Dec 2017/Jan 2018

The definitive source of news and analysis of the global fintech sector | Dec 2017/Jan 2018 www.bankingtech.com

IN THE EYE OF THE STORM We provide clarity CHARITIES AND CONTACTLESS PAYMENTS Goodwill and giving digitally CASE STUDY: TSB BANK Casting off the chains of legacy tech IN THIS ISSUE

Contents

NEWS 04 All the latest fintech news from around the globe: the good, the bad and the ugly.

FEATURES 18 Payments commentary Happy birthday to SEPA – it’s turning ten!

20 Spotlight: charities and contactless payments Tis’ the season of giving.

24 Case study: TSB Bank Liberating the bank from legacy tech shackles.

26 Interview: Javier Santamaría, EPC SCT Inst – a turning point in the industry. What’s next?

30 Analysis: blockchain A giant leap from paper to DLT in trade finance.

34 Analysis: regtech Undergoing a revival.

38 Spotlight: liquidity management Real-time nostro time?

REGULARS 43 Appointments – the movers and the shakers. 43 Industry events – mark your calendars! 44 Out of office – curiosities, frustrations and mishaps of the fintech world.

December 2017/January 2018 | www.bankingtech.com | 01 Editor Tanya Andreasyan +44 207 551 9010 [email protected]

Deputy Editor Antony Peyton +44 207 551 9010 [email protected]

Reporter Calum Parry +44 207 017 5709 [email protected]

Design & Production Manager Kosh Naran [email protected]

Head of Sales & Business Development Judith McInerney +44 203 377 3506 Clarification: Kevin Keegan is 2017, WHAT A YEAR! [email protected] not part of the team Editor’s note Looking back at the past 12 months, Business Development Executive Banking Technology’s story has been Alec Gost +44 207 017 6122 dynamic and rewarding. [email protected]

Our team has expanded (spot the new faces!), we Marketing Manager Get your act together, incumbent banks! and send them to us? It will be faster. Irena Andrisevic have introduced a shiny new website, the +44 207 017 5379 This is my recent exasperating Me: Are you serious? You want me Banking Technology Awards have seen a record high [email protected] experience of getting a mortgage with to download the PDFs of monthly a major high street bank, which also statements from two years ago, search number of entries, we’ve merged with global paytech Subscriptions and Renewals publication Paybefore, and our digital and print Tel: +44 207 017 5533 happens to be my provider of the current through them to find the right one, and Email: [email protected] account and credit card. Following a then send it to you? All the while you readership went through the roof. lengthy conversation with the bank’s are my main bank holding all this data Subscription for one year: mortgage advisor (the process felt more already. All of this wouldn’t be possible without you, our loyal ■ £495 supporters who read our publications and engage ■ €625 like a tick-box exercise for the bank) and Bank: Ah, that’s ok, we’ll find the ■ $795 masses of printed paperwork, the bank information. with us on social media. Subscription for two years: contacted me asking to provide the And they did. So, we would like to take this opportunity to thank ■ £800 address information for the last three Is this really how business should be ■ €880 years. done today, especially in the light of ever- you for being a part of our journey and wish you a very ■ $1,000 Chief happiness officer Me: You have been my main bank for increasing competition from old and new Merry Christmas and Happy New Year! over a decade, and you’ve been sending players? The time to get into the modern May 2018 be peaceful, successful, positive and kind. me my bank statements and other age of tech and customer centricity is correspondence regularly by post – are long overdue, and the era of big banks We will continue to bring you the breaking news, you saying you do not have my current domination is coming to an end. latest updates, happenings, analysis and gossip from address or address history? Let’s make 2018 the year of across the global industry. Bank: Ah, yes, we do. modernisation and change. © Banking Technology 2017 A couple of days later, I get another Let it be a dynamic, interesting, and Wishing you a lovely festive break, All rights reserved; Banking Technology material phone call about the deposit for the inspiring year! bt may not be reproduced in any form without Clarification: John Barnes is the written permission of the publisher. mortgage. It was in a savings account not part of the team with this bank until two years ago, when Banking Technology team Banking Technology is published ten times a I moved it to another bank as it offered a year by Knect365, an Informa Business Maple House, better deal. 149 Tottenham Court Road, Bank: Could you please send us the London W1T 7AD, paperwork showing where the money UK. was moved from your current savings Printer account with Bank X? Hobbs the Printers Ltd, Me: It was moved from a savings Hampshire, UK. account that I had with you to a savings ISSN 0266-0865 account with Bank X, so you have all this www.bankingtech.com information on your records. Tanya Andreasyan Bank: Can you log into your internet Editor banking account, find those statements Banking Technology

December 2017/January 2018 | www.bankingtech.com | 03 NEWS NEWS

All aboard the China CITIC Bank and Baidu launch Standard Chartered and Axis Bank Sunlight Payments Amex blockchain direct bank, AiBank launch payments via Ripple shines brightly for payments express China’s internet giant Baidu and one of the According to Li Rudong, AiBank’s Standard Chartered and Axis Bank have payments are handled”. philanthropy country’s largest lenders, China CITIC Bank, president, the start-up’s main focus will be on unveiled a real-time cross-border payment The new service will see corporate have joined forces to launch a new direct consumer and SME lending. It will leverage service for corporates using Ripple’s payments in SGD to accounts in Axis Bank, Sunlight Payments, a US-based paytech bank, AiBank. modern technologies such as artificial distributed ledger technology (DLT) India’s third largest private sector bank. start-up, says it has “successfully tested a The joint venture was approved by the intelligence (AI) and big data, Rudong says. solution. The banks say the service gives new platform to enhance controls and regulator earlier this year, and has now Technology plays a big part in AiBank, This offering is now commercially corporates “greater control over cash flow” accountability for philanthropic funding and opened its virtual doors for business (it has with 60% of the bank’s employees working available between Standard Chartered as Ripple’s network offers “full transparency grants”. an online presence only, and no physical in tech roles. (Singapore) and Axis Bank India, and, of associated fees”, which can be advised The test was carried out with Pathfinder branches). Baidu’s COO, Lu Qi, describes AiBank as accessible through Standard Chartered’s before transactions are executed. International, a women’s reproductive health China CITIC Bank owns 70% of AiBank, “the future of intelligent finance”. corporate digital banking platform, In addition, these payments are pre- non-governmental organisation (NGO) that American Express has launched while Baidu owns 30%. Tanya Andreasyan Straight2Bank. validated, providing straight through works in 19 countries. Sunlight says the NGO blockchain-enabled, business-to-business Himadri Chatterjee, president, processing and “fast settlement that lowers was selected as a pilot customer due to its cross-border payments with Santander transaction banking, Axis Bank, says by the overall cost of processing the payment “existing strong accounting systems”. using Ripple’s network. Airtel Payments Bank live with new using APIs and DLT there is an “opportunity while allowing for greater certainty”. The two companies used the new The Amex FX International Payments to radically change the way international Antony Peyton platform to transfer funds from the NGO’s US (FXIP) business is working with Ripple to core banking system office in Massachusetts to country offices in make blockchain payments commercially Tanzania and Uganda. available, “reducing the time and cost of Airtel Payments Bank, a start-up subsidiary It has also entered into a strategic Itaú Unibanco in wealthtech “Unlike traditional paper payment settlement”. Santander UK is the selected of Indian telco Airtel, has gone live with its partnership with Hindustan Petroleum methods, the pilot electronically tracked the partner to initiate this new transaction core banking system. This is understood to Corporation Limited (HPCL), turning revamp with Temenos follow-on payments down the distribution channel. be Infosys’ Finacle. HPCL’s network of 14,000 petrol stations Itaú Unibanco, Latin America’s largest Itaú, says the new platform will “enrich chain to vendors and partners in local Marc Gordon, EVP and CIO at American The new platform went live after across the country into Airtel Payments banking group, has signed for a new core the customer experience, reduce time communities in each country,” Sunlight Express, says the deal “represents the next “after a few tense moments”, according Bank’s banking points. banking solution – Temenos’ T24 – for its to market for new products, generate explains. “This approach allowed Pathfinder step forward on our blockchain journey, to Airtel’s global chief HR officer, Srikanth Customers can open a bank account international private banking business. efficiencies and reinforce the segments’ staff to have visibility into payments across evolving the way we move money around Balachandran. It was “a moment of joy “in a matter of minutes”, Balachandran The platform, marketed as WealthSuite digital strategy”. all parties. Those participating in the pilot the world”. and celebration for the 300-odd people says. by Temenos, also includes portfolio Also, it will make the bank “better moved monies between the Sunlight With the integration of Ripple into the at Airtel Payments Bank”, he writes in a The bank has rolled out an electronic management, channels and analytics prepared for the exponential evolution of platform and their bank accounts, in the FXIP platform, non-card payments can be LinkedIn post. know your customer (e-KYC) solution functions. technological cycles”, he adds. currency of their choice.” routed through Ripple’s real-time payment “Heralding the maturation of India’s using the Aadhaar-powered biometric It will be deployed in the cloud, in a “big Earlier this year, another Latin American Pathfinder’s CFO, Linda DeNicola, says her network, known as RippleNet. truly digital bank into a full-fledged system. (Aadhaar is a 12-digit unique bang” approach. financial institution, LarrainVial, went live team is “excited to see the enhanced controls Initially, Ripple will connect Amex’s financial institution, with all the system identity number issued to India’s citizens.) Carlos Constantini, CEO of US and with T24 following a seven-year effort. and cost savings”. customers to Santander in the UK, frameworks that power the transactions. Account holders are provided with a head of international private banking at Tanya Andreasyan A team of payment, fraud detection and providing “instant”, trackable, cross- Yet, clinging on to the soul of a start-up,” he virtual Mastercard debit card. distributed systems specialists from KPMG, border payments. RippleNet is helping continues. “Airtel Payments Bank runs on digital Deloitte and Amazon assisted with the remittances from Amex customers in the “A bank that has defied all traditional technologies. Its systems are engineered platform development and testing. US to reach UK bank accounts “faster” logic. No branches. No counters. To be a for mobile banking,” Balachandran states. BNP Paribas in “global transformation” Sunlight Payments’ CTO, Eric Merritt, through Santander. customer of Airtel Payments Bank, all you He adds that the bank leverages “the with Fenergo believes the new solution “will revolutionise Moreover, Ripple’s payments network need is a mobile number!” power of Airtel’s telecom network fully”, the way payments are distributed to provide has the “capability to allow American The bank opened for business in early with the created ecosystem “capable of Fenergo says its flagship Client Lifecycle out-of-the-box CLM functionality” and essential services in the field”. Express to connect with customers across 2017 and “has been adding millions of servicing every one of Airtel’s 282 million Management (CLM) solution has been for being “a good fit” with the bank’s own Sunlight is now ready to fully market the globe”. new customers month after month”, customers in India”. selected by BNP Paribas “as part of its technology landscape. its platform to philanthropic organisations Earlier this year, Amex joined the Balachandran says. “The digital capabilities are truly global transformation project”. Fenergo states the latest version of worldwide. Hyperledger Project, an open source “The volume and value of payments unmatched, and the technologies and Fenergo’s CLM solution “will deliver a its solution, v8, is built upon React – “the The paytech firm is backed by an project intended to advance blockchain throughput have been galloping quarter tools deployed are leading edge by any single client view across all jurisdictions same technology that underpins high- investment from Bill Gates. Bank of America digital technology for recording and after quarter.” standards in the banking and fintech and entities”. volume, high-profile firms such as Netflix, Merrill Lynch (BAML) is its financial services verifying transactions. It has recently launched the Unified worlds,” he claims. In addition, it will enable the bank to Facebook, Instagram and the New York provider: BAML’s global transaction American Express will contribute code Payment Interface (UPI), connecting to the “The product and engineering teams comply with all local and global regulatory Times e-platforms”. services division delivers the cross-currency and engineers and joins more than 100 new real-time payments system developed are oozing creativity, while the sales and rules, the vendor says. The vendor adds that BNP Paribas is its payments products to Sunlight. The bank members, including IBM and JP Morgan by the National Payments Corporation service folks are creating memorable Bernard Gavgani, global head of CIB sixth European client to be signed in the states it has been a strong supporter of Chase. of India (NPCI, an arm of the country’s moments for customers.” IT and operations at BNP Paribas, says last six months. Sunlight since its inception earlier this year. Antony Peyton government). Tanya Andreasyan Fenergo’s tech was chosen for its “deep, Tanya Andreasyan Tanya Andreasyan

04 | www.bankingtech.com | December 2017/January 2018 December 2017/January 2018 | www.bankingtech.com | 05 NEWS NEWS

