues are fundamental and not merely a sign of the by allowing users to combine older systems as times. “Most of the issues that drive core system components with newer technology.” And so with SOA at the fore, it is worth considering the constituents of such an approach. The three most obvious elements are customer focus, operational THE DOS AND DON’TS efficiency and innovation. With customer focus, the OF CORE BANKING central challenge is gaining complete access to customer information that is spread over various “It’s worth stressing that a core system locations. The rewards that follow are comprehensive. replacement project is not just about a “Banks that better understand their clients will have a partnership between the bank’s business and IT greater opportunity to retain them,” says Michael areas,” says Barrie Neill, retail banking strategy Nicastro, senior vice president and chief marketing manager at Temenos. “It should also be based officer of Open Solutions. “In this electronic world upon a long-term partnership between the where transactions move in cyberspace, the consumer vendor and the bank. If that partnership is not and the business owner may never physically enter the well established it can lead to poor bank, but they will expect service at a level as though communication, failure to manage issues and they were in a branch every day.” risks and uncertainty over scope and timescales The second main element of SOA relates to the to name just three. ability of a bank to offer new products and services. “When it comes to product innovation, clearly “In terms of examples of good practices to follow: parameterised product definition is great if you have it • Establish strong executive sponsorship and built into a traditional core banking system,” says Van engagement from both the business and IT for den Brande. “But increasingly companies need to the commitment and work required integrate a number of different competencies across • Carefully define at the highest levels, and the organisation to deliver a new product.” The way agree amongst all stakeholders, what they SOA enables product managers to bring together and want to achieve in terms of operational success orchestrate services is directly related to a bank’s ability over time to be innovative and to reassemble or put together a • Choose the right systems and tools to give the different product offering. exact functionality, flexibility and agility to The final notable SOA element underpins the support the realisation of the objectives previous two and is essentially concerned with the • Assign owners to the benefits and track these operational abilities provided by a dual layer business through implementation and subsequent system. “Operational efficiency is a lot about process realisation optimisation,” says Van den Brande. “If you can • Carefully manage the non-IT aspects of externalise those processes, in other words have an change management, such as training and SOA infrastructure and a layer on top of that, then you objection handling.” can change your processes without having to change the underlying systems.” Thus process and service run together, yet at the same time independently.
  • 22. CORE BANKING “ IN THIS ELECTRONIC WORLD CONSUMERS ANDTHEY EXPECT SERVICE MAY NEVER PHYSICALLY ENTER THE BANK, BUT BUSINESS OWNERS AT A LEVEL AS THOUGH THEY WERE IN A BRANCH EVERY DAY ” MICHAEL NICASTRO, SENIOR VICE PRESIDENT AND CHIEF MARKETING OFFICER, OPEN SOLUTIONS Even with its obvious benefits, an integrated services banks and information technology vendors that have approach must be implemented with care. It is formed with the aim of developing SOA standards for important for an organisation to select the services that the banking industry – effectively a common language are most relevant to its current business offering and and code of practice. This would smooth every stage of concentrate on them, at least at first. To achieve such an implementation. Technology would integrate prominent differentiation a bank must admit that rarely more freely, and banks would be able to communicate can it excel in every focus area – customer relationships, their needs more easily to vendors who, in turn, would innovation and operational efficiency – at once. be able to more accurately respond. Focusing on a particular service stream also makes a Microsoft is already part way down this road. The project easier to measure in terms of palpable success. company’s all-round flexibility and interoperability This leads naturally to another important element in ensure that it stays at the front of the vendor pack. any SOA implementation: a phased approach. For large “Microsoft, and specifically its .NET environment, banks in particular, a complete overhaul of the core continues to be the platform of choice for core systems banking system is simply not viable. Just as SOA is development and operations,” confirms McKee. “In about flexibility and balance, implementing such a addition to the productivity gains achieved in structure requires the same philosophy. development, banks also benefit from licensing and “The most popular and least disruptive method is support costs which are orders of magnitude better to deploy the new technology either for a new than those associated with more traditional (largely product or a new market or service to existing mainframe) alternatives.” customers,” explains McKee. “When this has been in Neill picks out a particular Microsoft product for production successfully, existing customers and its usefulness in the industry: “Microsoft SQL products can be migrated onto the new platform and Server is a proven solution. By combining ease of as the services on the legacy diminish, they can be use and the availability of leading core banking decommissioned. During this migration a common software from partners such as Temenos, front end with integration and/or interfacing to the widespread access to technical skills and very existing systems can minimise user disruption and competitive pricing on powerful commodity customer confusion.” hardware, SQL Server allows banks to empower A gradual server-based approach thrives on clear their people to improve operational efficiency at a aims, since it makes it easy to track the expected gains. much lower total cost of ownership.” This ensures that the business remains engaged and But for Microsoft, SOA is about the bigger picture. sees the conversion as a useful thing to do. However, is “The services offered by Microsoft and its partner such an approach considered too costly and disruptive ecosystem, combined with people competencies, map in the current climate? Nicastro quickly counters such directly over the BIAN framework,” says Van den qualms: “Technology can help, but bankers will need Brande. “It’s all about getting the big picture out there to forgo the myth that it can be done at minimal cost,” first – what are the competencies banks require, how he confirms. “Technology deployed properly can be do we translate this into the services landscape and efficient but it comes at a cost. A complete recipe for which services should we focus on to align with what failure is when a bank tries to ‘commoditise’ its core people are actually working on as business-driven technology. The old expression of ‘you get what you priorities at the moment?” It’s important to understand pay for’ is very much the case.” that the BIAN isn’t an attempt to prescribe a set Most banks have now caught on to the direction the medication to every bank. Rather, it represents the industry is heading, and accordingly their enterprise scaffolding for the construction of the ideal SOA architects have prepared SOA roadmaps. However, in structure for any bank. the past, when architects approached the market place And so the vision for the future of core banking is they were all too frequently unable to find the solution not so much of a one-size-fits-all system, but of a to match their needs. “The industry is still lagging a flexible, agile platform that integrates a wide variety little bit,” confirms Van den Brande. “This is one of the of customisable services. Whatever an organisation’s reasons why Microsoft joined the launch of the aim for its core banking system, Microsoft aspires to Banking Industry Architecture help them find the right path. “What we want to Network (BIAN). It represents illuminate is the practical route to this destination,” a direct attempt to align what sums up Van den Brande. “Where do we banks see as the roadmap and, start? What do we do first? Where do correspondingly, what the we get the services from? And how do vendors are able to deliver.” we make it work from a business The BIAN is a group of point of view?” F
