Financial Services

[Jo Vincent]

Banks are probably the biggest investors in Information Management. This thread is to take a look at issues relevant to all of the financial services industry.

[Jo Vincent]

Jennifer Foreshew | August 12, 2008 | Australian IT

INVESTORS' needs for more transparency and accurate and timely product and market information in the current credit and liquidity environment cannot be met by most legacy banking systems, a report finds.

The research by analyst Intelligent Business Research Services, says legacy banking systems must be replaced to restore organisational agility and improve the quality of service to customers.
"The credit crisis is providing an excellent reality check for financial organisations that have set up management information systems, decision support systems, data warehouses, data marts and business intelligence systems that were at some point hailed as the key to reliable data aggregation and information mining," the study says.

"Globally, billions of IT dollars have been spent on such systems in the banking sector, yet these systems cannot calculate even the most basic figures needed to make sound business decisions in a timely manner."

The report says the issue is not technology but semantic data quality issues associated with aggregating data from independent legacy systems in various localities.

"Due to the lack of reliable and timely information, traders and investors are forced to make decisions based on performance figures that are only visible through a smokescreen," it says.

The research, by Jorn Bettin, says banks must increase transparency of the design details of financial products to remain competitive.

They are also expected to improve clarity about the source and quality of information fed into risk analysis tools, along with timely and accurate information about market and product performance.

In these three areas, the quality attributes of current banking software systems are a major obstacle, the report says.

"Product design details tend to be encrypted in software source code, data quality is often not quantifiable, and the low-quality incomplete system integration introduces numerous manual steps that slow down the computation of performance figures," it says.

The research argues that the strongest business case for replacing legacy systems is not based on IT cost efficiency, but on the loss of organisational agility and the inability to provide information for making well-informed business decisions.

The study advises IT managers in financial institutions and related sectors to search for possible external service providers internationally and assess their offerings compared with their specific needs before setting up any major application software renovation initiative.

[Steve Bennett]

As some of my fellow CORTEXers may know, I have a day job working at a bank building performance management solutions.

Well this week we reached a major milestone with the new warehouse now primed with several billion rows of data. 6.7 to be exact.

Next we are turning our attention to delivering the first reports and dashboards - now it gets interesting!

Is there anyone else in ther Financial Services world at the same stage?

[Steve Bennett]

In November, Teradata announced that SCFB was one of its Market Leader Award winners for highly effective CRM programs by Teradata customers. Experts from Harvard University, Baylor University and CRM analysts at Yankee Group scored submissions. The winners in each category were:

• Overstock.com and Standard Charter First Bank (Korea) tied as winners for Transforming the Organization by increasing customer-centricity through tactical business process transformation.
• Westpac Banking Corporation (Australia) won for CRM Innovation, with a focus on unique, intriguing implementations that demonstrate exceptional results in direct marketing, email marketing, multiple channel usage, multi-step campaigns, event-based marketing and loyalty marketing leading to more efficient marketing spend with increased customer acquisition and retention.
• AT&T Business won in the category of Customer Strategy, for achieving its marketing objectives by helping account teams to communicate more consistently with customers, providing them with relevant and valuable analytical CRM intelligence to grow their relationships and create more opportunities.
• National Australia Group Europe (U.K., banking), won in the category of Rising Star, showcasing companies with newer implementations of Teradata CRM solutions that are demonstrating exceptional business performance, reporting tangible "before and after" results with documented examples.

In May, Teradata announced that it was placed in the Leaders Quadrant in Gartner's report, "Magic Quadrant for Multichannel Campaign Management, 2008," by Adam Sarner. Multichannel campaign management refers to marketing processes that enable companies to communicate with customers across channels such as web sites, email, mobile devices, call centers, direct mail, stores, branches and communities of interest.