BBVA and Wave test blockchain-based trade transaction First blockchain-based bancassurance Raiffeisen BBVA, working in collaboration with Wave, generally takes from seven to ten days, to To BBVA the pilot demonstrated the network launched in Hong Kong Switzerland sheds performed the first blockchain-based under three hours. potential blockchain uses in the import/ international trade transaction between The pilot was run on a transaction export process. AIA Hong Kong, a subsidiary of pan-Asian Ip Man Kit, chief technology and operations stake in Avaloq Europe and Latin America. between Mexico and Spain, in which The pilot focused on electronic life insurance group AIA, has launched a officer of AIA Hong Kong and Macau, states Built on distributed ledger technology Spain-based Frime bought 25 tons of document submission. blockchain solution for bancassurance. the company “embraces and harnesses value- (DLT) and blockchain, BBVA says it used frozen tuna from Pinsa Congelados in In the future, it could be applied to the It was co-developed with AIA Hong added technology across our business to help Wave’s solution to reduce the time México. The payment was made using final credit card payment and financing of Kong’s bank partners, based on Hyperledger people live longer, healthier and better lives, required to send, verify and authorise an a letter of credit. BBVA Spain issued the the operations. Fabric, and is the first instance of and strive to set new industry standards for international trade transaction, which credit, and BBVA Bancomer processed it. Calum Parry blockchain technology being deployed in a ease of doing business with our customers.” bancassurance partnership in Hong Kong. Last year, AIA Group joined the R3 “It enables AIA Hong Kong and its bank blockchain consortium. PSD2 regulatory technical standards set for 2019 partners to share required policy data and It also runs the AIA Accelerator, seeking documentation on a real-time basis, reducing out “high potential start-ups” in the insurance/ With PSD2 on its way in January next All PSPs will need to prove the other data from the customer account the time needed to process insurance insurtech space. The latest iteration, AIA Raiffeisen, the third largest banking group year, the European Commission has implementation, testing and auditing beyond those explicitly authorised by the applications for our customers and increasing Accelerator 4.0, was conducted earlier this in Switzerland, is selling its 10% stake in confirmed the deadline for its regulatory of the security measures. In case of a customer. transparency throughout the entire business year in partnership with KPMG Digital Village. core banking tech vendor Avaloq to private technical standards (RTS) will be around fraudulent payment, consumers will be With these new rules, it will no longer process,” AIA Hong Kong explains. Tanya Andreasyan equity firm Warburg Pincus. The latter already September 2019. entitled to a full reimbursement. be allowed to access the customer’s data owns 35% of Avaloq (the acquisition was By way of recap, the security measures In addition, the EC says PSD2 through the use of the techniques of completed in mid-2017). outlined in RTS stem from two key establishes a framework for new services screen scraping. (Screen scraping means Wanted: US-based bank for Raiffeisen and Avaloq have been partners objectives of PSD2: “ensuring consumer linked to consumer accounts, such as accessing the data through the customer crypto-friendly fun for over a decade. In early 2015, they set up a protection and enhancing competition”. initiation services and account information interface with the use of the customer’s joint venture, Arizon, to build a retail banking RTS introduces requirements that services. In this context, RTS specifies the security credentials. Through this, TPPs can It wasn’t spotted on Craigslist but here’s an According to Solodkiy, this will allow it platform for Swiss banks based on the Avaloq payment service providers (PSPs) “must” requirements for common and secure access customer data without any further unusual request. If you are the owner of a to partner with third-party developers and Banking Suite core banking system. observe when they process payments or standards of communication between identification vis-à-vis the banks.) small or medium-sized bank in the US and integrate into the networks of banks. Arizon is also responsible for provide payment-related services. banks and fintech firms. Banks will have to put in place a are ready to sell it completely (or partially) He adds: “There is no need to reinvent implementing and operating the platform in In the context of competition and Consumers and companies will be able communication channel that allows – you have a buyer! all fintech services once again – too many all Raiffeisen banks (at the time of the project innovation, RTS includes two new types to grant access to their data to third parties TPPs to access the data that they need in Vladislav (aka Slava) Solodkiy, managing people have been doing this for the past unveiling the number of banks was cited as of services, the “so-called payment providing payments-related services accordance with PSD2. The channel will partner at venture capital (VC) firm Life.Sreda, five years! You simply need to help them 300, but in the latest announcement it has initiation services” and the account (TPPs). These are, for example, payment also be used to enable banks and TPPs is being refreshingly direct and telling it like it to move to new rails, integrate them been revised to 255). information services. initiation services providers (PISPs) and to identify each other when accessing is. You can all learn from this, fintech folks! among themselves on the basis of your Later that year, Raiffeisen purchased 10% The Commission says it made some account information service providers these data. It will also allow them to Solodkiy plans to use the bank for his open architecture and business processes of Avaloq’s treasury shares, which have now “limited substantive amendments” to (AISPs). TPPs are sometimes fintech communicate through secure messaging. new project Arival, “the first crypto-friendly tailored for a new type of customers.” been sold to Warburg Pincus. the draft RTS submitted by the European companies, but could also be other banks, The RTS specifies the contingency fintech bank”. Well, I think quite a few people may The banking group is also disposing of Banking Authority (EBA). This was according to the EC. safeguards that banks shall put in place Like many others, Arival will be a neo argue they have been doing the “new rails” its 51% stake in Arizon: an agreement in done to “better reflect the mandate of As reported in May, a group of fintech if they decide to develop a dedicated bank, and combined with other start-ups concept for a while. principle has been reached for Avaloq to PSD2 and to provide further clarity and companies and associations were asking interface. to provide a range of financial services. Life.Sreda was established five years ago take the full ownership of Arizon as of 1 certainty to all interested parties”. for changes to PSD2 due to fears it will There will be transition period between So, it’s “not just an application and card”. and its focus is “only on fintech”. Previously January 2019. Avaloq says no management force them to become technologically the application date of PSD2 and the Always have a dig at your competitors. based in Moscow, since 2015 it has been in changes are anticipated and there will be no STRONG CUSTOMER dependent on banks. application date of the RTS. The EC says That’s the first rule of fintech club. Singapore. reductions in headcount (300 employees) as a AUTHENTICATION Banks can be exempted from setting up market players need this transition period Solodkiy says: “I want to buy a small It has invested in 22 start-ups (seven result of the transaction. According to the EC, RTS makes strong a fall-back mechanism if they put in place a to upgrade their security systems so that bank, completely clear of the traditional exits so far) in the US, UK, Germany, CIS, As part of the deal, Arizon will enter customer authentication (SCA) the basis “fully functional dedicated communication they meet the RTS requirements. business (to remove any conflict of interest), Singapore, Philippines, India and Vietnam. into a service agreement with Raiffeisen for accessing one’s account, as well as for interface responding to the quality criteria PSD2 will become applicable as of change the team, products, processes and Some of the names include – Simple, running until the end of 2024 – “for the making payments online. defined by RTS”. National authorities will 13 January 2018, except for the security technologies – and completely focus it on Moven, Fidor Bank, Rocketbank, SumUp, further development of the banking platform This means that to prove their grant the exemption to individual banks by measures outlined in the RTS. These will working with crypto fintech and blockchain Anthemis Group, Mobikon, and alternative and delivery of processing service”. Avaloq identity users will have to provide at national authorities, after having consulted become applicable 18 months after the start-ups, making the bank crypto-friendly.” credit score provider Lenddo. confirms that 255 Raiffeisen banks will be least two separate elements out of these the EBA. date of entry into force of the RTS. Subject Arival will target the SME sector and be Life.Sreda has also launched a $200 migrated onto the new platform. three: something they know (a password to the agreement of the Council and the built on the principle of open architecture million VC fund, named Based on Avaloq describes the deal as “bolstering or PIN code); something they own (a SCREEN SCRAPING European Parliament the RTS is due to “BAASIS” – a set of open APIs integrated Blockchain or BB Fund. This will invest its existing partnership with Raiffeisen card, a mobile phone); and something In terms of the data TPPs can access and become applicable around September into its own Blockchain-as-a-Service (BaaS) in companies by acquiring and holding Switzerland into a value additive, long-term they are (biometrics, e.g. fingerprint or screen scraping, the EC explains that 2019. platform (including blockchain-based equity and/or tokens. and pure client-supplier relationship”. iris scan). PSD2 prohibits TPPs from accessing any Antony Peyton digital KYC – BAASIS ID). Antony Peyton Tanya Andreasyan

06 | www.bankingtech.com | December 2017/January 2018 December 2017/January 2018 | www.bankingtech.com | 07 NEWS

Alior Bank to launch fintech accelerator Alior Bank has unveiled its acceleration The bank says the innovation model The technology will be developed and programme for technology start-ups using relies on two units: its innovation centre implemented by Tuatara. the OpenAPI environment based on IBM for crowdsourcing within the bank, and “We want to give clients a banking technology, implemented by business the fintech department responsible for app which integrates all bank accounts, solutions developer Tuatara. development with external partners, including accounts with Alior Bank and with With the mission to identify “innovative including the accelerator. other banks, so clients always know the ideas” of technology start-ups, support Both units will be in Warsaw, Poland and exact value of their accounts,” says Ożga. them in the development of their business. are scheduled to open in May 2018. The bank is also said to be planning the According to Alior Bank, it will select Alior Bank says it wants to be Poland’s first development of a marketplace where clients a group of start-ups for the accelerator financial institution to offer a sandbox – a can pick and choose services of partners whose ideas add value to its services. dedicated test environment for partners – that are complementary to the traditional The bank is seeking potential partners that will be open to third-party developers banking service. in Poland and Central and Eastern Europe and fintechs to develop products to ensure In October, Alior’s Romanian branch as well as beyond. compliance with the PSD2 requirements. teamed up with Deutsche Telekom Group’s Mariusz Ożga, Alior Bank’s fintech IBM’s API Connect meets the bank’s Telekom Romania Mobile Communications director, says: “We believe that the project technology requirements, it adds, and the to develop a new digital financial service can build a bridge between the world of platform will “accelerate” the prototyping, and provide the online exchange for this fintechs and Alior Bank which is open to designing and alignment of solutions service. ideas of others.” before they are offered to clients. Calum Parry

Allianz accelerates to new digital investments

Allianz with its in-house incubator, Allianz X, Cetin, co-CEO of Allianz X, to take over after transformed the Allianz Digital Accelerator has switched gears and pivoted towards a CEO Peter Borchers stepped down from to Allianz X, leading to the creation of new range of digital investments. the role (effective immediately). Borchers private car selling platform, Abracar. Allianz Its new venture replaces its previous was CEO since September last year. says Borchers will remain as an advisor to accelerator of company projects to focus Solmaz Altin, Allianz Group’s chief the company in all digital endeavours. on investments within five digital eco- digital officer, says the new strategic digital Recently, Allianz contributed to a systems and core technology including investment fund will support its “broader Series B funding round led by Fujitsu for mobility, connected property, connected mandate to bring innovation into our core 1QB Information Technologies (1QBit), health, wealth management, data business, enabling us to become digital by a quantum computing firm based in intelligence and cybersecurity. default”. Vancouver. The company has also brought in Nazin Before his departure, Borchers Calum Parry

PayPal’s TIO network data breach hits 1.6m customers

PayPal has revealed that a potential This ongoing investigation has identified These data breach issues are nothing new. compromise of personally identifiable evidence of unauthorised access to TIO’s Back in September, information specialist information for approximately 1.6 million network, including locations that stored Equifax revealed a cybersecurity incident customers has been found on its TIO personal information of some of TIO’s potentially impacting approximately 143 Networks. customers and customers of TIO billers. million US consumers. Later, the US Federal The network, a publicly traded payment TIO has also begun working with the Trade Commission (FTC), Mastercard and Visa processor PayPal acquired in July 2017, has companies it services to notify potentially warned issuers that more than 200 million been suspended as part of an ongoing affected individuals, and PayPal is working cards were at risk. investigation of security vulnerabilities. with an unnamed consumer credit reporting While in April, UK-based payday loan The firm says its PayPal platform is “not agency to provide free credit monitoring company Wonga said there may have been impacted in any way, as the TIO systems are memberships. Individuals who are affected illegal and unauthorised access to the completely separate from the PayPal network, will be contacted directly and receive personal data of some of its 270,000 users. and PayPal’s customers’ data remains secure”. instructions to sign up for monitoring. Antony Peyton

December 2017/January 2018 | www.bankingtech.com | 09 NEWS NEWS

The Clearing ABN Amro joins API rush Nordea finds fintech heaven with Nordic angel network House makes ABN Amro has launched the first version Nordea’s start-up and growth unit has while there aren’t many details besides the and large cross-border angel investments of its Developer Portal, with a series of unveiled a new partnership agreement partnership, it does mean Nordea becomes throughout the region. payments history commercial application programming with Nordic Business Angel Network a “Nordic angel”. This means it joins other Investments can vary per round, but interfaces (APIs). The bank says working (NordicBAN), a network of start-up businesses to invest their “time, networks according to NordicBAN, the size is about The Clearing House (TCH) has launched more closely with external developers will investors in the Nordics and Baltics. and capital into the growth of companies”. €20,000 per angel/round with 5-30% of shared its 24×7 real-time payments (RTP) system, help it accelerate innovation and improve The news comes from Nordea’s strategic NordicBAN itself supports the stake acquired if start-ups are successful. the first new core payments infrastructure its services. business developer, Tabitha Cooper, and networking of such active business angels Calum Parry in the US in more than 40 years. “Besides pursuing its own innovations, RTP was designed and built through the bank will accelerate the process by the “collaborative effort” of TCH’s 25 working with creative external developers It also offers the use of “building KBC seeks mobile app partnership owner banks and meets the objectives of and business owners to explore the future blocks” for sending Tikkie (the bank’s the Federal Reserve Faster Payments Task of banking,” ABN Amro states. payment app) requests and sending bulk Belgium bank KBC with its mobile welcomes those interested in a partnership Force. RTP is open to all US depository “Developer Portal provides everything payment orders. banking app is seeking to form a to contact no later than 25 December. institutions with a goal of reaching that external developers need to use the ABN Amro says it is “the first major partnership to broaden its third-party “ubiquity” by 2020. bank’s APIs effectively and productively. bank in the Netherlands to provide services. FIVE STEPS, FIVE MINUTES The first ever real-time payment on To start, the site will provide a number access to a Developer Portal and According to KBC, it’s looking to offer Last year, ING and KBC joined forces to the system was initiated between BNY of APIs for commercial clients and basic specifically ask the outside world to third-party financial and non-financial launch a new, integrated mobile payments Mellon and US Bank. They will be shortly functionalities.” More will be added in due become partners in its innovations”. products and services to its mobile and loyalty platform in Belgium. followed by Citi, JP Morgan, PNC and course. Tanya Andreasyan customers. By providing support to This combined ING’s payment app SunTrust, who represent the “industry’s selected third-parties, KBC says it wants Payconiq with loyalty platforms Qustomer earliest adopters” of RTP. to “strengthen” its service, and this call for and KBC’s CityLife. Irish customers to open, activate and use William S. Demchak, PNC’s chairman, Major Indian bank looks for “acquihire” interest is the first step in reaching out In addition to its mobile banking their bank account “at any time, within just president and CEO, and chairman of TCH’s and potentially partnering up. services in Belgium, KBC earlier in the year five minutes”. supervisory board, says RTP will “make A major financial institution in India is action in the SME space and could provide KBC says it wants people’s input and unveiled a new mobile app that allows Calum Parry everyday financial tasks such as paying looking to make a fintech “acquihire”, a good platform for the team to learn and bills, issuing invoices, making payroll according to Akhil Handa, head of fintech further sharpen their skillset,” he notes. or settling insurance claims faster, safer and new business initiatives at Bank of It is looking for a fintech with the and more satisfying for businesses and Baroda. following requirements: BPCE targets revenue growth with €600m digital revamp consumers across the country”. (Acquihire is an acquisition of a ■ team size – up to ten people; TCH explains that RTP is designed to company primarily for the skills and ■ team profile – experienced in the BPCE, the second largest banking group market, with close to 6% average annual focus on the development of channels support the transfer of funds, request expertise of its staff, rather than for the lending business; in France, is seeking revenue growth and growth in customer assets in private for all its brands – focusing on cloud, payments and provide information to products or services it supplies.) ■ core business – lending (preferably expansion with a new €600 million “TEC banking and a €65 billion net flow increase data management, automation tools and deal with back office reconciliation issues. In a LinkedIn post, Handa says that a focused on SMEs) 2020” digital transformation plan. in asset management business. shared platforms. Vocalink, a Mastercard company, large bank (he clarifies that it is not Bank of Handa is asking interested parties to get Through its earlier “Another way to BPCE also became a fully-fledged BPCE also says it will raise €600 adds that at its core, the technology Baroda) is looking to buy a fintech firm. in touch with him on LinkedIn. grow” transformation plan between 2014- bancassureur (bancassurance provider), by million a year to achieve these goals. behind RTP is an “evolution” of its “The institution is at the centre of lots of Tanya Andreasyan 2017, BPCE saw an increase of 730,000 creating a single insurance platform, and TEC 2020 will also allow BPCE and its system developed for the UK, Singapore active banking customers as well as an the decision to bring life insurance and subsidiaries to “step up” and provide and Thailand. These solutions have De Volksbank live with Ohpen core increase in the number of clients using its property and casualty insurance activities new advisory services in retail banking, been designed to “run on their own products. back in-house. asset management, and corporate and rails, working alongside and between De Volksbank, a retail and SME bank in the ASN Bank, BLG Wonen, RegioBank and SNS Customers equipped with non-life Natixis was continually expanded investment banking, as well as providing conventional settlement systems”. TCH Netherlands, has migrated over 122,000 [de Volksbank’s brands] are managed in insurance policies also increased by 4% and results of such showed it now earns staff with digital tools. signed a letter of intent with Vocalink investment accounts to Ohpen’s core Ohpen’s core banking platform,” the vendor – higher than at end of the 2013 and the 48% of its core business net revenues The brands that are part of the BPCE in 2015 to help build and deliver core banking platform. states. bank was able to generate €780 million internationally. Group are Banques Populaires, Caisses elements of RTP. Ohpen says the bank “has now Alexander Baas, COO at de Volksbank, through its networks by Natixis, Banque Collectively, these projects contributed d’Epargne, Crédit Foncier, Banque As reported in August this year, Swift completely and seamlessly integrated describes the migration as “smooth”. Populaire and Caisse d’Epargne. to gains amounting to €863 million Palatine and most recently, Fidor. said it will provide US institutions with a its investment services into its internet De Volksbank carries multiple As part of its digital transformation, between the end of 2013 and the end of BPCE says by the end of 2020; it’s gateway to RTP. And as instant payments banking environments” using the vendor’s brands with a single back office and IT 83% of its solutions can be subscribed September 2017, with a target of €900 targeting net revenues more than €25 become more ubiquitous in the US, API. organisation. The product range consists for electronically, with almost 80% of million for the end of 2017. billion. It will rely on the progress between Swift says it will provide an interface to “All investment processes – from of three core product groups: payments, customers using online banking. Its 89C3 Called TEC 2020, BPCE says its plan is to Natixis, the Banque Populaire and Caisse manage the requirements of sending the opening and maintenance of an mortgages and savings. De Volksbank has digital factory (i.e. an accelerator) is also process and support 90% of active clients d’Epargne networks and a cost-cutting and receiving domestic instant payment investment account, to order execution a balance sheet total of €62 billion and now up and running. using its digital spaces, and will see to it programme set to unlock €1 billion of transactions on behalf of customers. and portfolio management – from the about 3,500 employees. Over the same period, BPCE says it that 10% of subscriptions are made via savings on a full-year basis by 2020. Antony Peyton different internet banking environments of Tanya Andreasyan found success in the investment solution its digital channels. To do this, BPCE will Calum Parry