  • 23. GOVERNANCE, RISK MANAGEMENT AND COMPLIANCE SERIES more traditional ‘point solutions’ approach, so within a very short time chose to implement the remaining components of Financial Studio to take care of IFRS accounting, MIS and statistical regulatory reporting in all six countries in the DnB Nord group. Strategically, this provided DnB Nord with a seamless platform on which to introduce risk-based performance measures, such as Risk Adjusted Return on Capital (RAROC) and Economic Capital in additional to their IFRS accounting, profitability and Basel II functionality. The decision taken by DnB Nord is not unique. Almost without exception, all of Financial Architects’ recent customers are buying in to the FRP concept. EastWest Bank in Manila, Philippines is implementing Financial Studio in its entirety. This path has also been chosen by Snoras Bank for its Lithuanian base and ever-growing foreign branch network, not to mention Van Lanschot Bankiers in the Netherlands and Belgium, and Euroclear in Belgium. Bank of New York Mellon has chosen to adopt the solution globally to address Basel II and regulatory reporting, as has Bache Commodities in London. This pattern is repeated in new territories such as the Middle East with Byblos Bank also adopting Financial Studio for both Basel II and regulatory reporting. The ability to combine and leverage functionality from different pillars of FRP is proving to be a concept of great value to all of Financial Architects’ customers. Daiwa Securities has adopted Financial Studio for its EMEA operations. Financial Accounting for IFRS is combined at Daiwa with a huge amount of functionality from the MIS domain. In addition to providing event-based IFRS accounting, Financial Studio also underpins the internal reporting of the institution, proving itself a valuable asset to many business functions within Daiwa, from product control to audit and risk. BUILT FOR STRENGTH Magic Quadrant for Basel II, Financial Architects is also widely recognised as a market leader in the provision of accounting solutions. Financial In a market previously served by point solution vendors, generic business intelligence tool providers or generic ERP solution vendors, the need for a Architects Accounting solution provides event-based, solution created by bankers for bankers is continually real-time accounting complete with IFRS functionality increasing. Regulatory pressure is unrelenting, and NIGEL LEE DESCRIBES HOW THE CONVERGENCE OF RISK, FINANCE AND REGULATORY COMPLIANCE based on a complete set of IFRS accounting templates recent macroeconomic events suggest this will be the HAS TRANSFORMED THE LANDSCAPE FOR SOLUTION PROVIDERS AND BUSINESSES embedded in the business rules engine of the case for some time to come. New regulations are solution. constantly pointing to the need for a holistic With compliance reporting for more than 15 assessment of the institution. No longer will silo countries worldwide, the complete solution when solutions be appropriate. nce upon a time the landscape of solutions only apparent to solution providers, but also now delivered holistically is regarded by many as unique If one accepts the notion that regulation is no more O providers for risk and financial management solutions was grouped into niche players widely recognised by most industry commentators. Financial Architects’ solution Financial Studio and without competition. FRP provides huge benefits to Financial Architects an enforcement of best practice, then the introduction of IFRS and Basel II in a great number of markets (not sticking to their respective knitting: regulatory conforms to this convergence under the home-grown customers, not least in terms of economies of scale. least the US), will prove that a greater amount of reporting vendors took care of disclosure; risk vendors banner of finance resource planning (FRP). FRP Instead of having to invest in multiple solutions, only granularity of understanding within the risk and took care of risk; enterprise resource planning (ERP) brings together four key pillars: one core solution is needed to address a whole variety financial function is critical to success. vendors took care of general ledger solutions, and so • Finance and risk management of initiatives. This reduces total cost of ownership Imagine a solution that takes care of regulatory on. But then the sand started to shift. • Accounting significantly as well as drastically reducing compliance in the guise of the complexities of both Ten years ago, a small group of experts in Brussels • Management information systems (MIS) implementation risk. The synergies then offered by IFRS and Basel II. Then imagine that solution can also with long-standing experience in the banking and • Capital management and compliance. the combination of functionalities provide Financial provide enormous advantages in its application of finance industry had an idea. They foresaw the Architects customers with a unique competitive financial MIS and risk-adjusted performance convergence of risk and finance and the need to These pillars are brought together in a solution based advantage in understanding their business. measures. With the burden of compliance lifted from deliver regulatory compliance as an integral part of on a single core financial data architecture to deliver the institution and economies of scale and those functions. The company they founded to strength and agility not only within each pillar, but CASES IN POINT competitive advantage coming in equal measures, address this convergence was Financial Architects. also by uniquely combining all four pillars. DnB Nord began initially to look for a Basel II Financial Architects’ ‘innovative idea’ has not just Since 1997, progressively, Financial Architects’ Financial Architects leads the market, both as a solution. The company bought Financial Studio caused an industry-wide paradigm shift; for most vision on the evolution of risk and financial thought leader and as a provider of software because it provided both Basel II and the associated institutions it has become an economic necessity. F management solutions has been proved right. This solutions. Financial Studio is widely recognised as a regulatory reporting functionality in one package. It has turned what was once an innovative idea in to a market leader within each of the four pillars of FRP. soon became clear to DnB Nord that the full Financial Nigel Lee is chief commercial officer at Financial paradigm shift in the industry at large, one that is not Rated highly by Gartner Group as a leader in the Studio solution would offer benefits over and above a Architects 43
  • 24. GOVERNANCE, RISK MANAGEMENT AND COMPLIANCE SERIES GOVERNANCE, RISK MANAGEMENT AND COMPLIANCE SERIES SPREAD THE WORD ERM: PRESENT AND FUTURE WHEN IT COMES TO ENSURING COMPLIANCE BUSINESS-CRITICAL SPREADSHEETS CAN OFTEN BE SPONSORED BY MICROSOFT, THE PROFESSIONAL RISK MANAGERS’ INTERNATIONAL ASSOCIATION (PRMIA) NEGLECTED. JAMES BURNS DESCRIBES HOW FIRMS CAN TAKE CONTROL OF THESE VALUABLE TOOLS CONDUCTED A SURVEY TO ASSESS THE STATUS OF BEST PRACTICES IN ENTERPRISE RISK MANAGEMENT rganisations are under considerable regulatory and market versioning, auditing and workflow capabilities. roadly the global PRMIA enterprise risk management programme in place, said 34 per cent of all respondents; while 22 O pressure to ensure that financial reporting processes and modelling are transparent and well-documented. In fact, The ability to archive spreadsheets in a consistent manner based on the company’s policies is just one component of a larger records B (ERM) survey covered the following aspects – ERM programme and methodology; success factors in ERM per cent chose the Sarbanes-Oxley Act. In the EMEA region, 18 per cent opted for the Sarbanes-Oxley Act. the credit crunch has pushed corporate governance to the top of management process. Office System includes tools such as vault rollout and implementation; reporting structure; staffing; costs; mind for most financial firms, and it is one of the few areas where capabilities, information management policies, record routing and a and relation to economic capital. Its aim was to benchmark the COST firms are investing. record collection interface, and offers extensibility to enable the current and future state of ERM practices around the world. The For 62 per cent of respondents, ERM should be an embedded cost A lot of the business processes, financial management reporting process to cope with business growth. results point to the emergence of ERM as a key component of no different from costs associated with regulatory compliance. and risk modelling required by a complex financial services firm are Excel 2007 can be used to create a robust spreadsheet model that current and future business processes. However, 38 per cent think cost/benefit justification is needed developed and managed via the manual use of spreadsheets. Indeed, meets compliance challenges and enhances productivity. Excel 2007 The survey, released in June 2008, was conducted in 103 unless it can be demonstrated that ERM enhances shareholder spreadsheets are integral to the function and operation of the global can help organisations to deploy spreadsheet models that make it countries across risk practitioners, regulators responsible for ERM, value. financial system. Simply put, despite the higher operational risk, easier to become, and stay, compliant. For example, important cells consultants and/or vendors working in ERM, and members in Excel is the primary frontline tool in the finance sector. However, can be locked, while functionalities like cell styles and formula other related professional roles. Here is a summary of key findings. ERM EXPOSURE AND RISK CAPITAL these tools are often neglected in terms of budgetary resources or auditing tools help to ensure consistency and reduce errors. Risk capital targets were reported to be defined at regulatory sound management policies, resulting in unnecessary exposure to KEY COMPONENTS OF ERM minimums, independent of ERM, by 25 per cent of respondents, regulatory compliance risks. So how can we reduce operational risk? ENHANCED FUNCTIONALITY Business strategy risk was identified as the key ERM risk, receiving with 51 per cent reporting enhancing these minimums based on There are two key ways to achieve this – automating the many Microsoft has a number of partners – for example, ClusterSeven and a ‘most important’ rating by 29 per cent of respondents and ERM exposure calculations. The remaining 24 per cent define manual processes involved, and bringing in spreadsheet control. Finsbury Solutions – that build on top of