26 Aug 2008
The vast majority (85%) of bank executives responsible for managing payment systems agree that they are struggling to get information consistently out of multiple payment silos, according to Checkfree's survey of 60 of its customers at its user conference in July. Other payments processing concerns voiced by the respondents, in order of importance, included: international ACH transaction (IAT) compliance, rising electronic payment exception volume, cross-channel payment adjustments and exceptions, remote deposit capture, and changes in services offered by the Federal Reserve Bank.
Yet there was no consensus on when and how 'payments hub' technology will be ready to meet the challenge of managing and reporting on all payments across those different channels. Differing definitions of a payments hub also caused some confusion among the respondents.
Twenty-five percent of survey respondents agreed with the statement that a payments hub is "a solution whose time has come", while 15% viewed it as "an appealing idea, but the technology is not yet available". The largest group - 45% - said they wanted to learn more before commenting on the promise of payment hubs.
Over half (55%) of the respondents said they were familiar with the concept of a payments hub, and yet they disagreed on the definition: 60% of the bankers surveyed said it's a fully integrated common platform for managing all payments processes; 20% view a payments hub as a reporting tool that overlays existing payment systems; while 10% believe it entails using disparate technologies within one staffing centre. The remaining 15% had yet other definitions.
"One thing that is interesting about the 60% is they believe the payment hub is a 'fully integrated common platform for managing all payments processes'. We would take exception in that definition to the word 'all'. We define a payments hub as a tool that can solve the pain of pulling that information out of the different payment silos and allow the banks to manage those payments silos at least to some degree," said Bert Harkins, vice president, global strategic marketing at CheckFree, in an interview with gtnews.
"Some companies will talk about a payments hub in terms of a 'rip and replace' strategy - remove the different payments silos and replace all of those operating models with some gigantic payments hub. While that certainly solves the pain that the banks are reporting, there is a huge risk involved in taking such a dramatic step. A proper definition of a hub will certainly help manage some aspects of those payments silos holistically and centrally, but without that rip and replace strategy," he continued.
First published on www.gtnews.com
About Me
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- Joy Macknight
- Freelancer of the Year at Aviva Investors Sustainability Media Awards 2025. I am a former editor of The Banker, a Financial Times publication. I joined the publication in August 2015 as transaction banking and technology editor, was promoted to deputy editor in September 2016 and then to managing editor in April 2019. The crowning glory was my appointment as editor in March 2021, the first female editor in the publication's history. Previously I was features editor at Profit&Loss, editorial director of Treasury Today and editor of gtnews.com. I also worked on Banking Technology, Computer Weekly and IBM Computer Today. I have a BSc from the University of Victoria, Canada.
Thursday, 6 August 2009
Over a Third of Companies Abandoned Business Change Projects in Last Three Years
21 Oct 2008
Over a third (37%) of company executives surveyed said they had abandoned a major business change project in the past three years, according to research by Logica Management Consulting and the Economist Intelligence Unit (EIU). The researchers estimate that global companies are losing up to £7.8bn a year.
Some of the main barriers to effective business process improvement were found to be:
•Pressures of day-to-day business (48%).
•Lack of dedicated resources (38%).
•Lack of alignment between functions (38%).
•Lack of support from senior management (15%).
•Poor planning (16.3%).
•Lack of necessary IT/ infrastructure/applications (22%).
•Lack of expertise in business process design and/or change management (21%).
In a survey of 380 executives in western Europe, the key drivers for change management include improving financial performance (66%), improving customer focus (45%) and reacting to competitive pressures (32%); in practice, a worrying performance gap means this is unlikely to actually happen.
While 70% of the firms surveyed said they spent as much as 1-6% of their revenue every year on business change projects, nearly one third of business process changes fall short of expected benefits. Surprisingly, almost one fifth (18%) of organisations do not assess the achievement of specific goals against the original business case, such as ROI.
In an interview with gtnews, James Campbell, management consultant at Logica Management Consulting, said that this lack of evaluation around a project's success is a real problem. "One of the issues that we have identified with our clients is the ability to measure success. You need to start off with the business case and track the benefit realisation throughout the whole programme. Typically a lot of clients develop a business case and then they don't actually track it through, so there is no idea about how well they are doing and whether it is really giving them the return that they expected." Only 29% of the companies surveyed have specific systems in place to assess the impact of change projects on process performance.
The survey also found that:
•Successful changers are more ambitious. They undertake more cross-departmental projects and far more cross-regional projects (respectively 90% versus 85% and 81% versus 68%) than less successful changers.
•Collaboration with suppliers, customers and partners is not yet common practice, with only 24% of the companies surveyed reporting that they work highly collaboratively with suppliers, 27% with customers and 31% with business partners. Successful changers have a more open relationship with both customers and business partners.
•The top three most important business process changes over the past three years were the introduction of new technology, outsourcing and integration over different regions. For the next three years, automating processes replaces outsourcing in this top three. Future challenges for European executives consist of integrating locations and realising the benefits of earlier initiatives, including outsourcing.
First published on www.gtnews.com
Over a third (37%) of company executives surveyed said they had abandoned a major business change project in the past three years, according to research by Logica Management Consulting and the Economist Intelligence Unit (EIU). The researchers estimate that global companies are losing up to £7.8bn a year.