10 | www.bankingtech.com | December 2017/January 2018 December 2017/January 2018 | www.bankingtech.com | 11 NEWS

DBS creates lifestyle branch for tech generation In a move to attract the tech generation to supports video teller machines (VTMs); branches, Singapore’s DBS has launched a offering non-cash banking services and “lifestyle space” providing freshly brewed “face-to-face” video assistance, a “VR coffee, interactions with humanoid robots Corner” for virtual retirement planning and and a virtual reality (VR) area for retirement an on-site humanoid robot, called Pepper, planning. to offer guidance. According to DBS, by utilising the “café Further to staple itself as more than and branch” concept, the open spaced just a branch, DBS says the new location layout creates a relaxed atmosphere. With will also become a social interaction area support from Bettr Barista and the DBS for student art exhibitions, and monthly to change the impression of what branch Foundation, customers are welcomed by latte art and coffee appreciation classes banking is for the tech generation – hence the aroma of freshly brewed coffee at the with Bettr Barista. Musical talent is also to offering this new relaxed environment, entrance of the branch. be showcased with DBS culminating in where banking is woven into our Designed for the tech generation of the first-ever National Youth Music Awards customers’ daily lives”. today, the space offers a digital experience competition in 2018. DBS says, it currently has 13 VTMs in 12 to meet their banking needs, the bank says. Jeremy Soo, DBS Bank’s head of locations in Singapore and plans to install Alongside traditional services including consumer banking group (Singapore), more than 20 machines by the end of 2017. cash deposits and withdrawals, the branch says: “By reimagining banking, we want Calum Parry Robots have got OCBC’s retail banking back-end covered Hey humans! Feeling down? Well let’s application. (They must have been bored the finance section assists with sales get down some more. OCBC Bank has out of their minds.) performance reporting. OCBC says launched two robots – Bob and Zac – to The infinitely superior robot can sales reports were previously generated enhance internal backend processing process more than 100 re-pricing manually by a staff member, and to speeds in its retail banking secured lending applications a day. What used to take staff prepare a report, it requires 166 work steps (CSL) and finance teams. more than 45 minutes to complete, now across multiple spreadsheets. The robot attached to the CSL team takes the robot one minute to complete. In addition, staff used to spend 120 assists with housing loan re-pricing. This Can a robot look smug? That might be minutes preparing the report, but it is includes processing time, which “has happening now. now generated in 12 minutes by the been almost entirely reduced” (i.e. 97% The robot checks on customers’ robot. The bank says management is now reduction in processing time). eligibility to re-price, recommends able to receive the report “promptly” at The bank says a staff member previously appropriate re-pricing options, and drafts 9am, instead of at 4pm daily (“enabling had to execute 199 process steps, toggle the recommendation email for customer. management to make more effective daily across five systems and 27 screens, to All this means quicker responses. decisions”). process one housing loan re-pricing Meanwhile, the robot attached to Antony Peyton

Viola plans to pull strings with $100m fintech fund Israeli investment group Viola has tuned up transformation at Scotiabank, says the former deputy CEO of Bank Leumi (Israel’s nicely with an initial closing of $100 million partnership “will allow us to access Israel’s second largest bank) and former chairman of toward a target of $120-$150 million for its innovation ecosystem, including well- Leumi Partners, the bank’s investment arm. new global fintech fund. established cybersecurity and anti-fraud In addition, there is Tomer Michaeli, The fund is backed by banks, insurance expertise”. general partner, who co-founded FundBox (a companies and asset managers from North Viola says it has over $2.8 billion in assets small business credit and payment solutions America, Europe, APAC and Israel, including under management. It was founded in firm); and Avi Zeevi, who has been in the Scotiabank, the Travelers Companies Inc and 2000, and has invested in over 200 tech fintech industry for 35 years and is co-founder Bank Hapoalim. companies. of Viola Group and chairman of the Fintech Ignacio (Nacho) Deschamps, group The group is led by Prof. Daniel Tsiddon, Fund Investment Committee. head, international banking and digital founder and general partner, who was the Antony Peyton

December 2017/January 2018 | www.bankingtech.com | 13 NEWS NEWS

Top tier US bank in cash management tech revamp SocGen to cut jobs and close PostFinance has with Temenos and Finastra branches in 2020 plan crack at Swiss A top tier US-based bank is modernising old. For example, in the UK, State Street Finastra). It would seem Temenos’ own Société Générale has unveiled plans to With disruption caused by the jackpot via chatbot its global cash management ops with was known to be using Integrated payments platform, Temenos Payments cut costs and push itself forward towards increasing rise of start-ups, digital tools technology from Temenos and Finastra Banking System (IBS) from McDonnell Suite (TPS), did not the make cut. digital banking – translation: the closure of and regulations. Its 2020 plan will maintain Sprechen Sie Deutsch? Switzerland’s (formerly D+H Corporation). Douglas (the system is long sunsetted It is understood Temenos and Finastra branches and job cuts in France by 2020. its target of 3% revenue growth per year; PostFinance has unveiled a German The bank is understood to be State and the provider is long gone). (D+H at the time) jointly bid for this The plan, which will take course over pushing towards €3.6 billion revenue and language virtual assistant on its Street. The new cash management platform deal with State Street. Other contenders a three-year period, involves the pursuit an equity return of 11.5%. website – generating automatic replies Earlier this week, Temenos issued will be implemented “progressively in included FIS and Oracle FSS (which towards expanding its digital banking With the share price of the bank to customers’ most frequently asked an announcement about a “US-based multiple countries across the globe”, made it to the system selection final), it is capabilities. However, in details released by dropping more than 8% so far this year, it questions. tier 1 global bank” selecting its flagship according to Temenos. believed. SocGen, it’s revealed that the result of such could prove difficult – rising a lowly 0.9% in PostFinance, keen to tap into the T24 core banking offering “for its global Banking Technology understands Temenos and Finastra both provided a move means the cutting of 900 jobs and early trading in Europe this week. fintech zeitgeist for artificial intelligence cash management platform for deposit that for the payments component, the “no comment” responses to Banking closure of 15% (from 2,000 to 1,700) of the With additional plans to dispose of (AI), says it’s the “first Swiss financial transaction processing, internal account bank will use the payments platform Technology’s enquiry about the project. bank’s branch network. its non-core businesses, accounting for institution” to launch such a chatbot. It sweeping and interest compensation”. supplied by Finastra (which stems from State Street said its policy “is not to Furthermore, SocGen is expecting to roughly 5% of its capital requirements. If all was developed by the IT service provider The new solution will replace State Fundtech that was acquired by D+H publically endorse vendors”. consolidate its back office centres from goes as predicted, SocGen says it’s seeking ELCA, and is based on Nuance’s standard Street’s legacy tech, some of which is very and then merged with Misys to form Tanya Andreasyan 20 to 14, and the automation of 80% of to reach an annual cost base of €17.8 product Nina Web. its front-to-back processes. Not looking billion by 2020, helped by a €1.1 billion Sylvie Meyer, head of retail and a good, considering over 2,500 jobs were savings plan. member of PostFinance’s executive board, Starling makes big European push; bolts to Yolt money app cut last year. Calum Parry says the assistant answers “repetitive questions automatically” and so its staff UK-based challenger bank Starling is taking will be making a bid for a piece of a £833 built on the principles of open banking.” Klarna to fuel payments for Worldpay at the contact centre can “focus their the battle to lenders after being granted million competition boosting fund led by Yolt and Starling are using API attention on more complex customer a contract allowing for a big push into RBS. integration for this connection. The Worldpay and online payments firm Klarna Worldpay is one of the first companies concerns”. wholesale banking in Europe. On the mobile side, it has integrated link-up will enable Starling to join Yolt’s are joining forces. Worldpay clients in piloting Klarna’s new technology. The The development phase lasted eleven Starling has been accepted into the with Yolt, the money app backed by ING. platform with 28 other bank connections, Austria, Finland, Germany, the Netherlands, company notes that, because there is no months and various additional services EU’s payments system, Target2, to allow Yolt says its aggregation functionality now and follows partnerships with energy Norway, Sweden and the UK will be able plug-in, the service is easy to integrate which have only just been developed have for faster payments for major banks and enables Yolt users to view their Starling comparison platform, Runpath, and to use Klarna’s invoice and credit-based and results in faster time-to-market. been set up to process natural language. large companies. This coincides with the account details and transactions alongside international money exchange firm, payments. Additionally, risk management is taken care The idea is to improve dialogue announcement of its European expansion, their other bank accounts, together in one Moneytis. The new capabilities will enable of. According to Michael Rouse, Klarna’s management, provide more context and starting with Ireland. place. Yolt was launched with its open beta Worldpay’s e-commerce business clients chief commercial officer: “Klarna assumes improve its ability to process enquiries. It also received a payment services Since launching in June 2017, Yolt for iOS and Android in the UK. The app to offer shoppers new payment options responsibility for managing credit and PostFinance says it regularly feeds new contract with the Department for Work and states that its users have been requesting had been tested in closed beta since that will allow consumers to decide how fraud risks, allowing companies to quickly content to the virtual assistant based Pensions to assist with verifying benefit the addition of more partnerships and October last year. Yolt enables users to and when to pay for the goods after they receive payment for orders, and allowing on the questions asked. In addition, like claimants for credit. The deal will allow for bank connections. Starling becomes the view their bank accounts and credit cards receive them. consumers to pay only if they’re happy with almost all of these chatbots, it continues the bank to utilise a system to make initial 29th bank, and first mobile only bank, to in one place, see what shops they’re Consumers can manage the terms their purchase.” to learn over time thanks to feedback small payments as a means of identity connect with Yolt. spending the most (and the most often) of their payment, opting for a 14-day Worldpay offers products and from users. verification. Frank Jan Risseeuw, CEO of Yolt, says: “It with, set budgets and plan for upcoming payment by invoice, fixed, or flexible services to a client base of 400,000. According to PostFinance, it currently Starling is planning to launch a business is connections like these that contribute to debits. instalments, or choosing to spread the cost Its technology can process payments recognises three quarters of all enquiries current account model next year and a new and innovative banking landscape, Antony Peyton and Calum Parry over several months. The new checkout from 146 countries and 126 currencies, from the initial contact and can give the experience does not request payment enabling customers to accept more than customer a “suitable answer”. credentials at the point of checkout, but 300 different payment types. Earlier in There are no timelines or major details, Moneythor supplies PFM tech to Orange Bank rather requests only their email address the fall, the company built an SDK for but PostFinance says it will be equipped and postal code. This offers a faster internet of things (IoT) shopping and this with more capabilities and more closely Moneythor, a Singapore-based fintech personal financial management (PFM) on 2 November 2017, launched by the checkout experience and helps retailers summer Worldpay agreed to merge with integrated into its existing systems: for firm, has deployed its digital banking features”. telco company Orange. Other tech improve conversion rates by 20%. US credit card processor Vantiv in a $10 example, to chat with a customer advisor. toolkit and personalisation engine at André Coisne, CEO of Orange Bank, suppliers to the bank include Wirecard With consumers turning to online billion deal. For the time being, the chatbot only France’s new mobile bank, Orange. says the Moneythor solution helps the and Backbase. shopping to fulfil not only their gadget In August, Klarna launched a free operates in German and doesn’t have a Moneythor says it is “providing bank “combine the best innovations Moneythor was set up in 2013 and has and clothing needs but also for daily peer-to-peer (P2P) payments service cute name. So, my ideas are something the technology powering the digital available on the market with a relentless offices in Singapore and Paris. Among its grocery and sundry items, ecommerce is called Wavy. And earlier this year, Klarna like Gretl (meaning “pearl” – i.e. pearls of interactions of customers with their focus on addressing customers’ customers are DBS, Crédit Mutuel Arkéa more popular than ever. And with so many acquired online payment provider BillPay wisdom) or Monika – (a nod to moniker – transactions from both accounts and expectations for money management”. and Acorns Australia. players flooding the market, retailers are from Wonga for $75 million. i.e. a name). cards, including real-time balance and Orange Bank opened its virtual doors Tanya Andreasyan facing increased competition. Julie Muhn, Finovate Antony Peyton