this plumbing to offer edging out credit risk at 26 per cent. capital targets as formal multiples of ERM exposure calculations. F Once these are addressed, firms can improve operational risk and customers complete end-to-end control. Finsbury Solutions’ hence corporate governance, which will in turn reduce overall Spreadsheet Workbench brings spreadsheets under control and ERM METHODOLOGY The PRMIA survey, ERM - A Status Check on Global Best business risk. Microsoft and its partners can address these issues provides a flexible, enterprise-wide spreadsheet management and Over 60 per cent of respondents said their organisation has Practices, can be downloaded by members at without reengineering the whole process. compliance solution for the rapid control and development of adopted or will adopt an internally developed framework and Or contact the Microsoft Risk and Compliance solutions team business critical spreadsheet applications. Key elements include: methodology for ERM. In addition, 71 per cent of regulators and for a copy OUT-OF-THE-BOX FUNCTIONALITY • An enterprise-wide, multi-user repository with full version 51 per cent of consultants chose this option. Other respondents During the development of Office System 2007, Microsoft management of spreadsheets chose a published standard framework, with two-thirds opting for understood the importance of spreadsheet control to its customers • Comprehensive security and access control the Committee of Sponsoring Organisations framework. and included several features to help deliver this: • Complete audit trail and exception reporting • Preventing unauthorised access • Powerful analytics for spreadsheet comparisons RISK FUNCTION REPORTING STRUCTURE ERM IMPLEMENTATION ELEMENTS • Managing and monitoring spreadsheet changes • Advanced business logic validation The CRO should report directly to the board to avoid potential • Retaining and archiving spreadsheets • A spreadsheet development framework that lets users develop conflicts by reporting to the CEO/CFO, according to 82 per cent of From an implementation perspective, • Developing robust spreadsheet models. robust spreadsheet applications. respondents. rate in importance the following elements of ERM As the complexity and importance of a spreadsheet increases, so too SERVICES ERM REPORTING STRUCTURE does the cost of errors and inappropriate disclosures of data. Office Microsoft’s system integrators can help companies to ensure their In 22 per cent of companies with ERM programmes, the ERM 100 System offers options such as Office SharePoint Server 2007 compliance strategy is both efficient and cost effective. For example, function reports directly to the board, with 28 per cent reporting to Permissions; sharing spreadsheets using Excel Services; information Infosys has developed its End User Computing Solution, a the CEO/CFO and 43 per cent reporting to the CRO. 90 rights management, and workbook encryption. These can be used spreadsheet lifecycle management solution that delivers a regulatory 80 to help secure critical spreadsheets against unauthorised access and compliant environment for spreadsheet operation. It addresses the ERM STAFFING 70 modification on both the client and server side. issues via four main phases: Over 34 per cent of respondents staff ERM with a centralised Critical spreadsheets are living applications that will inevitably Discover – Identify critical business applications that use group and over 48 per cent use a decentralised or mixed staffing 60 change over time. However, it is crucial to maintain the integrity and spreadsheets, and their risk model. Seventeen per cent had no current programme. 50 compliance of these documents, and a sound compliance strategy Remediate – Determine the necessary controls to manage risk will include some level of ongoing change management and Control – Implement spreadsheet management with change control BENEFITS OF ERM 40 monitoring for critical spreadsheets. Office System can facilitate this management to the business critical spreadsheet Risk analytics was the most important benefit of ERM 30 process with its inbuilt enterprise content management, which offers Monitor – Develop a monitoring program to keep control of implementation for 55 per cent of respondents, followed by spreadsheets. regulatory compliance and business continuity at 17 per cent and 20 15 per cent respectively. 10 Clearly, spreadsheets are increasingly valuable to many financial services organisations, and are commonly used as a critical resource. INTERACTION 0 Organisations must therefore develop a spreadsheet compliance For 92 per cent of respondents, it is very important to have close framework that includes rigorous process controls around the interaction and collaboration between group risk management Risk analytics Regulatory compliance development, testing and use of business critical spreadsheets. Using and business line management, while seven per cent thought it the right tools and services, that control can be achieved without was somewhat important. Less than one per cent thought this Document management Data security and privacy losing the most used tool within financial services – Excel. F relationship was not important. and records retention Business continuity James Burns is chief technology officer for financial services at ERM AND REGULATORY REQUIREMENTS Microsoft UK Basel II (CRD) could be more easily fulfilled with a sound ERM 45
  • 25. GOVERNANCE, RISK MANAGEMENT AND COMPLIANCE SERIES needed to quickly assemble a packet of its own risk of the customer. Customer information on balances, management information, processes and policies to financial reports, and activity was stored in disparate RIGHT INFORMATION, provide to CBA, as well as create a process for submitting periodic updates. To accomplish this, ASB built a new Basel II risk databases, and each business unit uses separate transaction processing systems. Sasfin deployed an enterprise content management RIGHT TIME, RIGHT PLACE management data mart that collects data from approximately 60 data feeds – mainframe systems and SQL Server 2000 databases – each day. The bank and business intelligence solution that includes Microsoft Office Professional Plus 2007 (with a focus on the use of the Microsoft Office Excel 2007 decided to build the new solution on SQL Server 2005 spreadsheet software, the Office InfoPath 2007 Enterprise Edition, to take advantage of its numerous information gathering program), and Microsoft Office RISK ANALYTICS AND REPORTING AS PART OF THE BROADER GOVERNANCE, RISK AND COMPLIANCE FOCUS HAS features and technologies. SharePoint Server 2007. In addition, Sasfin elected to RE-EMERGED AS A TOP PRIORITY FOR FINANCIAL INSTITUTIONS. SAI SIREESH PACHAVA LOOKS AT HOW MICROSOFT SQL Server Integration Services technology enables implement Microsoft Dynamics CRM 3.0, Microsoft IS HELPING FIRMS REDEFINE THEIR COMPUTATIONAL AND REPORTING APPROACHES AROUND RISK MANAGEMENT ASB database administrators to import packages from BizTalk Server 2006, and Microsoft SQL Server 2005. multiple sources and manage multiple configurations The integration of these programs helped eliminate a more easily. In addition, SQL Server’s Notification substantial portion of the manual intervention that had Services are used to automate the load processes into been required to ascertain risk information and supply he recent credits-induced financial crisis will access to information, and using its risk calculations the Basel II data mart. Proactive caching in SQL Server the required compliance reports. T hopefully provide a fresh impetus to the risk analytics and reporting area. It was starting to and take advantage of a predicted reduction in capital adequacy requirements. 2005 Analysis Services brings data cube information closer to real time and enables ASB to define how often WHAT’S NEXT? lose some of its sheen over the years. Some of the the data cube should be refreshed to reflect changes to We already see many leading financial institutions that drivers for risk analytics and reporting have been asset SOCIETE GENERALE: RAPID RISK CALCULATION the source data. are evolving their next generation of risk analytics and liability management (ALM), market risk, derivatives The Commodities Trading Room, part of Société ASB’s new solution enabled it to meet the Basel II reporting blueprints, looking to embed and adopt our risk management, value at risk (VAR), Basel II, Générale Corporate & Investment Banking, operates accord framework in less than nine months. “SQL new wave of innovative assets. We expect that the next operational risk and now the Bank for International five offices that are responsible for trading derivative Server 2005 Integration Services gives us the generation risk analytics and report blueprints will Settlements’ new proposal for liquidity management. financial products on the commodities market. Unable transparency that the Basel II accord requires, and have four core pillars: risk visualisation; risk workflows Obviously the specialised risk engines and to process real-time risk and profit calculations, the enabled us to quickly demonstrate and display clear and processes; risk computing, and risk data applications from SunGard, Fiserv IPS Sendero, Commodities Trading Room could not adequately and transparent processes for managing data and management. Finarch, Reuters and Towers Perrin are the key pillars accommodate a fast-paced business environment. credit information,” says Peter Newey, manager of SQL The visual representation of risk exposures will for risk analytics and reporting. At the same time, most By using the Microsoft .NET Framework and Visual Server solutions