fow issue 30

MICROSOFT TECHNOLOGY IN THE FINANCIAL SERVICES INDUSTRYAUTUMN 2008

FINANCEON WINDOWS

NEWSINTERVIEWS

PROFILESFEATURES

COMMENTARYANALYSIS

“A well-architected, flexible payments infrastructure will give banks a greaterchance of outsourcing success. Microsoft’s Payments Services Factory allows

different services and applications to coexist with legacy systems.”

Colin Kerr, Payments Industry Technology Strategist, Microsoft

SWIFTAND SURE

Find out how Microsoft and its partners are workingto help integrate governance, risk management and

compliance into the organisational DNA. Page 42

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VIRTUALISATION

CORE BANKING

GOVERNANCE,RISK MANAGEMENTAND COMPLIANCE

Pim van der Horst on how KAS Bank is leadingthe way in Swift connectivity with Microsoft

BizTalk Accelerator for Swift

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FOREWORDAUTUMN 2008

Payments processing is high on the agenda for many of the region’s financialinstitutions as they deal with a growing number of new payment methods andregulations. In this rapidly evolving environment, the need for agile, people-ready technology is greater than ever.

KAS Bank was only too aware of this when, as part of its migration from themainframe to Windows, it decided to streamline its Swift connectivity withMicrosoft BizTalk Server and BizTalk Accelerator for Swift. On page 20, KASBank’s Pim van der Horst tells us about the project, and how it is helping thebank to direct valuable resources back to improving the customer experience.

This is an exciting time for virtualisation, with the latest technologies nowextending beyond the data centre to embrace the desktop. For our round tablefeature on page 26 we gathered a panel of experts to discuss the latestdevelopments, and asked how virtualisation can benefit capital markets firms.

As the global credit crunch intensifies, businesses and customers alike facefinancial uncertainty. Banks need the support of agile IT, but as budget holderstighten their belts, technology renewal can seem a daunting prospect. On page36, we explore how a phased, strategic approach to core banking renewal canenable banks to improve operations and reduce costs, answering today’schallenges while preparing for future growth.

We also have our usual selection of incisive commentary and news from theindustry. Don’t forget to visit us at www.onwindows.com/finance for the latestnews updates from across the region.

Enjoy the issue.

Anders AbrahamssonManaging Director, EMEA Financial ServicesMicrosoft

FINANCE ON WINDOWSEDITORIALEditorJacqui [email protected] EditorJames [email protected] EditorAdam Lawrence [email protected] ContributorsFreek Oldenhuis Arwert, Microsoft Günther Aust, Fujitsu Siemens ComputersMark Bates, RDTGraham Bright, Financial TradewareJames Burns, MicrosoftSteve Craggs, Lustratus ResearchPhil Dawson, GartnerSheida Hadji-Ashrafi, MicrosoftKirk Herrington, GaleForce SolutionsCarrie Higbie, SiemonPim van der Horst, KAS BankNick Jasper, ApakArnar Jonsson, AppliconColin Kerr, MicrosoftJohn Macaluso, Fiserv CBS WorldwideJohn McKee, Financial ObjectsIan Masters, Double Take SoftwareLeslie Muller, DynamicOpsBarrie Neill, TemenosMichael Nicastro, Open SolutionsPhilippe Nicolas, BrocadeBrian O’Gilvie, HPSai Sireesh Pachava, MicrosoftKarien Pype, Financial ArchitectsSteinar Sturlaugsson, AppliconKoen Van den Brande, MicrosoftIan Warford, MicrosoftSteve Yatko, Credit SuisseGreen IT AdvisorDr Bernd Kosch, Fujitsu Siemens Computers

MICROSOFT EDITORIALADVISORY BOARDAnders AbrahamssonManaging Director EMEA Financial ServicesAndreas DrescherEMEA Partner ManagerGordon Ejsmond-FreyEMEA Industry Director, InsuranceAndrew LongstaffIndustry Marketing ManagerTony EmersonEMEA Industry Director, BankingIan WarfordEMEA Industry Director, Capital Markets

COVER PHOTOGRAPHYRohan Van Twestwww.rohanvantwest.com

COMMERCIALPartner ManagersChristian [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] DirectorPaul [email protected] [email protected] [email protected] ManagerRichard PeppermanPublisherToby Ingleton

PRODUCTIONCreative DirectorLeigh TrowbridgeDesignersBruce GrahamKelvin JonesPaul RobinsonWeb Site ManagerDan Dore

3www.onwindows.com

COVER STORY

SWIFT AND SURE 20KAS Bank CIO Pim van der Horst tells ushow the bank is leading the way in Swiftconnectivity with Microsoft BizTalk Acceleratorfor Swift

CONTENTSAUTUMN 2008

COMMENTARY

WILL THE CREDIT CRUNCH 48BITE PAYMENTS OPERATIONS?A well-architected, flexible paymentsinfrastructure will give banks a greater chance ofsurviving the credit crunch, says Colin Kerr

MANAGING A WEALTH 50OF CLIENT INFORMATIONKirk Herrington looks at how CRM can bringbenefits for compliance as well as customers

SAFE AND SOUND 50Brian O’Gilvie discusses how financial firms cancreate a long-term information archiving strategy

FULL CIRCLE 54Companies are returning to virtualisation as asolution for data management, says Carrie Higbie

BACK TO BASICS 56A strong and agile technology base makes forsuperior online banking, say Arnar Jonsson andSteinar Sturlaugsson

PROFILED

TECHNOLOGY IMPLEMENTATIONS 58Successful projects at Kaupthing Bank, theLondon Stock Exchange and HgCapital

SIGN OUT

VOICE OF EXPERIENCE 64Mark Bates, chief executive officer of RDT tells usabout his passion for technology

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FEATURES

VIRTUAL WORLDS 26We ask a group of experts about thetechnology and trends behind virtualisationin the financial industry

CURBING THE CRUNCH 36How a service-oriented approach to coresystems renewal can help support businessagility without breaking the bank

MARKETWATCH

NEWS DIGEST 6Including the latest news and researchfrom technology providers across theEMEA region

GOVERNANCE, RISK MANAGEMENTAND COMPLIANCE

REGIONAL ROUND-UP 42How Microsoft and its partners areworking to help financial firms ensuregovernance, risk management andcompliance best practices throughoutthe business

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PUBLISHINGPARTNERSAUGUST 2008

HP is a technology solutions provider to consumers, businesses and institutions globally.

The company's offerings span IT infrastructure, personal computing and access devices,

global services, imaging and printing.

Getronics has fifty years' experience in providing solutions for retail banking and insurance

companies. Its focus is on branch renewal, on the end-to-end development and management

of solutions for the branch, and on designing and implementing multi-channel architectures.

Seventeen of the world’s top twenty financial services companies are Getronics clients.

Finance on Windows isproduced as a partnership

between Microsoft andselected key organisationsfrom the financial services

technology sector. Thesepartners are responsible for

the editorial direction ofFinance on Windows, and

collaborate to provide youwith content that covers the

key issues facing financialservices executives, and

technology solutions that canaddress these issues.

Published by Tudor RoseTudor House 6 Friar Lane, Leicester LE1 5RA, EnglandTel: +44 116 222 9900 Fax: +44 116 222 [email protected] www.tudor-rose.co.uk Managing Director: Jon Ingleton

ISSN 1473-2173

Finance on Windows is published quarterly and is available via subscription please visit:www.onwindows.com/subscribe for more information.

Printed in Great Britain by The Manson Group

Cover photography Rohan Van Twest.www.rohanvantwest.com

The Microsoft vision is to enable every business enterprise to use the Internet to build

richer customer experiences. Microsoft sees e- business as more than just transactions

over the Web, it is a means for establishing a closer relationship with customers and

trading partners and Microsoft .NET is the evolutionary strategy behind this vision.

FINANCE ON WINDOWS

© 2008 Tudor Rose Holdings Ltd. All rights reserved. Nopart of this publication may be stored or transmitted orreproduced in any form or by any means, includingwhether by photocopying, scanning, downloading ontocomputer or otherwise without the prior written permission from Tudor Rose Holdings Ltd.

Active Directory, BizTalk, Microsoft, Outlook, SharePoint,Visual Studio and Windows are either registered trademarks or trademarks of Microsoft in the US and/orother countries. The names of actual companies andproducts mentioned herein may be the trademarks oftheir respective owners.

Views expressed in this magazine are not necessarilythose of Microsoft or the publishers. Acceptance ofadvertisements does not imply official endorsement ofthe products or services concerned. While every care hasbeen taken to ensure accuracy of content, no responsibility can be taken for any errors and/or omissions. Readers should take appropriate professionaladvice before acting on any issue raised herein.

The publisher reserves the right to accept or reject advertising material and editorial contributions. The publisher assumes no liability for the return or safety ofunsolicited art, photography or manuscripts.

www.getronics.com

www.hp.com

www.microsoft.com

Fujitsu Siemens Computers, one of Europe’s leading computer companies, offers one of the

world’s most complete product and solution portfolios. The company ensures the highest

level of customer support with a direct sales force of more than 2,500 IT professionals on the

front lines and over 3,000 sales partners. As a joint venture between Siemens AG and Fujitsu

Limited, Fujitsu Siemens Computers was formed on 1 October 1999.

www.fujitsu-siemens.com

With more than 600 customers in 60 countries worldwide, SAP for Banking provides

banking specific (transactional banking, CRM, risk management) and banking relevant

(financial accounting, human resources management, procurement) services and

solutions, created on a single enterprise SOA enabled business process platform.

SAP and Microsoft are long term complementary partners as demonstrated by Duet™

software, a jointly developed solution to empower a company’s employees to

seamlessly access data and SAP enterprise applications within the familiar Microsoft

Office environment.

www.sap.com

Temenos is a global provider of banking software systems in the Retail, Corporate &

Correspondent, Universal, Private, Islamic and Microfinance & Community banking

markets. Headquartered in Geneva with 44 offices worldwide, Temenos serves over 600

customers in more than 120 countries. Temenos’ software products provide advanced

technology and rich functionality, incorporating best practice processes that leverage

Temenos’ experience in over 600 implementations around the globe.

www.temenos.com

become increasingly popular, says Craggs:“With rules-based capabilities, businesslogic is controlled by rules that areabstracted from the technology – if youwant to give students free banking, forexample, you could change a rule thatidentifies the payer as a student and setstheir charge to zero – you shouldn’t need togo in and change the code to achieve that,just alter a clearly presented rule.”

AN EXPERT’S VIEWFor Graham Bright, managing director ofFinancial Tradeware, the report’ssuggestions add up. “Payments systems areat the heart of all bank and financialoperations, beating continuously,performing their defined, often rigidfunctions with regularity, dependency andwith guarantees of service levels,” he says.“Just as an unfit runner becomes overheatedand fatigued, so the same issue arises whenthe system is stressed as volumes increase,or when it attempts to deal with theunexpected.”

Bright points out that many ageingsystems find it difficult to cope withexceptions, and this is helping to drive ashift toward the next generation oftechnologies. “Instructions of unusualformat, with incorrect addressing oroutside the accepted normality of straight-through processing as prescribed by ITdepartments lead to manual handling,” hepoints out. “Apart from the risk thisbrings in terms of time value, duediligence and potential interest loss, theflip side is that institutions can gain ahealthy income from charging punitivefees for this processing. Today, flexibilityof error and exception handling is thekey. Scalability of systems is now moresimple, less costly and managed inoperating systems.”

Looking ahead, Bright says thatstandardisation of payments messagingand formats is only part of the story: “Theindustry must accept that standardisationof messaging and formats needs to beavailable to all institutions, and that it isin fact only one small commoditisedcomponent in the scheme of paymentsprocessing. It is vital that as many

elements as possible of the businessflows, with all their quirks and subtleties,are included in order to minimiseexceptions,” he says. “The winners will bethose who can integrate externalmodules, often bought from third partieswithout affecting the core, whileenhancing overall capabilities, especiallyin exception handling and reporting.”

www.lustratusresearch.comwww.f-tradeware.com

www.onwindows.com

new generation of paymentsprocessing technology isemerging in response to the

latest challenges, according to a newreport from Lustratus Research.

The report, 2nd generation paymentsprocessing systems: payments processingsystems move to the next level, observesthat the dramatic impact of globalisationon financial operations has generatedincreasing competition, changing costmodels and surging volumes, whileregulatory activity has become moreintense. As a result, the report says,financial firms are looking for ways toimprove internal efficiency, differentiatethemselves from the competition,maintain profit margins and generate newrevenues. Payments processing is a keypart of the overall financial transaction,and is now being seen as an area of

opportunity to innovate and differentiate.“We’re reaching a sea change in

payments,” says the report’s author, SteveCraggs, director at Lustratus.“Globalisation has had a massive impact.The Single Euro Payments Area and cross-border transactions bring with them allsorts of issues, and then there is theexplosion of different payment types todeal with. Existing systems have beencoping as well as they can withdevelopments over the past 10-15 years,but they’re coping in the way they did inthe 1980s and 1990s, by delivering a newprogram to deal with each new challenge.This has led to an increasingly rigidstructure in these ‘first generation’payments systems, which now comprisemany different pieces all rigidly lockedtogether and delivering different pieces offunction. Many of these systems are

beginning to groan under their ownweight, and as it’s become more difficultto add new functionality, this alsohampers financial firms in differentiatingthemselves and responding to change.”

These issues can be resolved usingseveral recent technology developmentssuch as a service-oriented approach,centralised view of business activity andrules-based capabilities, says Craggs.“Software has moved on in terms ofcapabilities and styles,” he explains. “Aservice-oriented approach will enablereusable business-differentiatedcomponents, while centralised real-timemanagement of payments gives banks theability to see all of their payments activitytogether in one place.”

The third part of this agile paymentsenvironment, rules-based capability, is asoftware industry technique that has

A

MARKETWATCH | NEWS

AGEING PAYMENTS SYSTEMS CAN STRUGGLE WITH EXCEPTIONS, PROMPTING A SHIFT TOWARD NEXT-GENERATION TECHNOLOGIES

PAYMENTS ON ANOTHER LEVELPAYMENTS PROCESSING SYSTEMS ARE MOVING TO THE NEXT LEVEL, SAYS REPORT

REPORT by Jacqui Griffiths

7

MICROSOFT

.NET 8, 10, 12, 13, 14, 18Active Directory 18Insurance Value Chain 14IP Ventures 15SharePoint 14Silverlight 15Solver Foundation 15SQL database 10SQL Server 14, 16Vista 18Windows Mobile 16, 18Windows Workflow Foundation 18

TECHNOLOGY PARTNERS

Accenture 15Albany Software 13Apak 10Ascentn 8Business Control Solutions 12Devicelock 18Duck Creek Technologies Europe 18DynamicOps 18eMedia Monitor 8Financial Objects 13Financial Tradeware 7Finsbury Solutions 14, 16Fiserv CBS Worldwide 16Formicary 8Fujitsu Siemens Computers 14, 18GaleForce Solutions 13Gig Werks 12HP 8Insurity 18MBA Systems 8Moore Stephens 16Platform Computing 14Portrait Software 16QuantHouse 12RDT 16Ridgian 8Sword Group 10Third Financial Software 14Xenomorph 14Zignals 15

FINANCIAL SERVICES PROVIDERS

Bloomberg 16Credit Suisse 18Deutsche Bank 12Eucover.com 18Kohlberg Kravis Roberts & Co 16London Stock Exchange 8Rabobank 13SGAM Alternative Investments 12Société Générale Asset Management 12Thomson Reuters 18Towergate 16VTB24 18

ANALYSTS AND ASSOCIATIONS

Apacs 16Celent 15Committee on Payment and SettlementSystems 8Datamonitor 18Enterprise Ireland 15Juniper Research 8KRC Research 18Lustratus Research 6Securities Industry and Financial MarketsAssociation 16TowerGroup 16Transaction Performance Council 14

IN THIS ISSUE

MARKETWATCH | NEWS

In his report, Steve Craggs addressesthree key issues.

First-generation payments processingsystems are struggling to cope with theeffects of globalisation, higher volumesand increasing competition. They areoften not flexible enough, difficult tocustomise, and offer limited visibility ofpayments activity.

Second-generation paymentsprocessing addresses these issuesusing modern techniques:• Extensible, pluggable, service-

oriented approach• Centralised, real-time management

of all payment types• Rules-based functionality andcontrol.

In doing so, it brings a wide range ofbenefits to payments processing suchas cost-efficiency, agility, consolidatedmanagement and control, internalefficiency and a resilient, scalableplatform for innovation.

THE REPORT IN BRIEF

“A service-orientedapproach will enablereusable, business-differentiatedcomponents”

Steve Craggs Lustratus

The London Stock Exchange (LSE) hasgone live with Performance Channels, ahigh-speed delivery mechanism for its.NET-based Infolect information system.

The Performance Channels serviceensures that even during the highest peaksin trading activity, market data is deliveredat high speed. “The introduction ofPerformance Channels sets a newbenchmark for customers requiring thelowest latency connectivity to the LSEduring peak trading periods,” said DavidLester, chief information officer at the LSE.“The service gives member firms usingalgorithmic trading models greater visibilityof the spikes and events that occur duringperiods of high trading activity. Theimmediate delivery of price data during

these peaks creates additional tradingopportunities. With TradElect and Infolectunderpinning our markets, tradingparticipants can be confident of receivingworld-leading performance.”