Some of the main barriers to effective business process improvement were found to be:
•Pressures of day-to-day business (48%).
•Lack of dedicated resources (38%).
•Lack of alignment between functions (38%).
•Lack of support from senior management (15%).
•Poor planning (16.3%).
•Lack of necessary IT/ infrastructure/applications (22%).
•Lack of expertise in business process design and/or change management (21%).
In a survey of 380 executives in western Europe, the key drivers for change management include improving financial performance (66%), improving customer focus (45%) and reacting to competitive pressures (32%); in practice, a worrying performance gap means this is unlikely to actually happen.
While 70% of the firms surveyed said they spent as much as 1-6% of their revenue every year on business change projects, nearly one third of business process changes fall short of expected benefits. Surprisingly, almost one fifth (18%) of organisations do not assess the achievement of specific goals against the original business case, such as ROI.
In an interview with gtnews, James Campbell, management consultant at Logica Management Consulting, said that this lack of evaluation around a project's success is a real problem. "One of the issues that we have identified with our clients is the ability to measure success. You need to start off with the business case and track the benefit realisation throughout the whole programme. Typically a lot of clients develop a business case and then they don't actually track it through, so there is no idea about how well they are doing and whether it is really giving them the return that they expected." Only 29% of the companies surveyed have specific systems in place to assess the impact of change projects on process performance.
The survey also found that:
•Successful changers are more ambitious. They undertake more cross-departmental projects and far more cross-regional projects (respectively 90% versus 85% and 81% versus 68%) than less successful changers.
•Collaboration with suppliers, customers and partners is not yet common practice, with only 24% of the companies surveyed reporting that they work highly collaboratively with suppliers, 27% with customers and 31% with business partners. Successful changers have a more open relationship with both customers and business partners.
•The top three most important business process changes over the past three years were the introduction of new technology, outsourcing and integration over different regions. For the next three years, automating processes replaces outsourcing in this top three. Future challenges for European executives consist of integrating locations and realising the benefits of earlier initiatives, including outsourcing.
First published on www.gtnews.com
Banks Look to Consolidate Payments, Cash and Trade Silos
17 Sep 2008
More than three quarters of the banks surveyed in the recent survey from Misys and Finextra Research said they were looking to consolidate payments, cash and trade into a single function under the banner of transaction banking, but the delivery of a joined-up service is not there yet. According to the research, which polled over 100 banks in 32 countries, respondents were looking to provide a more efficient service to its corporate clients by breaking down these legacy silos.
The research found that a majority (57%) have already taken steps to restructure their organisations, bringing together trade services, cash management and payments services as a single offering. A further 19% have plans in place for specific transaction banking units within the next 12 months.
Despite these changes, 45% of respondents - including half of those who have already restructured - believe existing customers rate their services as no better than average, suggesting either that the new structures have yet to bed in or that other difficulties prevent them from reaching their potential. "It is still early days in terms of the consolidation of these disparate silos," said Edward Taylor, global head of public relations at Misys, in an interview with gtnews. "But the pressure is on because corporate clients are demanding more from their banks. Corporates are not seeing enough improvement in this service offering."
IT complexity is seen as the biggest obstacle to transaction banking plans ahead of 'domination of global banks', cited by 55% and 40% of respondents respectively. At the top of the list of technical problems that banks say their customers want them to solve are greater integration with corporate systems and delivery of cross-border, multi-currency cash pooling services.
Adding new products and services to satisfy existing customers and widening their appeal to the smaller customers are the top priorities for 39% and 33% of respondents, respectively. Offering new cash pooling offerings are particularly effective, with banks already seeing an average 14.4% increase in business as a result.
Although nearly half of banks in the survey said their overall 2009 IT budgets had been frozen, average spending on development of cash management systems and services is expected to increase by 8%. As the primary delivery platform for new services, the online channel is the main focus of IT spending. Cash forecasting, invoice and payment reconciliation and real-time payment tracking feature prominently in online investment plans of a third of respondents in the next 12 months.
In other news, Misys has launched a global cash pooling solution so banks can offer advanced cross-border cash management services at a low cost. The solution enables banks to offer international cash pooling services to corporate and institutional customers, across multiple currencies, borders, banks and time zones.
David Shilling, business analyst, core banking at Misys, explained to gtnews that this product was designed to address three problems faced by corporate treasurers of multinational firms: tracking cash in multiple accounts in multiple countries; automating money transfer according to rules defined by the corporate; and allowing the bank to offer a virtual account so that the money does not have to physically move.
Designed to co-exist with other back-office systems, the solution delivers the flexibility banks need to both define innovative pooling products and operate in multiple regulatory jurisdictions, whilst minimising operational costs the company says. Misys Global Cash Pooling uses a rules-based approach for processing standard SWIFT format statement messages, applied to a hierarchy of shadow accounts, to construct a full picture of balances and movements between accounts in the cash pool - either within one bank or across different banks.
Working with an international bank that was the sole pilot, Misys took three years to develop this product. "The previous version was only for domestic cash pooling, which is much simpler since it is possible to treat the cash as one lump sum. An international scope is much more complicated because there are many different regulations, for example tax restrictions, and complex calculations that companies face when cash moves cross-border," said Shilling.