at ASB Bank. emerge as a key element, especially for senior level institutions supplement these applications with Basic .NET, developers created an enhanced solution The new data mart also ensures the integrity of executives, who want a top-level snapshot of the risk Microsoft platform and technology capabilities as the that used components from the old system and business processes and data, allowing it to be delivered profile. We see Microsoft PerformancePoint Server basic underpinning for risk analytics and reporting encompassed a distributed architecture. The new, to CBA in a secure and timely manner each month. ASB 2007, Silverlight, Office Visio and Virtual Earth as new functions. The humble Office Excel and the Office extendable system supports business growth, and is now plans to use the Basel II data mart project as a capabilities that would provide value in this area. Access database have always been the classic much more powerful, calculating risks in minutes. The blueprint for all its future data mart loads and The focus on seamlessly embedding risk and workhorses for many a division’s risk reporting and distributed architecture supports high system operational reporting. compliance best practices and controls in everyday computing activities. availability. activities, workflows and processes will accelerate. There follow just a few examples of risk analytics Using the true, object-oriented design features MARKET DATA DISSEMINATION FOR NASDAQ Microsoft Office SharePoint 2007 is already making and reporting initiatives by financial institutions with available through the .NET Framework, the team can As the largest electronic stock market in the US, inroads as an integrated environment of choice for Microsoft and its partners. add new features easily, such as rebuilding and Nasdaq lists the securities of 3,300 of the world’s managing day-to-day workflows and processes. enhancing its Profit&Loss and risk analysis leading companies and transmits real-time quote and Most market risk, credit risk systems have been in RISK ANALYTICS AT NATIONWIDE applications. While these applications once required a trade data to more than 1.3 million users in 83 place for 5-10 years now. In some institutions a process Leading UK building society Nationwide is required to significant amount of time to run, they can now countries. It needed to replace a mission-critical such as mark-to-market, revaluation or VAR computing meet the strict requirements of the Basel II capital compute calculations in near-real time. mainframe-based solution with one that was more takes 16-18 hours. This needs to be reduced to 4-6 accord. It needed to deploy a new data management “We’re constantly improving the system, be it with powerful, flexible, and had a lower total cost of hours by adopting agile and easy-to-use computing solution to manage the huge reserves of data required data-caching features or reporting enhancements,” says ownership. platforms. We expect a role for SharePoint 2007 with while making it accessible to users and providing a full François Montegu, technical project manager of the Nasdaq internal developers created their Market Excel Server and its linkage to Windows Compute audit trail. Nationwide turned to Microsoft SQL Server Commodities Trading Room. “Our existing Data Dissemination System using Microsoft SQL Cluster Server-based high-performance computing in 2005, with the database engine running on a Unisys architecture supports the addition of each feature, Server 2005 database running on Windows Server this area. In addition Excel 2007 offers one million ES7000 enterprise server and operating a Panorama without disrupting the normal flow of business.” 2003 Enterprise Edition. It has achieved a lower total rows and 16,000 columns, and the new multi-threaded front end, to underpin its new IT environment. cost of ownership, as well as the agility to meet engine takes advantage of multi-CPU and multi-core Information intelligence consultancy Detica ASB ENSURES BASEL II COMPLIANCE customer needs, real-time reporting and enterprise- hardware. provided the specialist data warehousing expertise When ASB Bank’s parent organisation, the ready availability and performance. Users can perform Traditionally, risk managers have not been able to required to design and develop the core warehouse. As Commonwealth Bank of Australia (CBA), decided to a range of scans to query a broad range of trading benefit from additional risk insights based on the project gained momentum, Nationwide turned to apply for an advanced level of accreditation for the information, including risk management scans, which analysing rich information locked away in enterprise Microsoft partners Veritas and EMC to provide international Basel II risk management accord, ASB can be used by market makers, order entry and data warehouses. We see many projects where SQL additional consultancy and support around its storage clearing firms to view real-time market exposure. 2005 capabilities and its integration with Excel are requirements, in particular producing and validating used to tap the enterprise data warehouse. the physical storage design. SASFIN BANK Microsoft’s focus in Risk analytics and reporting is Nationwide migrated all the data it produces across With over 1,000 employees, Sasfin Bank is a around providing the right information in the right approximately 80 source systems into its new specialised banking and financial services group format to the right people at the right time. Our Historical Data Store (HDS), which serves as a positioned in the entrepreneurial corporate, capabilities help enhance the computing capacities and repository and makes the information readily available commercial, and private-client markets. unlock the rich business and risk insights hidden away to other parts of the data warehouse when required. To Basel II requires banks to minimise the amount of from business users in enterprise data warehouses. F help the database perform more efficiently, it used the manual intervention needed in producing compliance partitioning functionality of SQL Server 2005, enabling reports, which involves the reporting and analysis of Sai Sireesh Pachava is the worldwide director for risk the HDS to focus on the latest record for each account complex risk calculations. Banks must provide reports management and compliance industry solutions at when processing data feeds. by asset class, that is, customer type (as opposed to Microsoft. He also serves as the co-regional director for Nationwide can now meet the requirements of Basel product types as previously required under the Basel I the Professional Risk Managers’ International II while increasing database efficiency, enabling faster accord). The problem is that Sasfin had no single view Association (PRMIA) Seattle chapter 47
  • 26. COMMENTARY allow banks to focus on product and service level process management with legacy applications, differentiation, yet generate efficiencies and cut third-party vendor solutions and outsourced costs by outsourcing commodity elements of the functions alike. The solution orchestrates the back office. This approach also mitigates lifecycle of payments and provides business operational risk, one of the barriers to outsourcing, process management (BPM) and business activity because banks are able to outsource select monitoring (BAM) tools to monitor the state of functional areas. Furthermore, as market operations. Data transformation, technology conditions change, banks preserve the ability to adapters and business rules are implemented to modify the mix of outsourced services, or indeed direct payments from the delivery channels their sourcing partners. Whether choosing to through the back office of the bank, utilising outsource or to retain payments processing payment applications and services as required, internally, the right solution architecture is vitally before being delivered to the appropriate clearing important. and settlement mechanisms. Extending payments integration beyond the AN ARCHITECTURE FOR OUTSOURCING bank to corporate environments is essential. By Microsoft believes that integration and overall enabling adapters in BizTalk Server, treasuries can visibility into payments processing is a integrate enterprise resource planning (ERP) and fundamental issue. Poorly integrated payments treasury systems to banks and to Swift. systems make it difficult to increase the efficiency With integration being such an important factor, and profitability of payments processing, but also the development of industry models and standards impair a bank’s ability to truly understand the plays an increasingly significant role, and Microsoft overall status of payments operations. This in itself is actively involved with the adoption of XML creates reluctance to outsource because any standards in financial messaging. Payment internal operational integrity, regulatory schemas such as ISO 20022 will facilitate the compliance or management weaknesses will be integration of payment services, whether managed magnified in an outsourced environment. internally or hosted by an outsourcing provider. A service-oriented architecture (SOA) framework Clearly the credit crunch is having an impact on can alleviate the integration issues faced in a bank profits and, as a result, is pressuring all areas traditional operations environment, and also form of the business to cut costs. Although there are WILL THE CREDIT CRUNCH BITE the foundation for integration with outsourcing providers. In the early days of SOA, projects were confined to non-mission critical applications, but many long-term drivers that generate demand for outsourcing, inevitably the