[Steve Bennett]

St.George Bank Upgrades EDW with Teradata

Bank Leads Asia Pacific In the Next Generation of EDW Technology with the First Implementation of a Teradata 5550 Platform

Sept. 2, 2008

MIAMISBURG, Ohio, Sep 02, 2008 (BUSINESS WIRE) -- St.George Bank, widely recognised as having one of the best installations of a Teradata Enterprise Data Warehouse (EDW) in the Asia Pacific Region, is leading the way with the first hardware and software implementation of the Teradata 5550 platform and Teradata 12 database in Australia.
The new system consists of a three-node Teradata 5550 platform in addition to a hot standby node running on Linux for the Group Data Warehouse (GDW) production system as well as a minor upgrade to their existing four-node Teradata 5400 platform prior to redeployment as a disaster recovery (DR) system. The solution also includes a GDW maturity assessment and roadmap consulting engagement to ensure the bank continues to lead the field in enterprise data warehousing. This data warehouse upgrade gives St.George Bank increased speed, performance and capacity, which allows the bank to easily manage both planned growth and new business opportunities.

In considering this upgrade, St.George Bank undertook an extensive evaluation process, including a review of alternative data warehouse and appliance vendors, but in the end chose to upgrade with Teradata. "This significant win for Teradata cements the company's position as a global leading enterprise data warehouse vendor. The evaluation process pitted Teradata's technology against the competition and we came out as the best choice for enabling St.George to advance its already cutting edge data warehouse into the future," commented Noel Pettitt, vice president, South Pacific Area, Teradata.

"St.George is the first to implement this hardware and software in South Asia, and we are pleased that the new Teradata data warehouse has exceeded our expectations for speed and performance. It prepares us for the next phase of growth and the next generation of data warehousing. The implementation, put together by our combined St.George and Teradata technical team continues to be very successful," said Jean-Claude El-Sabbagh, head of Enterprise Business Intelligence, St.George Bank.

About Teradata

TDC 22.99, -0.43, -1.8%) is the world's largest company solely focused on raising intelligence through data warehousing and enterprise analytics. Teradata is in more than 60 countries and on the Web at www.teradata.com.
Teradata is a trademark or registered trademark of Teradata Corporation in the United States and other countries.

SOURCE: Teradata Corporation

[Steve Bennett]

St George revamps data warehouse
Liam Tung, ZDNet.com.au

01 September 2008 01:15 PM

Tags: bank, business intelligence, data warehouse, disaster recovery, st george, teradata, system, data warehousing

Australia's fifth largest bank St George has completed a refresh of its data warehouse systems on the eve of its likely merger with larger rival Westpac.

The implementation has seen the bank bring in Teradata's new three-node 5550 system, released earlier this year, along with an upgrade to its existing Teradata data warehousing systems. The legacy systems have been redeployed as the bank's disaster recovery systems.

Financial details of the deal have not been disclosed, but it has included ongoing consultancy with the data warehouse vendor.

"It prepares us for the next phase of growth and the next generation of data warehousing," Jean-Claude El-Sabbagh, head of enterprise business intelligence at St George said in a statement.

St George's last upgrade to its Teradata systems in 2005 saw the bank equipped for the first time with disaster recovery capabilities.

The new systems will also support the bank's Business Objects business intelligence systems, which were upgraded in 2006 to help the bank tackle sales and operational risk analysis, compliance reporting and loan management activities.

[Jo Vincent]

Oracle to star in NAB's online plans

Mahesh Sharma | August 19, 2008 | Australian IT

NATIONAL Australia Bank has given a crucial component of its legacy systems overhaul to Indian banking software developer i-flex, which may result in some of the bank's staff being left out of the early stages of the project.

NAB's new Star Bank project does not have physical branches and offers banking services through call centres and the internet.

It will be developed using i-flex banking software technology. Oracle is majority owner of i-flex solution, and it recently rebranded the business, Oracle Financial Services.


The Indian banking software company will be involved in designing the platform that will replace NAB's core banking systems and will plan the replacement process. I-flex will deliver a range of services, including support activities such as professional and application management, analytics and consulting, according to its local office.

Typically, i-flex uses both onshore and offshore resources to complete a project, but it is uncertain how this would break down for the NAB project.

Indian newspaper The Economic Times reported the deal was worth $US90 million.

Oracle staff were on-site at NAB last week sizing up the technology landscape, and the bank's employees have expressed concern over their future after comments from the management that they would not be involved in the first phase.

NAB spokeswoman Kerrina Lawrence said the development work would be split between its staff and Oracle, but the final make-up had not been decided.

At this stage there were no plans to host Star Bank offshore, she said.

"NAB has not decided against using its staff in the process. It is anticipated that NAB will use a mix of internal and external skills," Ms Lawrence said.

