Post on 01-Jun-2020
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True leadership in
At TCS Financial Solutions, we take an active interest in what the business media and industry analysts say, write and tweet
about “fintech.”
That shouldn’t surprise you. After all, our clients include numerous organizations considered “incumbent” providers of
financial services.
What may surprise you is our outlook for the incumbents.
According to the prevailing narrative, it’s the incumbent banks, securities firms and insurance companies most ripe for
disruption by nimble startups.
Based on our close relationships with leaders at financial institutions of all sizes around the world, I can assure you that there
is very little complacency in the industry.
Any fintech business model that relies upon the assumption that “large size equals inflexibility” may find the incumbents
harder to displace than implied by startups’ lofty valuations.
We know fully well that the world of financial services is changing quickly. That’s why, nine years ago, we created TCS BaNCS
to allow financial institutions of any size, geographical footprint or product mix to reinvent themselves for the future.
Judging from the more than 80 customer stories we’ve presented in 25 issues of the TCS BaNCS Customer Newsletter, and
the numerous other stories that have yet to be told, the future of financial services has already arrived.
We’ve enabled banks to participate in the launch of a brand new stock exchange. We’ve automated the operations of an
insurance company across multiple products and customer channels. We’ve helped a global custodian to support 40 countries
through a single platform. And that’s just in this issue alone.
These efforts may not garner the big headlines of the “unicorns” of the startup world. Nevertheless, if you’re looking for
innovation in financial services, look to our customers, large and small.
So far, the biggest impact of “fintech” has been on customer expectations. People now expect the widespread adoption of
cashless payments, IoT-based insurance products, P2P lending platforms, shared blockchain ledgers and more, all made
available through cloud-based platforms.
We also expect those innovations to arrive. That’s why we’ve been quietly working for years on building robust and
extensible core platforms that allow financial institutions to reshape themselves at will, no matter how quickly the marketplace
evolves.
At TCS Financial Solutions, we have always strived to anticipate our customers’ evolving business requirements. That’s why
the component-based, service-oriented architecture of TCS BaNCS has the flexibility to evolve with the financial services
marketplace. Furthermore, the self-healing, highly-available technology infrastructure of TCS BaNCS ensures the enterprise
scalability and robustness needed for widespread deployment. As new business models and technologies reach maturity,
our customers will be prepared.
We don’t view “fintech” through the cloudy glass of a crystal ball.
With TCS BaNCS, “fintech” is in the rear-view mirror.
By N Ganapathy Subramaniam President, TCS Financial Solutions
3
“ ”fintech
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For any inquiries: Email: tcs.bancs@tcs.com Phone: +91 80 6725 6963
from the editor
It has been a remarkable journey in the nine years since NGS
formed our strategic business unit on April 1, 2007. Way back then,
TCS was at 89,000 employees and $4.3 billion in revenue. With our
latest numbers, we have over 353,000 professionals and revenues
of US $16.5 billion.
Over the course of these 25 issues, we’ve interviewed over 80
of our financial institution customers for in-depth case studies,
sharing the best in business strategy across banking, capital markets
and insurance.
We’ve highlighted customers from six continents, from some of
the largest and most established banks in the world to some of the
smallest credit unions growing with cloud-based services. We’ve
written about our role in supporting market infrastructure powering
the world economy, and about how we’re enabling financial institu-
tions to take part in the capital markets for the first time.
We’ve covered all eight of our annual TCS BaNCS Customer
Forums, from our inaugural event in Vienna to our events in Hong
Kong, Amsterdam, Toronto, Osaka, Dubai, Boston and Singapore
(see page 18).
We’ve delivered numerous briefings with TCS subject-matter
experts for concise insights on a wide range of relevant top-
ics in financial services, from algorithmic trading and wealth
management, and from mortgage compliance to T+2 Settlement
(see page 14).
In this issue, we add two fascinating stories to the extensive set of
customer case studies in our Corporate Library.
First, you can learn how TCS BaNCS helped Myanmar’s two largest
banks to participate in the historic first day of equities trading on the
country’s new stock exchange (see page 6).
Then, read how AlAhli Takaful Company has been able to extend
the reach of its increasingly-popular Takaful insurance offerings to
new customers in the Kingdom of Saudi Arabia and beyond (see
page 10).
It’s been an exciting journey across these first 25 issues, and based
on what’s in the pipeline, we fully expect to have countless stories
to tell about our future successes together.