14 | www.bankingtech.com | December 2017/January 2018 December 2017/January 2018 | www.bankingtech.com | 15 NEWS NEWS

Prosper with ABN Amro’s Prospery wealth manager Revolut launches cryptocurrency trading

ABN Amro has unleashed Prospery, a is automatically uploaded and updated. Consumer interest in digital currency is at strategy that allows users to send more traveling abroad. “That is why we built new online wealth manager offering It also gives the client insight into the an all-time high, so the time is perfect for than $5,900 per month in 16 currencies Revolut,” Storonsky says. “It allows you to digital asset management combined with development of their future assets based global banking company Revolut to launch with no fee, UK-based Revolut will offer exchange, send, and spend your money, personal coaching by experts. It aims to on tried and tested forecasting models. cryptocurrency trading on its platform. low rates on cryptocurrency trading. The completely avoiding all your banking fees deliver a personalised financial planning Prospery Invest, meanwhile, manages Revolut account holders will be able company will charge a flat fee of 1.5% and, without actually using a bank.” approach without using a traditional clients’ investments and is fully digitally to buy, sell, and hold Bitcoin, Litecoin and thanks to its global currency platform, does Over the past two years, Revolut has bank branch and individual personal based on their individual risk profile. Ether. The mobile banking company, which not charge additional foreign exchange processed 42 million transactions for one bankers. Prospery Coach offers clients personal also supports 25 fiat currencies, aims to fees for purchases made with most fiat million users in Europe, tallying up $160 For its tech, it implemented Five coaching by certified financial planners “erase the divide between old and new currencies. million in savings on foreign transaction Degrees’ Matrix solution. According “whenever and wherever they want”, money”. During Revolut’s one week beta The company’s CEO and founder fees. According to Revolut, it is “doubling to the vendor, Matrix functions as Prospery has recently debuted in by chat or video call. Prospery Invest test, 10,000 users traded $1 million in Nikolay Storonsky began working on the the rate of new customer sign-ups versus “an orchestrating hub in the Prospery Germany. The platform consists of Prospery and Prospery Coach are offered at fixed cryptocurrencies. idea after his bank charged him $2,000 three months ago”. technological landscape”. It holds all View, Prospery Coach and Prospery Invest. fees (€239 per month for both services), In line with its transparent pricing in fees after spending $12,000 while Julie Muhn, Finovate the client data, governs all onboarding Prospery View is a free service that gives independent of the volume of assets flows and generates consistent client clients an online overview of their total invested. information across all other software assets, including accounts held with banks The platform is available to clients with solutions used by Prospery, Five Degrees other than ABN Amro. Clients can opt to assets exceeding €200,000. Barclaycard building digital bank in US says. connect their bank accounts, so their data Antony Peyton Barclaycard is rebranding itself to Barclaycard’s CEO, Curt Hess, says: “Being Barclays in the US as part of its retail a card business and heavily involved in digital banking strategy in 2018. analytics, data and the power of payments is UK cybersecurity centre shows off second start-up wave Barclaycard has been targeting a good starting point for us to branch more prime and super-prime borrowers with deeply into consumer retail banking.” The UK’s National Cyber Security Centre happening, and not all good. Elliptic is seeking to be “the global an online personal loan offering on a (NCSC) has unveiled the second wave of Levy is fully aware of the challenges standard for blockchain intelligence” and test-and-learn basis to a small group BARCLAYCAN nine cybersecurity start-ups seeking to ahead – calling the adversaries “brilliant” identifies illicit activity on Bitcoin and of customers, according to Tearsheet. Earlier in the year, Barclays US said it was bolster the defence of the realm. and “inventive” – and “sometimes we have blockchain and provides intelligence to Barclaycard plans to launch the same dipping its toe into the financial health At the recent launch at the NCSC HQ respect for them”. financial institutions and law enforcement offering publicly by the middle of 2018. business, testing a personal financial in Victoria, London, Banking Technology With this kind of tough scenario agencies. Unlike in the UK, where Barclays is management tool that aggregates all of a was invited to listen to speeches, pitches in place, the NCSC is looking for new Warden offers services that include based, its brand is well known among customer’s Barclays credit cards, personal and to talk with a coven of creative minds solutions in the cyber fight. This is where notifying customers of relevant security consumers, in the US it doesn’t have the loans and savings products – as well as all in cahoots for the common good. the start-ups and the GCHQ Cyber events and “secure and trusted” same kind of presence. While it does accounts with other banks – in one place. As a reminder, the NCSC was revealed Accelerator come in. cryptocurrency services. Considering the provide financial services in the US Later in November, Barclays trialled a to all in February 2017 – with a mission The companies chosen to join the number of hacks in the latter sector, it may under the Barclaycard name; without a system that itemised digital receipts to its to work with the Bank of England (BoE) nine-month accelerator outlined their have found a good market. branch or offerings beyond credit cards customers via a partnership with start-up to produce advice for the financial sector ideas (and all were very slick) for security Ioetec provides a “plug-and-play, out and savings, it just isn’t a household Flux, a rewards and receipt platform. for managing cybersecurity effectively. It products and services that will enhance of the box” cloud platform for “secure” name. Calum Parry is part of a raft of initiatives within the UK the UK’s cyber defences to journalists, connectivity for IoT. Government’s £1.9 billion investment to representatives from the NCSC, Wayra – ExactTrak wants to help protect data – and revamp the nation’s cyber barriers. part of Telefónica Open Future, and UK applies its technology to laptops, external At the event, Chris Ensor OBE, NCSC’s Minister of State for Digital, Matt Hancock. memory drives and a IoT devices. “It works Al Baraka Banking Group signs for Path Solutions’ iMAL deputy director cyber skills and growth, The companies taking part in the latest even when a device is turned off.” In a witty Bahrain-based Al Baraka Banking Group from Future Applied Computer Technology and Path says it was chosen following “a said it received 116 applications – more round of the accelerator are Cybershield, end to its presentation, which neatly was the (ABG) has signed to implement the iMAL (FACT) and Autobanker from Autosoft rigorous evaluation process”. than double in comparison to the first Secure Code Warrior, RazorSecure, Elliptic, final one, the firm showed that as an ultimate core banking system from Path Solutions at Dynamics among them. “iMAL was selected based on its broad cohort. These were whittled down to 24 – Intruder, Trust Elevate, Warden, Ioetec and recourse, a stolen device can “self-destruct” four of its 15 international subsidiaries. Path says ABG’s decision to go with Islamic coverage and technological and then to the shiny nine. ExactTrak. and so all data is deleted remotely. A number of ABG subsidiaries are iMAL was threefold: regulatory and strengths, being the perfect match for the Ensor adds: “Before it was six, but can Not only did I listen to the highly As you’d expect, the selected start-ups already using iMAL, including Algeria, Shari’ah compliance, fast time-to-market, group’s current and future requirements,” we manage? We will find out and we will professional pitches, I had a chance to receive funding, office space, mentoring Sudan and Syria. Also, the group is and functionality. the vendor states. experiment.” meet some of them. and contact with an investor network. implementing the system at its newly- Adnan Ahmed Yousif, president The new core banking system will Also speaking was NCSC technical For example, Cybershield, which is It will be interesting to see what established operation in Morocco. and CEO of ABG, says iMAL is “at the support ABG’s retail and corporate director, Ian Levy, who called these based in the UK town of Cheltenham – to happens in nine months when their ABG has a number of Islamic banking heart of the group’s technology-driven banking, payments, digital channels, times “interesting years – as in a Chinese be near to GCHQ – is offering tools to stop accelerator experiences end. systems across its operations, Equation transformation strategy”. branch automation and administration. proverb kind of way” – i.e. there is a lot employees opening phishing emails. Antony Peyton from Finastra (formerly Misys), Banxware ABG issued RFPs at the end of 2016 Tanya Andreasyan

16 | www.bankingtech.com | December 2017/January 2018 December 2017/January 2018 | www.bankingtech.com | 17 PAYMENTS COMMENTARY PAYMENTS COMMENTARY

Germany, Malta, the Netherlands, Portugal “There’s a lot of discussion about instant Are we there yet? and Sweden to join between 2018 and 2019. payments. Without that we won’t see the full What is more, the EPC says it will work to ensure the scheme “evolves to potential benefits SEPA delivers. So, we are better reflect market needs”. This will be The payments industry It is sometimes easy to forget SEPA, the year, including weekends and holidays. done in close dialogue with all payment absolutely not yet done when it comes to SEPA.” was dragged kicking and particularly as the reviewed Payment The transactions covered by the scheme stakeholders, it says. For example, the Paul Taylor, Bank of America Merrill Lynch screaming into the single Services Directive (PSD2), which provides must be denominated in euros. maximum amount per transaction will be the legal foundation for the operational Individuals, businesses, corporations regularly reviewed starting from November euro payments area (SEPA), implementation of SEPA, began to grab the and administrations can make and receive 2018. “An increased maximum amount but on 28 January 2018, headlines once the technicalities of SEPA instant euro credit transfers within their will make the scheme more attractive for Erwin Kulk, head of service For Paul Taylor, managing director at the initiative will celebrate were established. national borders as well as cross-border companies,” says the EPC. (See p26 for an development and management at Bank of America Merrill Lynch, SEPA has its tenth anniversary. No However, the plucky little initiative (starting with the eight countries), with the exclusive interview on the subject with EBA Clearing, says RT1 will provide the achieved some of its benefits but there has grabbed the headlines once again funds being immediately available. Javier Santamaría, chair of the EPC.) European payments industry with a is some way to go. He believes there are doubt former doubters will with the roll-out of the SEPA Credit The scheme is being promoted as Instant payments were one of the hot pan-European infrastructure platform for two phases of adoption for any payments sing its praises. Transfer Instant scheme (SCT Inst) in late an effective replacement for cash and topics at the Sibos conference this year. real-time payments in euro from day one initiative: compliance, realisation and the November. The scheme, created by the cheques. The creators say it is particularly Shortly before the event, Swift and EBA of SCT Inst. The accessibility via Swift’s ability to go live; and adoption. On the first European Payments Council (EPC), became convenient, if for example, an individual Clearing announced that users of EBA’s solution will provide this user community point, the market has achieved this, but he operational at 585 payment services must urgently send money to a relative, or instant payments system, RT1, will be able with additional choice in connectivity, he does not think readiness nor compliance providers in eight European countries: to pay for a product or service that requires to access the platform via SwiftNet Instant, added. “We expect more than 50 users in gives “full marks” for success. Austria, Estonia, Germany, Italy, Latvia, immediate settlement. In a standard credit Swift’s instant payments messaging the system by mid-2018.” The second phase, adoption, is the most Lithuania, the Netherlands and Spain. transfer, a beneficiary might have to wait solution, from November 2018. SwiftNet Instant is designed to important. “In this regard, we have seen The scheme allows the electronic up to one business day to receive money in Together with 39 funding institutions, work anywhere in Europe and around some of the benefits of SEPA and credit transfer of money – currently up to €15,000 his or her account. EBA Clearing has been developing and the world, enabling Swift members to transfer and direct debit volumes have – progressively across Europe in less than SCT Inst will progressively span over 34 implementing RT1 since April 2016. A pan- connect seamlessly to multiple instant risen consistently. This is in part because ten seconds, at any time and on any day of European countries, with Belgium, Finland, European infrastructure platform, it will be payment clearing and settlement these are attractive instruments versus used for the 24x7 settlement of real-time mechanisms. For SEPA, Swift will offer legacy instruments,” he says. payments in line with the SCT Inst scheme. connectivity not only to RT1, but also To realise the full benefits of Sepa, The objective was to provide payment to the Eurosystem’s Target Instant business models and treasuries must service providers across the single euro Payment Settlement (Tips) platform. change to take advantage of the truly payments area with a real-time payment Swift is supporting the Eurosystem’s cross-border instrument that is SEPA. On processing facility. aim to create a single gateway into the technology front, more treasuries must its market infrastructure services and adopt the ISO 20022 standard, and ERP and access to other clearing and settlement accounting systems must catch up with the mechanisms. concept of SEPA. “In these exciting Alain Raes, chief executive of Europe, “There’s also a lot of discussion about times when Middle East and Africa at Swift, says: instant payments. Without that we won’t “Europe is taking important steps to see the full potential benefits SEPA delivers. digitalisation is ensure its lead in the instant payments So, we are absolutely not yet done when it area and we are pleased to be able to comes to SEPA.” transforming every connect our customers to such critical The EPC agrees, pointing out that aspect of our society infrastructures. Our solution is future- although migration to the SEPA Credit proofed to meet the current and future Transfer (SCT) and SEPA Direct Debit and economy, there messaging needs of our customers in (SDD) is complete, EU regulators expect Europe and those in the rest of the world.” further harmonisation in mobile and are still plenty of The solution for European customers online payments. “In these exciting times payment contexts is the next step in Swift’s global instant when digitalisation is transforming every payments strategy, which began in 2015 aspect of our society and economy, there where harmonisation when the co-operative was awarded are still plenty of payment contexts where the contract to build the messaging harmonisation is lacking and where the is lacking.” infrastructure to underpin Australia’s new EPC continues to improve the ease and European Payments Council payments platform (NPP). Australians can convenience of payments for European expect to make instant payments from citizens and businesses,” it says. bt January. Heather McKenzie

18 | www.bankingtech.com | December 2017/January 2018 December 2017/January 2018 | www.bankingtech.com | 19 SPOTLIGHT: CHARITIES & CONTACTLESS PAYMENTS SPOTLIGHT: CHARITIES & CONTACTLESS PAYMENTS Contactless charitable cases

Some witty title here Sophie Green, recently recruited by the UK’s Charities Aid Foundation (CAF) from American Express as head of customer offer, believes there is the need to give potential donors the easiest way to donate. While contactless might still be less relevant in some countries, in the UK and other developed nations, it is becoming critical, she believes. At the same time, she points out that while “contactless is a great facility to help end-causes”, it is just one component. There are also the implications for payments of regulations, particularly PSD2, she points out, plus other forms of funding, particularly crowdfunding, and other Natural History Museum potentially relevant technologies, including artificial intelligence (AI) and blockchain.

