Examining IT infrastructure capabilities and reconciling data will be key for meeting the new EFS requirements from the Australian regulator, according to Douglas Cheung, Regulatory Product Manager for Wolters Kluwer’s Finance, Risk & Reporting business in Asia Pacific.

The Australian Prudential Regulation Authority (APRA) has made it clear that data quality is a “key impetus” for its ongoing effort to update the reporting forms used to collect Economic and Financial Statistics (EFS) from financial institutions. The exercise aims to reduce the relatively high rates of resubmissions and revisions that accompany some forms.

Failure to meet quality thresholds will likely result in banks having to resubmit forms, or even repeat the ‘parallel runs’ that are intended to accompany the introduction of the new reporting regime. These runs present a substantial administrative burden and can take months to prepare and execute, therefore it is critical that institutions lay the groundwork early to get their output right.

Though APRA’s proposals are still in the consultation phase, Wolters Kluwer has identified a few specific ‘pressure points’ for Financial IT that the evolving data requirements are likely to create.

New data requirements

The new Statement of Financial Position form (ARF 720.0/1/2) requires the incorporation of non-residency data in the balance sheet form that was previously segregated, as well as more details on foreign currency-denominated positions. Phase 2 of the APRA exercise, which includes replacement finance forms and new forms on interest rates, will require new breakdowns of rate and cost of funds data by categories such as purpose, industry, business size and maturity.

Refinements or the addition of new categories to existing forms will be accompanied by entirely new requirements for data that may not be readily available in institutions’ current systems. Form ARF 722.0 on derivatives, applicable to institutions with gross derivative positions of A$1bn or more, includes data on derivative movements and valuations that is not part of the current reporting framework and can’t be easily sourced from typical front-end and accounting systems.

Institutions will also have to reconcile data across new forms. Form ARF 723 on margin lending for example, designed to replace the Reserve Bank of Australia’s quarterly margin lending survey, incorporates additions designed to comply with new international reporting standards that will require more detailed breakdowns of loans and the assets underlying them. These will also need to be included in and reconciled with new financing reports, such as ARF 741 and 745.

Overall, therefore, banks will be facing additional processes and possibly brushing up against system limits. In our view there a few important points to keep in mind when preparing for these changes. First, the exercise is a work in progress, and particularly in the early stages of implementation, APRA will be watching industry reaction and outcomes closely. If elements of the new requirements are unclear or seem open to interpretation due to ambiguous instructions or unique institutional scenarios, the onus is on the bank to approach the regulator for guidance.

Attempts to simply ‘guess’ what new instructions mean are likely to lead to inaccurate data submissions and additional regulatory burdens, no matter how advanced a bank’s systems or reporting abilities. Alerting APRA to unclear aspects of the EFS transition, by contrast, should provide the institution with more certainty, and, by potentially encouraging the regulator to change or refine instructions, could benefit the industry as a whole.

Gauging the gaps

It’s also key for banks to take a good, hard look at their systems to hone in on likely problem areas or limitations. Some bank infrastructure, for example, will struggle to produce data on forex exposures -- a major emphasis of the first phase of the EFS -- in anything other than the head office currency or US dollars. Affected banks may have to invest in these capabilities, or prepare for more manual work to cater for the changes.

Institutions should also examine the ‘people’ aspect of the data quality equation. Some may consider hiring more resources, or preparing for a period of extended working hours. While the transition to the new regime will primarily fall on the finance and IT departments, in some cases it will involve treasury as well.

Directors and particularly CFOs should already be aiming to ensure the EFS transformation is given appropriate budgeting and resources across the implementation period, which (given the phased rollout and parallel runs) will in effect span from now to 2020, including time for training, planning and proper project closure.

When developing approaches to the new EFS regime, institutions confronting significant reporting overhauls or system shortfalls should consider engaging the support of an outside partner with deep regulatory expertise and solutions that are built to evolve with expanding compliance requirements. This can help institutions lay a foundation for consistent data quality that will withstand future regulatory demands.

FinTex, the Chicago fintech association, today announced the launch of Currency, a fintech Center of Excellence, dedicated to collaboration, research and sharing of best practices. 

Monitise FINkit can today announce the key findings from its research into senior banking executives’ priorities, challenges, and future plans. The study, carried out by independent researchers LM Research, includes responses from 15 major UK banks and other financial institutions.

Regulation: keeping bank executives awake at night but they are at risk of missing the opportunity presented

The findings paint a conflicted picture. 60% of respondents named regulatory change and the pressure of compliance as the key challenge keeping them awake at night (with competition 53%, fraud or criminal activity 53%, and Net Promoter Scores 53% also top distractions). However, despite the regulatory pressure and the CMA’s intentions, only 27% believe Open Banking will improve their business and make it more competitive, and only 13% believe it will allow them to offer their services to customers of other banks.