First published on www.gtnews.com
More than three quarters of the banks surveyed in the recent survey from Misys and Finextra Research said they were looking to consolidate payments, cash and trade into a single function under the banner of transaction banking, but the delivery of a joined-up service is not there yet. According to the research, which polled over 100 banks in 32 countries, respondents were looking to provide a more efficient service to its corporate clients by breaking down these legacy silos.
The research found that a majority (57%) have already taken steps to restructure their organisations, bringing together trade services, cash management and payments services as a single offering. A further 19% have plans in place for specific transaction banking units within the next 12 months.
Despite these changes, 45% of respondents - including half of those who have already restructured - believe existing customers rate their services as no better than average, suggesting either that the new structures have yet to bed in or that other difficulties prevent them from reaching their potential. "It is still early days in terms of the consolidation of these disparate silos," said Edward Taylor, global head of public relations at Misys, in an interview with gtnews. "But the pressure is on because corporate clients are demanding more from their banks. Corporates are not seeing enough improvement in this service offering."
IT complexity is seen as the biggest obstacle to transaction banking plans ahead of 'domination of global banks', cited by 55% and 40% of respondents respectively. At the top of the list of technical problems that banks say their customers want them to solve are greater integration with corporate systems and delivery of cross-border, multi-currency cash pooling services.
Adding new products and services to satisfy existing customers and widening their appeal to the smaller customers are the top priorities for 39% and 33% of respondents, respectively. Offering new cash pooling offerings are particularly effective, with banks already seeing an average 14.4% increase in business as a result.
Although nearly half of banks in the survey said their overall 2009 IT budgets had been frozen, average spending on development of cash management systems and services is expected to increase by 8%. As the primary delivery platform for new services, the online channel is the main focus of IT spending. Cash forecasting, invoice and payment reconciliation and real-time payment tracking feature prominently in online investment plans of a third of respondents in the next 12 months.
In other news, Misys has launched a global cash pooling solution so banks can offer advanced cross-border cash management services at a low cost. The solution enables banks to offer international cash pooling services to corporate and institutional customers, across multiple currencies, borders, banks and time zones.
David Shilling, business analyst, core banking at Misys, explained to gtnews that this product was designed to address three problems faced by corporate treasurers of multinational firms: tracking cash in multiple accounts in multiple countries; automating money transfer according to rules defined by the corporate; and allowing the bank to offer a virtual account so that the money does not have to physically move.
Designed to co-exist with other back-office systems, the solution delivers the flexibility banks need to both define innovative pooling products and operate in multiple regulatory jurisdictions, whilst minimising operational costs the company says. Misys Global Cash Pooling uses a rules-based approach for processing standard SWIFT format statement messages, applied to a hierarchy of shadow accounts, to construct a full picture of balances and movements between accounts in the cash pool - either within one bank or across different banks.
Working with an international bank that was the sole pilot, Misys took three years to develop this product. "The previous version was only for domestic cash pooling, which is much simpler since it is possible to treat the cash as one lump sum. An international scope is much more complicated because there are many different regulations, for example tax restrictions, and complex calculations that companies face when cash moves cross-border," said Shilling.
First published on www.gtnews.com
Credit Crunch Heightens the Chief Procurement Officer's FSC Role
22 Jul 2008
The impact of the 2008 economic slowdown has led to several problems within the financial supply chain (FSC), such as rising financing costs and less available credit, particularly in the form of long-term capital, plus an overall increase in pressure to maintain margins for shareholders. The pressure to cut costs has extended further into the organisation than ever before and now impacts the activities of the chief procurement officer (CPO). The CPO must be brought into the realm of FSC management in order to address these issues, argued Wolfgang Steck, vice president and head of procurement solutions and supply chain UK at global management consulting firm AT Kearney, speaking at the Financial Services Club's Supply Chain Forum last week.
Focusing on the question, 'Are actual solutions good enough for your clients?', Steck highlighted the importance of effective supplier relationship management and efficient operating process management in the global sourcing of supplies. He pointed out that the extensive market changes have made it even more difficult for CPOs to achieve their savings target, listing barriers to success such as talent availability, sustainability, interest rates, inflation, currency risk, regulatory issues, commodity scarcity, and supply continuity risks. He added that procurement departments must change - they must be collaborative and build trusting relationships throughout the supply chain, doing away with "bully buying" tactics.
To address these issues raised by the economic turmoil, FSC management has to include CPOs, argued Steck. He said that recognised leaders in procurement have embraced FSC management. "CPOs must tap into FSC management. Automation is a must. They must be part of supply chain finance and actively look at how to help their suppliers," argued Steck. "FSC management requires multi-lateral relations and collaboration between buyers, suppliers and financial institutions. Banks have an opportunity to work with a range of suppliers up and down the supply chain."
Eric Sepkes, chairman of the Supply Chain Forum and ex-Citi vice president, questioned whether banks understand what CPOs need. "Most banks don't know who the corporate's CPO is. We [Citi] always thought that our client was the treasurer in the company, but I think that may be changing," he said. "Each corporate must look at the procure-to-pay (P2P) costs because what is needed is something that helps the company decrease working capital throughout the whole FSC." But during the discussion, a representative from a bank stated that "most CPOs don't know what working capital is - and they should."