Dennis Roman
Editor-in-Chief and Vice President
TCS Financial Solutions
954 423 3560 office
954 806 6660 cell
https://www.linkedin.com/in/marketingasitshouldbedone
dennis.roman@tcs.com
www.tcs.com/bancs
lett
er
Welcome to our 25th “Silver Jubilee” issue of the TCS BaNCS Customer Newsletter!
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6 Bootstrapping an Equities Market Two largest banks in Myanmar first-to-market with retail brokerage services
10 AlAhli Takaful Company Saudi Arabia’s largest provider of Takaful insurance automates multi-channel life insurance
12 TCS BaNCS for Reconciliations Multi-entity, SWIFT-compliant solution reconciles both cash and securities accounts
13 Standard Chartered Update on single-touch custody solution deployed in 40 countries for securities services
14 T+2 Settlement Move to T+2 will reshape settlement and corporate actions in the US capital markets
16 Payments Modernization A payments hub offers a customer-focused response to trends, says CEB TowerGroup’s Andy Schmidt
EVENTS18 TCS BaNCS Customer Forum, FT-TCS Financial Leaders Dinner Forum and Sibos 2015 Singapore
20 TCS Expertise in Capital Markets on display at Sibos 2015
22 TCS BaNCS Dialogues, Carnegie Mellon, CSC Middle East
23 Snapshots, Awards, Upcoming Events
contents
About TCS Financial Solutions TCS Financial Solutions is a strategic business unit of Tata Consultancy Services. Dedicated to providing business application solutions to financial institutions globally, TCS Financial Solutions has compiled a comprehensive product portfolio under the brand name of TCS BaNCS. Our mission is to provide best-of-breed solutions that drive growth, reduce costs, mitigate risk, and offer a faster speed to market for our customers. TCS Financial Solutions delivers state-of-the-art software solutions for the banking, insurance and capital markets industries worldwide. For more information, visit us at www.tcs.com/bancs
About Tata Consultancy Services LTD (TCS)Tata Consultancy Services is an IT services, consulting and business solutions organization that delivers real results to global business, ensuring a level of certainty no other firm can match. TCS offers a consulting-led, integrated portfolio of IT, BPS, infrastructure, engineering and assurance services. This is delivered through its unique Global Network Delivery Model™, recognized as the benchmark of excellence in software development. A part of the Tata group, India’s largest industrial conglomerate, TCS has over 353,000 of the world’s best-trained consultants in 46 countries. The company generated consolidated revenues of US $16.5 billion for year ended March 31, 2016 and is listed on the National Stock Exchange and Bombay Stock Exchange in India. For more information, visit us at www.tcs.com.
Copyright © 2016, TCS Financial Solutions. All rights reserved. No part of this publication may be reprinted or reproduced without the written permission from the editor. TCS BaNCS newsletter is provided to clients and prospects on a regular basis. TCS Financial Solutions disclaims all warranties, whether expressed or implied. In no event will TCS Financial Solutions be liable for any damages on any information provided within the magazine. The information is provided to outline TCS BaNCS general product direction. The editorial is to be used for general information purposes. The development, release, and timing of any features or functionality described for TCS Financial Solutions products remains at the sole discretion of TCS Financial Solutions.
From its inception, TCS BaNCS newsletter has been printed on paper from environmentally responsible sources.
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BooTSTraPPiNG AN EqUITIES MARKET
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Participating in the historic launch of Yangon Stock Exchange, retail investors queue to open brokerage accounts at KBZSC.
BooTSTraPPiNG AN EqUITIES MARKET
117
l TCS Financial Solutions enables the two largest banks in Myanmar to be first-to-market with retail brokerage services
l Full lifecycle deployment of enterprise brokerage software completed in three months
l KBZSC and AYA Trust deploy TCS BaNCS solution for securities trading and settlement, adapting global capital markets practices and standards
Myanmar’s movement toward democracy has also opened the way to the develop-ment of domestic capital markets with the promise of rapid economic growth in the near-term horizon.
KBZ Bank and AYA Bank were licensed to start their securities businesses in Decem-ber 2015, just three months prior to the scheduled first day of trading on Yangon Stock Exchange (YSX). With the assistance of TCS, KBZ Bank and AYA Bank were able set up their respective retail brokerage op-erations from scratch, placing them among the select few banks to participate in the historic milestone for YSX.
KBZ Bank, a technology-forward finan-cial institution named as the fund settle-ment bank for cash settlement on stock trading at YSX, was an obvious contender to become a leading brokerage.