Over 40 customers have signed up to theservice, with more orders in the pipeline.Clients can continue to use the existingService Channel configuration wherebydata peaks are managed during periods ofhigh trading activity to ensure that clientsystems are not overloaded. PerformanceChannels is available through 100-megabyte Extranex lines, which cut theaverage round-trip network latency withinthe City to below one millisecond.

www.londonstockexchange.com

Financial services IT consultancyFormicary has joined forces with broadcastmonitoring technology firm eMediaMonitor to launch enterprise TV and audiomonitoring agent TVSeer.

The service has been designed forfinancial professionals who need to knowevents that will move or change the globalmarket landscape, as well as those who areinterested in sector-specific news.

TVSeer monitors media broadcasts on auser’s behalf and delivers targeted alertnotifications direct to the desktop viainstant message. Using advanced speech totext technology, it monitors multiplechannels in multiple languages 24/7,automatically delivering relevant contentwithin 15 seconds of transmission.

Specifically aimed at researchers, analystsand traders in financial services, TVSeerallows users to set up advanced searchfilters for specified keywords and complexterms. Once triggered, an alert containingthe summary is sent to the user, who canthen choose to view the original clip.

“We have been working with top tierinvestment banks to deliver this service,based on superior speech recognitiontechnology, uniquely tailored to thefinancial services market,” said PhilipMiller, head of intelligent messaging atFormicary. “We are pleased to announcethat all information consumers are now ina position to benefit from this innovation.”

www.formicary.netwww.emediamonitor.net

FORMICARY LAUNCHES TVSEER

LSE goes live withPerformance Channels

IN BRIEF

Ascentn has strengthened its position inthe European market after agreeing apartnership with Ridgian, a leading UK-based information management solutionsprovider. The alliance will help Ascentnaddress demand for its business processmanagement (BPM) solutions. “As aMicrosoft Gold Partner and an expert inSharePoint, .NET, business intelligenceand integration, the Ascentn BPMplatform will significantly complementour existing portfolio and allow us tofurther address the needs of ourcustomers,” said Jason Betteridge,managing director at Ridgian.www.ascentnemea.comwww.ridgian.co.uk

HP has launched its e-DiscoveryWorkshop for the financial servicesindustry. The workshops entail a provenmethodology, in which HP experts workwith companies to review theirinformation requirements, assess business,regulatory and governance drivers andshape a long-term strategy forinformation archiving. To mark thelaunch, HP is giving away a free workshopto ten financial firms – simply [email protected] to express an interestin the offer.www.hp.com

Central bankers have recommend anumber of actions to address the risk-transmission channels brought by systeminterdependencies. The bankers expressedtheir concerns in the Committee onPayment and Settlement Systemsreport, The interdependencies of paymentand settlement systems, which lays out aframework for analysing the risks ofinterdependencies, along with specificrecommendations for the industry toaddress them. The report recommendsthat central banks and other authoritiesreview their policies in light of theincreasingly integrated nature of theglobal financial infrastructure. www.bis.org/cpss

MBA Systems has launched IB.Net2, thelatest version of its Internet Brokersoftware for online trading. IB.Net2includes a new front-end database (FED)facility, a new limit order system, anenhanced payment utility and anexpanded range of tradable instruments,providing greater flexibility in use whileenhancing account management andenabling cost savings. It incorporates anexpanded range of tradable instrumentsto include unit trusts and other collectiveinvestments and employs straight-through processing and a FIX interfacewith EMX, to enable funds to be tradedalmost entirely automatically. www.mbasys.co.uk

MARKETWATCH | NEWS

www.onwindows.com

IN BRIEF

41.5 billion mobile financial service transactions will be made by the end of 2011 –driven by high-speed adoption of mobile banking facilities, especially by thosewithout access to banking Source: Juniper Research

UPWARDLY MOBILE

Knowledge bank

MARKETWATCH | NEWS

www.onwindows.com

A year ago, Apak was acquired by SwordGroup. We caught up with Nick Jasper,senior business manager at Apak, to findout what impact the takeover has had andwhat the future holds.

What has the acquisition meant to you?It’s brought us the kind of opportunitiesthat are normally available only to largercompanies. As an international company,Sword Group gives companies access totechnical and consultancy expertise on aglobal basis, which isn’t accessible tosmaller software companies like Apak,though it was successful in its own right.

We’re getting significant introductionsand we’ve got quite a large footprint now,with encouraging opportunities for cross-fertilisation across the Sword Group.We’ve already been dealing with otherparts of the group in terms of SharePointconsultancy, and we’ve introduced Swordto some of our customers using theMicrosoft platform for distributedinformation.

You’ve undergone some restructuringover the past year – tell us about that.Our core wholesale and bureau operationbusiness has continued as Apak, but ourUK-based banking division and its existingApak Beam subsidiary, based in Dubai, havebeen merged to form a single entity calledSword Banking Solutions.

Sword recognised that Apak was a UK

market leader in supplying bureau servicesfor finance firms, but also recognised theimmense potential of both the bankingdivisions’ technical platforms in the bankingsector. Given that they both operate on aMicrosoft .NET platform, bringing themtogether made sense. The synergy betweenthem made the new entity greater than thesum of its two original parts.

What does that mean in terms of yourproducts? We previously marketed our Auriusbanking system in the UK. But sinceBeam has an established name in theMiddle East and Africa, and is expandingrapidly into the Pacific Rim, we decided tocreate a family of products that could alltalk to one another, under the Beamheading. As a result, Aurius has becomeBeam Core, an integrated retail systemwhich has its own workflow and comescomplete with Internet banking facilitiesboth for private individuals andbusinesses. We can also split out BeamWorkflow as a standalone product.

Beam Branch is a branch system basedon .NET and SQL database, which hasbeen designed to sit across the front oflegacy systems but can also talk to BeamCore. It can also be used as a standaloneInternet banking application called BeamInternet. So an institution that’s runningan old legacy system, for example, canrapidly implement Beam Internet across

the front and provide Internet bankingfacilities, without having to change theircore system. Importantly, Beam Internetcontains a browser based user interfacewhich can be quickly adapted to reflect abank’s corporate image ensuringfamiliarity for existing customers.

Many banks are cautious aboutreplacing their core system, due to theperceived costs and risks involved. Butwith Beam they can do this in a modularway, for example by introducing theInternet banking element first. They couldimplement a modern branch systemwithout changing the core system. Then,later on they could replace the coresystem almost seamlessly.

So what does the future hold?You only have to look at TV and pressadvertising over the past few months tosee the new products – such as high ratesand linked accounts – being offered asbanks look for more ways to raise funds. Idread to think how much those productscost to develop on some of the olderplatforms. Tier-three and tier-four banks,with more agile packages like Beam, willbe able to respond in this kind ofenvironment a lot more quickly, and thatopens up opportunities for us. Watch thisspace for further announcements!

www.apakgroup.comwww.sword-group.com

BEAMING WITH SUCCESSINTERVIEW: NICK JASPER OF APAK

THE PAST YEAR HAS BEEN ANYTHING BUT BUSINESS AS USUAL FOR APAK

Deutsche Bank has commenced its globalrollout of BCS Integrity from BusinessControl Solutions (BCS).

The first phase of the rollout will see thesolution deployed in Deutsche Bank’s Asia-Pacific branches, before being extendedacross 40 countries, 3,000 users and morethan two million accounts.

Developed in a Microsoft-focusedenvironment, BCS Integrity is a database-agnostic solution designed to enable betterdecision-making for financial institutionsby providing instant visibility across theaccount substantiation process. DeutscheBank chose the solution having been along-term client of BCS OperationalControl Architecture, which monitorscontrol hotspots and highlights issues asthey arise.

“This implementation is testament tojust how seriously Deutsche Bank takes its

financial control,” said Nigel Walder, CEOof BCS. “Moreover, it demonstrates thebank’s commitment to constantly drivingcontrol improvements while reducingoperational costs.”

www.bcsplc.comwww.db.com

SGAM Alternative Investments, awholly-owned subsidiary of SociétéGénérale Asset Management, has selectedQuantFactory, the QuantHouse.NETtrading strategies developmentframework to develop, back-test andexecute trading models. The suite ofproducts allows financial firms torationalise trading strategies anddevelopment cycle by using an integrated,.NET-based development environmentacross the research, development andback-testing execution cycle.www.sgam-ai.comwww.quanthouse.com

Gig Werks has received two awards fromMicrosoft this year, most recently theaward for Excellence in BusinessProductivity Optimisation in the BestBusiness Intelligence Solutions category atthe Microsoft New York/New JerseyPartner Awards. The company pointed toits Microsoft certifications and subsequentstatus as a Microsoft Gold Certified FieldManaged Partner as key achievementsthat have helped it gain valuableexperience, boost credibility, increaserevenue, and achieve an annual growthrate of 50 per cent.www.gig-werks.com

IN BRIEF

MARKETWATCH | NEWS

Deutsche Bankrolls out BCS Integrity

IN BRIEF

Rabobank has chosen Financial Objects tojointly develop a global counterparty creditrisk management system. The three-phaseproject will involve the migration ofRabobank’s own Sky credit risk solution toMicrosoft .NET.

Once live, the system will spanRabobank’s global capital marketsdivision. Users will be able to capture,monitor and report credit exposure, andmanage collateral operations against globallimits.

“We wanted to retain the same level ofbusiness functionality available in Sky, anda joint development project soon becamethe obvious choice,” said Simon Calvert,head of risk IT at Rabobank. “We expect tomake significant savings compared to thecost of implementing an alternative systemfrom scratch, while retaining what weconsider to be superior functionality. By

employing Financial Objects’ provenmigration methodology and experience wecan have a future-proofed system, utilisingthe latest Microsoft technologies, tosignificantly reduce our total cost ofownership.”

Michel van Leeuwen, managing directorfor worldwide capital markets at Microsoftcommented: “We expect this project to setthe precedent for credit risk managementplatforms in the banking industry.”

“This project will take the foundations ofFinancial Objects’ award-winningenergycredit solution to deliver acomparable system to credit risk managersin the financial services sector,” said RolandJones, managing director of the riskmanagement division at Financial Objects.

www.finobj.comwww.rabobank.com

Financial Objectspartners with Rabobank

A new application from Albany Softwarewill allow all sizes of business to take fulladvantage of electronic paymentsincluding Faster Payments and Sepa.Albany ePay is integrated with Microsoftapplications and will be available for allmarket sectors. Different versions willcater to individual organisations’ needsdependent on transaction volumes,internal processes and line of business.The solution is fully scaleable, allowing foradditional functionality as business needsevolve. www.albany.co.uk

GaleForce Solutions is to release an on-demand version of the full GaleForceCRM for Financial Services applicationsuite, including wealth management,asset management, capital markets,investment banking and retail banking-specific solutions. GaleForce Online CRMfor Financial Services will be generallyavailable from GaleForce Solutions andselected partners in August 2008. www.galeforcesolutions.com

MARKETWATCH | NEWS

IN BRIEF

Irish start-up Zignals has launched a betaonline service to transform investing foractive traders. Zignals will provide retailinvestors with state-of-the-art decision-support tools and access to a financiallysavvy online network that shares its ownindependently rated investment strategies.The beta launch of Zignals will focus onpersonalised services for the investor –easy-to-use alerts that can be tested,tailored and delivered directly to any e-mailaddress, PDA or mobile device; intuitivecharting; and technical analysis – alldeveloped using the latest Microsofttechnologies, such as Silverlight.

Zignals was created through thecollaboration of the Microsoft IP Venturesteam, Enterprise Ireland, entrepreneurs PatBrazel and Scott Tattersall, ManresaPartners, and angel investors.

“The complete absence of personalised

service and access to powerful yet usabledecision-support tools is often cited bysmaller investors as a key constraint onimproving the performance of theirinvestment decisions,” said Pat Brazel,CEO of Zignals. “This is where we plan tochange the status quo. Zignals responds tothis need by democratising trading for theonline investor.

“Microsoft has provided the resourcesand the technology to developpersonalised communication services andoptimise trading strategies using the yet-to-be-launched Microsoft Solver Foundationtechnology. The highly intuitive serviceswe are building will open up a whole newworld for retail investors who want tomaximise the effectiveness of theirinvestment efforts without spending everywaking hour peering at screens.”www.zignals.com

Zignals launchesonline investment beta

Over the next three years banks willincreasingly use Web 2.0 technology todeliver online wholesale banking services,according to a report from Celent. Factorslike the credit crunch are currentlyhampering the move to next-generationofferings, and it will take 18 months beforereal progress is made, says the report.However, Celent says that many banksrecognise the need to embrace Web 2.0,which will revolutionise the currentlandscape with new systems emphasisingcustomer experience, usability andnavigation while allowing users to takecare of their core banking requirements.www.celent.com

Accenture has opened the AccenturePayments Innovation Showcase facility atits research and development technologylab in France. The facility focuses onoriginal research and development in allfacets of the payments business, includingmobile communications and other point-of-sale technology, bank-to-corporateconnectivity, processing, process models,biometrics, regulation such as the SingleEuro Payments Area (Sepa) initiative, andsecurity. www.accenture.com

MARKETWATCH | NEWS

Platform Computing has formed afinancial services business unit, following ayear of strong growth in the sector. Thecompany, which is a Microsoft partner andspecialises in high-performancecomputing (HPC) management software,saw consistent strong growth across allmajor geographies including NorthAmerica, Europe and Asia, with financialservices as a global driver.www.platform.com

A survey by Xenomorph has found that79 per cent of financial professionalsbelieve market data quality is an issue fortheir organisations. More than half ofrespondents at the SIFMA event in Junesaid they spend significant amounts oftime validating data rather than onproductive analysis to gain competitiveadvantage. In addition, 20 per cent of assetmanagers, investment bankers and hedgefund professionals spend between 25 percent and 50 per cent of their timevalidating data. www.xenomorph.com

Microsoft has released its Insurance ValueChain (IVC) Software Factory for AcordStandards at the Acord Loma InsuranceSystems Forum 2008. The new solutioncomprises a set of development tools andassets that use the Microsoft .NETFramework to aid insurance firms andsoftware vendors in the integration ofexisting applications and business logicwith Acord Web services. Targeting theproperty and casualty, and life and annuitybusinesses, the IVC Software Factory is anextension of Microsoft’s broader IVCArchitecture Framework.www.microsoft.com

Third Financial Software has acquiredthe rights to a unique proactive alertstechnology. Following a period of jointdevelopment, the new technology hasbeen launched specifically to meet thecompliance and regulatory needs of thewealth management community. Fullyintegrated into tercero, Third FinancialSoftware’s wealth management platform,the technology provides wealth managerswith a solution for compliance, risk andportfolio monitoring. The new module,tercero Alerts is already beingimplemented at Third Financial Software’searly adopters and advisory clients. www.thirdfin.com

IN BRIEF

MARKETWATCH | NEWS

www.onwindows.com

Finsbury Solutions has launched themarket’s first enterprise-wide spreadsheetmanagement solution specifically designedfor implementation on SharePoint 2007.

The company has architected its flagshipspreadsheet management system,Spreadsheet Workbench, to integrateseamlessly with SharePoint, and offerenhanced functionality for improvedspreadsheet control, risk management andcompliance across organisations.

“Microsoft SharePoint is the system ofchoice for enterprise documentmanagement and collaboration,” saidJeremy Wood, director and co-founder ofFinsbury Solutions. “By enhancingSpreadsheet Workbench to seamlesslyextend SharePoint’s spreadsheetfunctionality, we have created a powerfulsolution for the management and controlof business critical spreadsheets, from asingle environment. It enablesorganisations to reduce manually intensivespreadsheet-based processes and assists

with a wide range of business functionsincluding audit, risk and compliance,trading, operations, finance plus client andregulatory reporting.”

The solution features enhancedfunctionality including a spreadsheetmanagement portal for rapid and remotedeployment; a high-performancespreadsheet comparison and analyticserver; spreadsheet key performanceindicators, and high-availabilitydeployment options to provide increasedresilience and disaster recovery capabilitiesfor critical spreadsheet applications.

“Spreadsheet Workbench provides ascalable solution with powerful analyticand monitoring capabilities thatcomplement SharePoint Server 2007 andallow organisations to manage detailedand complex spreadsheets,” said BruceMcKee, industry partner manager atMicrosoft Financial Services.

www.finsburysolutions.com

FINSBURY ENHANCESSPREADSHEET WORKBENCH

Fujitsu Siemens Computers’ PrimergyTX300 server has set a new world recordfor efficiency in online transactionprocessing (OLTP). The server shaved 25per cent off the industry standardbenchmark for OLTP in the efficiencybracket.

The TPC Benchmark E (TPC-E) is a newOLTP workload developed by theTransaction Performance Council (TPC), anon-profit corporation founded to definetransaction processing and databasebenchmarks. The test is based onportraying the activity of a brokerage firm,with workload centred on the activity ofprocessing brokerage trades.

The new record is one of the firstbenchmarks to be achieved usingMicrosoft SQL Server 2008 – availablefrom 30 August 2008 – with the PrimergyTX300 S4. Lab results validate the server’sperformance when coupled with SQLServer 2008, putting the industry-standardserver straight into the top spot in theTPC-E price/performance tables.