Steck at AT KEarney contended that CPOs need to be sitting at the board level in order to achieve the level of integration needed for a corporate to get a complete overview of its supply chain. He outlined the three benefits corporates and CPOs will gain by integrating CPOs into FSC management:
1.Within processes: decreased paperwork, increased staff productivity, a link between the FSC and physical supply chain (PSC), increased collaboration, and decreased invoice exceptions.
2.Within financing: decreased financing costs, increased control over cash flow and better risk management.
3.Within the supply base: decreased cost of goods, access to new suppliers, attractive financing option, increased loyalty of supplier and an enhanced relationship, as well as connecting players in the supply chain.
First published on www.gtnews.com
The impact of the 2008 economic slowdown has led to several problems within the financial supply chain (FSC), such as rising financing costs and less available credit, particularly in the form of long-term capital, plus an overall increase in pressure to maintain margins for shareholders. The pressure to cut costs has extended further into the organisation than ever before and now impacts the activities of the chief procurement officer (CPO). The CPO must be brought into the realm of FSC management in order to address these issues, argued Wolfgang Steck, vice president and head of procurement solutions and supply chain UK at global management consulting firm AT Kearney, speaking at the Financial Services Club's Supply Chain Forum last week.
Focusing on the question, 'Are actual solutions good enough for your clients?', Steck highlighted the importance of effective supplier relationship management and efficient operating process management in the global sourcing of supplies. He pointed out that the extensive market changes have made it even more difficult for CPOs to achieve their savings target, listing barriers to success such as talent availability, sustainability, interest rates, inflation, currency risk, regulatory issues, commodity scarcity, and supply continuity risks. He added that procurement departments must change - they must be collaborative and build trusting relationships throughout the supply chain, doing away with "bully buying" tactics.
To address these issues raised by the economic turmoil, FSC management has to include CPOs, argued Steck. He said that recognised leaders in procurement have embraced FSC management. "CPOs must tap into FSC management. Automation is a must. They must be part of supply chain finance and actively look at how to help their suppliers," argued Steck. "FSC management requires multi-lateral relations and collaboration between buyers, suppliers and financial institutions. Banks have an opportunity to work with a range of suppliers up and down the supply chain."
Eric Sepkes, chairman of the Supply Chain Forum and ex-Citi vice president, questioned whether banks understand what CPOs need. "Most banks don't know who the corporate's CPO is. We [Citi] always thought that our client was the treasurer in the company, but I think that may be changing," he said. "Each corporate must look at the procure-to-pay (P2P) costs because what is needed is something that helps the company decrease working capital throughout the whole FSC." But during the discussion, a representative from a bank stated that "most CPOs don't know what working capital is - and they should."
Steck at AT KEarney contended that CPOs need to be sitting at the board level in order to achieve the level of integration needed for a corporate to get a complete overview of its supply chain. He outlined the three benefits corporates and CPOs will gain by integrating CPOs into FSC management:
1.Within processes: decreased paperwork, increased staff productivity, a link between the FSC and physical supply chain (PSC), increased collaboration, and decreased invoice exceptions.
2.Within financing: decreased financing costs, increased control over cash flow and better risk management.
3.Within the supply base: decreased cost of goods, access to new suppliers, attractive financing option, increased loyalty of supplier and an enhanced relationship, as well as connecting players in the supply chain.
First published on www.gtnews.com
Sibos 2008 - SIBOS Delegates Called Home to Fight Lehman Fires
18 Sep 2008
SIBOS is overshadowed by external economic shocks. Joy Macknight, Section editor at gtnews, explores the reactions of the delegates and attends the session on what keeps CEOs awake at night.
On the third day of SIBOS, there was a subdued air about the conference as delegates digested the latest news of the financial crisis following Lehman Brothers' rapid demise on Monday. Wednesday saw the Federal Reserves US$85bn bail out of American International Group (AIG) and Barclays' bargain basement acquisition of pieces of Lehman Brothers, including its New York head office. In addition, there have been an increasing number of large bank tie-ups, in order to stay afloat in the turbulent market, such as Lloyds TSB's acquisition of HBOS. Morgan Stanley is also earmarked for an acquisition bid by another major international bank.
As one Australian delegate said on the morning coach to the conference hall: "It's very hard to figure out what to make of it all. On day two, they were saying that the days of investment banking are over; and then the next day they are saying everything is not as bad as it seems." But most analysts are admitting that it is the worst financial crisis since the 1920s.
The conference floor was decidedly less crowded as many executive-level bankers were called back home to find out what risk exposure they have in terms of Lehman's. Some, it was rumoured, flew in Sunday night just to get the first flight back on Monday. This seismic sea change opens up new risks for all financial institutions and, of course, new opportunities, and the banks want their key decision makers back in the office.
This, in turn, has meant a lot of work for SWIFT as it had to scramble to replace its keynote speakers. SWIFT's CEO Lázaro Campos tried to put a positive spin on it by saying that it proves that SIBOS attracts only highest calibre speakers.
Commenting on the latest events in an interview with gtnews, Mark Hale, director at PricewaterhouseCoopers and head of the new transaction banking team, said that he was not surprised by recent events in the financial system because market fragility has been building up for a number of years with the increase in personal debt and mortgage debt and a misunderstanding of the risk involved. "Also, there has been a systematic underinvestment in payments infrastructure, with the industry more focusing on 'keeping the lights on' and compliance rather than modernising. Now the problems stemming from underinvestment are coming home to roost in a crisis." He believes that the crisis has resulted from a lack of leadership from all parties involved and leaders, regulators and shareholders must stake responsibility for what happened.