AYA Bank, the second-largest bank in Myanmar, also secured a brokerage license. AYA has been recognized for its governance and sustainability efforts by World Finance magazine, and since 2012 has been a participant of the United Nations Global Compact corporate sustainability initiative.
Both KBZ Bank and AYA Bank turned to TCS Financial Solutions to meet the extraordinary challenge of launching a new brokerage in a new marketplace in the space of just three months, and they were the only large banks to actually meet the deadline.
“We just had three months to go live, progressing through the entire project lifecycle with enterprise software for two new customers, and we did it,” says Ajay Wadkar, Principal Consultant, TCS Financial Solutions.
How the race Was WonKBZ Bank and AYA Bank deployed TCS BaNCS for Securities Trading, which is easily configurable to meet the needs of retail brokerages in any market. Draw-ing upon extensive experience in other advanced and emerging markets, TCS Financial Solutions deployed TCS BaNCS as an integrated trading and settlement solution, delivering turnkey adherence to global capital markets’ best practices and standards. However, the biggest chal-lenge was not in assembling the required components for the Myanmar brokerages or localizing the software for the Burmese language, but rather in establishing reliable connectivity to the exchange. TCS had to solve this critical challenge prior to signing up brokerage customers in Myanmar.
In the absence of terrestrial connectiv-ity options such as leased lines, broker-ages have to connect to YSX using virtual private networks (VPNs) over Internet connections that are relatively slow and unreliable by the standards of highly developed markets. As an example of the present state of telecommunications in Myanmar, market data is exchanged as batch files rather than through a persistent online connection.
In response, TCS engineered intelligent workarounds to maintain reliability and assurance for trade confirmations, settlement and data exchange. This enabled TCS to demonstrate that it was ready to operate in the Myanmar market.
“We were the first to start testing on the exchange,” says Bharat Shah, Principal Consultant, TCS Financial Solutions. “We certified our product in six weeks, proving
By Bharat Shah, Principal Consultant, TCS Financial Solutions
8
inte
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wca
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kets We just had three months
to go live, progressing through the entire project lifecycle with enterprise software for two new customers.
“” Ajay Wadkar, Principal Consultant, TCS Financial Solutions
9
to the market that our software was ready and that our banks would be able to start operations much earlier than others.”
The early preparations paid off, and TCS won the business from both KBZ Bank and AYA Bank.
KBZ Bank and AYA Bank each established a separate brokerage entity to serve the retail marketplace as well as to underwrite new listings.
KBZ Group, the parent company of KBZ Bank, formed a joint venture with Stirling Coleman Capital Ltd., an independent corporate finance advisory firm based in Singapore. The joint venture, called KBZSC, provides broker-dealer and investment advisory services, and will also underwrite new company listings on YSX.
AYA Trust Securities Company, or AYA Trust, the underwriting and broker-dealer business of AYA Bank, will provide corporate finance, advisory and underwriting services.
Despite several operational and technologi-cal risk factors, in the end KBZSC and AYA Trust both went live, as planned, before the end of March 2016.
Next StepsTCS Financial Solutions will continue to work with KBZSC and AYA Trust to enhance the brokerage offering for retail customers, including support for online trading.
In addition, TCS Financial Solutions will con-tinue to serve Myanmar financial institutions with TCS BaNCS brokerage readiness solutions, as well as complementary solutions in financial inclusion, insurance and core banking.
The TCS BaNCS brokerage solution for KBZSC and AYA Trust was deployed on private clouds managed by the banks’ respective IT depart-ments. To support newer organizations that may not yet have the same level of IT capabili-ties, TCS Financial Solutions, with its domestic partners in Myanmar, will make TCS BaNCS available through a hosted, cloud-based deployment. This turnkey approach will enable rapid and low-cost deployment for other brokerages trading on YSX.
Global implicationsThe increased economic integration be-tween Myanmar and the rest of the world has tremendous implications not only for the welfare of the people of Myanmar, but also for the country’s trading partners throughout the region and the world. Given Myanmar’s bounti-ful natural resources and its central positioning between the key markets of China and India, the commercial prospects are excellent for domestic companies going public, as are the investment possibilities for retail and institutional investors alike.
Both KBZSC and AYA Trust expect to be leading players in what is expected to be a high-growth business in helping domestic companies to go public on YSX.
For companies seeking to expand, the high cost of bank funding in Myanmar makes equity funding an extremely attractive proposition. The pipeline of companies slated for new listings on YSX will include several that are already traded through OTC markets or in private equity deals. New listings will also come about from entrepreneur-led ventures seeking to capitalize on the fast-growing Myanmar marketplace.