“Our customers benefit directly fromour investment in extensive testing in ourbenchmarking laboratories,” said Jens-Peter Seick, vice president of the enterpriseserver business at Fujitsu Siemens

Computers. “Our focus on fine-tuningsystems ensures that Primergy serversdeliver their best performance in the realworld. The new TPC benchmark providesindependent validation of our leadershipin an area that is very important to datacentre managers and financial controllersalike: the industry’s best price-per-transaction figures.”

www.fujitsu-siemens.comwww.tpc.org

Primergy sets OLTP efficiency record

THE TX300’S EFFICEINCY IS RECORD BREAKING

IN BRIEF

MARKETWATCH | NEWS

www.onwindows.com

Microsoft has announced the broadavailability of Bloomberg’s real-timeservices for Windows Mobile-basedphones.

The move, announced at theSecurities Industry and FinancialMarkets Association (SIFMA)conference, is in response to increaseddemands from financial professionalsfor on-the-go access to critical marketnews, data and other resources.

Bloomberg's real-time financialinformation network provides businessand financial professionals withcomprehensive tools and data on theall-inclusive Bloomberg Professionalservice. Users will now be able to accesseconomic data, pricing, the latestfinancial and world news, Bloombergmessaging, alerts, personalised marketmonitors and other functions fromvirtually any phone running WindowsMobile 6.

“Access to market information and

news is critical for Bloomberg users,who are the financial professionals withthe most at stake,” said John Waandersof Bloomberg. “Bloomberg on Microsoftwill further empower our globalcustomer base to access Bloombergfunctions via one of the world’s mostrecognisable mobile platforms.”

“Mobile access to news, data andother types of market information is nolonger a luxury for today’s financialservices professionals, who need to beconnected with real-time informationwhere their work takes them,” saidCraig Saint-Amour, director of UScapital markets industry solutions atMicrosoft. “Through our collaboration,Microsoft is able to provide Bloombergon Windows Mobile phones, givingusers real-time, productivity-enhancinginformation services while they areaway from their desktops and laptops.”

www.bloomberg.com.

Bloomberg availableon Windows Mobile

RDT and Moore Stephens have helpedTowergate to increase its competitiveadvantage by standardising on a coreunderwriting system underpinned by arobust data warehouse. TowergateUnderwriting is currently consolidating onthe RDT Landscape core underwritingsystem, while Moore Stephens has createdthe underwriting data warehouse. Thiscompleted ahead of schedule andaggregates business data from severalsources. www.rdt.co.ukwww.moorestephens.comwww.towergate.co.uk

Apacs has revealed that the security ofmany banks’ systems is driving criminalstoward customers. In the UK, onlinebanking fraud dropped 33 per cent year-on-year for 2007, but phishing attackshave become more frequent as criminalscontinue to target online bankingcustomers because the banks’ ownsystems have proved difficult to attack.More than 20,000 phishing incidents werereported in the first half of 2008, anincrease of more than 180 per cent fromthe same period last year.www.apacs.org.uk

Leading global alternative asset managerKohlberg Kravis Roberts & Co hasimplemented Finsbury Solutions’advanced Spreadsheet Workbenchsoftware system. Based on the latestMicrosoft technologies, the systemprovides finance, risk and auditdepartments with enhanced transparencyand control over the financial reportingprocess in accordance with the latestfinancial legislation such as Sarbanes-Oxley. www.finsburysolutions.comwww.kkr.com

Portrait Software has launched PortraitNew Business solution, to speed up policyissue and reduce risk exposure for lifeinsurance providers. Designed to integrateseamlessly with existing systems, thesolution handles the entire new businessacquisition process, from initial contactthrough to policy issue, based onunderwriting best practice. By providingend-to-end process transparency,traceability and reporting it reducesbottlenecks and sales leakage and is bothcompliant and auditable.www.portraitsoftware.com

Fiserv CBS Worldwide has exceeded itsperformance goal of 10,000 concurrentusers for its Aperio customer interactionmanagement solution.

The testing was carried out jointly byFiserv, Microsoft and Portrait Software,and involved multiple complex businessprocesses emulating deployment formajor institutions. The results provethat Aperio, which was created usingthe Microsoft Application Platformincluding SQL Server 2005 EnterpriseEdition (64-bit) database software, canhandle the demands of tier one, two andthree banks with diverse deploymentrequirements.

“We’ve always been impressed by thescalability of SQL Server,” said DavidSaunders, technical architect at PortraitSoftware, whose framework underlies

Aperio. “We’ve consistently found thatSQL Server provides a solid, reliableplatform that scales up very well. It is anexcellent environment in which towork.”

“The results of this projectdemonstrate that systems based onMicrosoft technology are scalable,reliable and secure enough to handlelarge volumes of data at the heart of abank’s transaction processingenvironment, and that they servemission-critical needs of our customersin the financial services industry,” saidKim Saunders, senior director of SQLServer marketing at Microsoft.

www.fiservcbs.comwww.portraitsoftware.com

Scalability milestone for Fiserv

Global adoption of Islamic credit cards is expected to grow rapidly from its currentbase of less than one million accounts, reaching up to six million accounts by 2012Source: TowerGroup

CREDIT WHERE IT’S DUE

Knowledge bank

VTB24, one of Russia’s largest retailbanks, has chosen DeviceLock 6.3 toensure end-point security for servers anddesktop computers across its entire ITinfrastructure, a distributedheterogeneous system includingWindows and other operating systems.

“With the proliferation of high-capacity removable storage devicesavailable today, there is a much greaterthreat of information leaks from thebank’s IT system, as well as infiltrationby destructive malware elements,” saidAnatoly Bragin, chief of VTB24’sInformation Security department.“DeviceLock is the software product thatcan most effectively help us to fight suchthreats. We used a previous version ofDeviceLock and found it a highlyfunctional and reliable product. It

provides flexible control over acomputer’s local ports and devices, thusaddressing one of our most significantinformation security problems.”

DeviceLock 6.3 featurescomprehensive central managementnatively integrated with Microsoft ActiveDirectory and Windows support, fromNT to Vista. Users can control, log,shadow-copy and audit end-user accessto any type of computer’s ports andperipheral devices. The product includespresence detection and access control tolocal, network and virtual printers as wellas Windows Mobile and Palm-basedpersonal mobile devices.

www.devicelock.comwww.vtb24.ru

Credit Suisse has launched DynamicOps,an independent company to market itsVirtual Resource Manager (VRM), avirtual infrastructure managementapplication.

Credit Suisse first deployed a virtualinfrastructure in 2005, and realised thatwhile virtualisation improved resourceutilisation and business agility, it alsoincreased operational complexity. VRMwas initially developed by the CreditSuisse Global Research and DevelopmentGroup. It has been in production formore than two years and managesthousands of virtual desktops andservers at multiple Credit Suisse datacentres in four locations worldwide.

Based on open technologies like Webservices, Microsoft .NET Framework 3.0,and Windows Workflow Foundation,VRM provides out-of-the-box policies,workflows and provisioning templateswhich can be customised to each

company’s unique environments.“In the case where self-provisioning for

virtualised servers has been deployed,VRM enabled us to reduce ourprovisioning lead times from weeks tominutes,” said Stephen Hilton, managingdirector for enterprise servers and storageat Credit Suisse. “This has resulted inmore efficient server utilisation and lowercapital costs. An additional benefit is thedramatic improvement in our ability torespond rapidly to business needs.”

Steve Yatko of Credit Suisse and LeslieMuller of DynamicOps give their viewson virtualisation in our round tablediscussion on page 26.

www.credit-suisse.comwww.dynamicops.com

CREDIT SUISSELAUNCHES DYNAMICOPS

VTB24 chooses DeviceLock

Over 25 per cent of life insurers and 20 per cent of non-life insurers do not considerenvironmental impact when making IT decisions – however, insurers do emphasiseperformance metrics and products that help promote a green economySource: Datamonitor

GREEN SHOOTS

Knowledge bank

Fujitsu Siemens Computers has wontwo categories in the Microsoft Partnerof the Year Awards, with its MobileBroadband embedded notebookcustomisation and offering taking theprize for OEM Hardware Solutions,System Building. “Developing products,solutions and services which directlyaddress our customers’ needs and adaptto a changing marketplace is the basis ofour strategy,” said Dr Bernd Kosch, vicepresident for strategic alliances at FujitsuSiemens Computers. “These awards fromMicrosoft confirm the added value oursolutions bring.”www.fujitsu-siemens.com

Insurity and Microsoft have released asurvey detailing the role of technologyfor insurance firms recruiting ‘millennialgeneration’ (those born between 1981and 2000) employees and customers.The Millennials in Insurance Survey 2008,conducted by KRC Research, found thatmillennials want to use newer, moreinnovative technologies in the workplaceand also have heightened expectationsas to how insurance companies shouldinteract with them as consumers. Around91 per cent said that being able to workwith ‘newer, innovative technologies’ inthe workplace would make them morelikely to consider a potential jobopportunity. www.insurity.comwww.krcresearch.com

Thomson Reuters has extended itsmobile market information, economicdata and news service to WindowsMobile devices, enabling it to access amuch wider customer base. Thedevelopment will allow financialprofessionals using Windows Mobilephones to have immediate access to thelatest market information such as stockquotes, breaking news, alerts andpersonal market monitors, from virtuallyanywhere.www.thomsonreuters.com

Dutch insurer Eucover.com has chosenthe Example Platform from Duck CreekTechnologies Europe, to provide direct-to-insured private motor quotations andunderwriting transactions. Based onMicrosoft .NET, the platform will deliverEucover.com’s policy application andquote process, enabling the company todevelop and deploy products quicklywhile effectively scaling the business. www.duckcreektech.com

IN BRIEF

MARKETWATCH | NEWS

www.onwindows.com

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COVER STORY: KAS BANK

WE WANTED TO BE SURE THATTHE NEW ENVIRONMENT WASABLE TO HANDLE A HIGHTRANSACTION LOAD.MICROSOFT SURPASSED THEOTHERS IN TERMS OF BOTHPERFORMANCE AND COST

“

PIM VAN DER HORST,CIO AND DIRECTOR OF ICT, KAS BANK

”

SWIFTAND

SUREKAS BANK IS LEADING THE WAY IN SWIFT

CONNECTIVITY WITH THE IMPLEMENTATIONOF MICROSOFT BIZTALK ACCELERATOR FORSWIFT. JACQUI GRIFFITHS FOUND OUT HOW

THE PROJECT IS ALREADY DELIVERINGSIGNIFICANT BENEFITS

21

ayments systems are critical to theoperations of any bank. As theglobal payments picture developsto include new regulations, new

standards, increasing numbers ofinternational transactions and innovativemethods of payment, banks are underincreasing pressure to ensure that their IT cansupport them in terms of workload,compliance and competition.

As a supplier of investment management,custody, clearing and settlement services KASBank understood these issues only too well.Based in Amsterdam and with 200 years ofbanking history, KAS Bank is among the top100 Swift users, with over 95 per cent of itstransaction messaging being carried over theSwift network. The company values both pastexperience and forward-looking innovation,an attitude that is amply illustrated by majorIT projects such as its implementation ofMicrosoft BizTalk Server and BizTalkAccelerator for Swift (A4Swift), a productextension that enables message formattingand connectivity to the Swift network.

The strategic migration of all its bankingapplications from a mainframe environmentonto Microsoft .NET gave KAS Bank the

P

opportunity to optimise its Swift connectivity. “For20-30 years, we were based on an IBM mainframe,”explains Pim van der Horst, chief information officerand director of ICT at KAS Bank. “We developedquite substantial functionality on that mainframe inan Adabas/Natural environment. However, wewanted to be more agile towards our customers. Wewanted to offer them more services, faster, and with24/7 availability. In addition, we wanted to achieve ashorter time to market for new productdevelopment. This was not possible with our actualmainframe infrastructure, so we looked foralternative technologies.”

As part of the migration project, KAS Bank choseA4Swift. “The Swift project was part of the wholemainframe migration,” says Freek Oldenhuis Arwert,business manager for the Enterprise and PartnerGroup at Microsoft in the Netherlands. “It was a bigdecision for KAS Bank. Their first choice had been anew mainframe, and they embarked on an extensiveselection process involving different technologyplatforms.”

KAS Bank considered technologies from IBM,Oracle and Microsoft. After extensive benchmarktesting at an independent technology institute,Microsoft .NET came out as the winner on bothperformance and cost. “Microsoft was the fastest atdeveloping new software,” continues Oldenhuis

Arwert. “During the selection process, we built thesolution in one day, while other parties didn’t finishat all.”

“Performance and cost were both taken intoconsideration in the decision,” says van der Horst.“We had a high volume of Swift messages, handling100,000-150,000 per day. This puts us among thetop 100 Swift users, which is quite an achievementfor a small bank like KAS Bank. Because of this, wewanted to be sure that the new environment wasable to handle such a high transaction load. We alsocalculated what it would cost to develop functionswithin the different environments. Microsoftsurpassed the others in terms of both performanceand cost.”

A further concern for KAS Bank was the availabilityof developers for its new environment, but Microsofthas a very extensive certified partner networkthroughout the world. “.NET developers are moreavailable than Java or Oracle specialists,” says van derHorst. “In addition, developers for those otherenvironments are much more expensive than .NETdevelopers.”

A WINNING TEAMA strong working relationship is essential to any majorIT project, particularly for such a mission critical area,and this is clearly evident at KAS Bank. “We have a

KAS BANK NOT ONLY HAS NEW TECHNOLOGY; IT ALSO HAS A MUCHMORE DYNAMIC ENVIRONMENT - MORE OPEN AND FLEXIBLE

“”


FREEK OLDENHUIS ARWERT, BUSINESS MANAGER, MICROSOFT

strong partnership with KAS Bank,” says OldenhuisArwert. “For the payments project we have a core teamon site at the bank, consisting of a strategy consultant,an application architect and an infrastructurearchitect. A close relationship is important becauseevery organisation is different, with different rulesaround their workflow. With A4Swift, some of theworkflow is tailor-made for them, so of course wework closely together to do that.”

“Two years ago we didn’t have any Microsoftknowledge in-house, only mainframe specialists,”adds van der Horst. “The role of Microsoft both as afacilitator and as a trainer of our people on the job isvery important. They provide very specialistknowledge on the project, and we also use Microsoftpartners to help us do the hands-on work. It’s clearthat our success in this project is also the success ofMicrosoft, and vice versa, so we have a commoninterest in achieving tremendous results with whatwe’re doing at KAS Bank.”

“The project has already led to more interest fromother parties,” says Oldenhuis Arwert. “Working withKAS Bank has been enjoyable and informative. TheKAS Bank team is always willing to engage indiscussions with us, and to explore other alternativeswith Microsoft technology.”

For KAS Bank, the relationship is enhanced by thesupport structure Microsoft offers. “We have a premier

support agreement with Microsoft, and we’re alsotaking part in the rapid deployment programme,” saysvan der Horst. “We also get high-level support becausewe’re now running on Vista – we were the firstfinancial institution in the Netherlands to implementVista across the organisation. In addition, ourenterprise licensing agreement with Microsoft helpsus to minimise costs.”

KAS Bank has taken the time to ensure it achievesthe results it wants, as van der Horst explains: “Thebroader migration to Windows is likely to continueuntil 2010, as we don’t have a big-bang strategy for it.We’re moving gradually, so we’ll phase down our useof the mainframe and build up our use of Intel andMicrosoft-based platforms simultaneously. In phasingout the mainframe, we’re following several strategies.We’re rebuilding functionality ourselves anddeveloping it in the .NET environment. We may alsoautomate aspects of the migration directly fromAdabas/Natural to C# using a conversion tool.

“The Swift project has entailed several phases,because we had a rather complicated architecture andinfrastructure. We had to source out the mainframeapplications and gradually build up the Microsoftenvironment. Now we’re at the stage where we’reabout to go live, and we’ve already phased out somemainframe applications.”

RAPID RESULTSPrior to fully going live with the A4Swift system, KASBank is using two channels for its Swift messaging. “Atthis point, not every transaction is going throughMicrosoft, as we have a mapping issue,” says van derHorst. “We’re putting them onto the new architecturemessage type by message type.”

Nevertheless, KAS Bank has already started to seethe benefits of its Swift agreement. Over the past 12months, the performance of the system has exceededexpectations. “The system can handle a large messageload,” says van der Horst. “We’re very pleased, even alittle surprised by its capability. It’s also very stable.The configuration we had on the mainframe, with a lotof packages talking together, caused me a lot ofheadaches, because the environment was not verystable. With A4Swift, we have much more stability.”

When it comes to saving time and costs, KAS Bankhas found A4Swift very rewarding. “One bigadvantage is that the cost of maintaining the systemgoes down enormously,” says van der Horst. “Anotheris that Swift’s November Changes are no longer aheadache for us. Before, we had to implement all thechanges in different systems; we had to be sure wewere complete, and had done every modificationnecessary, and then we had to test it, which was a lotof work. Now, Swift and Microsoft have taken care ofthat – we get a new version of A4Swift that contains allthe Swift changes. That’s saved us a lot of time, andalso reduces operational risk because we only have totest the upgrades against some forms from Microsoft.”

Management savings such as these are also

beneficial in terms of compliance. “The environmentgives us a more flexible reporting infrastructure,” saysvan der Horst. “The Swift environment now integratesits reporting services, so we can get a lot of reports onthe status of messages out of the system – anotherprocess that previously required a lot of work. We’reworking on making that functionality available tocustomers, possibly through SharePoint Portal.”

In fact, van der Horst explains, the project hasresulted in significant simplification in KAS Bank’sback office: “When a customer calls to ask where theirpayment or settlement is, it is now much easier tohandle the enquiry yourself, because all thetransactions are stored on a SQL Server database, andwe can use Microsoft reporting tools.”