Hale is also worried about the possibility of draconian regulations being brought in which won't address the fundamentals of how things went wrong, and, in particular, if form takes precedence over substance, or process displaces experienced judgment.
The 'big issue' debate, What keeps CEOs awake at night?, was pertinent as the meltdown of the financial system meant that most weren't getting much sleep at all. The panel consisted of June Felix, general manager, global banking and financial markets, IBM; Hans Van der Noordaa, member of the executive board, ING Group; S. Ramadorai, CEO and managing director, Tata Consultancy Services; Karen Fawcett, global head of transaction banking, Standard Chartered; Brian Stevenson, chief executive, global transaction services, The Royal Bank of Scotland; and Timothy Ryan, president and CEO, Securities Industry and Financial Markets Association (SIFMA). Almost all the participants talked about the importance of talent and getting the right people to make the right decisions, plus efficient and transparent internal processes, to weather the financial storm.
SIFMA's Ryan called on the industry as a whole to raise its hand and admit what has happened. He made a number of proposals for change: the credit rating process has to be modified to give it more transparency to that investors have an understanding about what information has been used to develop the rating; a process, such as asset pricing, has to be put in place to increase confidence for investors; and all components of risk management must be better integrated and monitored. "We have to change the focus to getting the future fixed instead of just fighting fires. It looks messy right now, but we shall get through it," he said with conviction.
Ralph Silva, research director, Europe, at TowerGroup, told gtnews that he believes the financial industry is at least 12 months from end of the crisis and the global economy may be looking at seven to 10 years of slow growth. This environment will have a dramatic effect on the treasury function. "There is a systemic lack of business; treasuries have to revise their forecasts which assumed a continuing growth rate of 5%. Treasury will see a halt of new investment and innovation will become a four-letter word. Corporates will focus their attention on the need to keep the lights on."
He predicts that the major banks will lose between 10-12% of their staff in treasury. He believes that the decrease will not hamper the banks' ability to supply products but there will be less focus on innovation and new product development. In an economic downturn, he points out, what corporates need is basic value. "Banks are trying to add on and sell complex services when really in this climate they should be lowering the price and offer the basics. Treasury services prices are increasing but this won't be accepted by the customer base."
First published on www.gtnews.com
SIBOS is overshadowed by external economic shocks. Joy Macknight, Section editor at gtnews, explores the reactions of the delegates and attends the session on what keeps CEOs awake at night.
On the third day of SIBOS, there was a subdued air about the conference as delegates digested the latest news of the financial crisis following Lehman Brothers' rapid demise on Monday. Wednesday saw the Federal Reserves US$85bn bail out of American International Group (AIG) and Barclays' bargain basement acquisition of pieces of Lehman Brothers, including its New York head office. In addition, there have been an increasing number of large bank tie-ups, in order to stay afloat in the turbulent market, such as Lloyds TSB's acquisition of HBOS. Morgan Stanley is also earmarked for an acquisition bid by another major international bank.
As one Australian delegate said on the morning coach to the conference hall: "It's very hard to figure out what to make of it all. On day two, they were saying that the days of investment banking are over; and then the next day they are saying everything is not as bad as it seems." But most analysts are admitting that it is the worst financial crisis since the 1920s.
The conference floor was decidedly less crowded as many executive-level bankers were called back home to find out what risk exposure they have in terms of Lehman's. Some, it was rumoured, flew in Sunday night just to get the first flight back on Monday. This seismic sea change opens up new risks for all financial institutions and, of course, new opportunities, and the banks want their key decision makers back in the office.
This, in turn, has meant a lot of work for SWIFT as it had to scramble to replace its keynote speakers. SWIFT's CEO Lázaro Campos tried to put a positive spin on it by saying that it proves that SIBOS attracts only highest calibre speakers.
Commenting on the latest events in an interview with gtnews, Mark Hale, director at PricewaterhouseCoopers and head of the new transaction banking team, said that he was not surprised by recent events in the financial system because market fragility has been building up for a number of years with the increase in personal debt and mortgage debt and a misunderstanding of the risk involved. "Also, there has been a systematic underinvestment in payments infrastructure, with the industry more focusing on 'keeping the lights on' and compliance rather than modernising. Now the problems stemming from underinvestment are coming home to roost in a crisis." He believes that the crisis has resulted from a lack of leadership from all parties involved and leaders, regulators and shareholders must stake responsibility for what happened.
Hale is also worried about the possibility of draconian regulations being brought in which won't address the fundamentals of how things went wrong, and, in particular, if form takes precedence over substance, or process displaces experienced judgment.
The 'big issue' debate, What keeps CEOs awake at night?, was pertinent as the meltdown of the financial system meant that most weren't getting much sleep at all. The panel consisted of June Felix, general manager, global banking and financial markets, IBM; Hans Van der Noordaa, member of the executive board, ING Group; S. Ramadorai, CEO and managing director, Tata Consultancy Services; Karen Fawcett, global head of transaction banking, Standard Chartered; Brian Stevenson, chief executive, global transaction services, The Royal Bank of Scotland; and Timothy Ryan, president and CEO, Securities Industry and Financial Markets Association (SIFMA). Almost all the participants talked about the importance of talent and getting the right people to make the right decisions, plus efficient and transparent internal processes, to weather the financial storm.