credit crunch will force many banks to reconsider outsourcing of PAYMENTS OPERATIONS? AMR Research finds that in financial services organisations 50 per cent of SOA projects are between US$1m (€630,000) and US$10m payments. Regardless of the business drivers, a well-architected, flexible payments infrastructure will give banks a greater chance of outsourcing (€6.3m), with another 13 per cent exceeding success. F AS THE CREDIT CRUNCH DRIVES BANKS TO CONSIDER OUTSOURCING CRITICAL US$10m (€6.3m). These are not trivial amounts, APPLICATIONS SUCH AS PAYMENTS, COLIN KERR ARGUES THAT A WELL-ARCHITECTED, and reflect the fact that strategic investment in SOA Colin Kerr is industry technology strategist for FLEXIBLE PAYMENTS INFRASTRUCTURE WILL GIVE THEM A GREATER CHANCE OF SUCCESS solutions is a reality. payments at Microsoft How does SOA apply to a bank’s payments s the autumn of 2008 approaches, the critical applications such as payments may infrastructure? TowerGroup defines SOA for A banking industry marks 12 months of severe impact from the credit crunch. suddenly seem more attractive, although there are undoubtedly challenges ahead. payments as: “A service-based, business architecture that develops and reuses product, Stock prices of financial institutions have fallen operational and technology assets to support a around the world and profit outlooks are PAYMENTS OPERATIONS CHALLENGES scalable, agile payments business strategy.” Clearly constantly being revised. Although much of the The pressures of competition for market share and the salient point of this message is that the focus has been on the mortgage industry and the customer retention, of ageing technology, and the payments technology architecture should be driven trading of mortgage-backed securities, banks are requirement to adopt new clearing infrastructures by the strategic requirements of the business, and inevitably faced with the broader impact of the come to a focal point in the back office. This cost of course, outsourcing may well be a part of that. crunch on other operational areas. Every area of a centre craves stability, a slow rate of change, and bank is under pressure to increase revenues, but repeatable processes to facilitate managing for MICROSOFT APPROACH: PAYMENTS SERVICES also to reduce processing costs, and the payments audit compliance and cost containment. Change is FACTORY business is no exception. Outsourcing in financial not welcome, but change is being forced upon this Microsoft believes in a SOA approach to simplify services is not new, but has typically not involved environment. back office operations by focusing on seamless mission critical applications such as electronic To meet these challenges requires a strategic integration to enable interoperability. The payments. But with payments technology costs response based on business and product strategy, Payments Services Factory is simply the framework increasing, and cost-cutting demanded throughout operational organisation, and supporting allowing different services and applications to the banks, will the credit crunch change a bank’s technology infrastructure. At the most basic level, coexist with legacy systems. willingness to outsource payments processing? such a view is intended to reduce cost by merging Leading analyst firms Gartner and Forrester Boston Consulting Group estimates that the Single payments silos that have developed over time, but Research recognise Microsoft as a leader in the Euro Payments Area (Sepa) will cost European the challenge of further reducing operational costs application server platform and B2B integration banks US$5 billion, and a 2008 survey by will raise the opportunity for banks to outsource marketplace. The Payments Services Factory is payments application vendor Fundtech estimates parts of their payments operations. Banks should envisioned upon the Microsoft .NET SOA that it will take banks five years to claw back lost internalise what is of core strategic value, and framework and the acclaimed enterprise class revenue due to Sepa. Furthermore, a 2008 outsource the commodity functions of payment products of SQL Server, BizTalk Server and Management Consultancies Association survey of processing, particularly when the scale of SharePoint Server. This SOA technology stack can British Bankers Association members found that 41 operations is relatively small. TowerGroup, a be implemented and configured to meet the per cent expect to increase the level of outsourcing leading research and advisory services firm, refers operational and product demands of any bank’s from current levels. In this light, outsourcing of to this as ‘smart-sourcing’. Such an approach would payments group, and facilitates integration and 49
  • 27. COMMENTARY “ TODAY’S WEALTH MANAGEMENT PREVIOUSARE FAR MORE - THEY SOPHISTICATED THAN THOSE OF CLIENTS GENERATIONS WANT TO UNDERSTAND THE INVESTMENT PRODUCTS AVAILABLE TO THEM AND ACTIVELY PARTICIPATE IN THE SELECTION PROCESS ” biggest challenges centre on capturing necessary roadmaps for each client and executes on them information, ensuring the integrity and accuracy of it, through a team of high-performing, focused money and handling exception cases. managers. Team members typically log in to Properly integrated business strategies, GaleForce CRM each day to monitor changes in a organisational structures, operational client’s portfolio, track changes in household management and policies and processes will members or money managers, or to assign a task to reduce the risk of compliance violation. Customer a member of the administration team. Sendero staff relationship management (CRM) systems can help also use the solution to track all communication financial services firms manage compliance and documentation with and about each client. requirements through automated processes and “With our GaleForce solution implemented, productivity tools. there’s no more scrambling when a client calls – everyone in the company is in the know, with equal HOW TO DELIVER RICH COMMUNICATION ability to answer client questions,” says Kahn-Smith. Sendero Wealth Management is an investment “From our principals, to investment advisors, to our advisory firm for high-net worth individuals, admin team, they’re all armed with up-to-date families and endowments, offering customised information.” investment strategies to help its clients preserve and grow their wealth. Sendero wanted to increase the EASIER REGULATORY COMPLIANCE relevance of information delivered to clients, reduce Investment policy statements (IPS) must be administration costs, and to help its advisory team completed by each client and updated at least once MANAGING A WEALTH offer more value and expand the client base without jeopardising the high level of service provided to existing clients. The company originally used a every three years for regulatory purposes. The Sendero advisory team prefers to visually check these statements once a quarter, and discuss them OF CLIENT INFORMATION DOS-based product for managing client information, but when this was discontinued, it switched to Microsoft Outlook to individually track with clients if necessary – a process under which their advisors and administration team spent a total of 30 days per year pulling IPS information and client communication and data. preparing for the review, including determining if EFFICIENT MANAGEMENT OF CLIENT INFORMATION IS CRITICAL TO ANY BUSINESS. KIRK HERRINGTON “The team was tracking e-mails in Outlook – each the IPS was out of date, locating the original, DISCUSSES HOW GOOD CRM CAN BRING BENEFITS FOR COMPLIANCE AS WELL AS CUSTOMERS with one Inbox folder for each of our clients,” populating a new form for the client to complete recalls Lisa Kahn-Smith, chief compliance officer at and ensuring the appropriate wealth manager set ealth management and private banking To be effective, client communication must occur Sendero Wealth Management. “They were also up a review. W firms have experienced tremendous industry changes over the last five years – according to client preferences (format, frequency, function), flow both ways and show an using individually-created distribution lists to keep internal and external portfolio managers informed Compliance and security requirements may dictate that only certain users can view or edit from client demand for personalised, sophisticated understanding of client history, goals and the of changes in trades, priorities, account certain fields belonging to a specific record such as and transparent service, to lower margins on trade investment vehicles that will get them there. Given management and client details. There was definitely a contact or company. GaleForce CRM delivers the orders, plan fees based on managed asset value, the wide range of products on the market today, an overlap of work.” With no central repository ability to define granular field level security for any dramatically increased compliance regulations and specialists are often required to participate as part ensuring accurate tracking of communications record field, and restrict permissions by role to volatile investment markets. To reestablish investor of a team to support sophisticated clients. Yet, each between Sendero staff, clients and external account each field. confidence and advisor effectiveness, financial team member must have access to up-to-date and managers, too much time was being spent “We feel that with GaleForce in place, the services firms must realign their business models to detailed client and product information so they distributing information or – in reverse – trying to administrative time needed to pull our IPS address these big challenges. don’t