Competition: banks preoccupied with peers rather than challengers

Competitive threat is overwhelmingly seen to be coming from incumbent banks (80%) rather than challengers such as Atom and Monzo or technology businesses such as Amazon or Facebook applying for banking licenses (33%).

“The confusion and contradiction is typical of an industry in the middle of a transition,” says Nick Cheetham, Managing Director of Monitise FINkit. “Some are preoccupied with their peers and believe that banking is a protected industry where the barriers to entry such as regulation and security are too high. Others are further ahead and have seen industries decimated by digital and believe that reality isn’t too far away.”

Technical prowess: banks see themselves as technical leaders but are held back by existing systems

Surprisingly, and despite continuing rhetoric around the ‘problem with legacy systems’, only one-fifth of respondents named outdated and / or failing technology as a key business challenge keeping them awake at night, with just over two-thirds (67%) seeing their bank as a technical leader. On the flip side, a third agreed that existing technology was the single biggest thing holding them back from executing on innovation, along with internal systems and processes (27%) and a risk-averse culture (20%).

Investment ROI: only half the money spent leads to services in the customers’ hands  

80% of respondents confirmed they are investing more than £25 million into ‘innovation’ every year, with over a quarter (27%) spending more than £100 million. While the majority said they are seeing a return on that investment in terms of PR or planning, only half (53%) said that the innovation team’s work is delivering new services into customers’ hands on a regular basis.

Reliance on existing talent to increase the pace of change

As expected, the majority of respondents agreed that digital transformation is critical to the future of the bank (73%), and 47% are working towards a goal of releasing new services at a faster pace in the coming two years. That said, only 7% of respondents are worrying about hiring the right talent to support that transformation.

Nick Cheetham continues: “We all know that a drive towards digital transformation is creating a real storm in the banking sector – it is all anyone can talk about. The reality though is that now there is a buy-in internally, a mandate from the board, and pressure from the regulators, most have reached transformation gridlock. It is difficult for them to see the Open Banking wood for the trees. They now need to put the right systems in place with the right talent. This will drive revenues and also result in significant cost savings if they take advantage of existing technology rather than rebuilding from scratch.”

“We know and understand that Open Banking Initiatives are well underway, it’s happening and it is intended to be in a catalyst. However banks will really miss an opportunity if they don’t start embracing its potential and combine mandatory APIs with other non-mandatory APIs from existing technology players and create new, competitive services for the modern ‘Uber’ consumer.”

Mizuho Financial Group, Mizuho Bank and IBM Japan today announced they are building a blockchain-based trade financing platform. With the platform, Mizuho is aiming to streamline trading operations and improve supply chain efficiency.

The timely and highly secure exchange of trade documents is essential for stakeholders in the supply chain ecosystem. Digitizing trade information on the blockchain can help change the way information is shared, infusing greater trust into transactions to make it easier for parties involved in the supply chain, including exporters, importers, shippers, insurance companies, port operators and port authorities, to share critical shipment data in near real-time.

Mizuho Financial Group is working with IBM Japan to ultimately conduct actual trade transactions based on Hyperledger Fabric, a blockchain framework implementation and one of the Hyperledger projects hosted by The Linux Foundation. Specifically, the project exchanges digitized letters of credit for actual trade transactions between Japan and overseas clients. As the letter of credit is digitally shared among parties including importers, exporters and their banks, it is expected to simplify the associated document creation and exchange processes, which have traditionally been time- and paper-intensive. Also, the system will enable all parties to view the latest shipment status data, which can result in reduced trade transaction and processing costs.

"We are pleased to be the market leader in Japan in powering our processes and workflows with distributed ledger technology and continue to work aggressively towards expanding our portfolio of its implementations across the group," said Daisuke Yamada, Managing Executive officer and Chief Digital Innovation Officer of Mizuho Financial Group. "The global expertise in digital technology of IBM complements our vision and has opened further avenues for us to tap the potential of distributed ledger in transforming our processes and workflows for better enterprise agility, transparency and regulatory reporting."

"The Mizuho Financial Group and Mizuho Bank's project marks an important step in using blockchain technology for actual operations in trade finance," said Masao Sanbe, Managing Director, Industry Sales, IBM Japan. "In working with global trade networks to digitize documentation and processes, IBM recognizes the potential of blockchain to help streamline financial trade services."