Natural History Museum, London TAP London, Victoria Park THE SOLUTIONS Set up in 2016, GoodBox looked at the Charities large and small are waking up to the need to embrace contactless payments. challenge from the charity perspective, Banking Technology looks at the drivers, challenges and opportunities. says O’Brien. It saw the need for one point of contact, the ability to purchase and rent devices, and to have consolidated analytics On the streets of Amsterdam and THE RATIONALE enables people to transfer one euro per tap In fact, an individual Big Issue seller as well as providing the homeless street and affordable hardware that would Rotterdam, rough sleepers have been A survey of 2028 UK adults carried out for using the NFC technology. After the donation, was ahead of the charity. In 2016, Simon funders with the London Living Wage (it is suit different needs. At the higher end, it provided with winter coats incorporating Barclaycard in January 2017 by YouGov donors receive a payment notification in their Mott, a former London Underground hoped in future to also gain sponsors for envisages large charities with networks contactless payments technology. concluded that charities could be missing bank account, with a personal thank you from driver who had been selling The Big Issue the wages). of thousands of units, so its platform has In the London Boroughs of Hackney out on more than £80 million in donations the homeless person. outside South Kensington tube station for In addition, TAP plans to provide remote monitoring, including alerts if a and Islington, people experiencing each year by only accepting cash The homeless person can only spend the previous five years, invested £59 in a training and speakers to allow the device goes offline. homelessness have been given portable donations. Around 42% of respondents the money in the account through an card reader from Swedish firm iZettle so fundraisers to build up skills in sales so On the donor side, GoodBox identified terminals. In the Natural History Museum said they carried less cash now than three official homeless shelter, for a meal, a bath that he could take card payments using his that they can move into employment. “We the power of story-telling, along the lines in London, a contactless terminal under years earlier. or a place to sleep. They can also choose smartphone after seeing a steep decline wanted to put the generosity of Londoners of TV adverts, says O’Brien, so there is the the iconic blue whale skeleton in the main Andrew O’Brien, co-founder and CEO at to save the money and spend it on bigger in the number of people carrying loose to good use in a way that’s safe, quick and ability to convey video and still imagery or foyer has proved a success. specialist fundraising technology company, goals, such as training courses, or might change. easy,” says Whitlock. To date, its devices messages on its devices. These are all pilot projects but there GoodBox, points to the drop in charitable choose to keep it per se, to start to build The route being taken in Hackney and have been set at £3 per tap; donors are There might also be a need to quickly is no doubt that the charity and not- giving in the UK in the last ten years from some savings. This controlled spending Islington by charity, TAP London, has the given “thank you” cards with artwork from change messages, such as in the event of a for-profit sector is now rushing towards 0.75% of GDP to less than half a per cent. model addresses the concern donors may same reassurance but with a different local artists. While London-based so far, disaster, so new messages can be uploaded contactless payments, for good reason. As “You can assess the reasons but I’d strongly have about how their money will be spent. approach. “We first wanted to take she feels the model is perfectly applicable by charities to the central cloud-based people carry ever less cash, particularly in argue that it is not because things are The approach also brings recipients into contactless and use it in an applied way to beyond here. portal and pushed out to all devices. >> metropolitan areas, so many charities have getting any better, there are now more the financial services sector, from which create a new model,” says co-founder, Katie seen a steep reduction in donations. While homeless people than the population of they are often excluded. For instance, the Whitlock. Having trialed NFC terminals there are undoubtedly other factors as Newcastle,” he says. UK’s long-standing Big Issue magazine, with volunteers over the summer, the “The customer uplift more than well, consumers have become comfortable As well as a reaction to the demise of which empowers homeless people but has charity has been piloting them with with contactless in an extremely short cash, the contactless approach provides seen a steep decline in sales in the last few homeless people. justifies the cost.” space of time and studies have shown that reassurance for the donor. In the Dutch years, is also trialing contactless and the She explains that donations go to local Andrew O’Brien, GoodBox many would now favour this method for example, run by the Helping Hearts charity, proportion of the cover price that goes to charities, such as the Islington Foodbank charitable giving. the integrated patch in the winter jacket the seller will credit a bank account. – “the localness went down really well” –

20 | www.bankingtech.com | December 2017/January 2018 December 2017/January 2018 | www.bankingtech.com | 21 SPOTLIGHT: CHARITIES & CONTACTLESS PAYMENTS

Where an organisation such as a church The definitive source of news & analysis of the global fintech sector or supermarket supports multiple charities, “The beauty of digital transactions is that there can be revolving displays and donations can be allocated to each. things are scalable, and smaller charities “Technology-based solutions should be can often be more creative, it is a huge Monthly page views: user-led,” says Hugh Goulbourne, senior associate at advisory business, The Social opportunity for them.” Innovation Partnership (TSIP). This includes 263,000+ the commissioning organisation as well as Sophie Green, CAF the actual user. It should be about how to make a difference to the person who needs it the most, he says, not about, for instance, Newsletter subscribers: reducing the cost of delivery. careful about the supply chain for its CAF’s Green believes the technology “We are quite confident that this is devices. “We walked the floor of all the can be applicable to most sized charities 30,000+ the type of innovation that’s needed. But factories we’re using,” says O’Brien. It is now and it might be the smaller ones that are however we set up the giving experience, crowdfunding, ahead of the launch of its quickest off the mark. “To some degree, there has to be the same sort of safety and next version of devices in March 2018. the beauty of digital transactions is that confidence between the recipient and the Donors can specify the amount they things are scalable, and smaller charities giver.” want to give or can choose a pre-set can often be more creative, it is a huge Customer database: ADVERTISE One project TSIP is advising on is to bring amount. GoodBox co-founder and COO, opportunity for them.” the Helping Hearts contactless patched coats Francesca Hodgson, says, “a lot of times, 53,000+ from the Netherlands to the UK, initially in because it is so convenient, people are CONCLUSION WITH US London, Manchester and Liverpool. happy to select the pre-set amount”. So TSIP’s Goulbourne describes contactless The established payment heavyweights far, a pre-set amount of £5 has been well as bringing the charity and not-for- Magazine distribution: are also active. In particular, Barclaycard received, she says, but points out that the profit sector “up-to-date, especially for carried out a pilot in Q4 2016 with nine pilots have mostly been in London to date a demographic of under 35”, although national charities and two museums. The so this might vary elsewhere. points out that ever more people 38,000+ Barclaycard donation boxes comprised GoodBox estimates that to date there generally are “used to one or two touch a small card reader; a branded, hand- has been an increase of around 24% in payments”. held box specific to each charity; and an donations via contactless cards versus However, he emphasises that the accompanying payment acceptance app, cash. For a museum, for instance, this solutions need to be cost-effective. For connected to the reader via Bluetooth. means an average return on investment of the Big Issue model, for instance, the cut print and online Partners were brand design agency, one week; for a mobile device, it claims it is taken by the payment company has to Sprout, payment gateway provider, closer to nine hours. “The customer uplift come out of the seller and/or the charity’s Payworks, and mobile payments specialist, more than justifies the cost,” says O’Brien. income. Ultimately someone pays Miura Systems. somewhere along the line but in the pilots Twitter @BankingTechno: LinkedIn Group: Barclaycard has stated that the launch to date, it doesn’t look difficult to make of a full charity box offering is planned for Sophie Green, CAF the business case. early 2018 as part of its mobile point-of- GoodBox’s O’Brien describes his sale “Barclaycard Anywhere” range. company as “the bridge” that is trying GoodBox emphasises the benefits of to reconnect “how donors want to give being a fundraising payments specialist and how charities are able to receive”. and one-stop shop. It claims to be “actively The company isn’t solely focused on 30,000+ followers 1,900+ members engaged” with 180 charities, 40 museums, contactless, he points out. It is quick and 15 hospitals and a number of banks in the simple but if something else came along UK, and with interest from at least seven “then we would turn to it immediately”. other countries. For instance, there is room on its devices It has three devices, comprising to support QR codes if there proves to be a handheld GoodBox mini, which is a justification for doing so. contactless and chip and PIN-enabled; For the time-being at least, contactless a larger unit with 7” LCD screen; and the is likely to be the major focus for charities. standalone GoodBox Pro terminal. Chip From today’s pilots, it won’t be long and PIN-enablement allows donations before this form of payment becomes www.bankingtech.com above the maximum limit for contactless. commonplace on the streets and elsewhere Sourced from China, GoodBox was of countries around the globe. bt Contact Judith McInerney Tel: +44 203 377 3506 | Email: [email protected] December 2017/January 2018 | www.bankingtech.com | 23 CASE STUDY: TSB CASE STUDY: TSB

ALL CHANGE unheard of before”. New features and The platform was built with a great deal of “[The app has] the enhancements are launched every month, input from TSB’s employees – or “partners” speed, adaptability based on customer feedback. “We listen to (as the bank calls them) – says Helen Rose, what our customers want,” she states. the bank’s COO. and flexibility For example, navigation has been The team was careful to minimise the simplified further and merchant logos have impact on the customer side, she says, unheard of before.” been added to transactions so a user can e.g. no changes to sort codes, account Genevieve Kangurs, TSB Bank easily see where they spent the money. numbers and so on, but for the “partners” The year 2018 and beyond will be the the change was monumental. “humanisation of digital” for the mobile All channels systems, all back office app: more use of artificial intelligence (AI), and internal systems (e.g. HR, ERP etc) and culture that enables greater flexibility and money management capabilities, a digital “every single piece of IT kit in all offices” productivity,” Rose states. passport as well as other useful features were replaced, Rose says. (e.g. advanced transaction view and “It was a massive effort – 300,000 GOING MOBILE spending insights). hours of partner training, 80,000 tests As mentioned above, TSB launched Thanks to agile methodology, TSB can so far.” The bank has also introduced a a brand new mobile app, based on bring to market new mobile app features new digital workplace solution, with Proteo4UK, in early spring this year. It in just four to six weeks, Kangurs says. In Give me liberty video conferencing and other remote is hosted on the Amazon Web Services the previous environment, this took up to working capabilities, as well as a bring (AWS) cloud. six months. “We have a great partnership your own device (BYOD) policy. “We want Genevieve Kangurs from TSB’s digital with Sabadell and the development team to attract the best talent – and thus we transformation office says the app boasts in Barcelona,” she notes. bt are creating a work environment and “the speed, adaptability and flexibility Tanya Andreasyan TSB has unveiled its new banking tech platform, Proteo4UK – aimed to bring the “liberation” to the bank on all fronts. DATA CENTRALISATION “We have created a more digital, agile centres, all critical services will switch “with NCR Corporation – for the latter to look and flexible TSB,” stated Paul Pester, CEO no interruption or loss of customer data, after the bank’s 900+ ATMs and IDMs as TSB describes data as “the life blood of of TSB, at the unveiling of the bank’s new transactions or services” to the other one, well as provide service desk support for its banking”. The bank has transformed its technology platform, Proteo4UK. Abarca explains. employees across its branch network. data environment to “build a foundation The core originates from Proteo, the Pester says the new set-up is going There are also plans to move into the SME to respond to customer and regulations platform of TSB’s Spanish parent, Sabadell. to save TSB over £100 million a year. At banking segment, which will be supported quicker”. In turn, Proteo’s roots are in the Alnova present, the bank continues to rely on by Proteo4UK. TSB is bidding for a share of The previous set-up had a complex retail core banking system supplied by Lloyds (the two were one entity until four the £750 million fund set up by Royal Bank architecture, resulting in duplicate Accenture. Sabadell has been developing years ago) for its core banking software, of Scotland (RBS) to boost business lending technologies, multiple data sources and the system under its own steam for a which is provided on a hosted basis and in the UK (the fund replaced RBS’s failed heavy reliance on end-user computing number of years and owns the IP. costs £220 million a year. attempt to shed 300 branches and carve out (EUCs). The project to build Proteo4UK has “We are liberating TSB by moving to the a separate bank under the Williams & Glyn The new structure has simple architecture, been underway for two and a half years, new platform,” Pester states. In addition to brand). Pester says TSB is aiming to get three is centralised and offers single version of truth. and some components are already in significant cost saving, it enables flexibility grants worth £60 million, £100 million and For example, change of address – a point of production, such as the new mobile in choosing providers and partners, he £20 million. TSB Bank’s data environment before (above) and after (below) frustration for both customers and employees, banking app (launched in March this year) explains. For example, the bank is moving Abarca highlights the benefit of as it had to be done multiple times in multiple and the platform for mortgage brokers. all of its current account debit cards to launching new products and services systems – can now be done just once across Customer migration is yet to come – the Mastercard (farewell, Visa) in 2018 as part “at a speed that has not been seen in all systems. bank will be working on this in 2018. of a new seven-year agreement. It has this country”. The bank was the first in Teradata’s tech supports data Carlos Abarca, CIO of TSB, says the new also recently signed a five-year deal with Europe to launch the iris scan technology acquisition, IBM Infosphere provides data system is “customer centric by design” and for its mobile app; first in Europe to integration and MicroStrategy enables data “enables the open banking revolution”. enable Samsung Pass for login and exploitation. “Proteo4UK was built in close co- “We are liberating payment authentication; and among TSB has also invested in data quality operation with world-class companies, and TSB by moving to the the first in the UK to introduce the facial tools and has created a data catalogue has very few legacy systems,” he states. “It is recognition technology, Face ID, for Apple’s about its data (meta data). a brand new core banking system for us.” new platform.” iPhone X users (for login and payment “We can now meaningfully apply and use Proteo4UK is running “in a very active authentication). the data for our processes, customer services mode” out of two new data centres in Paul Pester, TSB Bank “It’s the technology journey that we are on and new products,” says Kate Gallego, head of the UK. In case of a disaster in one of the together with our customers,” Abarca says. business intelligence at TSB. Source: TSB Bank 24 | www.bankingtech.com | December 2017/January 2018 December 2017/January 2018 | www.bankingtech.com | 25 INTERVIEW: JAVIER SANTAMARÍA, EUROPEAN PAYMENTS COUNCIL INTERVIEW: JAVIER SANTAMARÍA, EUROPEAN PAYMENTS COUNCIL