The bank moved a step closer to identifying that balance yesterday, as it combined two of its biggest technology teams, enterprise services technology and technology banking Australia, to improve the bank's capability to service the next-generation platform.

The plans are detailed in an internal memo obtained by The Australian.

"It recognises that we'll be rebalancing our investment between business as usual and NexGen and must therefore consolidate our capabilities to free up capacity to focus on the significant transition activity ahead," NAB chief information officer Michelle Tredenick writes.

The combined division has about 1300 staff, half of NAB's IT workforce, with leadership teams reporting to technology banking managing director Craig Bright. Former enterprise services technology head Stephen Phillips has been appointed as technology lead for Star Bank.

The restructure will be bedded down over the next two months, under the watch of an integration manager and Mr Bright, and Ms Tredenick said more structural changes could be rolled out to other business units.

"We'll continue to progressively evolve our model over time as we further progress our transformation agendas."

NAB has embarked on an offshoring program over the past couple of years. It started with back office and finance and credit card processing functions, but gathered pace this year with the IT outsourcing program.

The first wave of IT outsourcing affected jobs in several legacy banking system areas.

As well, some payments and enterprise resource planning functions were sent offshore to Indian outsourcers Satyam and Infosys.

NAB is in the final stages of reviewing outsourcing wave two, which could lead to up to 400 jobs in technology banking and the MLC wealth management business going offshore.

Planning is believed to have begun on outsourcing wave three.

Several sources have said any legacy replacement work that is not done by Oracle will be sent offshore to Infosys and Satyam.

Ms Tredenick told staff the offshore trend would continue in line with its technology transformation program, code-named NEOS.

She also said it would use offshore resources to do some of the work for the core banking project.

"NAB has always used hosting and still uses a combination of hosting, having some of our internal people host the platforms and develop the platforms, and working with external suppliers," Ms Tredenick said. "We've done that for the past 10 to 15 years and will continue to do that."

However, she also expected the next-generation project to create more local jobs as the scale and intensity of work increased over five years.

Technology banking general manager Craig Bright said recently that technology staff numbers could fall to less than 1000 over the next five years.

The figure was noted by several NAB employees during an exchange in an informal question and answer session at a technology team event.

[BI Tragic]

This should make for some interesting analytics!

Switching banks made easy

Karen Dearne | September 25, 2008
IT will soon be easier to switch your business to another bank, with the Australian Payments Clearing Association confirming financial institutions will be able to supply customers' direct debit and credit arrangements by November 1.

The "listing and switching" service is part of a Labor Government reform package aimed at promoting competition announced in February.

Treasurer Wayne Swan said there were "too many adminstrative and other obstacles" for customers wanting to change banks.

Customers were effectively locked into banking relationships because of difficulties in identifying and re-establishing scheduled payments, he said. People were often hit with unexpected fees due to missed payments during a changeover.

The Australian Payments Clearing Association, which is managing the account switching program, says an agreement has been reached with leading banks and the ABACUS industry association for credit unions and building societies.

"Upon request, a customer's old financial institution will provide a list (printout) of direct payment arrangements over the previous 13 months to the customer in order to facilitate the establishment of the new account," APCA says.

"The new financial institution will help the customer make the switch. If requested, the new provider will assist in notifying billing or paying organisations of the new account details."

APCA is preparing a set of industry guidelines that will detail the steps customers need to take to complete the switching process.

Meanwhile, Reserve Bank's Payments System Board has signalled a crackdown on the fees charged by banks for using a competitor's ATM.

Under reforms designed to free up network access to new entrants, ATM owners are able to charge customers for using their machines, but must disclose the fees upfront and allow transactions to be cancelled at no cost.

At the same time, the bilateral interchange fees paid by banks and other financial institutions to ATM owners for network services have been abolished.

However, the board notes a concern that the agreement on ATM reform did not cover the "foreign fees" levied on customers who use another bank's network.

"The four largest banks currently charge fees of up to $2 to their customers and pay an interchange fee that averages around $1," the PSB says in its annual report, released yesterday.

"Under the new arrangements, issuing banks will no longer be paying interchange fees and the Reserve Bank sees no justification for foreign fees to remain at their present level.

"Indeed, we see a strong case for foreign ATM transactions to be charged at the same rate, given that the issuing costs are almost identical."