This first phase of the project will lead to Mizuho conducting actual trade transactions using blockchain in June 2017 advancing the trade financial platform for commercialization. Mizuho continues to utilize new technologies, like blockchain, for innovative and better financial services for customers. Mizuho worked with IBM on another blockchain pilot focused on currency settlement.

IBM launched IBM Blockchain on Bluemix for organizations that require blockchain networks that are trusted, open and ready for business.

The software includes Artificial Intelligence (AI) driven Personalization and Recommendation Engines. These options allow travel businesses to mine data from multiple sources and provide personalised product offerings enabling better conversion rates and, ultimately, better margins. Further revolutionary tools gather insights and customer sentiments to better deliver what customers are looking for and what criteria is most important to them. Plus, new Revenue Manager allows for dynamic pricing, responding intelligently to competitors, and to sales and search trends.

TravelBox, the company’s signature, state-of-the-art reservation platform which is already in use by giants of the global travel industry, is complemented by innovative AI products. Importantly, all of CodeGen’s AI solutions can be integrated with TravelBox. Visitors can also look forward to viewing the cutting-edge online solutions that employ machine learning and natural language processing for more user-friendly search which in turn allows better merchandising of product and ancillaries rather than responding within a pre-determined framework. 

Bharat Patel, president, sales, marketing and commercial, CodeGen, explains:

“We are looking forward to EyeforTravel Europe and to demonstrate to visitors how our exciting artificial intelligence led tools work alongside the industry-leading TravelBox. As a company, CodeGen has a long history of investing in the research and development of AI and I am thrilled to be demonstrating our new, revolutionary solutions for the travel industry to visitors at EyeforTravel.”

The technology on display at EyeforTravel Europe from CodeGen includes:

• TravelBox Surf – a multi-device web application which via its advanced algorithms and robust architecture, delivers superfast personalised holiday propositions and post booking management facilities
• Review Spotter – understands the natural language and semantics of travel reviews shared by customers allowing the user to easily extract sentiment-level intelligence 
• Personalization and Recommendation Engines – a new intelligent review platform which builds user profile details of the customer to ensure personally tailored product recommendations in search results. This accelerates the booking process for the customer while enhancing conversions and retention
• Revenue Manager – Optimises pricing and product placements to increase revenue
• Artificial Intelligence and bot ready architecture – find out more about how CodeGen is utilising its long history of investing in artificial intelligence and bot technology to power the technical landscape of business with robust, futuristic tools

Concurrent, a global leader in storage, protection, transformation, and delivery of visual assets announces the availability of Origin Release 3, offering video service providers the most comprehensive origin platform for ingesting, hosting, distributing, and serving video content to any device, any time, over any network, for content service providers.

Concurrent's Origin Release 3 adds several new capabilities including "Restart TV" for live streams to IP devices enabling viewers to go back to the beginning of any live show they are watching; and new small footprint deployment options providing lower cost entry points without compromising functionality or the ability to scale as capacity requirements increase.

The platform uses a common integrated architecture to enable service providers to launch live video streaming, video on demand, Catch-up TV, Restart TV, and cloud DVR services to IP devices and classic cable set-top boxes. Integrated content adaptation for Just-In-Time IP packaging and encryption ensures the content is delivered using the adaptive bitrate (ABR) format and digital rights management (DRM) supported by the type of IP device.

"As viewers request more video services and flexibility for an ever-increasing array of consumer devices, service providers are challenged to meet new expectations and remain competitive," said Scott Ryan, Concurrent's SVP of Content Solutions. "Concurrent's Origin Release 3 delivers new revenue generating, value-added features supporting live, on-demand, and cloud DVR workloads for any device, from a single platform that is far simpler to deploy and scale."

With new redundancy and scalability features, Origin Release 3 can now be deployed with minimal footprint, without compromising functionality, reliability, and scalability. Instead of multiple separate servers supporting back-office integration, resource management, VOD, live streaming, and DVR, Origin Release 3 enables all these services to exist on a single server, or initially two servers to support seamless failover for high availability.  Additional servers can be added to support live recording and streaming capacity scaling requirements.

New and enhanced features include:

• Multiple hardware and software deployment options from software-only, VM, single server, and clustered hardware solutions
• Restart TV for IP Devices, an addition to a comprehensive suite of time-shift TV options for both IP devices and RTSP set-top-boxes including Pause Live TV, Catch Up TV and Cloud DVR
• Content delivery for all devices, all formats, all protocols, to support RTSP/QAM Set-Top-Boxes and IP Devices
• Direct-to-object integration with AquariTM flexible and scalable performance storage
• Just-In-Time Packaging for streaming the correct format required by IP devices such as Smooth Streaming, HLS, HDS, and DASH
• Just-In-Time Encryption with DRM (Digital Rights Management) integration
• VOD ingest and storage, live ingest recording, and live IP streaming
• Comprehensive Back-office integration

A recent survey by Liberis, a UK alternative finance provider, reveals that 8 out of 10 consumers plan to use independent businesses in preference to larger businesses this year. The survey was commissioned by Liberis to discover current consumer attitudes towards small businesses. The data further revealed that 65% were aware that using a smaller provider can be more expensive, but responses suggested that the benefits of doing so outweighed the increased costs as 48% still wanted to boost the local economy and support their community.