have to gather background details each time pull together disparate information for reports and information for review will be drastically reduced. they speak with a client. To achieve this, client and client meetings. “We had to rely on each other to This will allow our team to have more time to IMPROVED CLIENT COMMUNICATION product data must be retained and consolidated so remember to forward the right information to the devote to managing relationships and managing Today’s wealth management clients are far more that appropriate staff members can quickly, easily right person,” says Kahn-Smith. “We realised we money, not managing paper,” says Kahn-Smith. sophisticated than those of previous generations – and cost-effectively match client interests with needed a system that would allow us to continue to And, if a client makes changes to their IPS, all they want to understand the investment products appropriate product offerings, based on real-time offer a personal touch.” parties needing this information are automatically available to them and actively participate in the market data. The IT department head was tasked with creating informed. selection process. Clients no longer satisfied with a central location for customer relationship Sendero is confident that with its customer monthly paper statements are demanding 24/7 COMPLEX COMPLIANCE REGULATIONS information and to ‘clean things up’. The advisory relationship information and advisory workflow access to their account details, and expect ongoing The last ten years have also seen dramatic increases team was happily using Microsoft Outlook to track steps captured in GaleForce, it will be able to communication with their advisors whether in in security and compliance regulations for financial and communicate critical client information, and expand its business while continuing to provide person, on the phone or via e-mail. They expect all services organisations. The complexities imposed Sendero knew users would best adapt to a new the same or better quality of service its clients points of contact to know who they are and what by MiFID, the EU Data Directive, anti-corruption CRM system if it was integrated with tools they require. F they want, and to be offered products appropriate and anti-money laundering, foreign investment and were already familiar with. The company chose to their particular situation. High-net worth clients other regulatory acts will continue to grow, and Microsoft Dynamics as its CRM of choice, which, Kirk Herrington is chief technology officer of are increasingly interested in international and effectively managing them is critical. combined with GaleForce CRM for Wealth GaleForce Solutions domestic tax products, insurance and estate Yet according to research firm IDC, financial services Management can meet the unique requirements of planning, trust services and other alternate firms are generally dissatisfied with the effectiveness of managing high net worth, emerging affluent and investments such as hedge funds and private equity their document workflow processes in support of mass affluent clients. placements. government and industry regulation compliance. The Sendero’s advisory team develops detailed 51
  • 28. COMMENTARY SAFE AND SOUND INTEGRATED ARCHIVING CAN HELP IMPROVE PERFORMANCE AND CUT COSTS, SAYS BRIAN O’GILVIE ost financial institutions have well- have been inadvertently deleted during a cleansing M established policies to control the archiving of business information. But the operation, or even deliberately deleted by a disgruntled employee. These situations are, sadly, onset of stringent industry regulations and calls for typical, and are a direct result of inadequate or transparent corporate governance has brought a flawed processes that need to be addressed to avoid new scale to the issue. Institutions now face the potential pitfalls – and the high cost and additional prospect of proving compliance to operational disruption that are the inevitable external bodies with many scenarios likely to outcomes. However, it can be difficult for financial trigger an urgent search for evidence to avoid firms to know how to approach information reputation loss or penalties. The problem has archiving in a way that will enable them to avoid rapidly shifted from one of efficiently retrieving such pitfalls. essential business data that’s already in the archive, The best approach is to develop and implement a to ensuring that all relevant data from anywhere in robust strategy to manage information archiving. the environment is automatically stored. The Such a strategy will employ automated processes to biggest challenge nowadays is not in finding data store relevant information from across the network that’s in the archive – it’s more often finding the in a secure archive; an archive that offers reliable single piece of information that isn’t! This is why HP back-up, flexible access rules and fast retrieval when has introduced the e-Discovery workshop. required using a variety of search criteria. The Over the past two issues of Finance on Windows, starting point has just three simple elements: we have discussed the subject of e-Discovery, identifying what data should be held rather than outlining various scenarios including proving what is held; agreeing appropriate retrieval and regulatory compliance, demonstrating the back-up processes; fully defining information effectiveness of internal controls, or averting the structures appropriate to the organisation. threat of a malpractice lawsuit. The conclusion was Through its e-Discovery Workshop, HP offers a that searches for information chains are expensive proven methodology that takes institutions through and disruptive – and should be avoided. a series of stages to determine the answers to these But the real issue is much deeper and has more three elements. Experts from HP Services work with profound consequences. Even if expense and an institution’s IT and business groups to review disruption were acceptable prices to pay, success the essential requirements and shape a long-term cannot be guaranteed no matter how long the strategy for information archiving. F search takes or how much it costs. That one piece of vital information may never have been stored in the Brian O’Gilvie is EMEA solutions manager at HP. first place because it was processed at a local He can be contacted at workstation and escaped routine back-up, or it may
  • 29. COMMENTARY FULL CIRCLE DATA MANAGEMENT IS ONCE AGAIN EMBRACING VIRTUALISATION, SAYS CARRIE HIGBIE ow and where we store and retrieve data is networked storage, with data centres becoming the H changing. But not in an evolutionary manner. Data handling is best described as central hub for businesses and applications. As the cost of computing fell, it became possible to have cyclical. separate servers for each application, but the need for In the past 10-15 years, we have seen a movement these applications to talk to storage and the from single computer rooms with shielded cabling, increasing bandwidth needed for storage backup mainframes and dumb terminals, to PC-based caused network demand to rise. Power and cooling networks, shared PCs, then to clustering. Bandwidth requirements became a prime concern. Virtualisation needs have grown significantly along with storage was introduced as a way to allow multiple demands. Now, with increased loads for data applications to utilise one piece of server hardware, retention and accessibility, single computer rooms which would be easier to cool and take up less space. are no longer adequate for many enterprises. Now, many end users are forcing renewed focus The issues are perhaps felt more keenly in on virtualisation because it enables them to get financial services than in many other sectors. better efficiencies from their CPUs using less power. Information must be secure, and everybody wants to But along with healthcare, finance is one of the be on their own application server or platform. With slowest sectors to return to virtualisation. There will multi-channel delivery and the trend toward always be some stand-alone applications, such as algorithmic trading, financial firms are moving to algorithmic trading, which banks don’t want to risk more grids and more powerful data centres. going down due to sharing with another application. Before financial firms began to move toward PC But that doesn’t mean all the supporting applications, mainframes were the most common applications for that same bank can’t be virtualised. computer platform in the sector. Back then, Pushing data around is part of what any bank everything was virtualised because that’s the way does. Customers expect banks to move their money mainframes run. But PC application vendors didn’t around, take care of their data, and make sure it’s want to share their technology with any other box. secure. That means there will always be some Associating the application with a piece of hardware applications that can be virtualised to share data and gave implementers a level of comfort. Over the years, reduce costs. The technologies might be different, a bank might end up with a data centre including but the trend has returned – with more storage hardware from every vendor there is. That’s a across fewer computers, data centres are likely to nightmare for IT to support, because multiple start looking more like they did in the days of the platforms mean multiple management interfaces. mainframe. F The cost of storage, as well as the cost to the business when data was unavailable, led to Carrie Higbie is global data centre director at