“Europe’s diversity is seen as a positive in many cases, but it can also create obstacles, meaning it takes longer to reach consensus and to conclude projects than in lesser developed markets.” Javier Santamaría, EPC

SCT Inst: catalyst SCT Inst could strengthen the concept Yet bringing some 500 million people of the single market that has been trying into a single scheme for euro transactions to harmonise itself against a backdrop is seen as something of a triumph. But for a new world? of EU unrest and political problems in expectations have to be tempered and the southern half of the continent. As the EPC and Santamaría have not tabled Santamaría points out, the EPC’s raison unrealistic deadlines. This conservative d’etre was to further integration, so the view is shared by many, judging by a It may not provide all the Advocates of the single market see SCT Inst introduction of SCT Inst was as much survey on the EPC site asking people when ticks on everyone’s wish as the catalyst for broad transformation about preserving that mission as it was they expected “critical mass” to be reached list, but the new SEPA that, along with the Revised Payment to bring new technologies to the broader in the scheme. A third of respondees felt Services Directive (PSD2), will considerably environment. that the system would have sufficient Instant Credit Transfer alter the face of the European payments “EPC was created for SEPA and our traffic after 2020, but within SEPA, there are Scheme (SCT Inst) could system. Javier Santamaría, chair of the underlying goal is the development and deadlines imposed on new projects for the well be the start of European Payments Council (EPC), believes furtherance of the market. Yes, the arrival adoption process – normally two to three something even more that over a period of several years, the real of various national solutions was a concern, years. In other words, behind the scenes, impact of this initiative will make its mark but it also reflects the innovation that’s in people will not wait forever. seismic for the European on the region. “SCT Inst is more than just the ecosystem. Avoiding fragmentation That may be academic, though, as payments sector and also about making quicker payments, it reflects was probably the strongest argument for Santamaría expects SCT Inst to be well pave the way for a different, the growing trend for faster business the implementation of SCT Inst.” received and to meet all deadlines more immediate way of processes,” he says. The arrival, enthusiasm and success of imposed upon it. “Our world is all about immediacy and various national schemes suggests that If fragmentation across European conducting business. some aspects of business, such as banking, SCT Inst is fulfilling a definite need, so payments would have been a problem, have struggled to adapt to a changing some might say the pan-Eurozone solution the issue of interoperability is definitely world – for a number of reasons. We don’t is long overdue, but Santamaría defends an ongoing concern. For SCT Inst to be expect that the full benefit of this new any hint that Europe’s structure makes truly successful, systems will need to speak system will be visible for a while, but we it difficult to achieve. Certainly, other to each other and broad adoption has to could look back on the introduction of regions that do not have the complexity be a pre-requisite. From the outset, it is schemes like SCT Inst as a turning point for or legacy of Europe have found it easier an optional system, so if that’s the case, the industry.” to kick-start new systems. “Although we how will it become ubiquitous? Again, are obviously championing and working Santamaría is confident that market forces towards a single, integrated market, we will drive its use. “Avoiding fragmentation was probably the have to accept that some practices remain He is adamant that optionality is not localised. Europe’s diversity is seen as a an obstacle although there are other strongest argument for the implementation positive in many cases, but it can also issues at stake, such as the need for create obstacles, meaning it takes longer to complementary, interoperable systems of SCT Inst.” reach consensus and to conclude projects that allow technical integration and the Javier Santamaría, EPC than in lesser developed markets. It does cost of investment associated with new take more time in Europe, we cannot deny systems – some smaller banks might find that,” admits Santamaría. the bill too high and decide not to offer the >> Source: EPC

26 | www.bankingtech.com | December 2017/January 2018 December 2017/January 2018 | www.bankingtech.com | 27 INTERVIEW: JAVIER SANTAMARÍA, EUROPEAN PAYMENTS COUNCIL

Fintech outside London Javier Santamaría, knows this is a major priority for our European Payments “We don’t expect that Council the full benefit of this scheme,” says Santamaría. “But the launch of report SCT Inst and other systems that offer real- new system will be time payments provides the opportunity to overhaul existing measures to ensure they Meet the UK fintech firms working visible for a while, but comply with our requirements and allows the chance to implement the best possible outside the “London bubble” we could look back controls.” on the introduction of There are also questions being asked about the transfer limit for the system – a schemes like SCT Inst maximum of €15,000 per transactions. On a consumer basis, this would appear to be as a turning point for adequate, but if SCT Inst is to flourish on a the industry.” B2B basis, surely this is too low, and possibly over-cautious? Santamaría explains: “This is Javier Santamaría, EPC something that is frequently discussed and of course, we will need to watch it carefully. People should be aware that nothing is cast in stone with this new initiative. Of all the things that we will be reviewing on a service, although those that do not take regular basis, B2B business and this limit will up the challenge run the risk of losing out be a priority point. We are prepared to act if on a big business opportunity. Santamaría we need to and act quickly. Our approach adds the EPC didn’t want to make anything to this is very pragmatic.” mandatory at this introductory stage as Santamaría sees SCT Inst and PSD2 this would bring added pressures. as signs of our times, both being an Importantly, one of the reasons for underlying response to a market that optimism is that SCT Inst is, in many ways, is constantly evolving. SCT Inst was a response to customer requirements and first discussed two years ago and its Santamaría sees similar demand driving details have been known for at least the take-up of the new system. “I am of a year. Concludes Santamaría: “It is the opinion that natural momentum will no coincidence that both are being dictate the speed of adoption – customers launched at more or less the same that want the convenience and benefit of time. They both have a common goal in real-time payments will ask their payment promoting an integrated market with service providers to offer that service.” a greater level of homogeneity. One Of course, there are reservations about of PSD2’s objectives is further increase security and the need for due diligence innovation in payments, so I am very ■ Where are they to keep pace with instant payments. confident that we will beat expectations Maintaining risk management measures for SCT Inst. We are at the start of a based and why? when the world has just got considerably journey that will see a host of new faster poses significant challenges and the methods of payment, so it’s an exciting ■ What is their EPC will be watching this issue closely in time for our industry.” bt the early months. Neil Jensen (hi)story? Within the system, elements such as data transfer, screening, validation, authorisation ■ Who are their clients? and settlement have to be built in, but “We are prepared to act if we need to and with an instant payments environment, these steps have to be executed in a very act quickly. Our approach to this is very ■ How do they see tight timeframe. Naturally, there is some pragmatic.” their future? anxiety that this may make any such system vulnerable to missing errors or criminal Javier Santamaría, EPC activity such as fraud, money laundering Visit www.bankingtech.com to get your free report or other aspects of cyber crime. “Everyone December 2017/January 2018 | www.bankingtech.com | 29 ANALYSIS: BLOCKCHAIN ANALYSIS: BLOCKCHAIN

A world of possibilities

Amid the hype around distributed ledger technology and blockchain it can seem they are technologies looking for solutions. In the heavily paper-based business of trade finance, such technology looks promising and progress is being made elsewhere.

The milestones in applying digital ledger did not use the platform. Also, transactions to adopt a range of digitisation tools, and “There has been a lot of hype surrounding blockchain and distributed technology (DLT) to trade finance are coming must be conducted as before, and enabling a dataset that can then leverage what this thick and fast. In July this year, Japanese the transmission of the wide variety of technology has to offer. Innovations such as ledger technologies, which is why we have kept our proofs of concept bank Mizuho completed a trade finance information necessary for trade transactions enhanced character-recognition technology, transaction between Australia and Japan, would require standardising the information robotics and artificial intelligence can all play to use cases that solve real-world problems.” digitising all necessary documentation and for blockchain and DLT at an international a role in this digitisation journey.” Nigel Dobson, ANZ sharing the data with multiple participants level. But there are other challenges to consider across a distributed ledger. In August, The key innovation that blockchain in the adoption of blockchain technology, he software firm R3 and 12 banks developed a brings to the table is the ability to move to adds. The cross-border nature of trade and the prototype trade finance application on R3’s a distributed dataset, says Peter Jameson, range of participants in any trade transaction digitalisation means the use of data or account trade transactions. The members DLT platform. co-head of product management, global make it difficult to drive forward a common technologies in the trade and supply chain. of the consortium are KBC, Unicredit, Trade finance is a complex, paper-based transaction services at Bank of America set of standards that would make blockchain We would expect adoption to happen across HSBC, Rabobank, Societe Generale, activity. It encompasses lending, issuing Merrill Lynch (BAML). “For trade, the adoption truly effective. “Add the fact that trade the physical supply chain, the financial supply Deutsche Bank and Natixis. letters of credit, factoring, export credit and challenge lies in the fact that today, much of has traditionally lagged other parts of the chain (purchase to pay and order to cash) and The aim of the project is to enable insurance. Companies involved with a trade this data is in paper form. For blockchain to transaction services world from a digitisation in the documents chain, including movement authorised European small and medium- finance transaction include importers and play a role in trade finance, the industry needs and automation point of view, and it would of bills of lading, insurance certificates etc.” size enterprises (SMEs) to increase and exporters, banks and financiers, insurers and clearly be somewhat of a challenge to get Standard Bank believes the benefits from enhance trade transactions. These will export credit agencies, and other service all players, across all jurisdictions, to agree the digitisation of the “documents chain” can Nigel Dobson, ANZ be initiated on a paperless and secure providers, such as customs organisations. on the single set of standards that would be be realised fastest by enabling electronic basis, and tracked at each stage of the Documentation is an important aspect of key to blockchain’s trade success.” Moreover, copies of bills of lading to be sent from the transaction lifecycle, through to the point trade finance, but it isn’t standardised and the cost benefits would not be “immediately exporter (or exporter’s bank) to the importer of settlement and payment. Launch is invoices, letters of credit and bills of lading obvious”. Although inefficient, paper-based (or importer’s bank), in a manner that secures scheduled for 2018 in Belgium, France, can differ greatly from country to country. trade is tried and tested, and players are their legal transferability and drastically Germany, Italy, the Netherlands and In the Mizuho project, several benefits “There are certain more inclined – particularly when seeking reduces delays in couriering the documents. the UK. Inclusion of other countries and were identified: shorter delivery time for trade legislative issues that to mitigate risk – to “stick with what they Standard Bank has successfully conducted additional service providers may be documents (reduced from multiple days to know” over charting unknown innovative proofs of concept (PoC) using blockchain considered in the future. two hours); reduction of time required to need to be addressed technology territory, he says. in the digitisation of documents. It is “The DTC initiative is helping us to create and transmit documents, as well as Vinod Madhavan, head, trade at South working with various participants to achieve understand the difference between a labour and other costs through document before most of the Africa’s Standard Bank, says the search for commercial viability. The bank also recently blockchain PoC and launching a real digitisation; and increased transparency by projects can be put operational efficiencies in the largely paper joined R3. product,” says Anne-Claire Gorge, global sharing transaction details with all parties. intensive trade finance business, means there By the end of 2016, a consortium of seven head of product management and There were challenges, however, as the into production.” should be increased adoption of digitisation European banks formed the Digital Trade innovation – trade services and finance. bank found it was not possible to transmit and digitalisation in trade finance processes. Chain (DTC) initiative. DTC is a blockchain- “All of the banks involved are working very trade transaction information in digital Evgeniy Kravchenko, Sberbank “By digitisation, I mean the conversion of based digital platform for managing and well together, but it is still a very complex blockchain or DLT format to parties that analogue content into digital form and tracking domestic and cross-border open and challenging project.” >>

30 | www.bankingtech.com | December 2017/January 2018 December 2017/January 2018 | www.bankingtech.com | 31 ANALYSIS: BLOCKCHAIN ANALYSIS: BLOCKCHAIN