That stability has resulted in a notable - andwelcome - silence in one aspect of KAS Bank’scustomer relationships. “One thing about Swiftmessaging is that customers simply expect it to work.So when you get it right, nobody really tells you so,”says van der Horst. “But they do complain when youget it wrong. So far, we’ve found that with A4Swift, wedon’t receive any complaints!”

MOVING FORWARDMoving from the mainframe can prove challenging forbanks in terms of organisational change, saysOldenhuis Arwert: “KAS Bank not only has newtechnology,” he explains. “It also has a much moredynamic environment than it was used to – moreopen and more flexible.”

However, at KAS Bank, the system has not simplygained acceptance from users; it is also buildingexcitement for the future. “Our IT people are quiteexcited by the system,” says van der Horst. “Comingfrom decades on the mainframe, they were initially alittle wary of the new technology, but in fact they havefound it easy to learn and to adapt.”

The relationship between KAS Bank and Microsoftlooks set to deliver ongoing benefits in terms of cost,performance and scalability. “As a medium-sized bank,it’s in our interest to standardise on one platform inorder to achieve the lowest possible total cost ofownership,” says van der Horst. “We now have a newSwift infrastructure in place, and we’re investigatingopportunities to use other Microsoft tools to increasethe performance and visibility of that environment.We want to use System Center Operations Manager tomonitor the infrastructure, and we’re looking atworking with Swift and Microsoft to develop anadapter for that. We can also use reporting tools fromMicrosoft, as well as SharePoint, to give us adashboard on the performance of the environment.”

The project has also created a stir outside of KASBank’s organisation, says Oldenhuis Arwert: “KASBank is among the top three banks for Swift in theNetherlands,” he says. “Other organisations havealready contacted them about the Swift migration

project – it has created a buzz in the market, for bothMicrosoft and KAS Bank.”

“Microsoft is looking forward to building on thesuccess of this SwiftNet integration and supportingKAS Bank in its ongoing reengineering effortsthroughout its infrastructure,” says Sheida Hadji-Ashrafi, worldwide industry manager for payments atMicrosoft. “KAS Bank’s work goes to show that a cost-effective integration platform can be the foundation oftechnology renewal programme. SwiftNet integrationis a vital component of this.” F

THE COST OF MAINTAINING THE SYSTEM GOES DOWN ENORMOUSLY.SWIFT’S NOVEMBER CHANGES ARE NO LONGER A HEADACHE FOR US- SWIFT AND MICROSOFT HAVE TAKEN CARE OF THAT

“”


www.onwindows.com

“At Microsoft we see quite an upheaval inthe payments industry, especially in Europe,”says Sheida Hadji-Ashrafi, worldwideindustry manager for payments at Microsoft.“New regulations such as the PaymentsServices Directive are causing legal andproduct changes throughout Europeanbanks, and that is resulting in technologychallenges as well. New credit and debittransfer products created under the SingleEuro Payments Area (Sepa) require theadoption of XML messages that manylegacy systems cannot support. As a result,banks are faced with complying with Sepawhile, at the same time, working out how toadapt the ageing technology platforms thatconnect to domestic systems.”

Swift integration is one example of this,says Hadji-Ashrafi: “In the foreseeablefuture Swift FIN MT message types willmost likely be retired, and will be graduallyreplaced by the new MX XML messagesbased on ISO 20022. This raises additionalcomplexity for banks as they Swiftinfrastructure must support both MT andMX message types simultaneously.

“Microsoft sees many bankingcustomers adopting the Swift integrationplatform as a first step to a widertechnology renewal effort. At the core ofthis challenge is application integration,coupled with business processmanagement. Once a bank realises successin implementing a mission-critical processfor Swift connectivity, the significant effortpreviously associated with expanding thetechnology renewal programme to theentire solution stack really does become afar less daunting proposition.”

A PICTURE OF THEPAYMENTS INDUSTRY

PIM VAN DER HORST, CHIEF INFORMATION OFFICER AND DIRECTOR OF ICT, KAS BANK

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JACQUI GRIFFITHS ASKED THE EXPERTS ABOUT THE TECHNOLOGY ANDTRENDS BEHIND VIRTUALISATION IN THE FINANCIAL INDUSTRY

27

irtualisation is today’s hot topic,and the latest developments intechnology and businessdemands mean that it’s likely to

see phenomenal growth. But this is not a newconcept, having been around since themainframe – so why are we now seeingrenewed interest in it, from financial firmsand vendors alike? We gathered some of theindustry’s top experts to discuss thedevelopment of virtualisation, and what itmeans for financial firms.

Why is virtualisation getting so muchattention now?Leslie Muller, DynamicOps: One reason isthat a lot of the technologies are starting to

mature. But really it’s been waiting in thewings for the past four years or so. A lot ofcompanies, especially in the financialindustry, have been looking for ways tobecome more dynamic in managing their datacentres. As well as cost issues, their mainconcern is about being able to respond tomarket events much quicker, utilising theirvast compute resources more efficiently. Thismove towards ‘data centre 2.0’ is completelyunderpinned by virtualisation technologies –not just hypervisors, but also virtualisation atthe storage, network and operating systemlevel. A lot of things have come together now,and it’s really starting to enable people tomove toward that vision of the dynamic datacentre. It’s just the right time to do that.

V

VIRTUALISATION

www.onwindows.com

VIRTUALISATION

Ian Masters,Double Take Software:

Companies are seeing that IT candeliver now, and they’re enabling themselves tooffer additional or enhanced services. Theunderlying technology wasn’t necessarily therebefore. Now it is, and it’s giving people the abilityto try something new.

Phil Dawson, Gartner: There are two levels ofvirtualisation. Many virtualisation projects areabout consolidation of existing technology andoptimising utilisation, and in that sense they’reretrospective and represent an IT benefit. Now,though, a growing proportion of virtualisationprojects are about improving service levels,workload management and availability. Theseprojects are about the virtualisation of newworkloads, which is a very different business case.

Günther Aust, Fujitsu Siemens Computers: Today’sserver systems offer an increasing amount ofperformance, and right now there is a clear trend:more companies are trying to move away fromproprietary Unix systems, and they’re increasinglyentering the open server or industry standardserver market – Intel and AMD based systems.

The first motivation for virtualisation was toconsolidate under-utilised servers and to do morewith less. But virtualisation doesn’t just supportconsolidation – because of the hardware andsoftware independence it creates, it also offers theopportunity to create infrastructures that providemore high-availability, flexibility and agilitywithout using complex cluster systems.

Philippe Nicolas, Brocade: Virtualisation representsa cost killer enabler. When you virtualiseapplications, server, network or storage, youdecouple the logical layer and the physicalcomponents – you make incompatible thingscompatible, with no downtime and no impacton business. This is a much betterutilisation of resources and leveragesexisting assets, so the total costof ownership (TCO) isimproved.

Ian Warford,Microsoft: Virtual

machine technology for time-sharing on mainframes has been around

since the 1960s, but it’s been pushed to the top ofthe business mind because these technologies nowspan the entire stack. Businesses of all kinds arefacing challenging demands, and they need to beable to respond in a dynamic way. The expansionof virtualisation has come at the right time toanswer those business needs.

Steve Yatko, Credit Suisse: People are recognisingthat virtualisation is no longer about a puretechnology. It’s more about a paradigm shift interms of data centre capability and businesscapability. The true value of virtualisation is farbeyond server and desktop virtualisation –ultimately it’s the ability to layer on top ofvirtualisation, to deliver new capabilities that helpachieve unprecedented advances in time to market.

How can capital markets firms benefit fromvirtualisation? LM: Virtualisation allows you to do a lot ofconsolidation, driving up utilisation levels andlowering capital costs, or utilising the moneyyou’ve put into your data centre much better. Formany capital markets firms, the big issue isretasking – having virtual machines runningdifferent types of systems allows you to do riskcalculations and in-depth analyses during the daywhile at night you may be using the same systemsto do settlement or other back-office operations.It’s about being able to be a lot more adaptable.

We’ve seen the need for this in the pastfew months as events have unfoldedin the financial industry. Assome institutionsstart to struggleand it becomespublic,their

“AT GARTNER, WE THINK VIRTUALISATION AS A MARKET IS ABOUTSIX TO SEVEN PER CENT PENETRATION OF SERVERS TODAY, ANDTHAT WILL GROW TO AROUND 15 PER CENT BY ABOUT 2010-2011”PHIL DAWSON, GARTNER

VIRTUALISATION

clients sometimes leave them and move to otherfinancial firms, which then have to rapidly increasetheir capability around some product offerings.From one day to the next, they might literally haveto increase their volumes three times or more, andyou can’t do that with physical environments.Having your applications and systems run insidevirtual machines allows you to grow a particularproduct or business unit overnight, to deal withthe extra volume that accompanies market events.That’s been absolutely critical for some companies.

PN: We see many virtualisation technologiesdeployed for consolidation projects, as peoplerealise that this improves their IT utilisation andreduces global cost for things like powerconsumption and operational expenditure.Financial companies have to react to a fastchanging world and they need agility in both theirbusiness and the IT that sustains it.

In financial simulation, many firms use gridcomputing based on commodity hardware. Thegoal is to deliver fast results, and virtualisationallows easy and transparent provisioning withoutany impact on users or applications. Then, forspecific usage, some departments select verticalapplications on dedicated platforms, which costmore than traditional ones. The effect ofvirtualisation here is to standardise key corefunctions like resource management, dataprotection and business continuity by using thesame horizontal open layer across server, storageand various IT units.

GA: Some key benefits that also relate to capitalmarkets firms can be seen in Fujitsu SiemensComputers’ recent work for HypoVereinsbank inMunich. The company’s IT team started to evaluatevirtualisation technology very early on. Initially,their main focus was consolidation, and weconsolidated 650 physical servers in their datacentre onto 43 Fujitsu Siemens blade systems. Thissaved the bank around 1.6m KwH (€180,000 inenergy costs) per year in the data centre, andenabled it to stay in its existing data centreenvironment in Munich. That kind of saving is verysignificant to any business with high reliance on ITresources.

We’re still working with HypoVereinsbank, thistime on desktop virtualisation in the data centre,and this is a key area where capital markets firmscan benefit – we’ve had a lot of requests forapplication scenarios for brokers, who have towork with multiple systems at the same time. Theynormally have six to ten dedicated workstations

under the desk and the same amount of screensabove it, and they skip around the differentapplications for the information they need to takedecisions. Their problem is not only the amount ofphysical workstations they need, but also that thedata they deal with is very sensitive. They wouldlike to store sensitive data and applications in ahosted data centre environment, but traditionalapproaches like terminal services are not allowedin that area due to legal restrictions. For thosescenarios, financial firms are looking to things likedesktop virtualisation to keep the individualsystems separated in virtual machines, whileconsolidating and centralising them into a hosteddata centre for security reasons.

Are there any potential issues raised byvirtualisation in the capital markets? How arecompanies addressing these?PD: With capital markets, as with any financialservices company, you have IT-centric applicationslike internal IT processes and HR systems, andthen the business IT services. Virtualising andconsolidating the core IT is similar to any otherbusiness, but when you get down to thetransactional and call centre systems, it’s verymuch down to the applications. If you’ve gotindependent software vendor (ISV) enterpriseresource planning (ERP) systems, that’s like anyother application, but if they’re in-houseapplications it can be much more complex.

IM: One big reason for virtualisation is to get moreout of less, but from a workload point of view, someapplications are really only going to deliver the rightperformance when they’re hardware hosted. It’sdown to specific application needs – if you have alarge application that will really only deliver theright performance on hosted hardware, then youneed to think about whether virtualisation issuitable. But as long as virtualisation is managedcorrectly in terms of things like security,performance, and data protection, it can offersignificant benefits.

IW: That’s one area where partnering with ITspecialists can pay dividends – as virtualisationtechnologies continue to develop, financial firmsneed to know how to structure their virtualenvironment, and also to simplify its managementto ensure compliance as well as agility. For capitalmarkets firms, where successful trades can dependon split-second timing, it is crucial to ensure thatresource-intensive business-critical applications areperforming at optimal levels.

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“THE IT WORLD IS SHIFTING FROM AN APPLICATION, DATA, SERVER,STORAGE OR NETWORK CENTRIC WORLD TOWARDS A VIRTUALISEDCENTRIC APPROACH WHERE ALL THE OTHERS ARE EMBEDDED

PHILIPPE NICOLAS, BROCADE

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VIRTUALISATION

How important is the management of virtualisedenvironments in this arena?LM: In the past, you had one application tied to aserver, and business units would not share thosephysical platforms. With virtualisation you sharecomputer platforms and physical machines withmultiple applications, sometimes across businessunits. It’s important to be aware of the end-to-endprocess, from the desktop right through to theback-end system and the market, and make sureyou understand the impact.

For example, traditionally in a data centre weworry about how busy the CPU is, or how full thememory is. We really have to move beyond that

and start understanding the service levelagreements (SLAs) of

that applicationor system.

That

might mean that the underlying environment isrunning at almost 100 per cent, but as long as yourbusiness system is meeting your SLAs to internaland external customers, there’s nothing wrongwith that. The challenge is really that mind shift,for operations people and for the developmentcommunity within the financial industry.

SY: Virtualisation is becoming more nativelyembedded in operating systems, enabling theubiquity and pervasiveness that drive value acrossthe IT landscape and deliver the beginnings oftransparent capability. On top of that are layers ofvirtual management which can create highlyavailable virtual environments that satisfytraditional, physical high availability as well asdisaster recovery and business continuity plans –factors that are critical to capital marketsorganisations. The additional aspect is really aboutseamless access to the whole lifecycle of the virtualenvironment management layer. This is why CreditSuisse developed DynamicOps. We wanted to

extend the value of our existing suppliers andtechnologies – to add value on top of that.

PD: Rationalisation can help reducecomplexity and cost. If you look at a

typical virtualisation process, takinga thousand workloads to a hundred

servers on a ten-to-one ratio is thesaving. But if you rationalise

them down to 800 workloadson 80 servers, you’ll get evenbigger savings. The process ofbalancing consolidation,rationalisation and virtual-isation is absolutely key.

What benefits can Microsoftoffer?PN: Microsoft is playing akey role in virtualisation byleveraging Windows’ corefunctions to enable thedynamic data centre. It

confirms that software is thekey enabler for virtualised

infrastructures that offergreater flexibility.

In many directions, such asservers with Hyper-V or storage

with a file storage approach basedon CIFS (the standard file sharing

protocol for Windows) and distributed

“ IT WILL BE INTERESTING TO SEE IF MANUFACTURERS CONTINUE TOTRY AND DEVELOP THEIR PRODUCTS TO FIT IN WITHVIRTUALISATION OR WHETHER VIRTUALISATION WILL HAVE TO FITIN WITH THE HARDWARE DEVELOPMENTS

IAN MASTERS, DOUBLE TAKE SOFTWARE

”

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VIRTUALISATION

“

file system (DFS), Microsoft has set new de factostandards that help users define new and better ITusage. In fact, when people select Microsoftcomponents in financial arenas, they continue touse these elements with recent Microsoftvirtualisation technologies. It helps them maintainand augment the life of their IT resources,drastically influencing the TCO.

IM: Hyper-V is going to be a very valuablealternative for customers in the capital markets andothers. Companies that already standardise onMicrosoft will find it even more appealing from asupport perspective, because they’re so familiarwith the Microsoft operating system.

LM: When the Hyper-V becomes fully availablelater this year, it will attract significant interest.Microsoft has put significant amount of investmentinto this space, and I believe it will become a majorplayer in the next couple of months. In developingDynamicOps, it was key that we utilised Microsofttechnology, specifically its workflow and rulesengine technologies. We worked with Microsoftfrom day one, and got a fantastic product out of it.

PD: At Gartner, we think virtualisation as a marketis about six to seven per cent penetration of serverstoday, and that will grow to around 15 per cent byabout 2010-2011. As it goes over 15 per cent thatstarts affecting the volumes of shipments for thesystems – as systems get bigger, their value goesup, but units may go down. Vendors will competemore on the management and tools aroundvirtualisation than on virtualisation itself.

GA: Microsoft has done an excellent job inexpanding its management suite with a newstrategic pillar, the System Center Virtual MachineManager. It has been very clever in identifying theimportance of management – it had a managementproduct before it had an enterprise readyvirtualisation product.

How do you think the industry will develop next?PN: It’s all about partnerships and featuresintegration. Users are waiting for global data centresolutions with application, server, network andstorage to control and manage. They want to usecommodity hardware with intelligent software, andthat software will make the difference.

Standards are also important, as they contributeto reducing cost, and best practice legislation likeITIL is key for a broader adoption. One fact toremember is that IT is managed, controlled and

seen with and through this virtualisationtechnology. The IT world is shifting from anapplication, data, server, storage or network centricworld towards a virtualised centric approach whereall the others are embedded.

PD: I think we’ll see sedimentation in terms of thehardware, and real differentiation will come fromavailability suites and systems management.

IM: In the future, we’ll see even more cores. Therewill be hardware developments in conjunctionwith virtualisation developments that allow evenbetter use of the CPU in a machine, being able tothread it properly and having multi-core processorsthat can deliver performance on an almostindividual virtual machine basis. We could also seemodularised applications that can spin off a newvirtual machine to add capacity as they hit aworkload state or threshold, and then spin it downagain when it isn’t required.