The introduction of a public market for equities smooths the way for domestic com-panies to enter into joint ventures with foreign partners, further facilitating the flow of foreign direct investment into Myanmar. Also, the availability of publicly-listed equities expands the pool of institutional investors that can participate in the growth of the market.
From the point of view of retail investors, the launch of a new equities market opens up a new asset class having the promise of better long-term returns than bank deposits can offer. As investment opportunities expand with new listings, the equities market will provide greater diversification compared to other investment opportunities available in the marketplace.
The initial response to the launch of retail brokerage services has been highly encourag-ing. At the opening of KBZSC, there were lines around the block for people signing up for new brokerage accounts.
Through the establishment of democratic institutions and capital markets, the gradual opening of Myanmar to the outside world promises to inaugurate a new era of peace and prosperity in the region. n
Launching ceremony of AYA Trust Securities Company Ltd., held at AYA Bank Head Office on 30th January 2016
At left: TCS team in Myanmar: Bharat Shah, Principal Consultant, Ravindra Joshi, Consultant, Ajay Wadkar, Principal Consultant, Karthik Krishnamoorthy, Assistant Consultant
10
alaHli TakaFul COMPANYMulti-channel, multi-lingual solution for group programs and life insurance automationBy kaushik ravishankar and Vijay ramachandran, TCS Financial Solutions
ALAHLI TAkAfuL CompAny (ATC) is the kingdom of Saudi Arabia’s largest provider of Takaful Insurance, a cooperative form of insurance permitted by Sharia Islamic Law.
ATC offers two main product lines: life insurance products
for individuals including unit-linked investment products, and
group life programs for organizations.
National Commercial Bank (NCB) offers ATC’s life insurance
products through its bancassurance channel. As the largest
bank in Saudi Arabia and the leading financial institution in the
region, NCB represents the main distribution channel for ATC’s
retail business.
ATC distributes group insurance products through a
broader set of channels, and until recently, the group business
relied upon highly manual processes. “Our strategy was to start
growing our business from the group side, which requires a
dynamic system to support that growth across different
channels,” says Mr. Abdulrahman Al-Obrah, CEO of ATC.
In late 2013, ATC began the process of selecting a new ven-
dor, with the objective of deploying a single solution for life
and group products that could be distributed across multiple
channels. “We looked for a reliable vendor with international
experience, a proven track record with successful implementa-
tions, and ongoing good relationships with customers,” says Mr.
Abdulrahman Al-Obrah. “We also wanted to find an application
reflecting the overall best practices in the market without the
need for doing a lot of customization.”
Out of nine companies invited to participate, three were
short-listed for the final stage, during which time ATC
executives visited customers of the finalists. “We asked decision-
makers in each of those companies, from top management and
IT management, for their experience and feedback, and even
their suggestions and recommendations,” says Mr. Abdulrah-
man Al-Obrah. “Based on our evaluations and the feedback we
received, we decided to select TCS.”
TCS BaNCS, in addition to supporting life insurance with
unit-linked investment products and group life programs, also
included a feature that some of the other contenders lacked—
a multilingual interface. “We thought that would be a basic
feature in a Takaful application, but we were surprised to see
that some of the vendors in the market were unable to provide
Arabic language support,” says Mr. Abdulrahman Al-Obrah.
Another main concern was the data migration from earlier
technology solutions. “That’s always the biggest challenge that
any company goes through in deciding to change system, and
one of the factors that we considered in selecting TCS was their
previous experience in data migration,” says Mr. Abdulrahman
Al-Obrah.
insu
ranc
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One of the factors that we considered in selecting TCS was their previous experience in data migration.
“
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ATC formed a project steering committee consisting of all
of the business unit heads, supported by resources from
operations, finance and IT.
In addition, ATC hired a dedicated project manager to work
with the offshore and onsite teams from TCS. “The high level of
engagement from the offshore and onsite teams, as well as from
management, helped to mitigate the risks that we faced during
the project,” says Mr. Abdulrahman Al-Obrah. “That’s what made
it a successful implementation.”
The first phase of the implementation was completed in
2015 with full migration of legacy retail policies to TCS BaNCS,
including distribution enabled through NCB’s bancassurance
channel. The group life module was launched in February 2016.
The new solution allows ATC to grow across both sides of the
business, retail and group.
Automation of the manual processes that had been used to
deliver group policies has been a major change. “We can now
grow our business, while also ensuring that we provide our
customers with the required high level of servicing, starting
from policy issuance through to invoicing and reporting to all
stakeholders,” says Mr. Abdulrahman Al-Obrah.