The challenge does not come solely from negotiation. Blockchain could arguably have And when combined with the internet of “We see significant potential in the application of smart contracts in a technology perspective, says Gorge. “We a greater short-term positive impact on these things – by integrating data on the physical are creating a brand-new solution that is processes than on trade or payment flows location of goods, containers or vessels – it’s trade finance and will continue to work with industry partners and not defined by regulators. The project has themselves. This is where the industry could fair to say that blockchain infrastructure could started with a restricted scope of seven banks begin its focus, to deliver tangible, short-term become a very powerful tool for the industry.” regulators to make this a reality in the near future.” in Europe, which is designed to help keep benefit, says Jameson. Standard Chartered Bank’s Hong Kong Gautam Jain, Standard Chartered complexity to a minimum. The aim is to ask Despite the challenges, the potential subsidiary announced in March that it had other banks to join the initiative to extend the benefits blockchain could bring to trade completed a DLT PoC for smart contracts in geographical reach as much as possible.” flows cannot be ignored, says Jameson. trade finance. Standard Chartered is the lead Vinay Mendonca, global head of product “The distributed nature of the data could bank of the DLT Trade Finance Working Group “Like most leading banks, we have Gautam Jain, Standard Chartered to external contributions, with key features and propositions at HSBC, says unlike significantly reduce cycle times – for example, under the Hong Kong Monetary Authority’s analysed the impact of DLT on traditional – enhanced performance, enterprise-grade previous digitisation attempts in trade by making data simultaneously available to all Fintech Facilitation Office, collaborating with trade finance products and definitely believe privacy, peer permissioning, configurable finance, some of the current DLT work parties in a transaction, each could perform Deloitte Touche Tohmatsu and four other that its use will be beneficial for all parties consensus, and a full IDE/SDK to support streams are considering interoperability. “In their respective checks in parallel, reaping banks in Hong Kong. involved. Our pilot cross-border letter of rapid deployment. the past, digitisation occurred only in islands immediate benefits over today’s slower, The bank said the PoC was a “significant credit transaction has proved the benefits of “Quorum is now attracting contributions as particular processes were digitised. Now linear approach. Furthermore, the availability milestone in the digitisation journey of transparency and increased processing speed from leading blockchain start-ups and we are looking at the full breadth of trade of this data could significantly increase risk trade finance”. Gautam Jain, global head, due to the electronic exchange of documents. developers,” says Farooq. For example, zCash finance. If we get DLT in trade finance right, management and compliance checking. digitisation and client access at Standard This technology is definitely the future.” is adding privacy enhancements in a zero- with seamless interoperability, our clients and Chartered’s transaction banking division While trade finance efforts are well under knowledge settlement layer for Quorum and other parties in the trade chain will benefit said DLT will deliver improved efficiency way, financial institutions are investigating Amis Technologies in Taiwan is incorporating greatly,” he says. and greater transparency to trade finance other potential applications for blockchain its recently released Istanbul BFT consensus. The key step-change for trade on the clients. “We see significant potential in the and DLT. Nigel Dobson, general manager, Also, Microsoft and Synechron are creating journey to blockchain adoption is how application of smart contracts in trade finance transformation projects, ANZ, says: “There has developer tools to make it easier to build information could be digitised and captured and will continue to work with industry been a lot of hype surrounding blockchain on Quorum. “We’re seeing other institutions early in the transaction cycle, so it can be partners and regulators to make this a reality and distributed ledger technologies, which like Santander, IHS Markit, Broadridge and further leveraged to the benefit of banks and in the near future.” is why we have kept our proofs of concept the Monetary Authority of Singapore use clients, says Jameson. Capturing data up- His colleague, regional CIO, Greater China to specific use cases that solve real-world Quorum to build blockchain prototypes front would mean that banks could use it for and North Asia, Peter Clark, said DLT in trade problems.” with support from the Enterprise Ethereum deeper analysis and profiling of client flows finance was not just about digitising the The bank has undertaken a PoC of DLT for Alliance. A Quorum ecosystem is emerging – either for enhancing risk management; processes, but also standardising the data bank guarantees for commercial property beyond any single firm, JP Morgan included.” supplementing compliance controls; or models and enabling more collaboration leasing. ANZ digitised and improved the Bank of America’s Jameson says during identifying client needs that could drive the among industry participants. In the next process for issuing, tracking and claiming on the past year, blockchain has morphed cross-selling of other capabilities. “Taking phase of the project, Standard Chartered will guarantees for Scentre Group, the operator of from idea to practical reality. “I believe it one step further, by driving automation, invite clients and a number of intermediaries Westfield shopping malls. The Group leases JP Morgan has been researching 2018 will see us defining common industry banks could achieve greater scale and to join the pilot. retail space to about 11,500 retailers across blockchain technology and potential goals and ensuring we take these forward reduce the reliance on people thereby Russia’s Sberbank believes blockchain Australia and New Zealand, who – instead of use cases since 2014. “When Ethereum on a pragmatic basis. We should also not improving efficiency, mitigating human technology will significantly influence the putting down a cash rental deposit – often [a decentralised platform that runs smart ignore the other technological leaps that error, reducing costs and managing risk financial sector in the future, says Evgeniy use a rental bond, which is issued by a bank. contracts] emerged in 2015, it quickly stood are contributing to a sea change in trade. more effectively,” he says. Kravchenko, senior managing director “These bank guarantees are typically manual, out to us for its ability to handle business Advances such as those in optical character Many clients’ frustrations in trade and head of Sberbank’s trade finance and paper-based, and can be difficult to verify,” logic via smart contracts and its uptake recognition or voice recognition software finance are related to what banks think of as correspondent relations division. “We have says Dobson. “Also, tracking any changes to among early adopters and developers,” says have the potential to generate significant “ancillary processes”, such as onboarding, the about 20 projects under way related to the the rental agreement – and thus the bank Umar Farooq, head of channels, analytics benefits too, helping to drive paper to management of KYC, paper-based account implementation of blockchain in various guarantee – is particularly onerous. The trial and innovation, JP Morgan Treasury Services. electronic data early in the process.” opening, identity management and contract Peter Jameson, BAML activities, including documentation exchange addressed these issues and successfully “As we began developing use cases using HSBC’s Mendonca says digitisation of with state authorities, factoring, trade finance, showed how DLT could be used to digitise Ethereum, we realised there were technical trade finance is a journey, not a jump. “There payments etc,” he says. “As the technology and standardise bank guarantees.” ANZ challenges we needed to address – privacy, will be steps along the way – for example, we “For blockchain to play a role in trade finance, is relatively new, most of our projects are at partnered with IBM Research and Westpac scalability, throughput – before we could see will begin with digitising bills of lading and the industry needs to adopt a range of prototype or pilot stages. There are certain to test the technology for Scentre Group. a path to production.” have already established an electronic bill legislative issues that need to be addressed Dobson says it is “highly desirable” for banks Because few players were looking at these of lading solution that is live with some title digitisation tools, and a dataset that can then before most of the projects can be put into to collaborate in developing DLT solutions for issues from an enterprise perspective, JP registry companies.” production.” Most regulatory authorities, customers, so they can be scaled for an entire Morgan tackled them itself by developing With each PoC initiative, the industry leverage what this technology has to offer.” including those in Russia, realise the necessity industry sector. The next step for the bank Quorum, an enterprise-focused blockchain gains practical knowledge of DLT, he adds, Peter Jameson, BAML of creating transparent rules for this new guarantee is to move to a pilot stage where platform based on Ethereum. Quorum was which will take it ultimately to a truly sphere, including cryptocurrencies and smart additional organisations from banks to large released to the public in open source in 2016, digital future. bt contracts, for example. landlords are expected to take part. making it freely available on GitHub and open Heather McKenzie

32 | www.bankingtech.com | December 2017/January 2018 December 2017/January 2018 | www.bankingtech.com | 33 ANALYSIS: REGTECH ANALYSIS: REGTECH

Regtech to the rescue

Regulatory technology “Superior regtech improved loan decisions, or better liquidity (regtech) is often cited as pricing. can reduce costs Meanwhile, mastering internal or the answer to the rising external data can also improve auditability cost of compliance, risk significantly.” and risk monitoring, for example on and reporting duties at Simon Eacott, NatWest AML, across disparate financial supply chains. This may help slow fines, the risk banks. Will it help financial of reputational damage and the trend of institutions escape IT silos banks de-risking. and enhance control over “Superior regtech can reduce costs data? liquidity monitoring and pricing, reducing significantly, allowing companies to free up risks and fines, improving service and data capital to invest in more productive areas,” The principle of applying technology, analysis capabilities. says Simon Eacott, head of payments such as regtech, to significant business Regtech can also be used by regulators innovation at NatWest. “The potential challenges is “not new”, says Paul Ellis, to improve their ability to digest the greater of AI in regtech to analyse both internal global head of regulatory product volume of data that is fed to them due to structured and external unstructured big development at HSBC Securities Services. the Basel III capital adequacy regime, more data at speed, with little manual effort, is What is new is that regtech promises to stringent anti-money laundering (AML), KYC, attractive. In the risk management field, marry the new landscape of post-financial sanctions, tax and other such rules. regtech can help create superior data crisis regulation to the new landscape of Financial institutions can use modelling that more accurately conveys a digital technologies. technologies such as artificial intelligence company’s risk profile.” Bob Garrison, CIO at the Depository (AI), machine learning and big data Jean Devambez, global head of product Trust and Clearing Corporation (DTCC), analytical techniques to organise and and solutions, asset and fund services agrees. “If you define regtech as control their regtech data in a more at BNP Paribas Securities Services, says technology companies that provide efficient fashion. This enables simpler the key driver in the rise of regtech is services to financial market participants compliance with financial crime controls, the increasing number of regulations to assist in regulatory compliance, then more efficient adherence to stringent “generating complexity and cost”. it is not a new concept and one that has conduct rules and Basel III reporting The fall in banks’ return on equity since been operating for many years. However, requirements. It also gives better data the 2008 crash and contemporaneous rise regtech is undergoing a revival, spurred Regtech is often considered a subset Reuters’ Org ID know your customer (KYC) control leading to improved customer in compliance costs as new, more stringent by new regulations and increased of fintech, particularly if the focus is on managed service. targeting, tracking and service. regulations were introduced, mean that pressure to reduce costs, requiring greater start-up companies. The UK’s Financial Utilities enable banks to collectively FIs must cut operational costs and increase collaboration between technology vendors Conduct Authority (FCA) defines regtech move to shared services to get economies DATA MASTERY controls. It is clear to see why trying to and financial market participants.” as a subset of fintech that focuses on of scale on aggregated data in non- The need to protect data from numerous harness the innovation of fintech start-ups Whether new or not, for Luc Meurant, technologies that may facilitate the competitive areas. As consolidation cyber risks can also be enhanced for compliance is attractive. >> head of financial crime compliance delivery of regulatory requirements increases, however, the fuel for this by improving data handling – a key services, Swift, regtech companies have the more efficiently and effectively than compliance trend will eventually die characteristic of regtech solutions. Cloud potential to transform compliance in the existing capabilities. In a wider context, out. Using data in more creative ways computing, with appropriate security and same way fintech is transforming payments regtech also refers to utilities, such via collaborating with regtech start-ups standards, can also be used as a supporting and other sectors. as Swift’s KYC Registry and Thomson potentially offers longer-term, more technology to improve the sharing of data comprehensive enterprise-wide benefits. across financial market infrastructures, In the FCA’s definition regtech is where it is safe to do so. “Regtech is undergoing a revival, spurred by new regulations and another vertical within the wider fintech Regtech start-ups are often better at scene. Many of the same technologies that data mastery than banks. Data is almost a increased pressure to reduce costs, requiring greater collaboration have been deployed on payment, capital religion for technology companies. FIs are market or other duties can find a different therefore keen to collaborate with start- between technology vendors and financial market participants.” compliance end use. Data organising, ups to learn how to use data better within Robert Garrison, DTCC tracking and delivery services can meet their organisations, expose it more cheaply regulatory requirements and potentially for regulatory reporting reasons, or to get Robert Garrison, pay for themselves by improving intraday simultaneous business benefits such as DTCC

34 | www.bankingtech.com | December 2017/January 2018 December 2017/January 2018 | www.bankingtech.com | 35 ANALYSIS: REGTECH

However, Garrison urges some caution The London-based company won for its on this point. Financial services providers range of sanction screening compliance, are increasingly looking to partner with AML and other risk management software. technology vendors to aid in compliance The mentoring, knowledge sharing and What is your go-to source with new regulations and to address other assistance available should lead to ongoing cost pressures, he says. a better solution and may feed into Citi’s Collaboration between financial market trade solutions in future. participants and technology vendors, There are also standalone regtech for the latest global particularly in the implementation of companies. For example, Simility, a US- new technologies, can create efficiencies, based start-up founded by former Google reduce expenses and mitigate compliance employees raised $7.2 million in late 2015 fintech news? risk. “However, modernising high volume in a Series A fundraising round led by legacy systems that already facilitate venture capitalists Accel Partners. Simility compliance and operate well can be offers a fraud prevention solution that uses an extremely complex and expensive AI machine learning. San Francisco-based undertaking. Firms must therefore consider Merlon Intelligence raised $7.65 million business cases whenever assessing Ruth Wandhofer, Citi in seed financing this year from the Data technology changes to ensure the cost Collective venture capital fund and others. of the changes are aligned with the value says Wandhofer. “That may mean we invest It targets AML via AI and enhanced big which can be derived from them. internally or take a stake in a start-up, or data analysis. “Also, when implementing new we may buy a start-up outright to help us In the UK, hundreds of regtechs technologies, while cost savings can be or to launch a wider third-party solution. have been through the pioneering FCA achieved by decommissioning systems, Alternatively, it may mean participating in regulatory sandbox, making the country there are occasions when legacy systems a shared financial utility to get economies something of a hotbed for regtech and have to remain in place and operate of scale savings with other banks – other technology-based solutions. alongside new solutions, which means that whatever works best.” Financial institutions should explore the financial benefits may be reduced.” Pole Star is an example of a start-up and the collaboration opportunities available The Boston Consulting Group report, bank collaboration. It provides sanctions to them, via sandboxes or not. “We Global Risk 2017: Staying the Course in compliance and risk management software believe cooperation between regtechs Banking, estimates FIs spend $18-$21 to banks, trading and finance companies, and FIs is the way forward,” says BNP billion on AML; $16-$19 billion on KYC; and marine insurers and other maritime Paribas Securities Services’ Devambez. $11-$15 billion on conduct surveillance. organisations. Citi supported the regtech “The combination of regtechs’ technology It’s a big market for vendors. firm after it won its regional Tech for expertise and banks’ business experience Cyberdefence risks, regulatory reporting Integrity Challenge Dublin in May 2017. is a powerful proposition, which can help duties and financial utilities mean that the solve many of the industry’s challenges.” compliance processing and related regtech BNP Paribas Securities Services recently market is potentially worth hundreds of took a minority stake in Fortia, a start- billions of dollars. “From a bank’s point up which uses AI machine learning and Try Banking Technology’s free newsletter for all business process monitoring to help the the top stories, commentary and analysis, HUGS AND HOTBEDS of view regtech fund industry meet rising compliance Ruth Wandhofer, global head of regulatory requirements and manage mounting delivered daily straight to your inbox. and market strategy, treasury and is collaborative as volumes of data. “As well as helping finance trade solutions at Citi, says regtech is we are looking for the growth of Fortia, we agreed to share “collaborative rather than disruptive”. In our expertise and knowledge of their the wider fintech marketplace there are the best provider target market to help them develop their Subscribe today many start-ups that want to displace FIs offering,” Devambez says. or shave-off niche segments, but banks’ to help us with “We’ve now gone one step further and knowledge of the compliance duties they our compliance have decided to move our trustee and www.bankingtech.com face is a necessary component within depositary business onto Fortia’s platform regtech, unless players want to get their automation and data to help our clients enhance controls and own licence. operational efficiency. Our partnership “From a bank’s point of view regtech needs.” with Fortia illustrates the benefits of Interested in advertising opportunities? is collaborative as we are looking for Ruth Wandhofer, Citi cooperation for banks, regtechs but also the best provider to help us with our the industry as a whole.” bt Contact compliance automation and data needs,” Neil Ainger Judith McInerney Email: [email protected] December 2017/January 2018 | www.bankingtech.com | 37 Tel: +44 203 377 3506 SPOTLIGHT: LIQUIDITY MANAGEMENT SPOTLIGHT: LIQUIDITY MANAGEMENT