SIFMA's Ryan called on the industry as a whole to raise its hand and admit what has happened. He made a number of proposals for change: the credit rating process has to be modified to give it more transparency to that investors have an understanding about what information has been used to develop the rating; a process, such as asset pricing, has to be put in place to increase confidence for investors; and all components of risk management must be better integrated and monitored. "We have to change the focus to getting the future fixed instead of just fighting fires. It looks messy right now, but we shall get through it," he said with conviction.
Ralph Silva, research director, Europe, at TowerGroup, told gtnews that he believes the financial industry is at least 12 months from end of the crisis and the global economy may be looking at seven to 10 years of slow growth. This environment will have a dramatic effect on the treasury function. "There is a systemic lack of business; treasuries have to revise their forecasts which assumed a continuing growth rate of 5%. Treasury will see a halt of new investment and innovation will become a four-letter word. Corporates will focus their attention on the need to keep the lights on."
He predicts that the major banks will lose between 10-12% of their staff in treasury. He believes that the decrease will not hamper the banks' ability to supply products but there will be less focus on innovation and new product development. In an economic downturn, he points out, what corporates need is basic value. "Banks are trying to add on and sell complex services when really in this climate they should be lowering the price and offer the basics. Treasury services prices are increasing but this won't be accepted by the customer base."
First published on www.gtnews.com
Mazda Motor Logistics Implements Wallstreet Treasury
28 Oct 2008
Mazda Motor Logistics Europe (MLE), the European logistics and financial services subsidiary of Mazda Motor Corporation, has selected Wall Street Systems to centralise its treasury processes, improve cash visibility and develop efficient forecasting capabilities. The firm is implementing Wallstreet Treasury ASP (application service provider) solution at its central treasury in Belgium in a two-stage project.
According to the company, the benefits of the Wallstreet Treasury ASP solution include a lower total cost of ownership (typically by 30% to 40%) with no hardware or software costs and limited IT support requirements, global accessibility, advanced security and strong disaster recovery services.
"We selected Wallstreet because of its understanding of our needs, the functionality of Wallstreet Treasury ASP and its ability to show quantifiable and significant value to the business," said José Jimenez, European treasury manager, MLE. "We benefit from best practice treasury practices and external help to improve treasury productivity. The ASP model means that upgrades are managed and rolled out by Wallstreet, while data hosting is Sarbanes-Oxley (SOX) compliant."
This follows on from the recent announcement that Wallstreet has launched its treasury software as a software as a service (SaaS) model at a fixed monthly subscription.
Aimed at the mid-sized corporate market, the core Wallstreet Treasury service costs US$800 per user per month, giving mid-tier corporate users access to best practice functionality at a competitive rate. Test marketed this year in the US from March, over 90% of new clients have chosen to subscribe to the service, instead of purchasing and running it in-house. Wallstreet clients that have selected the subscription service include National Express Group, adidas, Mazda and Six Continents.
Under this new model, clients will be able to add to the core Wallstreet Treasury solution by choosing options from Wallstreet's integrated partner network, therefore only paying for the services they need for each user while ensuring all aspects of their treasury requirements are met through one supplier. Partners available at launch are:
•Fides Treasury Services, developed by Credit Suisse as an alternative to traditional bank interfaces and workstations, providing off-the-shelf connectivity to more than 850 banks and allowing integrated payment and statement services.
•Speranza Systems, which enables automated, real-time bank relationship management, providing full transparency of signing privileges and accounts, as well as electronic document exchange.
•Reval, which provides multi-asset hedge accounting solutions.
Wallstreet will be adding to its partner network over time, linking with complementary treasury solutions providers to offer a full 'treasurer's desktop' to its clients.
Paul Wheeler, managing director of Wallstreet Treasury at Wall Street Systems, told gtnews: "There are many barriers for mid-sized corporates when embarking on treasury transformations, particularly the prohibitive costs of IT whether in implementation or upkeep. The ASP delivery model means that clients can access these services and pay for what they use. In today's economic climate, we believe that there will be an accelerated adoption of the hosted service model."
Wallstreet also offers a 'try before you buy' concept, where corporates can implement the solution for a month before finalising the contract. Wheeler explains that the knowledge gained through the month trial is grandfathered into the implementation process. "The trial period drives discovery early - the corporate can see how the solution fits into their system and processes and it also means they can give feedback to us," said Wheeler.
First published on www.gtnews.com
Mazda Motor Logistics Europe (MLE), the European logistics and financial services subsidiary of Mazda Motor Corporation, has selected Wall Street Systems to centralise its treasury processes, improve cash visibility and develop efficient forecasting capabilities. The firm is implementing Wallstreet Treasury ASP (application service provider) solution at its central treasury in Belgium in a two-stage project.
According to the company, the benefits of the Wallstreet Treasury ASP solution include a lower total cost of ownership (typically by 30% to 40%) with no hardware or software costs and limited IT support requirements, global accessibility, advanced security and strong disaster recovery services.