Obviously everyone’s use of a particularapplication is different, so it will be interesting tosee if hardware and storage manufacturerscontinue to try and develop their products to fit inwith virtualisation or whether virtualisation willhave to fit in with the hardware developments thatare occurring anyway.

GA: Fujitsu Siemens Computers’ dynamic datacentre strategy is based on three main pillars:virtualisation, automation and integration.Virtualisation as we see it is not simply a concept;it’s a set of capabilities provided by that concept.Accordingly, while hypervisors are an importantbuilding block in the overall virtualisation strategyof a company, there are other things, like a uniformmanagement of real and virtualized environments,to take into consideration. It’s becoming a muchbroader landscape.

LM: The data centre is going to require a very goodmanagement platform with workflow engines,rules engines, policy controls and so on, to enableit to deal with a very complex dynamic situation.This is the end state that DynamicOps has in mind.It’s a vision that Credit Suisse shares withMicrosoft, and with a lot of financial companies.Microsoft understands what the data centre isgoing to look like, and is on the technology space,solving issues in critical areas of the realvirtualisation space, from interfaces to hardware.Complementing that endeavour, companies likeDynamicOps will offer solutions to deal with thecomplexity at a higher level. F

VIRTUALISATION OFFERS THE OPPORTUNITY TO CREATEINFRASTRUCTURES THAT PROVIDE MORE HIGH-AVAILABILITY,FLEXIBILITY AND AGILITY WITHOUT USING COMPLEX CLUSTERS

GÜNTHER AUST, FUJITSU SIEMENS COMPUTERS

”

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IN THE CURRENT FINANCIAL CLIMATE IT IS CRUCIAL THAT BANKSRETAIN CUSTOMERS BY PROVIDING THE SERVICES THEY DEMAND –BUT THIS CAN PROVE DIFFICULT AND COSTLY TO RECONCILE WITHTRADITIONAL CORE BANKING SYSTEMS. JAMES DODD FINDS OUTTHAT A SERVICE-ORIENTED ARCHITECTURE CAN HELP

37

ith the credit crunch currentlyon everybody’s lips, it seemsimpossible to escape exposureto it and its ramifications – no

matter where you are in the world.Obviously the finance sector is taking thebrunt of this, and possibly on the veryfrontline is banking.

The credit crunch has promptedcustomers to call into question thefundamental services banks provide them.Are they efficient, flexible and easy to use?Now, more than ever, it is important forbanks to excel in this area of basic services,which is ultimately traceable to core bankingsystems. Customers want quality in existingservices, as well as the option of new ones,and they want multi-channel access to theseofferings. For banks, the challenge lies inmaking such improvements viable in termsof cost and risk – any changes to the coresystem must result in operational efficiency,with minimal disruption to the business.

With core banking at the root of thechallenge it seems pertinent to first ask,what is actually meant by the term?Naturally, it depends on whom you ask.Typically, industry analysts have quite anarrow definition focused on the retailcontext and incorporating current savingsaccounts, lending, customer information

systems and general ledgers. But in a sensethis represents the theoretical side of corebanking. In reality the industry sees it as anincreasingly relative and fragmented idea.

“From the bank’s point of view it dependson what sort of business they’re in – retail,wholesale or private banking,” says KoenVan den Brande, worldwide industrymanager for core banking at Microsoft. “It isalso very likely that different parts of thebank will consider different elements oftheir back-office systems to be core.” Thesame relativity is prevalent among theindustry vendors, who tend to see corebanking as whatever it is they sell.

With such a plethora of interpretationsit’s easy to understand why Microsoft takes aliberal view of the concept: “Our approachtends to accept a very broad description ofcore banking,” says Van den Brande.“Roughly, we see it as being constituted ofmost things that happen in the back office.”Clearly, such a flexible approach is primarilyconcerned with the evolving nature of corebanking systems.

In fact, Van den Brande suggests that thefuture may have limited room for corebanking systems as we know them today:“We may find that in the future, as peoplestart to break apart traditional core bankingsystems, we have a collection of core

W

CORE BANKING

THE CRUNCH URBING

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CORE BANKING

banking services.” But why this move from themonolithic, universal systems of old to a more service-oriented approach (SOA)? Some would argue, ‘if it’snot broken; don’t fix it’. But maybe a few cracks arestarting to show.

“The current climate illustrates how rapidlybusiness priorities must change and, subsequently,how agility is key to a bank’s survival,” says JohnMcKee, managing director of the banking division atFinancial Objects. “The Internet and mobile bankinghave lowered barriers to entry substantially, and if abank’s current core system cannot support rapidchannel deployment, it will lose assets or market shareto more agile institutions.”

However, Barrie Neill, retail banking strategymanager at Temenos, is keen to point out that suchissues are fundamental and not merely a sign of thetimes. “Most of the issues that drive core system

replacement are not the result of the current economicdownturn, because they are rooted in the past,” hesays. “Neither are those issues going to disappear as aresult of the current economic climate. The need forscalable and open systems that can cope with thedemands of growth through merger or acquisition mayhave diminished, but the need for flexibility, openness,scale and agility remains.”

The ability to reuse resources is also becomingincreasingly important. “SOA has become a keydifferentiator in the financial services industry in that itallows banks the flexibility and opportunity to reusetechnology assets,” says John Macaluso, senior vicepresident and chief technology officer at Fiserv CBSWorldwide. “Choosing a flexible and customisablesystem can also help mitigate the risk of replacementby allowing users to combine older systems ascomponents with newer technology.”

And so with SOA at the fore, it is worth consideringthe constituents of such an approach. The three mostobvious elements are customer focus, operationalefficiency and innovation. With customer focus, thecentral challenge is gaining complete access tocustomer information that is spread over variouslocations. The rewards that follow are comprehensive.“Banks that better understand their clients will have agreater opportunity to retain them,” says MichaelNicastro, senior vice president and chief marketingofficer of Open Solutions. “In this electronic worldwhere transactions move in cyberspace, the consumerand the business owner may never physically enter thebank, but they will expect service at a level as thoughthey were in a branch every day.”

The second main element of SOA relates to theability of a bank to offer new products and services.“When it comes to product innovation, clearlyparameterised product definition is great if you have itbuilt into a traditional core banking system,” says Vanden Brande. “But increasingly companies need tointegrate a number of different competencies acrossthe organisation to deliver a new product.” The waySOA enables product managers to bring together andorchestrate services is directly related to a bank’s abilityto be innovative and to reassemble or put together adifferent product offering.

The final notable SOA element underpins theprevious two and is essentially concerned with theoperational abilities provided by a dual layer businesssystem. “Operational efficiency is a lot about processoptimisation,” says Van den Brande. “If you canexternalise those processes, in other words have anSOA infrastructure and a layer on top of that, then youcan change your processes without having to changethe underlying systems.” Thus process and service runtogether, yet at the same time independently.

“It’s worth stressing that a core systemreplacement project is not just about apartnership between the bank’s business and ITareas,” says Barrie Neill, retail banking strategymanager at Temenos. “It should also be basedupon a long-term partnership between thevendor and the bank. If that partnership is notwell established it can lead to poorcommunication, failure to manage issues andrisks and uncertainty over scope and timescalesto name just three.

“In terms of examples of good practices to follow:• Establish strong executive sponsorship and

engagement from both the business and IT forthe commitment and work required

• Carefully define at the highest levels, andagree amongst all stakeholders, what theywant to achieve in terms of operational successover time

• Choose the right systems and tools to give theexact functionality, flexibility and agility tosupport the realisation of the objectives

• Assign owners to the benefits and track thesethrough implementation and subsequentrealisation

• Carefully manage the non-IT aspects ofchange management, such as training andobjection handling.”

THE DOS AND DON’TSOF CORE BANKING

“ IT’S ABOUT GETTING THE BIG PICTURE FIRST – WHAT COMPETENCIESDO BANKS REQUIRE, HOW DO WE TRANSLATE THIS INTO THE SERVICESLANDSCAPE, AND WHICH SERVICES SHOULD WE FOCUS ON?

JOHN MCKEE, MANAGING DIRECTOR OF THE BANKING DIVISION, FINANCIAL OBJECTS

”

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CORE BANKING

“

Even with its obvious benefits, an integrated servicesapproach must be implemented with care. It isimportant for an organisation to select the services thatare most relevant to its current business offering andconcentrate on them, at least at first. To achieveprominent differentiation a bank must admit that rarelycan it excel in every focus area – customer relationships,innovation and operational efficiency – at once.

Focusing on a particular service stream also makes aproject easier to measure in terms of palpable success.This leads naturally to another important element inany SOA implementation: a phased approach. For largebanks in particular, a complete overhaul of the corebanking system is simply not viable. Just as SOA isabout flexibility and balance, implementing such astructure requires the same philosophy.

“The most popular and least disruptive method isto deploy the new technology either for a newproduct or a new market or service to existingcustomers,” explains McKee. “When this has been inproduction successfully, existing customers andproducts can be migrated onto the new platform andas the services on the legacy diminish, they can bedecommissioned. During this migration a commonfront end with integration and/or interfacing to theexisting systems can minimise user disruption andcustomer confusion.”

A gradual server-based approach thrives on clearaims, since it makes it easy to track the expected gains.This ensures that the business remains engaged andsees the conversion as a useful thing to do. However, issuch an approach considered too costly and disruptivein the current climate? Nicastro quickly counters suchqualms: “Technology can help, but bankers will needto forgo the myth that it can be done at minimal cost,”he confirms. “Technology deployed properly can beefficient but it comes at a cost. A complete recipe forfailure is when a bank tries to ‘commoditise’ its coretechnology. The old expression of ‘you get what youpay for’ is very much the case.”

Most banks have now caught on to the direction theindustry is heading, and accordingly their enterprisearchitects have prepared SOA roadmaps. However, inthe past, when architects approached the market placethey were all too frequently unable to find the solutionto match their needs. “The industry is still lagging alittle bit,” confirms Van den Brande. “This is one of thereasons why Microsoft joined the launch of the

Banking Industry ArchitectureNetwork (BIAN). It representsa direct attempt to align what

banks see as the roadmap and,correspondingly, what the

vendors are able to deliver.”The BIAN is a group of

banks and information technology vendors that haveformed with the aim of developing SOA standards forthe banking industry – effectively a common languageand code of practice. This would smooth every stage ofsuch an implementation. Technology would integratemore freely, and banks would be able to communicatetheir needs more easily to vendors who, in turn, wouldbe able to more accurately respond.

Microsoft is already part way down this road. Thecompany’s all-round flexibility and interoperabilityensure that it stays at the front of the vendor pack.“Microsoft, and specifically its .NET environment,continues to be the platform of choice for core systemsdevelopment and operations,” confirms McKee. “Inaddition to the productivity gains achieved indevelopment, banks also benefit from licensing andsupport costs which are orders of magnitude betterthan those associated with more traditional (largelymainframe) alternatives.”

Neill picks out a particular Microsoft product forits usefulness in the industry: “Microsoft SQLServer is a proven solution. By combining ease ofuse and the availability of leading core bankingsoftware from partners such as Temenos,widespread access to technical skills and verycompetitive pricing on powerful commodityhardware, SQL Server allows banks to empowertheir people to improve operational efficiency at amuch lower total cost of ownership.”

But for Microsoft, SOA is about the bigger picture.“The services offered by Microsoft and its partnerecosystem, combined with people competencies, mapdirectly over the BIAN framework,” says Van denBrande. “It’s all about getting the big picture out therefirst – what are the competencies banks require, howdo we translate this into the services landscape andwhich services should we focus on to align with whatpeople are actually working on as business-drivenpriorities at the moment?” It’s important to understandthat the BIAN isn’t an attempt to prescribe a setmedication to every bank. Rather, it represents thescaffolding for the construction of the ideal SOAstructure for any bank.

And so the vision for the future of core banking isnot so much of a one-size-fits-all system, but of aflexible, agile platform that integrates a wide varietyof customisable services. Whatever an organisation’saim for its core banking system, Microsoft aspires tohelp them find the right path. “What we want toilluminate is the practical route to this destination,”sums up Van den Brande. “Where do westart? What do we do first? Where dowe get the services from? And how dowe make it work from a businesspoint of view?” F

IN THIS ELECTRONIC WORLD CONSUMERS AND BUSINESS OWNERSMAY NEVER PHYSICALLY ENTER THE BANK, BUT THEY EXPECT SERVICEAT A LEVEL AS THOUGH THEY WERE IN A BRANCH EVERY DAY

MICHAEL NICASTRO, SENIOR VICE PRESIDENT AND CHIEF MARKETING OFFICER, OPEN SOLUTIONS

”

Magic Quadrant for Basel II, Financial Architects isalso widely recognised as a market leader in theprovision of accounting solutions. FinancialArchitects Accounting solution provides event-based,real-time accounting complete with IFRS functionalitybased on a complete set of IFRS accounting templatesembedded in the business rules engine of thesolution.

With compliance reporting for more than 15countries worldwide, the complete solution whendelivered holistically is regarded by many as uniqueand without competition.

FRP provides huge benefits to Financial Architectscustomers, not least in terms of economies of scale.Instead of having to invest in multiple solutions, onlyone core solution is needed to address a whole varietyof initiatives. This reduces total cost of ownershipsignificantly as well as drastically reducingimplementation risk. The synergies then offered bythe combination of functionalities provide FinancialArchitects customers with a unique competitiveadvantage in understanding their business.

CASES IN POINTDnB Nord began initially to look for a Basel IIsolution. The company bought Financial Studiobecause it provided both Basel II and the associatedregulatory reporting functionality in one package. Itsoon became clear to DnB Nord that the full FinancialStudio solution would offer benefits over and above a

more traditional ‘point solutions’ approach, so withina very short time chose to implement the remainingcomponents of Financial Studio to take care of IFRSaccounting, MIS and statistical regulatory reporting inall six countries in the DnB Nord group.

Strategically, this provided DnB Nord with aseamless platform on which to introduce risk-basedperformance measures, such as Risk Adjusted Returnon Capital (RAROC) and Economic Capital inadditional to their IFRS accounting, profitability andBasel II functionality.

The decision taken by DnB Nord is not unique.Almost without exception, all of Financial Architects’recent customers are buying in to the FRP concept.EastWest Bank in Manila, Philippines isimplementing Financial Studio in its entirety.

This path has also been chosen by Snoras Bank forits Lithuanian base and ever-growing foreign branchnetwork, not to mention Van Lanschot Bankiers inthe Netherlands and Belgium, and Euroclear inBelgium.

Bank of New York Mellon has chosen to adopt thesolution globally to address Basel II and regulatoryreporting, as has Bache Commodities in London. Thispattern is repeated in new territories such as theMiddle East with Byblos Bank also adopting FinancialStudio for both Basel II and regulatory reporting.

The ability to combine and leverage functionalityfrom different pillars of FRP is proving to be a conceptof great value to all of Financial Architects’ customers.Daiwa Securities has adopted Financial Studio for itsEMEA operations. Financial Accounting for IFRS iscombined at Daiwa with a huge amount offunctionality from the MIS domain. In addition toproviding event-based IFRS accounting, FinancialStudio also underpins the internal reporting of theinstitution, proving itself a valuable asset to manybusiness functions within Daiwa, from productcontrol to audit and risk.

In a market previously served by point solutionvendors, generic business intelligence tool providersor generic ERP solution vendors, the need for asolution created by bankers for bankers is continuallyincreasing. Regulatory pressure is unrelenting, andrecent macroeconomic events suggest this will be thecase for some time to come. New regulations areconstantly pointing to the need for a holisticassessment of the institution. No longer will silosolutions be appropriate.

If one accepts the notion that regulation is no morean enforcement of best practice, then the introductionof IFRS and Basel II in a great number of markets (notleast the US), will prove that a greater amount ofgranularity of understanding within the risk andfinancial function is critical to success.

Imagine a solution that takes care of regulatorycompliance in the guise of the complexities of bothIFRS and Basel II. Then imagine that solution can alsoprovide enormous advantages in its application offinancial MIS and risk-adjusted performancemeasures. With the burden of compliance lifted fromthe institution and economies of scale andcompetitive advantage coming in equal measures,Financial Architects’ ‘innovative idea’ has not justcaused an industry-wide paradigm shift; for mostinstitutions it has become an economic necessity. F

Nigel Lee is chief commercial officer at FinancialArchitects

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GOVERNANCE, RISK MANAGEMENT AND COMPLIANCE SERIES

nce upon a time the landscape of solutionsproviders for risk and financial managementsolutions was grouped into niche players

sticking to their respective knitting: regulatoryreporting vendors took care of disclosure; risk vendorstook care of risk; enterprise resource planning (ERP)vendors took care of general ledger solutions, and soon. But then the sand started to shift.

Ten years ago, a small group of experts in Brusselswith long-standing experience in the banking andfinance industry had an idea. They foresaw theconvergence of risk and finance and the need todeliver regulatory compliance as an integral part ofthose functions. The company they founded toaddress this convergence was Financial Architects.

Since 1997, progressively, Financial Architects’vision on the evolution of risk and financialmanagement solutions has been proved right. Thishas turned what was once an innovative idea in to aparadigm shift in the industry at large, one that is not

only apparent to solution providers, but also nowwidely recognised by most industry commentators.

Financial Architects’ solution Financial Studioconforms to this convergence under the home-grownbanner of finance resource planning (FRP). FRPbrings together four key pillars: • Finance and risk management• Accounting• Management information systems (MIS)• Capital management and compliance.