reconcile those nostro Liquidity management: accounts more efficiently and in real-time, optimising intraday liquidity, lowering real-time nostro time? costs and reducing operational risk. Didier Balland, head of marketing for correspondent banking, at Société Générale, which is a participant in the PoC, As part of its global “While significant progress has been says standardisation will help to reduce made on the technology side, one must costs and build the necessary base for new payments innovation realise that it is still early days for the services. The bank will adopt the standard (gpi) initiative, Swift and a newer generation of blockchain and that during 2018, he says. group of banks have been it will still take some time before it is ready Launched in January 2017, the gpi PoC trialling distributed ledger for mission-critical applications,” said aims to help banks overcome significant Damien Vanderveken, head of research challenges in monitoring and managing technology (DLT) in the and development at SwiftLab and of user their international nostro accounts, which reconciliation of nostro experience at Swift. are crucial to the facilitation of cross- databases in real-time. Banks hold nostro accounts with each border payments. At present, banks cannot other, usually in a foreign country and in a monitor their account positions in real foreign currency. Typically, the banks receive time because they lack intraday reporting nostro account information at the end of the coverage. The PoC recognises the need for In total, 33 global banks have taken part day. The information is often from disparate banks to receive real-time liquidity data to in Swift’s blockchain proof of concept sources and must be aggregated overnight. manage funds throughout the business (PoC), designed to validate whether the This means reconciliation of accounts is done Services, and was ultimately integrated day. At its core, the PoC builds on the technology could help banks reconcile using end of day statements. From a liquidity with SunGard’s Real Time Liquidity rulebook defined by Swift as part of the their international nostro accounts in management perspective, this is far from Management solution. (SunGard was intraday liquidity standard. real-time. The PoC is part of Swift’s gpi optimal. acquired by FIS at the end of 2015.) “The potential business benefits ensuing service for cross-border payments. The Attempts to bring real-time to nostro Fast forward to today and from the PoC are clear,” says Vanderveken. “If results indicate that the Swift-developed accounts started more than a decade ago. developments are continuing apace. The standard was developed by Swift management at Barclays Corporate banks could manage their nostro account DLT application delivers the business Back in the early 2000s, a group of banks In July, Swift and the Liquidity in consultation with more than 20 liquidity Banking, said the standard would help the liquidity in real time, it would allow them functionalities and data richness required chose the Cable & Wireless Real Time Implementation Task Force – a group users and providers, providing a common bank’s clients to manage their liquidity to accurately gauge how much money to support real-time liquidity monitoring Nostro product as a standard infrastructure of large and medium sized custodian set of business rules and technical positions more efficiently. “Through more is required in each account at any given and reconciliation. Issues remain, however, for sharing nostro account information. banks and global brokers – released an specifications applying to cash reporting in streamlined and standardised reporting point, ultimately enabling them to free up including data confidentiality, governance Later, the product became Gresham industry standard for intraday liquidity. the interbank space. It includes nostro and across the industry, we hope to be able to significant funds for other investments.” and identification framework. Computing’s Clareti Cash Reporting The standard is designed to help banks custodian cash accounts. It supports real- make real-time reconciliation much simpler Carolyn Burke, head, enterprise comply with intraday liquidity regulatory time transactions by transaction liquidity and reduce costs.” payments at Royal Bank of Canada, agrees. frameworks and optimise liquidity reporting and resolves data challenges The standard is also used as the basis She says blockchain’s ability to enable all monitoring of their correspondent banking caused by the lack of real-time reporting, for Swift’s gpi distributed ledger PoC, partners to see data in real time should accounts positions, through the provision timed confirmations and data accuracy. which leverages the common rulebook bear fruit in liquidity management. A PoC, of debit and credit confirmations at At the launch of the standard, David provided by the intraday liquidity standard. she adds, is a “learning tool” that enables transactional level in real time. Gaselee, head of agency and intraday It explores the use of DLT to help banks participants to determine which tools work Swift says around 35% of the cost of an liquidity, financial institution product manage their intraday positions and best in which areas. >> international payment transaction is related to nostro-vostro reconciliation and liquidity, including the opportunity cost related to “We will respond trapped liquidity. To manage their positions “While significant progress has been made on the technology side, to each challenge more efficiently – avoiding liquidity excess or unnecessary overdrafts – financial one must realise that it is still early days for the newer generation of banks face in a institutions first need better visibility of blockchain and that it will still take some time before it is ready for their liquidity positions on those accounts, significant way.” on an intraday basis. The intraday liquidity mission-critical applications.” Wim Raymaekers, Swift standard is a “crucial component” to allow banks to exchange this information on a Damien Vanderveken, Swift Wim Raymaekers, Swift transactional level in real time, says Swift.

38 | www.bankingtech.com | December 2017/January 2018 December 2017/January 2018 | www.bankingtech.com | 39 SPOTLIGHT: LIQUIDITY MANAGEMENT

for security, scalability, transparency and protecting confidentiality. The PoC is just one of a series of phases planned for gpi. More than 110 transaction banks from Europe, Asia Pacific, Africa and the Americas have signed up to the gpi initiative, which opened for live payments in January 2017. The first phase of the initiative is focused on business to business payments. A second phase will encompass digitisation of cross-border payments, followed by an exploration of the potential of new technologies such as distributed ledger, in the third phase. Wim Raymaekers, head of banking markets and gpi at Swift, says in its initial phase, gpi uses existing payments rails, Paula Roels, Deutsche Bank which enabled the initiative to be rolled out quickly. “Now that gpi is up and running, we can assess other technologies such as blockchain for related activities like “Although banks settlement.” compete with Nostro and vostro accounts lend themselves to DLT because they are each other in the ledgers between banks of what they have on account with each other. correspondent For the PoC, a smart contract banking business, application has been developed on top of a DLT protocol. This is connected to debit collaborative efforts and credit events and passes through the relevant parties allowing banks to are indeed vital to determine their exposures and balances at benefit international any time. gpi is very much the start of a journey, In developing the PoC, Swift leveraged trade as a whole.” adds Raymaekers. “We will bring more Hyperledger Fabric v1.0 technology, and value over time like blockchain, DLT and combined it with key Swift assets, to Paula Roels, Deutsche Bank rich payments data. We will respond to ensure that all the information related to each challenge banks face in a significant nostro and vostro accounts is kept private way.” and seen only by the account owner and Paula Roels, head of market its correspondent banking partner. The PoC infrastructure and industry initiatives, application used a private permissioned showed how DLT can be used for real-time institutional cash management at blockchain in a closed user group nostro reconciliation to make payments Deutsche Bank – another institution environment, with specific user profiles more efficient. A wider multilateral trial involved in the PoC – agrees gpi is a and strong data controls. User privileges was then tested through Swift’s gpi, which journey that is just beginning. “But and data access was strictly governed. aims to help banks improve their liquidity, this initiative shows that, although Nigel Dobson, general manager, as well as make payments faster, more banks compete with each other in transformation projects at ANZ, says the transparent and more traceable.” the correspondent banking business, PoC leverages a bilateral trial the bank did While other technologies could be just collaborative efforts are indeed vital to with Wells Fargo in the third quarter of as effective, says Dobson, DLT “covered the benefit international trade as a whole.”b t 2016 for cross-border payments. “That trial items on our checklist” balancing the need Heather McKenzie

December 2017/January 2018 | www.bankingtech.com | 41

Movers and shakers EVENTS CALENDAR

Bitcoin exchange Coinbase has a new Moving the other way is Morgan Salmon, February 2018 president, Asiff Hirji, who will also serve who has left Citi after almost a decade with 5-6: Seamless Thailand, Bangkok in the newly created position of COO. the bank. Most recently, he was head of www.terrapinn.com/exhibition/seamless- Hirji is formerly of Hewlett-Packard and B2B commercial cards. thailand Andreessen Horowitz; he also was senior Salmon has now joined the business advisor at Bain Capital; founded private development team, global alliances at 19-20: PSD2 & GDPR Forum, investment and operating company Amazon Business. Amsterdam Inflekxion; and is a director at number of Salmon was also a mentor at www.psd2gdpr.com tech firms including Eze Software Group, TES Startupbootcamp Fintech and Level39. Global Limited, RentPath, and Saxo Bank. 21-22: African Women in Fintech & HSBC has appointed Mike Warriner Payments, Kigali Infosys has named its new CEO and MD, as CIO for its retail banking and wealth www.awfpkigali2018.com/ Salil S Parekh, with effect from 2 January management digital division. He joins 2018. from five years at Google, where he was 21-22: Digital Integration in Wealth An industry veteran with over 25 engineer director. Management, London years of experience, Parekh moves from Prior to that, he spent nearly two www.arena-international.com/ Capgemini, where he is a member of the decades as CTO at Intelligent Environments wealthmanagement/ group executive board. (IE), a UK-based digital banking tech firm. Infosys says Parekh’s appointment is a HSBC is investing $2.1 billion in digital 22: Global Private Banking, London result of “a comprehensive global search across its business. www.imn.org/globalpb effort”. U B Pravin Rao will step down as the Atom Bank has lost its MD of business March 2018 interim CEO and MD, and will continue as banking and founding member, Craig 6-9: Finovate Europe, London COO. Iley. Iley joined the challenger bank from finance.knect365.com/finovateeurope/ Santander in mid-2014. International payments platform He has joined Digital Allies, a UK-based 12-14: MoneyLIVE: Retail Banking Currencycloud has appointed Tanya tech consultancy firm, as a non-executive Europe, Amsterdam Ziv as its new chief compliance officer director. He is also a non-executive director new.marketforce.eu.com/money-live/ and money laundering reporting officer of publishing company Remember Media. (MLRO). April 2018 With ten years’ experience in the legal Gerrard Schmid, former CEO of D+H 12-13: 10th Global Banking Innovation sector, Ziv joins from telco Lebara, where Corporation (now part of Finastra), has Forum & Expo, Prague she held the same role. She also worked joined the Boston Consulting Group www.uni-global.eu/portfolio-page/10th- for eToro and Cornercard UK. (BCG) as senior advisor. Schmid was with global-banking-innovation-forum/ D+H for a decade in various senior roles, Lisa Cochran and Yasaman Hadjibashi but left once the company was acquired by 17-19: TRANSACT, Las Vegas have joined Citi as head of operations Vista Equity Partners earlier this year. etatransact.com digitisation and technology (consumer banking), and global consumer Rob Finlay has left DBS Bank where he technology head of data and analytics, was SVP, experience design, for nearly four respectively. years. He has moved to Accenture as its Banking Technology is a prominent media Cochran moves from Humana, where MD, financial services, Australia and New partner of many financial services and she was VP of sales, servicing and digital Zealand. banking technology industry events technology. She also previously worked at worldwide. If you are interested in a Softcard (acquired by Google) and held a Sairah Mojib has joined blockchain media partnership with us and marketing variety of roles during a 17-year tenure at consortium R3 as product marketing opportunities, please contact: Bank of America. director. She moves from a treasury Hadjibashi had a seven-year tenure and capital markets tech firm, Openlink Irena Andrisevic, Marketing Manager at Barclays, most recently as group chief Financial, where she was marketing Tel: +44 (0) 207 017 5379 creation officer at Barclays Africa. director, EMEA, for two years. bt Email: [email protected]

December 2017/January 2018 | www.bankingtech.com | 43 Position yourself as a thought leader through webinars

Out of office Webinars are an excellent way of raising your company’s profile, delivering thought leadership and generating high quality sales leads. With Banking Technology, your company will receive the complete webinar UK start-up secures inevitable Hollywood movie sequel package, including full project management, a moderator and a full-scale multi-channel marketing campaign to drive registrations. With unerring predictability, the Hollywood that can be cranked up to any level for Michelle explains what happened: movie machine has churned out a sequel more appropriate action. “We’re big fans of David’s work – films for the energetic and eventful life story of a In a surprise twist, the producers chose such as Eraserhead, Blue Velvet, Inland UK-based payments start-up. David Lynch, once famously referred to Empire and Mulholland Drive are fantastic As reported in May, the rise of Charon as “Jimmy Stewart from Mars”, to direct – and we were delighted to meet him for Ferries, the creation of the husband and the film. Clearly his success from the a chat about our company and life story. wife team of Michelle and Mark Morrison phenomenal and quirky TV show Twin “He was charming, folksy and, frankly, (who have defied all known laws of the Peaks: The Return must have enchanted at times bonkers. Love Pays 2 – certainly universe by remaining happily married), the movie moguls. The producers probably not David’s choice as a title – is a dark was turned into a stolid cinematic never watched the series, just heard it was and twisted version of events, but concoction – called Love Pays, by truth- great. Come on people! You can’t seriously highly entertaining. Put it this way, if the dodging director Ron Howard. expect them to work! They have long producers had chosen Michael Bay or Like a British Airways helpline telling lunches to attend! Sycophantic staff to Roland Emmerich, you would be speaking you all lines are “busy” – no matter what intimidate! to me from a prison cell. As I’d probably freaking time it is – Hollywood offered no have strangled them for the movies they surprises… and demanded a “part two” to make.” tap into the blatant ballyhoo for fintech. Mark adds: “The film was enjoyable. Now, Banking Technology can “Love Pays 2 is a dark No doubt about that. But it does require exclusively report on Love Pays 2 (genius!), and twisted version a level of patience and attention that which continues to chart Charon Ferries’ really only existed before the internet was progress. As a quick synopsis, they get of events, but highly invented. more funding (who doesn’t?), get more “Characters speak slowly with very staff (humans, not robots), lose some entertaining.” long pauses. At one point a local priest money (I don’t mean down the back of Michelle Morrison, Charon Ferries in the audience at the premiere lost it a sofa), get the money back (still no sofa and shouted out: ‘Sweet Jesus! Get the involved), and wallow in the usual drama hell on with it!’. The music is a mixture of cute tracks from the 1950s or something darker that Satan’s soul. You’re never quite sure where you’re headed. Rather like using Uber when travelling abroad.” As with the first instalment, Banking Technology was lucky enough to get a preview of the whole film. It’s a lively and beguiling affair, which may be confusing, or at least disconcerting, to those unfamiliar with the Lynchian mindset. Scenes include The key benefits of Banking Technology webinars include: someone spray painting shovels gold; lots ■ Increased brand awareness of coffee being discussed and drunk; and for about five minutes what looked like ■ Direct lead generation an apricot stuck on top of a tree spoke ■ Reaching key decision-makers across the fintech sector backwards. ■ Direct engagement with the webinar audience via live Q&A That said, the “apricot-tree entity” ■ Extended value with an on-demand recording, hosted on the Banking Technology website still made more sense than some of the panels I have had to sit through at fintech and accessible via registration for further lead capture conferences. bt Antony Peyton

44 | www.bankingtech.com | December 2017/January 2018 For more information get in touch with Judith McInerney: email [email protected] or call +44 (0)203 377 3506