"We selected Wallstreet because of its understanding of our needs, the functionality of Wallstreet Treasury ASP and its ability to show quantifiable and significant value to the business," said José Jimenez, European treasury manager, MLE. "We benefit from best practice treasury practices and external help to improve treasury productivity. The ASP model means that upgrades are managed and rolled out by Wallstreet, while data hosting is Sarbanes-Oxley (SOX) compliant."
This follows on from the recent announcement that Wallstreet has launched its treasury software as a software as a service (SaaS) model at a fixed monthly subscription.
Aimed at the mid-sized corporate market, the core Wallstreet Treasury service costs US$800 per user per month, giving mid-tier corporate users access to best practice functionality at a competitive rate. Test marketed this year in the US from March, over 90% of new clients have chosen to subscribe to the service, instead of purchasing and running it in-house. Wallstreet clients that have selected the subscription service include National Express Group, adidas, Mazda and Six Continents.
Under this new model, clients will be able to add to the core Wallstreet Treasury solution by choosing options from Wallstreet's integrated partner network, therefore only paying for the services they need for each user while ensuring all aspects of their treasury requirements are met through one supplier. Partners available at launch are:
•Fides Treasury Services, developed by Credit Suisse as an alternative to traditional bank interfaces and workstations, providing off-the-shelf connectivity to more than 850 banks and allowing integrated payment and statement services.
•Speranza Systems, which enables automated, real-time bank relationship management, providing full transparency of signing privileges and accounts, as well as electronic document exchange.
•Reval, which provides multi-asset hedge accounting solutions.
Wallstreet will be adding to its partner network over time, linking with complementary treasury solutions providers to offer a full 'treasurer's desktop' to its clients.
Paul Wheeler, managing director of Wallstreet Treasury at Wall Street Systems, told gtnews: "There are many barriers for mid-sized corporates when embarking on treasury transformations, particularly the prohibitive costs of IT whether in implementation or upkeep. The ASP delivery model means that clients can access these services and pay for what they use. In today's economic climate, we believe that there will be an accelerated adoption of the hosted service model."
Wallstreet also offers a 'try before you buy' concept, where corporates can implement the solution for a month before finalising the contract. Wheeler explains that the knowledge gained through the month trial is grandfathered into the implementation process. "The trial period drives discovery early - the corporate can see how the solution fits into their system and processes and it also means they can give feedback to us," said Wheeler.
First published on www.gtnews.com
Friday, 24 July 2009
Bullet proof IT
01 May 2008Features
Business continuity is about disaster-proofing the business to ensure it keeps running 24x7. To adhere to regulations like Basel II or new standards like BS25999, financial institutions have got to prove they have robust, best practices in place.
High profile disasters like the 7 July London bombings and the events of 11 September, or potential epidemics like SARS or Bird Flu, have brought business continuity out of a dark corner and into the boardroom. But it’s not just big headline problems that effect the ability of a firm to run its business: the most well laid plans can also be disrupted by events that seem benign at first, like the 2012 Olympic Games which are effectively capping electricity supplies to Canary Wharf limiting the data centre expansion much needed in the financial sector.
Business continuity, simply, is the ability to roll with the punches and stay up and running no matter what. Financial firms are well aware of the threat to their business caused by an outage – client trust in the reputation, brand and business of a financial institution can waver. HSBC is one bank that has had recent experiences of outages.
Since the beginning of the year, HSBC’s Secure ePayments service has gone down three times – a fairly significant outage in January followed by more significant outages in March and the beginning of April. Merchants clamoured for compensation because they couldn’t process their payments, thereby losing out on business themselves. HSBC’s UK press office had not responded to Banking Technology’s questions regarding the outages or its business continuity plans by the time we closed for press.
To its corporate customers, HSBC appeared to be without a contingency plan. Said one client: “One doesn’t expect a major international bank to be in a position where it has no continuity arrangements in place such that, whatever it is that goes wrong, it doesn’t take the bank out of business for 48 to 72 hours. Also it shouldn’t put its customer service in the position where they can only say ‘we also don’t know what is going on – keep trying every 15 minutes’. If you run an e-commerce service, you have in place a rollover so that if your main system goes down your backup comes online – that is a pretty basic part of business continuity planning.”
David Porter, head of security and risk at technology consultancy firm Detica, dismisses the idea that a modern bank would be without a business continuity plan, but argues that the bigger issue is probably the question of when that plan was last dusted off, refreshed and simulated.
“In the old days you put your BCP in place and then you could all go down the pub and say job done,” says Porter. “But now banks need to dust off their plans and really re-assess them in light of today’s risks. Ten years ago, being deprived of the internet for 24 hours across all employees may not have been such a big deal, but I wonder how the average organisation today would cope if their email or internet access went down even for a few hours.”
Porter points out that the way data gets linked together – the soft human and also the hard data links – means that BCP practitioners should keep in mind that very small changes in one part of this massively linked network can have sudden and unforeseen implications on another, seemly unconnected, part. He uses the example of Buntsfield oil depot explosion in the UK which was connected to a number of employees at various companies not getting their 2005 Christmas payroll – all because of an unforeseen series of links between the explosion and a computer system nearby.