  • 30. COMMENTARY BACK TO BASICS SUPERIOR ONLINE BANKING NEEDS A TECHNOLOGY BASE THAT IS BOTH STRONG AND AGILE, SAY ARNAR JONSSON AND STEINAR STURLAUGSSON ompetition in the retail banking Applicon i-Banking consists of two main C environment is constantly increasing. The ability to respond quickly to change, and components, the Service Hub and the Portal, which together enable financial services institutions to run to bring new products to market quickly, are key online banking using only one solution. requirements for banks of any size as they try to The SOA-based i-Banking Service Hub is a core differentiate themselves. But the time taken in the element in delivering a collection of services to development process can seriously hamper a operate fully-functional online banking. It enables bank’s attempts to respond to customer demands. Microsoft solutions to communicate efficiently with It is common practice for banks to have internal the SAP Banking system, a process that was Internet banking solutions developed and previously complex. The i-Banking Portal is the user customised for them, but this can be a costly and interface, which banks can brand or customise. time-consuming process, and is usually difficult to “To ensure that the solution was both agile and maintain. scalable, we used the latest Microsoft technologies in “At Applicon, we have experienced the costly the development process, including .NET process of developing and running bespoke internal Framework 3.5, ASP.NET 2.0 and Ajax for the front Internet banking solutions through our engagement end. All services that use SAP Transactional Banking with a number of financial services companies. are provided using the Windows Communication Recognising the value of a service-oriented Foundation (WCF) which allows for great flexibility architecture (SOA) in enabling the functionality while adhering to all the latest web service required by banks, we started working on the standards,” says Sturlaugsson. Applicon i-Banking platform, which enables “Our approach has proved its worth, ensuring the financial services organisations to make SAP phenomenal level of scalability that has enabled Transactional Banking services available to Internet Kaupthing Bank, for example, to extend its initial banking users,” says Steinar Sturlaugsson. Applicon i-Banking-based online banking offering “Our experience in the financial services industry rapidly to nine countries across Europe. Banks today includes work with a lot of traditional banking need to improve the services they offer, as well as products, as well as significant involvement in all adding new ones. Similarly, we are looking forward types of infrastructure issues. It is a part of our to continually improving our solution in response to strategy to follow our customers and help them customer demands,” concludes Jonsson. F implement our solution – a service we can provide remotely because the Internet banking platform is a Arnar Jonsson is the i-Banking development multi-entity platform that can run across countries,” manager and Steinar Sturlaugsson is the i-Banking says Arnar Jonsson. solution architect at Applicon
  • 31. PROFILED PROFILED THIS ISSUE... “ OUR MAIN AMBITION IS TO OFFER QUALITY BANKING SERVICES IN EACH COUNTRY WHERE WE OPERATE. THESE SHOULD BE UNIFIED ACROSS OUR OFFICES AND REPRESENT HgCapital 60 A SERIOUS ALTERNATIVE TO Implementing Microsoft Dynamics CRM enabled HgCapital employees to monitor and analyse OTHER NORTHERN customer relationships and contacts. EUROPEAN OPERATORS IN THE FIELDS OF INVESTMENT AND MERCHANT BANKING ” KAUPTHING BANK ounded in 1982, Kaupthing Bank is new business endeavours – such as banking industry. Of particular importance The implementation was completed part of a network of SAP partners that can F among the eight largest banks in the Nordic region. It has doubled in size investment banking – and handle multiple currencies, time zones, and regulations. was SAP’s experience in cross-border applications that support multi-country remarkably quickly, with the first go-live just six months after the project started. The rapid participate in and benefit from the ongoing development of global core banking every year for the past eight years, and To address these needs, Kaupthing functionality with local options. “SAP offers an installation was due mainly to the unique, solutions.” The next steps include operates in ten countries. While it has grown established an enterprise-wide business and IT excellent system that can work in a difficult multi-phased approach, that required each implementations involving SAP applications rapidly, the bank has also trimmed its cost-to- integration initiative. On the IT side, it wanted environment,” says Asgrimur Skarphedinsson, implementation phase to be completed within for analytical banking and business income ratio from 47 per cent to 34 per cent a flexible architecture to support its CIO of Kaupthing Bank. four weeks and add evident business value. consolidation. F through strong cost control. Its infrastructure competitive strategy by maximising risk SAP for Banking enables Kaupthing to Kaupthing Bank’s business processes and London Stock Exchange 62 runs entirely on Microsoft technologies. management, assuring fast delivery of handle multiple currencies, countries and products are now unified. Employees who The London Stock Exchange worked with HP to information within and outside the institution, time zones. The solution’s support for a broad process loan applications in Finland can also deliver its Technology Road Map, including the “The main ambition of our group is to offer enabling sharing of group resources and range of financial services was also important, process loans from Sweden or Iceland using TradElect information platform. quality banking services in each country supporting efficient product development. as was the capacity it gave the bank to the same system and rules. OVERVIEW where we operate,” says Sigurdur Einarsson, In addition to integrating multiple produce implementations with short lead The bank now offers a wide range of Solution: Cross-border core banking executive chairman at Kaupthing Bank. “The legislative requirements and cross-border times at relatively low cost. Some key sophisticated products that clearly applications services should be unified across our offices business activities, the solution had to applications of the bank’s developed solution demonstrates its role as an international Benefits: Unified processes and and represent a serious alternative to other enable the bank to standardise and now manage its loan and deposit activities. institution. It introduced new products in products; more sophisticated product northern European operators in the fields of synchronise services and processes – such as AppliCon, an SAP service partner Finland, Sweden, and Iceland almost and service offering; immediate new investment and merchant banking.” custody, cash, settlement and clearing – consultancy based in Denmark, worked with immediately, including multi-country deposit offering of products in Finland, Sweden In 2004 Kaupthing embarked on a project across the institution while addressing local Kaupthing to streamline the implementation accounts and loans as well as syndicated loans. and Iceland; improved resource to unify business processes throughout its business needs. process. SAP helped the bank gather its Over time, the bank expects to be able to management enterprise and provide a more competitive Kaupthing wanted to integrate its legacy system requirements and wrote the system develop its own IT competencies, which will international offering. Of particular architecture into the new architecture, which blueprint, providing expert consulting increase its competitive advantage. Technologies: . SAP for Banking importance was centralising the clearing and would have a modular framework based on throughout the project and helping the bank Kaupthing anticipates further benefits as it solution portfolio, integrated with settlement of cash transactions and modern integration technology that would to provide authorisations for multiple introduces additional business units that Microsoft SQL Server database and developing multiple currency products. support standard components for Web countries and merge its workflow into a single leverage its new IT solution. The bank also Windows operating system Process unification was challenging due to services, process collaboration and XML. For system. Kaupthing reengineered the business expects the recent business and IT Partner: SAP, AppliCon the bank’s recent acquisitions, which resulted its software, it chose core banking processes required by the project and handled consolidation to help it manage its bank in a heterogeneous patchwork of processes applications within the SAP for Banking set of the comprehensive change management resources more effectively, resulting in and IT systems. Kaupthing also required a solutions, a choice based on the global programme. This important work eased the significant cost savings. centralised core banking system to integrate leadership and commitment of SAP in the bank’s transition to the new system. Skarphedinsson observes: “We are now 59