These pillars are brought together in a solution basedon a single core financial data architecture to deliverstrength and agility not only within each pillar, butalso by uniquely combining all four pillars.

Financial Architects leads the market, both as athought leader and as a provider of softwaresolutions. Financial Studio is widely recognised as amarket leader within each of the four pillars of FRP.Rated highly by Gartner Group as a leader in the

O

BUILT FOR STRENGTHNIGEL LEE DESCRIBES HOW THE CONVERGENCE OF RISK, FINANCE AND REGULATORY COMPLIANCEHAS TRANSFORMED THE LANDSCAPE FOR SOLUTION PROVIDERS AND BUSINESSES

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rganisations are under considerable regulatory and marketpressure to ensure that financial reporting processes andmodelling are transparent and well-documented. In fact,

the credit crunch has pushed corporate governance to the top ofmind for most financial firms, and it is one of the few areas wherefirms are investing.

A lot of the business processes, financial management reportingand risk modelling required by a complex financial services firm aredeveloped and managed via the manual use of spreadsheets. Indeed,spreadsheets are integral to the function and operation of the globalfinancial system. Simply put, despite the higher operational risk,Excel is the primary frontline tool in the finance sector. However,these tools are often neglected in terms of budgetary resources orsound management policies, resulting in unnecessary exposure toregulatory compliance risks. So how can we reduce operational risk?

There are two key ways to achieve this – automating the manymanual processes involved, and bringing in spreadsheet control.Once these are addressed, firms can improve operational risk andhence corporate governance, which will in turn reduce overallbusiness risk. Microsoft and its partners can address these issueswithout reengineering the whole process.

OUT-OF-THE-BOX FUNCTIONALITYDuring the development of Office System 2007, Microsoftunderstood the importance of spreadsheet control to its customersand included several features to help deliver this:• Preventing unauthorised access• Managing and monitoring spreadsheet changes• Retaining and archiving spreadsheets• Developing robust spreadsheet models.

As the complexity and importance of a spreadsheet increases, so toodoes the cost of errors and inappropriate disclosures of data. OfficeSystem offers options such as Office SharePoint Server 2007Permissions; sharing spreadsheets using Excel Services; informationrights management, and workbook encryption. These can be usedto help secure critical spreadsheets against unauthorised access andmodification on both the client and server side.

Critical spreadsheets are living applications that will inevitablychange over time. However, it is crucial to maintain the integrity andcompliance of these documents, and a sound compliance strategywill include some level of ongoing change management andmonitoring for critical spreadsheets. Office System can facilitate thisprocess with its inbuilt enterprise content management, which offers

versioning, auditing and workflow capabilities.The ability to archive spreadsheets in a consistent manner based

on the company’s policies is just one component of a larger recordsmanagement process. Office System includes tools such as vaultcapabilities, information management policies, record routing and arecord collection interface, and offers extensibility to enable theprocess to cope with business growth.

Excel 2007 can be used to create a robust spreadsheet model thatmeets compliance challenges and enhances productivity. Excel 2007can help organisations to deploy spreadsheet models that make iteasier to become, and stay, compliant. For example, important cellscan be locked, while functionalities like cell styles and formulaauditing tools help to ensure consistency and reduce errors.

ENHANCED FUNCTIONALITY Microsoft has a number of partners – for example, ClusterSeven andFinsbury Solutions – that build on top of this plumbing to offercustomers complete end-to-end control. Finsbury Solutions’Spreadsheet Workbench brings spreadsheets under control andprovides a flexible, enterprise-wide spreadsheet management andcompliance solution for the rapid control and development ofbusiness critical spreadsheet applications. Key elements include:• An enterprise-wide, multi-user repository with full version

management of spreadsheets • Comprehensive security and access control • Complete audit trail and exception reporting • Powerful analytics for spreadsheet comparisons • Advanced business logic validation • A spreadsheet development framework that lets users develop

robust spreadsheet applications.

SERVICESMicrosoft’s system integrators can help companies to ensure theircompliance strategy is both efficient and cost effective. For example,Infosys has developed its End User Computing Solution, aspreadsheet lifecycle management solution that delivers a regulatorycompliant environment for spreadsheet operation. It addresses theissues via four main phases:Discover – Identify critical business applications that usespreadsheets, and their riskRemediate – Determine the necessary controls to manage riskControl – Implement spreadsheet management with change controlmanagement to the business critical spreadsheetMonitor – Develop a monitoring program to keep control ofspreadsheets.

Clearly, spreadsheets are increasingly valuable to many financialservices organisations, and are commonly used as a critical resource.Organisations must therefore develop a spreadsheet complianceframework that includes rigorous process controls around thedevelopment, testing and use of business critical spreadsheets. Usingthe right tools and services, that control can be achieved withoutlosing the most used tool within financial services – Excel. F

James Burns is chief technology officer for financial services atMicrosoft UK

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SPREAD THE WORDWHEN IT COMES TO ENSURING COMPLIANCE BUSINESS-CRITICAL SPREADSHEETS CAN OFTEN BENEGLECTED. JAMES BURNS DESCRIBES HOW FIRMS CAN TAKE CONTROL OF THESE VALUABLE TOOLS


roadly the global PRMIA enterprise risk management(ERM) survey covered the following aspects – ERMprogramme and methodology; success factors in ERM

rollout and implementation; reporting structure; staffing; costs;and relation to economic capital. Its aim was to benchmark thecurrent and future state of ERM practices around the world. Theresults point to the emergence of ERM as a key component ofcurrent and future business processes.

The survey, released in June 2008, was conducted in 103countries across risk practitioners, regulators responsible for ERM,consultants and/or vendors working in ERM, and members inother related professional roles. Here is a summary of key findings.

KEY COMPONENTS OF ERMBusiness strategy risk was identified as the key ERM risk, receivinga ‘most important’ rating by 29 per cent of respondents andedging out credit risk at 26 per cent.

ERM METHODOLOGYOver 60 per cent of respondents said their organisation hasadopted or will adopt an internally developed framework andmethodology for ERM. In addition, 71 per cent of regulators and51 per cent of consultants chose this option. Other respondentschose a published standard framework, with two-thirds opting forthe Committee of Sponsoring Organisations framework.

RISK FUNCTION REPORTING STRUCTUREThe CRO should report directly to the board to avoid potentialconflicts by reporting to the CEO/CFO, according to 82 per cent ofrespondents.

ERM REPORTING STRUCTUREIn 22 per cent of companies with ERM programmes, the ERMfunction reports directly to the board, with 28 per cent reporting tothe CEO/CFO and 43 per cent reporting to the CRO.

ERM STAFFINGOver 34 per cent of respondents staff ERM with a centralisedgroup and over 48 per cent use a decentralised or mixed staffingmodel. Seventeen per cent had no current programme.

BENEFITS OF ERMRisk analytics was the most important benefit of ERMimplementation for 55 per cent of respondents, followed byregulatory compliance and business continuity at 17 per cent and15 per cent respectively.

INTERACTIONFor 92 per cent of respondents, it is very important to have closeinteraction and collaboration between group risk managementand business line management, while seven per cent thought itwas somewhat important. Less than one per cent thought thisrelationship was not important.

ERM AND REGULATORY REQUIREMENTSBasel II (CRD) could be more easily fulfilled with a sound ERM

programme in place, said 34 per cent of all respondents; while 22per cent chose the Sarbanes-Oxley Act. In the EMEA region, 18 percent opted for the Sarbanes-Oxley Act.

COST For 62 per cent of respondents, ERM should be an embedded costno different from costs associated with regulatory compliance.However, 38 per cent think cost/benefit justification is neededunless it can be demonstrated that ERM enhances shareholdervalue.

ERM EXPOSURE AND RISK CAPITAL Risk capital targets were reported to be defined at regulatoryminimums, independent of ERM, by 25 per cent of respondents,with 51 per cent reporting enhancing these minimums based onERM exposure calculations. The remaining 24 per cent definecapital targets as formal multiples of ERM exposure calculations. F

The PRMIA survey, ERM - A Status Check on Global BestPractices, can be downloaded by members at www.prmia.org.Or contact the Microsoft Risk and Compliance solutions teamfor a copy

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ERM: PRESENT AND FUTURESPONSORED BY MICROSOFT, THE PROFESSIONAL RISK MANAGERS’ INTERNATIONAL ASSOCIATION (PRMIA)CONDUCTED A SURVEY TO ASSESS THE STATUS OF BEST PRACTICES IN ENTERPRISE RISK MANAGEMENT

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Risk analytics

Document managementand records retention

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ERM IMPLEMENTATION ELEMENTS

From an implementation perspective,rate in importance the following elements of ERM

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needed to quickly assemble a packet of its own riskmanagement information, processes and policies toprovide to CBA, as well as create a process forsubmitting periodic updates.

To accomplish this, ASB built a new Basel II riskmanagement data mart that collects data fromapproximately 60 data feeds – mainframe systems andSQL Server 2000 databases – each day. The bankdecided to build the new solution on SQL Server 2005Enterprise Edition, to take advantage of its numerousfeatures and technologies.

SQL Server Integration Services technology enablesASB database administrators to import packages frommultiple sources and manage multiple configurationsmore easily. In addition, SQL Server’s NotificationServices are used to automate the load processes intothe Basel II data mart. Proactive caching in SQL Server2005 Analysis Services brings data cube informationcloser to real time and enables ASB to define how oftenthe data cube should be refreshed to reflect changes tothe source data.

ASB’s new solution enabled it to meet the Basel IIaccord framework in less than nine months. “SQLServer 2005 Integration Services gives us thetransparency that the Basel II accord requires, andenabled us to quickly demonstrate and display clearand transparent processes for managing data andcredit information,” says Peter Newey, manager of SQLServer solutions at ASB Bank.

The new data mart also ensures the integrity ofbusiness processes and data, allowing it to be deliveredto CBA in a secure and timely manner each month. ASBnow plans to use the Basel II data mart project as ablueprint for all its future data mart loads andoperational reporting.

MARKET DATA DISSEMINATION FOR NASDAQAs the largest electronic stock market in the US,Nasdaq lists the securities of 3,300 of the world’sleading companies and transmits real-time quote andtrade data to more than 1.3 million users in 83countries. It needed to replace a mission-criticalmainframe-based solution with one that was morepowerful, flexible, and had a lower total cost ofownership.

Nasdaq internal developers created their MarketData Dissemination System using Microsoft SQLServer 2005 database running on Windows Server2003 Enterprise Edition. It has achieved a lower totalcost of ownership, as well as the agility to meetcustomer needs, real-time reporting and enterprise-ready availability and performance. Users can performa range of scans to query a broad range of tradinginformation, including risk management scans, whichcan be used by market makers, order entry andclearing firms to view real-time market exposure.

SASFIN BANKWith over 1,000 employees, Sasfin Bank is aspecialised banking and financial services grouppositioned in the entrepreneurial corporate,commercial, and private-client markets.

Basel II requires banks to minimise the amount ofmanual intervention needed in producing compliancereports, which involves the reporting and analysis ofcomplex risk calculations. Banks must provide reportsby asset class, that is, customer type (as opposed toproduct types as previously required under the Basel Iaccord). The problem is that Sasfin had no single view

of the customer. Customer information on balances,financial reports, and activity was stored in disparatedatabases, and each business unit uses separatetransaction processing systems.

Sasfin deployed an enterprise content managementand business intelligence solution that includesMicrosoft Office Professional Plus 2007 (with a focuson the use of the Microsoft Office Excel 2007spreadsheet software, the Office InfoPath 2007information gathering program), and Microsoft OfficeSharePoint Server 2007. In addition, Sasfin elected toimplement Microsoft Dynamics CRM 3.0, MicrosoftBizTalk Server 2006, and Microsoft SQL Server 2005.The integration of these programs helped eliminate asubstantial portion of the manual intervention that hadbeen required to ascertain risk information and supplythe required compliance reports.

WHAT’S NEXT?We already see many leading financial institutions thatare evolving their next generation of risk analytics andreporting blueprints, looking to embed and adopt ournew wave of innovative assets. We expect that the nextgeneration risk analytics and report blueprints willhave four core pillars: risk visualisation; risk workflowsand processes; risk computing, and risk datamanagement.

The visual representation of risk exposures willemerge as a key element, especially for senior levelexecutives, who want a top-level snapshot of the riskprofile. We see Microsoft PerformancePoint Server2007, Silverlight, Office Visio and Virtual Earth as newcapabilities that would provide value in this area.

The focus on seamlessly embedding risk andcompliance best practices and controls in everydayactivities, workflows and processes will accelerate.Microsoft Office SharePoint 2007 is already makinginroads as an integrated environment of choice formanaging day-to-day workflows and processes.

Most market risk, credit risk systems have been inplace for 5-10 years now. In some institutions a processsuch as mark-to-market, revaluation or VAR computingtakes 16-18 hours. This needs to be reduced to 4-6hours by adopting agile and easy-to-use computingplatforms. We expect a role for SharePoint 2007 withExcel Server and its linkage to Windows ComputeCluster Server-based high-performance computing inthis area. In addition Excel 2007 offers one millionrows and 16,000 columns, and the new multi-threadedengine takes advantage of multi-CPU and multi-corehardware.

Traditionally, risk managers have not been able tobenefit from additional risk insights based onanalysing rich information locked away in enterprisedata warehouses. We see many projects where SQL2005 capabilities and its integration with Excel areused to tap the enterprise data warehouse.

Microsoft’s focus in Risk analytics and reporting isaround providing the right information in the rightformat to the right people at the right time. Ourcapabilities help enhance the computing capacities andunlock the rich business and risk insights hidden awayfrom business users in enterprise data warehouses. F

Sai Sireesh Pachava is the worldwide director for riskmanagement and compliance industry solutions atMicrosoft. He also serves as the co-regional director forthe Professional Risk Managers’ InternationalAssociation (PRMIA) Seattle chapter


he recent credits-induced financial crisis willhopefully provide a fresh impetus to the riskanalytics and reporting area. It was starting to

lose some of its sheen over the years. Some of thedrivers for risk analytics and reporting have been assetliability management (ALM), market risk, derivativesrisk management, value at risk (VAR), Basel II,operational risk and now the Bank for InternationalSettlements’ new proposal for liquidity management.

Obviously the specialised risk engines andapplications from SunGard, Fiserv IPS Sendero,Finarch, Reuters and Towers Perrin are the key pillarsfor risk analytics and reporting. At the same time, mostinstitutions supplement these applications withMicrosoft platform and technology capabilities as thebasic underpinning for risk analytics and reportingfunctions. The humble Office Excel and the OfficeAccess database have always been the classicworkhorses for many a division’s risk reporting andcomputing activities.

There follow just a few examples of risk analyticsand reporting initiatives by financial institutions withMicrosoft and its partners.

RISK ANALYTICS AT NATIONWIDELeading UK building society Nationwide is required tomeet the strict requirements of the Basel II capitalaccord. It needed to deploy a new data managementsolution to manage the huge reserves of data requiredwhile making it accessible to users and providing a fullaudit trail. Nationwide turned to Microsoft SQL Server2005, with the database engine running on a UnisysES7000 enterprise server and operating a Panoramafront end, to underpin its new IT environment.

Information intelligence consultancy Deticaprovided the specialist data warehousing expertiserequired to design and develop the core warehouse. Asthe project gained momentum, Nationwide turned toMicrosoft partners Veritas and EMC to provideadditional consultancy and support around its storagerequirements, in particular producing and validatingthe physical storage design.

Nationwide migrated all the data it produces acrossapproximately 80 source systems into its newHistorical Data Store (HDS), which serves as arepository and makes the information readily availableto other parts of the data warehouse when required. Tohelp the database perform more efficiently, it used thepartitioning functionality of SQL Server 2005, enablingthe HDS to focus on the latest record for each accountwhen processing data feeds.

Nationwide can now meet the requirements of BaselII while increasing database efficiency, enabling faster

access to information, and using its risk calculationsand take advantage of a predicted reduction in capitaladequacy requirements.

SOCIETE GENERALE: RAPID RISK CALCULATIONThe Commodities Trading Room, part of SociétéGénérale Corporate & Investment Banking, operatesfive offices that are responsible for trading derivativefinancial products on the commodities market. Unableto process real-time risk and profit calculations, theCommodities Trading Room could not adequatelyaccommodate a fast-paced business environment.

By using the Microsoft .NET Framework and VisualBasic .NET, developers created an enhanced solutionthat used components from the old system andencompassed a distributed architecture. The new,extendable system supports business growth, and ismuch more powerful, calculating risks in minutes. Thedistributed architecture supports high systemavailability.

Using the true, object-oriented design featuresavailable through the .NET Framework, the team canadd new features easily, such as rebuilding andenhancing its Profit&Loss and risk analysisapplications. While these applications once required asignificant amount of time to run, they can nowcompute calculations in near-real time.

“We’re constantly improving the system, be it withdata-caching features or reporting enhancements,” saysFrançois Montegu, technical project manager of theCommodities Trading Room. “Our existingarchitecture supports the addition of each feature,without disrupting the normal flow of business.”