To cope with disasters hitting a specific location, most financial institutions’ best practice has been to move from local-oriented concepts, like mirroring data across distances of 10 or 30 kilometres, to more sophisticated schemes of having a third data centre in a different country or even a different continent. “Typically customers, large banking or financial institutions, would have a dual site setup where they do synchronous mirroring across mostly fibre optical links within distances up to 30 kilometres,” says Matthias Werner, secretary and co-chair, events committee at the Storage Networking Industry Association Europe.
“In order to comply with the needs for extended distances back up or disaster recovery sites, most of these customers would have a third site where they do asynchronous copy of most or all of their data thousands of kilometres away. To do asynchronous copying, you don’t have any physical limitations because typically these are remote sites and they would lag a couple of seconds or even minutes behind real-time data centres.” Werner believes that the three sites concept – having two synchronous sites and one asynchronous remote site – is cutting edge technology.
Tim Furmidge, head of products in BT’s financial services group, has a different take on the solution. “What firms are doing is distributing their systems across the main trading floor and perhaps a back up data centre or a disaster recovery location – but the secondary or tertiary system isn’t a separate lights out system that they are waiting to turn on if they need it. It is operating day in and day out and effectively it is a part of the day-to-day operational platform,” he says.
“If there is a flood in the trading building, the equipment that is deployed in a remote data centre carries on taking the full load instead of running a partial load. And if the traders can’t get into the trading floor they can relocate to alternative trading facilities either regular office buildings or purpose built ATF floors and then they can connect into the systems from there.”
BT’s ITS voice trading system can split the physical and voice communication service over multiple data centres; it allows traders to connect to their turrets over the network so that they can connect in from a remote alternative trading location or come in over a web browser from home. And with BT’s Radianz shared market infrastructure, many firms have dual connections coming into their main trading building to their data centre, so if they lose their main building they can very easily switch their market data services down electronic feeds to alternative locations.
GoldenGate Software promotes a dual online approach and focuses solely on the continuous availability of data because, as Sami Akbay, vice president of marketing and product management, points out: “Data is somewhat unique in the sense that unlike hardware, software, wires, and cables, once you lose data you cannot really replace it. You can buy new servers, cables, racks, and all that stuff but if you have lost the data you are in deep trouble.”
With GoldenGate’s Active/Active service, both the main and the backup systems are processing transactions and if one becomes unavailable the other one seamlessly takes over and when the primary system comes back online the workload is redistributed again without any transaction loss (see box).
These best practices and more have been codified in a new British standard BS25999, for which a certification service was launched last October. This allows firms to prove that they are following best practices, something that was difficult to show hard evidence for previously. But if the standard is to succeed, it has to be a generic standard that the small guy can cope with as well as the big guys. Many of the top financial and banking organisations, however, believe that they are already equal to, or in advance of, the standards set out by BS25999.
Mike Osborne managing director of ICM Business Continuity Services says that these financial institutions will look at the standard as a supply chain management tool. “Most banks think they are better than that, but they are looking at their supply chain – the firms that dovetail into their technology solutions in terms of information feeds, service providers, etc. Where BS25999 will have its part to play in the banking sector is the way in which the smaller organisations are asked to comply with BS25999. I personally believe that if they don’t, the banks will say I am sorry we are not going to renew our relationship with you because you represent too high a risk.”
Swedbank takes Active/Active approach
Nordic retail bank Swedbank processes electronic payment requests for a number of Swedish and international banks, as well as ATM transactions and payment requests for its own customers. With its growing international presence, the bank now processes more than one billion transactions per year.
Swedbank has been a long-time user of ACI’s Base24 application running on HP NonStop servers. Initially, its business continuity plan involved operating a “hot” backup site for testing and for failover in the event of an unplanned primary system failure. However, as it continued its global expansion, the time that it took to fail over to the backup system for both planned and unplanned outages barred Swedbank from achieving true 24x7 availability for its customers. The bank realised that any type of outage has an impact on customer satisfaction and loyalty, which ultimately can affect the bank’s revenue.
In 2006 Swedbank decided to implement an Active/Active configuration with GoldenGate’s High Availability solution. “Having evaluated various data migration and availability solutions, we decided to deploy GoldenGate because of its interoperability with the ACI Base24 application, and because the solution had already been proven elsewhere at Swedbank where it was deployed by other departments,” says Magnus Kleveby, systems area manager for authorisation processing at Swedbank.
The Swedbank Active/Active system runs on two HP NonStop server nodes separated geographically for disaster tolerance best practice reasons. Both databases are active and are processing different transactions against their own copies of the Base24 application database. Additionally, transactions are split between the databases to provide load balancing. In the event that one database fails or must be taken offline for planned hardware or software maintenance, upgrades, or migrations, all transactions are simply routed to the surviving node for processing. Thus, planned downtime is eliminated; and recovery from a sudden failure occurs literally within seconds.
“In the event of an unexpected outage, we can restore data within seconds and the system can cope with sudden peaks in demand, such as at the end of the month when most people do a lot of shopping or go online to pay bills,” says Kleveby. “GoldenGate has given us the assurance we are looking for and we can maintain our level of customer service no matter what.”
Swedbank’s Active/Active configuration was also leveraged during a migration across the HP NonStop environment when moving to the new HP Integrity platform. By taking down one server at a time, upgrading it, and then returning it to service, this major upgrade was achieved with no application downtime.
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