  • 32. PROFILED “ NOWINFORMATION INDATA AND WE CAN TRACK A MUCH MORE DETAILED AND COHESIVE MANNER ” HGCAPITAL stablished in 1990, HgCapital is a integrated with Microsoft Office Outlook them communicate better, and have a better E private equity firm with offices in the United Kingdom, Germany, and the 2003, a tool our employees were already familiar with, and offered greater view of how their deal flow is progressing. Before, individual investment teams tracked Netherlands. When its existing customer customisation possibilities.” deal flow using Word or Excel documents. relationship management (CRM) system made Various CRM solutions were evaluated, Now the centralised system makes data it difficult to manage the firm’s contact including Salesforce, ACT, and Goldmine. But analysis faster and easier. Also, employees now database, oversee key relationships, and track Microsoft Gold Certified Partner Aspective have the ability to access contacts while on the prospective deals efficiently, HgCapital provided the tailored solution the firm needed, move. Batchelor says: “Employee feedback is implemented Microsoft Dynamics CRM. Now, using Microsoft Dynamics CRM. IT and client positive and user acceptance is more than 90 employees can monitor and analyse services employees worked with Aspective to per cent. What’s more, our teams have relationships with contacts and reduce time design and build a Microsoft Dynamics CRM reduced their time spent on administrative spent on administration. environment, which was launched in April tasks. Personally, I’m saving five hours a 2007 in conjunction with Microsoft Dynamics month.” F Staff often had to search through a number of CRM Mobile, which gives employees access to different applications to find information, and the contact information they need when away inputting data into multiple sources was time from the office. The other technologies that consuming. Batchelor says: “Our employees integrate with the solution are SQL Server OVERVIEW were restricted by the limited automation 2005, Office 2003, Outlook 2003 and provided by Access, our contact database Exchange Server 2003. Solution: Contact management system system.” Employees can monitor e-mail, meetings, using Microsoft Dynamics CRM Employees also needed mobile access to and deals more effectively, without having to Benefits: Centralised management of CRM contact information. This was search through multiple systems, now that contacts; reduced admin overhead; particularly important for the investment they work on a centralised basis. Batchelor better collaboration teams, who spend a significant amount of time says: “Now we can track data and information out of the office. Employees needed a solution in a much more detailed and cohesive manner. Technologies: Microsoft Dynamics that promoted mobility, as well as executing Information relating to key contacts and CRM, SQL Server 2005, Office 2003, three main functions: content management, prospective deals is pulled directly from Exchange Server 2003 analysis of intermediary relationships, and Dynamics CRM and provides something more Partner: Aspective deal-flow monitoring. Associate director Steven concrete for us to build our business Batchelor says: “We wanted a customer relationships on.” relationship management system that HgCapital staff now have tools that help
  • 33. PROFILED LONDON STOCK EXCHANGE he powerful reputation of the London sites and run in active/active market data and also runs on HP ProLiant T London Stock Exchange has been enhanced by a four year Technology configuration with synchronous replication to maintain continuous service in the event of a servers. Infolect sends out between 30 and 40 million price updates a day to over 130,000 Road Map (TRM) which has set new component or complete site failure. The screens in over 100 countries. standards for speed, agility, capacity and remaining 200 HP ProLiant servers run the The successful delivery of the TRM functionality in trading systems. development instance. Within TradElect, programme has also enabled the Exchange to there are five specific application tiers which beat the deadline for compliance with MiFID, The final achievement of the TRM give the Exchange the ability to scale up in a the Financial Service Authority’s new programme has been the launch of the cost effective granular fashion. The TradElect regulations governing the conduct of financial Exchange’s electronic trading platform – production estate also includes HP MSA1500 organisations. It’s now planned to migrate TradElect – which has produced and MSA1000 Modular Smart Arrays. With Italian equity trading onto TradElect following unprecedented levels of performance and over one terabyte of disk space, they mainly the Exchange’s merger with Borsa Italiana. F reliability and which runs on an HP ProLiant run Microsoft SQL Server. platform. The system that TradElect replaced used to “We have to be able to cope with increased take 140 milliseconds (ms) to process an volumes in our main cash equity market and order. The equivalent action on the first also require the agility to support new release of TradElect was 14 times faster, OVERVIEW markets, asset classes, currencies and time reducing latency to 10ms. Now, TradElect Solution: Four year Technology Road zones,” says chief technology officer Robin Release 2.0 has improved latency by a further Map leading up to launch of new Paine. “We wanted well defined and deep 40 per cent, bringing it down to 6ms from electronic trading system relationships with a small number of receipt of order right through to execution, Benefits: Improved speed, agility; more companies involved with the delivery of the with an average 3ms external network latency capacity; improved functionality in overall TRM. HP was a natural choice because depending on the client’s location. trading systems of the partnership we have had for many TradElect 2.0 has not only reduced latency years.” The other main partners in the TRM but it has also increased the Exchange’s Technologies: HP ProLiant servers were Microsoft, Accenture, Cisco and Verizon. trading capacity by 70 per cent, enabling it to running Microsoft SQL Server A production and a development instance handle 4,200 orders a second. When Partner: HP of TradElect run on 400 HP ProLiant DL385 instruments are traded in TradElect, prices are servers. The 200 servers running the communicated across to the Infolect production instance are mainly based at two application which disseminates real-time
  • 34. SIGN OUT VOICE OF EXPERIENCE MARK BATES, CEO OF RDT, GIVES US HIS TAKE ON LIFE AND LEARNING After graduating from Bristol University My home cinema. It took two years to build and “ MY BEST HABIT IS P with a degree in System Analysis, Mark Bates worked at Charles Schwab and really is quite phenomenal if I say so myself. NEVER DIVULGING Bank of America before setting up Relational What do you think has been the most important MY WORST ONES ” Database Technology (RDT) in 1992. Since then, invention in the history of the world, and why? RDT has developed integrated insurance The integrated circuit (IC) – within 50 years we systems for the personal lines and commercial have seen the world change dramatically markets on the .NET platform, including because of it. Computers, mobile phones, Internet development and software to enable microwave ovens, the Internet, going to the interactive quotations and real-time placement of moon… none of these would have been possible insurance business via the Web. without them. I love technology, what did you Mark’s passion for technology has been a expect? significant motivating factor in his career – and as we found out, it’s a big part of his life outside Do you have any pets – either real or virtual? work too. I have had four cats over the years but none currently, although I’m coming under some Who or what inspires you most, and how has serious pressure from my daughter to get this contributed to your own achievements? another one. My dad. He built a very successful and profitable company, always seemed happy, was renowned What are your best and worst habits? for his integrity and was universally respected by My best habit is never divulging my worst ones. his peers. I’m not sure I’ve achieved that but he has been a great role model for me. What piece of advice would you give to your younger self? Would it have made a difference if What did you want to be when you were you’d heard it at the time? growing up? Did you ever become that? Listen, especially to older people – they have the A surgeon. Unfortunately, studying was never benefit of experience! I was given lots of advice high on my list of priorities when I was a many times and it rarely made a difference. Now teenager (especially when the sun was out) and that I’m getting on a bit I try to listen to my grades weren’t good enough to get me into everyone! medical school, so I took the easier route and opted for a computing degree. In hindsight it’s How do you wind down at the end of the day? all turned out pretty well. I think those that know me would tell you I rarely wind down, although I will either watch a How did you get started in your current career? film or run/take the mountain bike out for a Have there been any major triumphs or spin, which is a great way to get rid of some challenges on the way to where you are now? excess energy and clear the mind. F An underwriter had seen a finance system I was developing for a major bank and asked if I was interested in doing the same for his insurance company – the rest, as they say, is history. The biggest challenge in the early days was convincing insurers that a company with six people could support their entire business. An older, more experienced person did warn me this would be a problem but I didn’t listen. Now the company is a lot larger and the insurers are coming to us, so that has been a major triumph. What’s your must-have piece of technology for work, and what would you do if you lost it? It’s a close call between my Lenovo ThinkPad X300 and my HTC Touch Diamond phone. If I lost either it’s possible I would have a little cry. What’s your favourite gadget at home – how does it make your life easier, more fun or exciting?