ATC’s retail capabilities have also been boosted by full
automation. “The turnaround time for policy activation has
been significantly enhanced,” says Mr. Abdulrahman Al-Obrah.
Based on these results and the experience throughout the
project, ATC management gave TCS high marks for profes-
sionalism and engagement. “TCS showed their dedication and
willingness to work with us, as the customer, to find solutions,
and that makes it a partnership rather than a vendor-customer
relationship,” says Mr. Abdulrahman Al-Obrah.
“We’re looking for TCS to be a partner for the long-term,”
he adds. n
FaST FacTSalaHli TakaFul comPaNy (ATC) specializes in
offering Takaful insurance products and services
in the Kingdom of Saudi Arabia.
Takaful, as an insurance concept, means to
“guarantee each other.” A Takaful contract is
based upon the core principles of co-operation,
protection and mutual responsibility for all
participants.
aT a GlaNcEcompany
ALAHLI TAKAFUL COMPANY
Headquarters
Jeddah, Saudi Arabia
Business challenge
Migration to a highly-automated,
Takaful-compliant insurance solution for life
and group programs, to be delivered across
multiple channels, including bancassurance
Solution
TCS BaNCS for Takaful Insurance
We’re looking for TCS to be a partner for the long-term.
“”
Mr. Abdulrahman Al-Obrah, CEO of ATC
TCS Financial Solutions has added Reconciliations to the TCS
BaNCS product suite.
TCS BaNCS for Reconciliations is a multi-entity, SWIFT-
compliant solution that covers reconciliations for both cash and
securities accounts. Built on the robust, reliable, secure and scal-
able architecture of TCS BaNCS, the Reconciliations solution can
be deployed either as an integrated component of other
TCS BaNCS solutions, or as a standalone.
The first customer of TCS BaNCS for Reconciliations was
Mercantile Bank Ltd., a bank serving business and commercial
clients in South Africa, a highly innovative market in financial
technology. With the new TCS BaNCS solution in place,
Mercantile Bank has increased automated matching by 70
percent, which in turn has sped up the reconciliations process by
80 percent.
Furthermore, drawing upon unparalleled depth of experience
in product deployment, TCS completed the implementation in
eight weeks, three weeks ahead of schedule and to the delight of
the bank.
“The TCS BaNCS implementation heralds another milestone in
our journey towards providing solutions that anticipate customer
and market needs,” said Karl Kumbier, CEO of Mercantile Bank.
Additional implementations are progressing at banks in Israel,
Kuwait, Singapore and the United States.
Aligning the booksReconciliation ensures that the financial records of any
organization as maintained in their bank accounts are precisely
aligned with the records maintained in their accounting systems.
On the securities side, reconciliation ensures that the internal,
post-settlement record of holdings of shares, bonds and other
financial instruments are consistent with the records at the
depository. This has to be done for every security holding in
every account. When there are position mismatches or breaks,
the settled trades can be matched to identify the reason for
the break. These crucial back-office processes usually require
significant manual intervention, which is a time-consuming and
error-prone approach to reconciliation.
TCS BaNCS for Reconciliations uses sophisticated business rules
and patent-pending artificial intelligence (AI) algorithms to match
accounting entries and balances maintained in the two systems.
Future releases of the product will enhance the AI-based
“deep learning” techniques, for it to learn from historic matching
patterns and to make the process more effective over time.
Many straightforward business rules will be generated
automatically, minimizing the number of rules that users have
to create themselves.
The improved user experience of TCS BaNCS ensures faster
identification of exceptions through online alerts, color-coded
records and online audit trails. Exception items, or “breaks,” are
grouped into priority buckets based on user-defined parameters
such as amounts and aging, so that users can configure alerts as
appropriate to the underlying business.
Users are assigned specific accounts through a unique work
allocation hierarchy that ensures the appropriate segregation
of accounts with configurable access controls, and fine-grained
workflow authorizations.
TCS BaNCS is fully integrated with standard SWIFT message
types appropriate to the reconciliation process.
With a combination of intelligent features that are unique
within the industry, TCS BaNCS has given financial institutions
a new approach to managing reconciliations, one of the most
fundamental operations in financial services. n
Eight-week deployment in South Africa; further implementa-tions in Israel, Kuwait, Singapore and USA.
tCs banCsfor
reconciliations
80% faster
By Hema Thomas, Senior Consultant, TCS Financial Solutions
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“We had to roll out initially to 17 markets, but within the space
of 12 months, Standard Chartered went through two major
acquisitions, which changed the 17 to 40. We had to have a dif-
ferent approach on how we would manage to roll out to a larger
number of markets within the same timeframe – which, in our
case, was about four years.