While the PSB hoped the changes would be in place by October 1, the deadline is now March 3 because of technical issues and the need to modify some 26,000 ATMs nationwide.

Direct charging software cannot be turned on remotely in some 2500 ATMs, putting pressure on available technical staff.

[Doug Heywood]

An interesting article but I am not sure the analysis is correct. Isn't there an argument that the need for BI and Analytics goes up when time are hard? I wasn't here in Australia during the last tech crash. What was it like in Australia at that time?

Anyone?

Financial crisis: The tech innovations at risk
Analytics, SOA, storage networking, and cloud computing providers face huge fallouts as financial customers wither

John Edwards (InfoWorld) 01 October, 2008

September 2008 will certainly go down as one of the blackest months in Wall Street history. Venerable financial institutions such as Lehman Brothers, Merrill Lynch, and AIG abruptly vanished or were radically overhauled. Investors lost loads of money -- in some cases, fortunes -- and ordinary taxpayers are now finding themselves funding an industry bailout that could cost a staggering US$700 billion, perhaps even more.

Also hit hard by the financial services industry meltdown are the tech vendors that depended on high-flying investment banks, brokerages, insurance companies, and related firms for revenue -- as well as to popularize and mainstream a variety of cutting-edge products and services to IT organizations across industries.

Now that most of the major investment banks and sundry financial services firms have either evaporated, transformed, or been absorbed by other companies, an untold number of vendors in fields ranging from business intelligence to cloud computing are sadly waving good-bye to many of their prime customers. "For some vendors it's undoubtedly going to be very painful," concludes Andrew Bartels, a research analyst at Forrester Research.

As October dawns, vendors that once served a seemingly reliable and stable market are now awakening to a starkly altered reality. "It may not be a new world, but it's certainly going to be a different one," says Jeanne Capachin, research vice president at Financial Insights, a research firm that serves the financial services industry.

With many vendors reliant on financial industry sales now struggling to navigate a radically transformed business landscape, customers in fields far removed from Wall Street will begin noticing market changes, primarily in the amount and types of available products and services, but perhaps also in the number of vendors they can turn to for solutions. "Given the important role the financial services industry played in the tech market, changes are bound to happen," Bartels says.

"This will mean, for many vendors, a need to refocus on customers in fields outside of financial services," says Vivek Mehra, head of the financial services practice at IT services company Keane.

Which technologies -- and providers -- are at risk?

The most obvious technology at risk from the financial services firms' meltdown is analytics, including business intelligence. Fewer customers with cutting-edge needs, combined with slowing revenue, may have the long-term effect of stifling innovation. "It's the chicken-and-egg scenario," Mehra says. "Without the financial services vendors around to drive advancements, innovation could suffer."

But a silver lining to this cloud may be that analytics developers will refocus on mainstream market needs while downplaying exotic and esoteric offerings, Mehra suggests.

And even BI and analytics vendors may be able to mount a near-term strategic comeback, Bartels says. However, to do so, they will have to work hard to make their offerings relevant to surviving financial services firms as well as to enterprises at large. Vendors will have to focus "on providing software that's seen as a 'must have' as opposed to a 'nice to have.'" Over the long run, such a trend could lead to BI and analytics software geared more toward real-world needs than the arcane requirements of investment traders. "For many vendors, it will mark a return to the real world," he says.

Beyond BI and risk analytics, vendors active in such diverse fields as SOA, SANs, and cloud computing can also expect to feel at least some of the effects of a collapsed financial services industry.

SOA infrastructure, for instance, is widely used by financial services firms for transaction integrity and scalability. Therefore, SOA vendors who targeted financial services firms can expect to experience many of the same customer pullback and revenue issues as their BI and risk analytic counterparts. On the other hand, since financial services firms didn't play as big a role in driving SOA innovation as they did in the BI and analytics markets, enterprise customers shouldn't see any serious impact on long-term product development.

The same calculation generally holds true for the SAN market, says Mehra, where vendors over the years sold financial services firms an impressive number of systems for managing and protecting vast data repositories. But, as is the case with SOA vendors, SAN innovation isn't heavily dependent on financial services firms, so the damage shouldn't significantly extend beyond vendors' bottom lines, he notes.