Convenience and leisure are the main reasons why consumers choose a small business over a larger retailer

58% of respondents said they use a grocery and convenience store the most, with the older generation, 55 – 64 year olds, selecting this as their most used type of independent store.

Clothing, jewellery, books, music and gift retailers were the second most utilised businesses at 45%, followed by cafes, bars, pubs and eateries at 44%, suggesting that consumers spend their disposable income at smaller, leisure focused establishments.

The primary reason for shopping small was due to convenience, suggesting that locality is still advantageous for many purchases. However, almost 50% of those polled said that they shop small to support independent establishments, indicating that this plays an important role in purchasing decisions.

Friendly and personalised service makes ‘small’ successful

51% of those polled said there is a noticeable difference between the quality of customer service offered in small businesses compared to larger stores. One respondent said “small stores seem more genuine and go out their way to help you” and another said at “smaller stores the service is more personal”,  suggesting that in order to be competitive against bigger brands, your business must continue to provide a memorable and tailored customer service.

Limited product selection and price are a challenge for small businesses

50% of consumers said that a ’limited product range’ selection is the number one drawback to using a small business. Almost half (48%) said that smaller stores tend to be more expensive, which was their second highest concern.

Very few people stated brand penetration (e.g. online offering, household name and peer recommendations) as an influential factor in their decision to support a small business, where historically, being a household name has gone in a larger brand’s favour. However, when asked why consumers shop at larger stores, price was the number reason at 47%. It was the 65+ age bracket that chose price as their main reason to shop at bigger businesses, which indicates that this age group keep tighter control over their finances than other age groups.

“A more varied marketplace for consumers is dependent on the UK’s small business sector, having another major chain retailer doesn’t increase choice, in fact it reduces the choice. Liberis support local highstreets, domestic hospitality, entrepreneurs and small scale industries here in the UK and in turn they all contribute significantly to the overall economy. Our findings show that consumers share the importance of growing this sector and the value that it brings everyone.” 

Temenos, the software specialist for banking and finance, today hosts over 1,200 delegates at its 18^th annual Temenos Community Forum in Lisbon.

The theme of the conference, “Real-World Fintech”, addresses the truth beyond the fintech hype, with real-world examples of the exciting innovation coming out of banks and fintech companies. The conferences also takes a closer look at some emerging technologies – such as Artificial intelligence and blockchain – highlighting real-world use cases.

Across a series of 12 mainstage presentations and 32 breakouts, 22 customer speakers and 24 industry experts will present alongside Temenos thought leaders, and our platinum sponsor, Accenture, to share experience and shed light on what it takes to be the world’s most successful banks. The program includes interviews with customers such as Nordea Bank, Credit Suisse, EFG Bank and First Abu Dhabi Bank about how technology helps them to build and sustain leadership positions.

Throughout the two-day event, 23 Temenos partner sponsors and exhibitors will further bring to life and quantify the areas where innovation and collaboration - in areas such as cloud, data, and payments - can help banks stay ahead.  Delegates will also have the opportunity to learn more about open banking, through and with access to the 18 solution providers exhibiting in the Temenos MarketPlace zone. 

TCF will also play host to what is now a regular feature of TCF, the global final of the Innovation Jam. The winners of the regional competitions in Abu Dhabi, Miami, London Geneva and Singapore will compete in Lisbon for the crown of global champion, a prize which will be decided by TCF attendees.

David Arnott, Temenos CEO commented: “The pace of technology and regulatory change is accelerating in the digital age. This opens up new competitive threats for banks as well giving them the opportunity to embrace new, collaborative models that will deliver better customer outcomes. Our goal at this year’s conference is to challenge some conventional thinking around digital banking and make concrete what banks should do to take advantage of the opening banking opportunity. In particular, we believe that for banks to offer rich, engaging, personalized experiences mobile first that are critical for survival over the next 10 years, they will need to undertake full front to back renovation of systems -new channels alone will not be able to offer a single view of the customer and cope with the huge demands of real time processing and high volume interactions. To address the perceived challenges around system replacement, we will be highlighting several customer cases of how progressive renovation de-risks projects and speeds up time to value.”