ASB ENSURES BASEL II COMPLIANCE When ASB Bank’s parent organisation, theCommonwealth Bank of Australia (CBA), decided toapply for an advanced level of accreditation for theinternational Basel II risk management accord, ASB

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RIGHT INFORMATION,RIGHT TIME, RIGHT PLACE RISK ANALYTICS AND REPORTING AS PART OF THE BROADER GOVERNANCE, RISK AND COMPLIANCE FOCUS HASRE-EMERGED AS A TOP PRIORITY FOR FINANCIAL INSTITUTIONS. SAI SIREESH PACHAVA LOOKS AT HOW MICROSOFTIS HELPING FIRMS REDEFINE THEIR COMPUTATIONAL AND REPORTING APPROACHES AROUND RISK MANAGEMENT

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allow banks to focus on product and service leveldifferentiation, yet generate efficiencies and cutcosts by outsourcing commodity elements of theback office. This approach also mitigatesoperational risk, one of the barriers to outsourcing,because banks are able to outsource selectfunctional areas. Furthermore, as marketconditions change, banks preserve the ability tomodify the mix of outsourced services, or indeedtheir sourcing partners. Whether choosing tooutsource or to retain payments processinginternally, the right solution architecture is vitallyimportant.

AN ARCHITECTURE FOR OUTSOURCINGMicrosoft believes that integration and overallvisibility into payments processing is afundamental issue. Poorly integrated paymentssystems make it difficult to increase the efficiencyand profitability of payments processing, but alsoimpair a bank’s ability to truly understand theoverall status of payments operations. This in itselfcreates reluctance to outsource because anyinternal operational integrity, regulatorycompliance or management weaknesses will bemagnified in an outsourced environment.

A service-oriented architecture (SOA) frameworkcan alleviate the integration issues faced in atraditional operations environment, and also formthe foundation for integration with outsourcingproviders. In the early days of SOA, projects wereconfined to non-mission critical applications, butAMR Research finds that in financial servicesorganisations 50 per cent of SOA projects arebetween US$1m (€630,000) and US$10m(€6.3m), with another 13 per cent exceedingUS$10m (€6.3m). These are not trivial amounts,and reflect the fact that strategic investment in SOAsolutions is a reality.

How does SOA apply to a bank’s paymentsinfrastructure? TowerGroup defines SOA forpayments as: “A service-based, businessarchitecture that develops and reuses product,operational and technology assets to support ascalable, agile payments business strategy.” Clearlythe salient point of this message is that thepayments technology architecture should be drivenby the strategic requirements of the business, andof course, outsourcing may well be a part of that.

MICROSOFT APPROACH: PAYMENTS SERVICESFACTORYMicrosoft believes in a SOA approach to simplifyback office operations by focusing on seamlessintegration to enable interoperability. ThePayments Services Factory is simply the frameworkallowing different services and applications tocoexist with legacy systems.

Leading analyst firms Gartner and ForresterResearch recognise Microsoft as a leader in theapplication server platform and B2B integrationmarketplace. The Payments Services Factory isenvisioned upon the Microsoft .NET SOAframework and the acclaimed enterprise classproducts of SQL Server, BizTalk Server andSharePoint Server. This SOA technology stack canbe implemented and configured to meet theoperational and product demands of any bank’spayments group, and facilitates integration and

process management with legacy applications,third-party vendor solutions and outsourcedfunctions alike. The solution orchestrates thelifecycle of payments and provides businessprocess management (BPM) and business activitymonitoring (BAM) tools to monitor the state ofoperations. Data transformation, technologyadapters and business rules are implemented todirect payments from the delivery channelsthrough the back office of the bank, utilisingpayment applications and services as required,before being delivered to the appropriate clearingand settlement mechanisms.

Extending payments integration beyond thebank to corporate environments is essential. Byenabling adapters in BizTalk Server, treasuries canintegrate enterprise resource planning (ERP) andtreasury systems to banks and to Swift.

With integration being such an important factor,the development of industry models and standardsplays an increasingly significant role, and Microsoftis actively involved with the adoption of XMLstandards in financial messaging. Paymentschemas such as ISO 20022 will facilitate theintegration of payment services, whether managedinternally or hosted by an outsourcing provider.

Clearly the credit crunch is having an impact onbank profits and, as a result, is pressuring all areasof the business to cut costs. Although there aremany long-term drivers that generate demand foroutsourcing, inevitably the credit crunch will forcemany banks to reconsider outsourcing ofpayments. Regardless of the business drivers, awell-architected, flexible payments infrastructurewill give banks a greater chance of outsourcingsuccess. F

Colin Kerr is industry technology strategist forpayments at Microsoft

WILL THE CREDIT CRUNCH BITEPAYMENTS OPERATIONS?

AS THE CREDIT CRUNCH DRIVES BANKS TO CONSIDER OUTSOURCING CRITICALAPPLICATIONS SUCH AS PAYMENTS, COLIN KERR ARGUES THAT A WELL-ARCHITECTED,FLEXIBLE PAYMENTS INFRASTRUCTURE WILL GIVE THEM A GREATER CHANCE OF SUCCESS

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COMMENTARY

s the autumn of 2008 approaches, thebanking industry marks 12 months ofsevere impact from the credit crunch.

Stock prices of financial institutions have fallenaround the world and profit outlooks areconstantly being revised. Although much of thefocus has been on the mortgage industry and thetrading of mortgage-backed securities, banks areinevitably faced with the broader impact of thecrunch on other operational areas. Every area of abank is under pressure to increase revenues, butalso to reduce processing costs, and the paymentsbusiness is no exception. Outsourcing in financialservices is not new, but has typically not involvedmission critical applications such as electronicpayments. But with payments technology costsincreasing, and cost-cutting demanded throughoutthe banks, will the credit crunch change a bank’swillingness to outsource payments processing?Boston Consulting Group estimates that the SingleEuro Payments Area (Sepa) will cost Europeanbanks US$5 billion, and a 2008 survey bypayments application vendor Fundtech estimatesthat it will take banks five years to claw back lostrevenue due to Sepa. Furthermore, a 2008Management Consultancies Association survey ofBritish Bankers Association members found that 41per cent expect to increase the level of outsourcingfrom current levels. In this light, outsourcing of

critical applications such as payments maysuddenly seem more attractive, although there areundoubtedly challenges ahead.

PAYMENTS OPERATIONS CHALLENGESThe pressures of competition for market share andcustomer retention, of ageing technology, and therequirement to adopt new clearing infrastructurescome to a focal point in the back office. This costcentre craves stability, a slow rate of change, andrepeatable processes to facilitate managing foraudit compliance and cost containment. Change isnot welcome, but change is being forced upon thisenvironment.

To meet these challenges requires a strategicresponse based on business and product strategy,operational organisation, and supportingtechnology infrastructure. At the most basic level,such a view is intended to reduce cost by mergingpayments silos that have developed over time, butthe challenge of further reducing operational costswill raise the opportunity for banks to outsourceparts of their payments operations. Banks shouldinternalise what is of core strategic value, andoutsource the commodity functions of paymentprocessing, particularly when the scale ofoperations is relatively small. TowerGroup, aleading research and advisory services firm, refersto this as ‘smart-sourcing’. Such an approach would

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biggest challenges centre on capturing necessaryinformation, ensuring the integrity and accuracy of it,and handling exception cases.

Properly integrated business strategies,organisational structures, operationalmanagement and policies and processes willreduce the risk of compliance violation. Customerrelationship management (CRM) systems can helpfinancial services firms manage compliancerequirements through automated processes andproductivity tools.

HOW TO DELIVER RICH COMMUNICATIONSendero Wealth Management is an investmentadvisory firm for high-net worth individuals,families and endowments, offering customisedinvestment strategies to help its clients preserve andgrow their wealth. Sendero wanted to increase therelevance of information delivered to clients, reduceadministration costs, and to help its advisory teamoffer more value and expand the client base withoutjeopardising the high level of service provided toexisting clients. The company originally used aDOS-based product for managing clientinformation, but when this was discontinued, itswitched to Microsoft Outlook to individually trackclient communication and data.

“The team was tracking e-mails in Outlook – eachwith one Inbox folder for each of our clients,”recalls Lisa Kahn-Smith, chief compliance officer atSendero Wealth Management. “They were alsousing individually-created distribution lists to keepinternal and external portfolio managers informedof changes in trades, priorities, accountmanagement and client details. There was definitelyan overlap of work.” With no central repositoryensuring accurate tracking of communicationsbetween Sendero staff, clients and external accountmanagers, too much time was being spentdistributing information or – in reverse – trying topull together disparate information for reports andclient meetings. “We had to rely on each other toremember to forward the right information to theright person,” says Kahn-Smith. “We realised weneeded a system that would allow us to continue tooffer a personal touch.”

The IT department head was tasked with creatinga central location for customer relationshipinformation and to ‘clean things up’. The advisoryteam was happily using Microsoft Outlook to trackand communicate critical client information, andSendero knew users would best adapt to a newCRM system if it was integrated with tools theywere already familiar with. The company choseMicrosoft Dynamics as its CRM of choice, which,combined with GaleForce CRM for WealthManagement can meet the unique requirements ofmanaging high net worth, emerging affluent andmass affluent clients.

Sendero’s advisory team develops detailed

roadmaps for each client and executes on themthrough a team of high-performing, focused moneymanagers. Team members typically log in toGaleForce CRM each day to monitor changes in aclient’s portfolio, track changes in householdmembers or money managers, or to assign a task toa member of the administration team. Sendero staffalso use the solution to track all communicationand documentation with and about each client.

“With our GaleForce solution implemented,there’s no more scrambling when a client calls –everyone in the company is in the know, with equalability to answer client questions,” says Kahn-Smith.“From our principals, to investment advisors, to ouradmin team, they’re all armed with up-to-dateinformation.”

EASIER REGULATORY COMPLIANCEInvestment policy statements (IPS) must becompleted by each client and updated at least onceevery three years for regulatory purposes. TheSendero advisory team prefers to visually checkthese statements once a quarter, and discuss themwith clients if necessary – a process under whichtheir advisors and administration team spent a totalof 30 days per year pulling IPS information andpreparing for the review, including determining ifthe IPS was out of date, locating the original,populating a new form for the client to completeand ensuring the appropriate wealth manager setup a review.

Compliance and security requirements maydictate that only certain users can view or editcertain fields belonging to a specific record such asa contact or company. GaleForce CRM delivers theability to define granular field level security for anyrecord field, and restrict permissions by role toeach field.

“We feel that with GaleForce in place, theadministrative time needed to pull our IPSinformation for review will be drastically reduced.This will allow our team to have more time todevote to managing relationships and managingmoney, not managing paper,” says Kahn-Smith.And, if a client makes changes to their IPS, allparties needing this information are automaticallyinformed.

Sendero is confident that with its customerrelationship information and advisory workflowsteps captured in GaleForce, it will be able toexpand its business while continuing to providethe same or better quality of service its clientsrequire. F

Kirk Herrington is chief technology officer ofGaleForce Solutions

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COMMENTARY

MANAGING A WEALTHOF CLIENT INFORMATION

EFFICIENT MANAGEMENT OF CLIENT INFORMATION IS CRITICAL TO ANY BUSINESS. KIRK HERRINGTONDISCUSSES HOW GOOD CRM CAN BRING BENEFITS FOR COMPLIANCE AS WELL AS CUSTOMERS

ealth management and private bankingfirms have experienced tremendousindustry changes over the last five years –

from client demand for personalised, sophisticatedand transparent service, to lower margins on tradeorders, plan fees based on managed asset value,dramatically increased compliance regulations andvolatile investment markets. To reestablish investorconfidence and advisor effectiveness, financialservices firms must realign their business models toaddress these big challenges.

IMPROVED CLIENT COMMUNICATIONToday’s wealth management clients are far moresophisticated than those of previous generations –they want to understand the investment productsavailable to them and actively participate in theselection process. Clients no longer satisfied withmonthly paper statements are demanding 24/7access to their account details, and expect ongoingcommunication with their advisors whether inperson, on the phone or via e-mail. They expect allpoints of contact to know who they are and whatthey want, and to be offered products appropriateto their particular situation. High-net worth clientsare increasingly interested in international anddomestic tax products, insurance and estateplanning, trust services and other alternateinvestments such as hedge funds and private equityplacements.

To be effective, client communication must occuraccording to client preferences (format, frequency,function), flow both ways and show anunderstanding of client history, goals and theinvestment vehicles that will get them there. Giventhe wide range of products on the market today,specialists are often required to participate as partof a team to support sophisticated clients. Yet, eachteam member must have access to up-to-date anddetailed client and product information so theydon’t have to gather background details each timethey speak with a client. To achieve this, client andproduct data must be retained and consolidated sothat appropriate staff members can quickly, easilyand cost-effectively match client interests withappropriate product offerings, based on real-timemarket data.

COMPLEX COMPLIANCE REGULATIONSThe last ten years have also seen dramatic increasesin security and compliance regulations for financialservices organisations. The complexities imposedby MiFID, the EU Data Directive, anti-corruptionand anti-money laundering, foreign investment andother regulatory acts will continue to grow, andeffectively managing them is critical.

Yet according to research firm IDC, financial servicesfirms are generally dissatisfied with the effectiveness oftheir document workflow processes in support ofgovernment and industry regulation compliance. The

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TODAY’S WEALTH MANAGEMENT CLIENTS ARE FAR MORESOPHISTICATED THAN THOSE OF PREVIOUS GENERATIONS - THEYWANT TO UNDERSTAND THE INVESTMENT PRODUCTS AVAILABLE TOTHEM AND ACTIVELY PARTICIPATE IN THE SELECTION PROCESS

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COMMENTARY

SAFE AND SOUNDINTEGRATED ARCHIVING CAN HELP IMPROVE PERFORMANCE AND CUT COSTS, SAYS BRIAN O’GILVIE

ost financial institutions have well-established policies to control thearchiving of business information. But the

onset of stringent industry regulations and calls fortransparent corporate governance has brought anew scale to the issue. Institutions now face theadditional prospect of proving compliance toexternal bodies with many scenarios likely totrigger an urgent search for evidence to avoidreputation loss or penalties. The problem hasrapidly shifted from one of efficiently retrievingessential business data that’s already in the archive,to ensuring that all relevant data from anywhere inthe environment is automatically stored. Thebiggest challenge nowadays is not in finding datathat’s in the archive – it’s more often finding thesingle piece of information that isn’t! This is why HPhas introduced the e-Discovery workshop.

Over the past two issues of Finance on Windows,we have discussed the subject of e-Discovery,outlining various scenarios including provingregulatory compliance, demonstrating theeffectiveness of internal controls, or averting thethreat of a malpractice lawsuit. The conclusion wasthat searches for information chains are expensiveand disruptive – and should be avoided.

But the real issue is much deeper and has moreprofound consequences. Even if expense anddisruption were acceptable prices to pay, successcannot be guaranteed no matter how long thesearch takes or how much it costs. That one piece ofvital information may never have been stored in thefirst place because it was processed at a localworkstation and escaped routine back-up, or it may

have been inadvertently deleted during a cleansingoperation, or even deliberately deleted by adisgruntled employee. These situations are, sadly,typical, and are a direct result of inadequate orflawed processes that need to be addressed to avoidpotential pitfalls – and the high cost andoperational disruption that are the inevitableoutcomes. However, it can be difficult for financialfirms to know how to approach informationarchiving in a way that will enable them to avoidsuch pitfalls.

The best approach is to develop and implement arobust strategy to manage information archiving.Such a strategy will employ automated processes tostore relevant information from across the networkin a secure archive; an archive that offers reliableback-up, flexible access rules and fast retrieval whenrequired using a variety of search criteria. Thestarting point has just three simple elements:identifying what data should be held rather thanwhat is held; agreeing appropriate retrieval andback-up processes; fully defining informationstructures appropriate to the organisation.

Through its e-Discovery Workshop, HP offers aproven methodology that takes institutions througha series of stages to determine the answers to thesethree elements. Experts from HP Services work withan institution’s IT and business groups to reviewthe essential requirements and shape a long-termstrategy for information archiving. F

Brian O’Gilvie is EMEA solutions manager at HP.He can be contacted at [email protected]

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FULL CIRCLEDATA MANAGEMENT IS ONCE AGAIN EMBRACING VIRTUALISATION, SAYS CARRIE HIGBIE

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COMMENTARY

ow and where we store and retrieve data ischanging. But not in an evolutionarymanner. Data handling is best described as

cyclical.In the past 10-15 years, we have seen a movement

from single computer rooms with shielded cabling,mainframes and dumb terminals, to PC-basednetworks, shared PCs, then to clustering. Bandwidthneeds have grown significantly along with storagedemands. Now, with increased loads for dataretention and accessibility, single computer roomsare no longer adequate for many enterprises.

The issues are perhaps felt more keenly infinancial services than in many other sectors.Information must be secure, and everybody wants tobe on their own application server or platform. Withmulti-channel delivery and the trend towardalgorithmic trading, financial firms are moving tomore grids and more powerful data centres.

Before financial firms began to move toward PCapplications, mainframes were the most commoncomputer platform in the sector. Back then,everything was virtualised because that’s the waymainframes run. But PC application vendors didn’twant to share their technology with any other box.Associating the application with a piece of hardwaregave implementers a level of comfort. Over the years,a bank might end up with a data centre includinghardware from every vendor there is. That’s anightmare for IT to support, because multipleplatforms mean multiple management interfaces.

The cost of storage, as well as the cost to thebusiness when data was unavailable, led to

networked storage, with data centres becoming thecentral hub for businesses and applications. As thecost of computing fell, it became possible to haveseparate servers for each application, but the need forthese applications to talk to storage and theincreasing bandwidth needed for storage backupcaused network demand to rise. Power and coolingrequirements became a prime concern. Virtualisationwas introduced as a way to allow multipleapplications to utilise one piece of server hardware,which would be easier to cool and take up less space.