For cloud computing vendors, however, the outlook appears somewhat darker. In fact, next to BI and risk analytics, cloud computing vendors may stand to lose the most from an eroded financial services market. Forrester's Bartels notes that some financial services firms led the way in using cloud computing's vast resources to test novel investment strategies and alternative model scenarios. "Not much of that is going to be happening for financial institutions in the near future," he says. The good news is that cloud computing is a nascent market with relatively few enterprise adopters heavily involved in the technology. As a result, any negative impact should be muted and limited mostly to the vendors' revenue streams.


Small vendors are the most at risk

Financial Insights' Capachin says that across all categories the biggest vendor losers will be the small, innovative firms that have "sold well into the capital markets industry." For at least some of these firms, the loss of one or more key customers could mark the end of the road as a viable business. "If it were me, I'd check with my vendors to see their exposure to the financial industry," she says.

"I just think it's going to be a tough market anyways for tech spending, but in particular if you're not a well-capitalized, well-known firm," she says. For survival, many smaller vendors will likely find themselves driven into partnerships with bigger players, Capachin says.

Conversely, while some small innovators with specialized products and a narrow market focus may be devastated by the meltdown, diversification and economies of scale should help larger vendors like IBM and Sun Microsystems withstand the collapse with only minimal damage. "IBM, for example, says that 29 percent of its revenue comes from financial services -- but only 6 percent of that comes out of the US," Bartels says. Sales in Europe -- whose financial firms have also been hit by the financial crisis -- adds another 5 percent. "So they're going to feel some pain, but it's only a small part of their overall business."

Life after death: Integration, compliance opportunities abound

Given the severity of the current crisis, it's comforting to know that there may actually be a faint silver lining on the horizon. As the financial services industry enters a new and -- in all likelihood -- very much downsized era, several fresh opportunities could arrive to benefit at least some vendors and their enterprise customers.

As banks and other institutions swallow each other up, industry consolidation may itself open new doors. "The need for integration software will be very high, because a lot of these [financial services] companies will want to change their business models," Keane's Mehra says. This trend could help spur the development of better integration software, leading to products and services designed to help merging businesses in industries beyond financial services.

Vendors with productivity-enhancing and cost-cutting technologies may also prosper. In the foreseeable future, sellers in a wide array of tech sectors -- everything from call center automation to virtual meetings to environmental controls -- should be able to take advantage of a financial services industry driven by a need to ruthlessly slash expenses. "A vendor that sells software to help cut or reduce IT cost may still be in a good position," Bartels says. Furthermore, many of these solutions will likely appeal to a broad spectrum of enterprise customers.

Mehra expects that increased government oversight will power a growing market for compliance applications in the financial services industry, just as the Sarbanes-Oxley Act did several years ago for a variety of enterprises affected by the corporate corruption scandals. "I think business intelligence will start to benefit right away because, from a regulatory standpoint, [there will be a need for] more transparency of information," he says. As a result, better and easier-to-use compliance tools could eventually become available to all enterprises.

[Steve Bennett]

NAB shuts down controversial social media site


By Kathryn Small
16 October 2008 03:14PM

NAB has shut down its social media website experiment, amidst criticism over the way it allegedly treated commentators.

NAB Corporate Affairs spokesperson Luisa Ford told iTnews that myfuturebank.org was always scheduled for closure today.

“It was an experiment to gather data, and we’ve gathered all the data we need,” said Ford. “It was always scheduled to run for a few weeks.”

The website’s aim was to provide a forum for feedback and criticism about banking experiences as part of its new offering, UBank.

The website read in part, “We need your help. Please share with us and our visitors what frustrates you about your bank, and more importantly, what you would do differently to improve your banking experience.”

But social media commentators have alleged that NAB employees posed as anonymous customers in order to admonish those who criticised the bank.

NAB said that there were no authorised attempts to market UBank by NAB employees contributing to independent blogs.

“If NAB responds to a blog entry, the contributor is clearly identified as a member of our organisation to ensure transparency with the public.

“Any unidentified comments are unauthorised and are not necessarily the view of the bank. NAB has not authorised marketing activity on any other blog sites for the promotion of UBank.”

The website was built by Loaded Tech, which also owns the domain name. According to a Loaded Tech staff member, once the project was completed, all control was managed by NAB.

Staff at Loaded Tech were under strict orders not to comment to the media today, but one staff member expressed surprise that the website had been taken down so quickly.