Now, many end users are forcing renewed focuson virtualisation because it enables them to getbetter efficiencies from their CPUs using less power.But along with healthcare, finance is one of theslowest sectors to return to virtualisation. There willalways be some stand-alone applications, such asalgorithmic trading, which banks don’t want to riskgoing down due to sharing with another application.But that doesn’t mean all the supportingapplications for that same bank can’t be virtualised.

Pushing data around is part of what any bankdoes. Customers expect banks to move their moneyaround, take care of their data, and make sure it’ssecure. That means there will always be someapplications that can be virtualised to share data andreduce costs. The technologies might be different,but the trend has returned – with more storageacross fewer computers, data centres are likely tostart looking more like they did in the days of themainframe. F

Carrie Higbie is global data centre director at

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BACK TO BASICSSUPERIOR ONLINE BANKING NEEDS A TECHNOLOGY BASE THATIS BOTH STRONG AND AGILE, SAY ARNAR JONSSON AND STEINAR STURLAUGSSON

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COMMENTARY

ompetition in the retail bankingenvironment is constantly increasing. Theability to respond quickly to change, and

to bring new products to market quickly, are keyrequirements for banks of any size as they try todifferentiate themselves. But the time taken in thedevelopment process can seriously hamper abank’s attempts to respond to customer demands.It is common practice for banks to have internalInternet banking solutions developed andcustomised for them, but this can be a costly andtime-consuming process, and is usually difficult tomaintain.

“At Applicon, we have experienced the costlyprocess of developing and running bespoke internalInternet banking solutions through our engagementwith a number of financial services companies.Recognising the value of a service-orientedarchitecture (SOA) in enabling the functionalityrequired by banks, we started working on theApplicon i-Banking platform, which enablesfinancial services organisations to make SAPTransactional Banking services available to Internetbanking users,” says Steinar Sturlaugsson.

“Our experience in the financial services industryincludes work with a lot of traditional bankingproducts, as well as significant involvement in alltypes of infrastructure issues. It is a part of ourstrategy to follow our customers and help themimplement our solution – a service we can provideremotely because the Internet banking platform is amulti-entity platform that can run across countries,”says Arnar Jonsson.

Applicon i-Banking consists of two maincomponents, the Service Hub and the Portal, whichtogether enable financial services institutions to runonline banking using only one solution.

The SOA-based i-Banking Service Hub is a coreelement in delivering a collection of services tooperate fully-functional online banking. It enablesMicrosoft solutions to communicate efficiently withthe SAP Banking system, a process that waspreviously complex. The i-Banking Portal is the userinterface, which banks can brand or customise.

“To ensure that the solution was both agile andscalable, we used the latest Microsoft technologies inthe development process, including .NETFramework 3.5, ASP.NET 2.0 and Ajax for the frontend. All services that use SAP Transactional Bankingare provided using the Windows CommunicationFoundation (WCF) which allows for great flexibilitywhile adhering to all the latest web servicestandards,” says Sturlaugsson.

“Our approach has proved its worth, ensuring thephenomenal level of scalability that has enabledKaupthing Bank, for example, to extend its initialApplicon i-Banking-based online banking offeringrapidly to nine countries across Europe. Banks todayneed to improve the services they offer, as well asadding new ones. Similarly, we are looking forwardto continually improving our solution in response tocustomer demands,” concludes Jonsson. F

Arnar Jonsson is the i-Banking developmentmanager and Steinar Sturlaugsson is the i-Bankingsolution architect at Applicon

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The implementation was completedremarkably quickly, with the first go-live justsix months after the project started. The rapidinstallation was due mainly to the unique,multi-phased approach, that required eachimplementation phase to be completed withinfour weeks and add evident business value.

Kaupthing Bank’s business processes andproducts are now unified. Employees whoprocess loan applications in Finland can alsoprocess loans from Sweden or Iceland usingthe same system and rules.

The bank now offers a wide range ofsophisticated products that clearlydemonstrates its role as an internationalinstitution. It introduced new products inFinland, Sweden, and Iceland almostimmediately, including multi-country depositaccounts and loans as well as syndicated loans.

Over time, the bank expects to be able todevelop its own IT competencies, which willincrease its competitive advantage.Kaupthing anticipates further benefits as itintroduces additional business units thatleverage its new IT solution. The bank alsoexpects the recent business and ITconsolidation to help it manage its bankresources more effectively, resulting insignificant cost savings.

Skarphedinsson observes: “We are now

part of a network of SAP partners that canparticipate in and benefit from the ongoingdevelopment of global core bankingsolutions.” The next steps includeimplementations involving SAP applicationsfor analytical banking and businessconsolidation. F

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ounded in 1982, Kaupthing Bank isamong the eight largest banks in theNordic region. It has doubled in size

every year for the past eight years, andoperates in ten countries. While it has grownrapidly, the bank has also trimmed its cost-to-income ratio from 47 per cent to 34 per centthrough strong cost control. Its infrastructureruns entirely on Microsoft technologies.

“The main ambition of our group is to offerquality banking services in each countrywhere we operate,” says Sigurdur Einarsson,executive chairman at Kaupthing Bank. “Theservices should be unified across our officesand represent a serious alternative to othernorthern European operators in the fields ofinvestment and merchant banking.”

In 2004 Kaupthing embarked on a projectto unify business processes throughout itsenterprise and provide a more competitiveinternational offering. Of particularimportance was centralising the clearing andsettlement of cash transactions anddeveloping multiple currency products.

Process unification was challenging due tothe bank’s recent acquisitions, which resultedin a heterogeneous patchwork of processesand IT systems. Kaupthing also required acentralised core banking system to integrate

new business endeavours – such asinvestment banking – and handle multiplecurrencies, time zones, and regulations.

To address these needs, Kaupthingestablished an enterprise-wide business and ITintegration initiative. On the IT side, it wanteda flexible architecture to support itscompetitive strategy by maximising riskmanagement, assuring fast delivery ofinformation within and outside the institution,enabling sharing of group resources andsupporting efficient product development.

In addition to integrating multiplelegislative requirements and cross-borderbusiness activities, the solution had toenable the bank to standardise andsynchronise services and processes – such ascustody, cash, settlement and clearing –across the institution while addressing localbusiness needs.

Kaupthing wanted to integrate its legacyarchitecture into the new architecture, whichwould have a modular framework based onmodern integration technology that wouldsupport standard components for Webservices, process collaboration and XML. Forits software, it chose core bankingapplications within the SAP for Banking set ofsolutions, a choice based on the globalleadership and commitment of SAP in the

banking industry. Of particular importancewas SAP’s experience in cross-borderapplications that support multi-countryfunctionality with local options. “SAP offers anexcellent system that can work in a difficultenvironment,” says Asgrimur Skarphedinsson,CIO of Kaupthing Bank.

SAP for Banking enables Kaupthing tohandle multiple currencies, countries andtime zones. The solution’s support for a broadrange of financial services was also important,as was the capacity it gave the bank toproduce implementations with short leadtimes at relatively low cost. Some keyapplications of the bank’s developed solutionnow manage its loan and deposit activities.

AppliCon, an SAP service partnerconsultancy based in Denmark, worked withKaupthing to streamline the implementationprocess. SAP helped the bank gather itssystem requirements and wrote the systemblueprint, providing expert consultingthroughout the project and helping the bankto provide authorisations for multiplecountries and merge its workflow into a singlesystem. Kaupthing reengineered the businessprocesses required by the project and handledthe comprehensive change managementprogramme. This important work eased thebank’s transition to the new system.

KAUPTHING BANK

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www.kaupthing.com

OUR MAIN AMBITION IS TOOFFER QUALITY BANKINGSERVICES IN EACH COUNTRYWHERE WE OPERATE. THESESHOULD BE UNIFIED ACROSSOUR OFFICES AND REPRESENTA SERIOUS ALTERNATIVE TOOTHER NORTHERNEUROPEAN OPERATORS INTHE FIELDS OF INVESTMENTAND MERCHANT BANKING

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OVERVIEW

Solution: Cross-border core bankingapplications

Benefits: Unified processes andproducts; more sophisticated productand service offering; immediate newoffering of products in Finland, Swedenand Iceland; improved resourcemanagement

Technologies: . SAP for Bankingsolution portfolio, integrated withMicrosoft SQL Server database andWindows operating system

Partner: SAP, AppliCon

www.sap.comwww.applicon.com

HgCapital 60

Implementing Microsoft Dynamics CRM enabledHgCapital employees to monitor and analysecustomer relationships and contacts.

PROFILED THIS ISSUE...

London Stock Exchange 62

The London Stock Exchange worked with HP todeliver its Technology Road Map, including theTradElect information platform.

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PROFILED

stablished in 1990, HgCapital is aprivate equity firm with offices in theUnited Kingdom, Germany, and the

Netherlands. When its existing customerrelationship management (CRM) system madeit difficult to manage the firm’s contactdatabase, oversee key relationships, and trackprospective deals efficiently, HgCapitalimplemented Microsoft Dynamics CRM. Now,employees can monitor and analyserelationships with contacts and reduce timespent on administration.

Staff often had to search through a number ofdifferent applications to find information, andinputting data into multiple sources was timeconsuming. Batchelor says: “Our employeeswere restricted by the limited automationprovided by Access, our contact databasesystem.”

Employees also needed mobile access toCRM contact information. This wasparticularly important for the investmentteams, who spend a significant amount of timeout of the office. Employees needed a solutionthat promoted mobility, as well as executingthree main functions: content management,analysis of intermediary relationships, anddeal-flow monitoring. Associate director StevenBatchelor says: “We wanted a customerrelationship management system that

integrated with Microsoft Office Outlook2003, a tool our employees were alreadyfamiliar with, and offered greatercustomisation possibilities.”

Various CRM solutions were evaluated,including Salesforce, ACT, and Goldmine. ButMicrosoft Gold Certified Partner Aspectiveprovided the tailored solution the firm needed,using Microsoft Dynamics CRM. IT and clientservices employees worked with Aspective todesign and build a Microsoft Dynamics CRMenvironment, which was launched in April2007 in conjunction with Microsoft DynamicsCRM Mobile, which gives employees access tothe contact information they need when awayfrom the office. The other technologies thatintegrate with the solution are SQL Server2005, Office 2003, Outlook 2003 andExchange Server 2003.

Employees can monitor e-mail, meetings,and deals more effectively, without having tosearch through multiple systems, now thatthey work on a centralised basis. Batchelorsays: “Now we can track data and informationin a much more detailed and cohesive manner.Information relating to key contacts andprospective deals is pulled directly fromDynamics CRM and provides something moreconcrete for us to build our businessrelationships on.”

HgCapital staff now have tools that help

them communicate better, and have a betterview of how their deal flow is progressing.Before, individual investment teams trackeddeal flow using Word or Excel documents.Now the centralised system makes dataanalysis faster and easier. Also, employees nowhave the ability to access contacts while on themove. Batchelor says: “Employee feedback ispositive and user acceptance is more than 90per cent. What’s more, our teams havereduced their time spent on administrativetasks. Personally, I’m saving five hours amonth.” F

HGCAPITAL

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www.hgcapital.com

OVERVIEW

Solution: Contact management systemusing Microsoft Dynamics CRM

Benefits: Centralised management ofcontacts; reduced admin overhead;better collaboration

Technologies: Microsoft DynamicsCRM, SQL Server 2005, Office 2003,Exchange Server 2003

Partner: Aspective

www.aspective.com

NOW WE CAN TRACK DATAAND INFORMATION IN AMUCH MORE DETAILEDAND COHESIVE MANNER

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PROFILED

he powerful reputation of theLondon Stock Exchange has beenenhanced by a four year Technology

Road Map (TRM) which has set newstandards for speed, agility, capacity andfunctionality in trading systems.

The final achievement of the TRMprogramme has been the launch of theExchange’s electronic trading platform –TradElect – which has producedunprecedented levels of performance andreliability and which runs on an HP ProLiantplatform.

“We have to be able to cope with increasedvolumes in our main cash equity market andalso require the agility to support newmarkets, asset classes, currencies and timezones,” says chief technology officer RobinPaine. “We wanted well defined and deeprelationships with a small number ofcompanies involved with the delivery of theoverall TRM. HP was a natural choice becauseof the partnership we have had for manyyears.” The other main partners in the TRMwere Microsoft, Accenture, Cisco and Verizon.

A production and a development instanceof TradElect run on 400 HP ProLiant DL385servers. The 200 servers running theproduction instance are mainly based at two

London sites and run in active/activeconfiguration with synchronous replication tomaintain continuous service in the event of acomponent or complete site failure. Theremaining 200 HP ProLiant servers run thedevelopment instance. Within TradElect,there are five specific application tiers whichgive the Exchange the ability to scale up in acost effective granular fashion. The TradElectproduction estate also includes HP MSA1500and MSA1000 Modular Smart Arrays. Withover one terabyte of disk space, they mainlyrun Microsoft SQL Server.

The system that TradElect replaced used totake 140 milliseconds (ms) to process anorder. The equivalent action on the firstrelease of TradElect was 14 times faster,reducing latency to 10ms. Now, TradElectRelease 2.0 has improved latency by a further40 per cent, bringing it down to 6ms fromreceipt of order right through to execution,with an average 3ms external network latencydepending on the client’s location.

TradElect 2.0 has not only reduced latencybut it has also increased the Exchange’strading capacity by 70 per cent, enabling it tohandle 4,200 orders a second. Wheninstruments are traded in TradElect, prices arecommunicated across to the Infolectapplication which disseminates real-time

market data and also runs on HP ProLiantservers. Infolect sends out between 30 and 40million price updates a day to over 130,000screens in over 100 countries.

The successful delivery of the TRMprogramme has also enabled the Exchange tobeat the deadline for compliance with MiFID,the Financial Service Authority’s newregulations governing the conduct of financialorganisations. It’s now planned to migrateItalian equity trading onto TradElect followingthe Exchange’s merger with Borsa Italiana. F

LONDON STOCK EXCHANGE

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www.londonstockexchange.com

OVERVIEW

Solution: Four year Technology RoadMap leading up to launch of newelectronic trading system

Benefits: Improved speed, agility; morecapacity; improved functionality intrading systems

Technologies: HP ProLiant serversrunning Microsoft SQL Server

Partner: HP

www.hp.com

MY BEST HABIT ISNEVER DIVULGINGMY WORST ONES

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SIGN OUT

After graduating from Bristol Universitywith a degree in System Analysis, MarkBates worked at Charles Schwab and

Bank of America before setting up RelationalDatabase Technology (RDT) in 1992. Since then,RDT has developed integrated insurancesystems for the personal lines and commercialmarkets on the .NET platform, includingInternet development and software to enableinteractive quotations and real-time placement ofinsurance business via the Web.

Mark’s passion for technology has been asignificant motivating factor in his career – andas we found out, it’s a big part of his life outsidework too.

Who or what inspires you most, and how hasthis contributed to your own achievements?My dad. He built a very successful and profitablecompany, always seemed happy, was renownedfor his integrity and was universally respected byhis peers. I’m not sure I’ve achieved that but hehas been a great role model for me.

What did you want to be when you weregrowing up? Did you ever become that?A surgeon. Unfortunately, studying was neverhigh on my list of priorities when I was ateenager (especially when the sun was out) andmy grades weren’t good enough to get me intomedical school, so I took the easier route andopted for a computing degree. In hindsight it’sall turned out pretty well.

How did you get started in your current career?Have there been any major triumphs orchallenges on the way to where you are now?An underwriter had seen a finance system I wasdeveloping for a major bank and asked if I wasinterested in doing the same for his insurancecompany – the rest, as they say, is history. Thebiggest challenge in the early days wasconvincing insurers that a company with sixpeople could support their entire business. Anolder, more experienced person did warn methis would be a problem but I didn’t listen. Nowthe company is a lot larger and the insurers arecoming to us, so that has been a major triumph.

What’s your must-have piece of technology forwork, and what would you do if you lost it?It’s a close call between my Lenovo ThinkPadX300 and my HTC Touch Diamond phone. If Ilost either it’s possible I would have a little cry.

What’s your favourite gadget at home – howdoes it make your life easier, more fun orexciting?

My home cinema. It took two years to build andreally is quite phenomenal if I say so myself.

What do you think has been the most importantinvention in the history of the world, and why?The integrated circuit (IC) – within 50 years wehave seen the world change dramaticallybecause of it. Computers, mobile phones,microwave ovens, the Internet, going to themoon… none of these would have been possiblewithout them. I love technology, what did youexpect?

Do you have any pets – either real or virtual?I have had four cats over the years but nonecurrently, although I’m coming under someserious pressure from my daughter to getanother one.

What are your best and worst habits?My best habit is never divulging my worst ones.

What piece of advice would you give to youryounger self? Would it have made a difference ifyou’d heard it at the time?Listen, especially to older people – they have thebenefit of experience! I was given lots of advicemany times and it rarely made a difference. Nowthat I’m getting on a bit I try to listen toeveryone!

How do you wind down at the end of the day?I think those that know me would tell you Irarely wind down, although I will either watch afilm or run/take the mountain bike out for aspin, which is a great way to get rid of someexcess energy and clear the mind. F

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VOICE OF EXPERIENCEMARK BATES, CEO OF RDT, GIVES US HIS TAKE ON LIFE AND LEARNING

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