“Once we got over the initial hurdles [in the first year], within
the second year, we developed and delivered successfully 17
markets.
“We have a platform now which delivers a standard service
across many markets where only Standard Chartered plays in
that market. We have clients who receive the same level of ser-
vice, whether it’s in their asset servicing or their custody servic-
ing. That’s a great achievement, which I don’t believe any other
international bank has been able to fulfill.”
— Peter OkaneProduct Development Head, Transaction Banking,
Standard Chartered Bank
“We’re present in the markets of Asia, Africa and the Middle East,
and we cover 40 different countries for securities services.
“Last year, we entered a new market, Jordan — which we
managed to do start-to-finish within 60 business days. That
would not have been possible had we not been on a single
platform.”
— Alan Naughton Head of Securities Services and Corporate Agency & Trust,
Transaction Banking, Standard Chartered Bank
Then... The custody project commenced in late 2010, and thus far, the updated, single-touch core custody
solution has been deployed in three markets: the Philippines, Vietnam, and Singapore.
TCS BaNCS #16 (2012)
...and Now
There are several factors that you need to consider in choosing
a partner, and I use the word “partner” deliberately.
You need to ensure that within the space of the overall project,
you have somebody who’s going to be there for the good times –
and more importantly, for the bad times.
There will always be bumps in the road, and the depth of your
partnership is challenged when you have these difficult times.
You need to identify somebody who’s going to be there — for the
whole duration of the project.
That strong partnership does not come overnight. The level
of trust has to be built from the personal level and from the
professional level.
That’s what we’ve achieved from this program with the key
partners that I deal with at TCS. Peter Okane n
Experience certainty. IT ServicesBusiness SolutionsOutsourcing
2012 Number 16
Artwork provided. Please do not recreate.
Date : 31 I 01 I 2007Title : Tata and TCS Marks - Stacked with TaglineDesign Magger : Gargi SharmaProject Co- ordinator : Vishal JhunjhunwalaColour : Pantone 2427 CSoftware Formats : CorelDraw 11, Adobe Illustrator CS2
IMPORTANT : COLOURS USED TO CREATE THIS MECHANICAL ARE FOR VISUAL SUGGESTION ONLY. USE PANTONE COLOUR SWATCHES TO MATCH FOR CORRECT COLOURS. EVEN THOUGH THIS MECHANICAL HAS BEEN CHECKED FOR ACCURACY, PLEASE DOUBLE CHECK PRIOR TO RELEASE TO THE VENDOR. IF INSTRUCTIONS ARE FOUND DEFICIENT, PLEASE CONTACT corporate.o�ce@tcs.com
Tata and TCS Marks - Stacled with TaglineFor use in 2D applications
Tata Consultancy Services Identity Guidelines I Jan 2007
Guide-sheet developed by Design Services, Corporate MarketingCopyright © 2007 Tata Consultancy Services Limited
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One WOrld, One TOuch
Standard chartered Bank provides
an innovative “single-touch” custody model
Visit us at Stand 4B05
TCS is #2
in FinTech100 Ranking
Briefing on regulatory compliance in the United States
Credit Union Australia deploys mobile app
SOFGEN joins TCS BaNCS Global Channel Partner Program
Savvis hosts TCS BaNCS for North American clientspl
uS n n n n
Advice on selecting a Partner for a Major Project
Standard charteredAn update on the “single-touch”
custody model deployed in 40 countries
Peter Okane
Alan Naughton
14
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Q: What is t+2?It’s a rule change that speeds up settlement in the US
financial markets from three days to two days. Current
practice allows three days (“T+3”) between the trade date
when an order is executed, and the settlement date when
the securities are typically exchanged for payment. The
proposed implementation moves that up a full day, to “T+2.”
Q: Which entities and financial instruments are covered by t+2?The shorter settlement cycle will affect any entity that
facilitates trading, including retail clients, investment
managers, hedge funds, custodians, broker dealers and
markets/depositories. Financial instruments covered by
T+3 settlement include equities, corporates, municipal
bonds and unit investment trusts (UITs) in the U.S. market.
Q: When will t+2 implementation occur? Industry testing is scheduled to occur in the first half of 2017,
with the implementation scheduled for September 5, 2017.
The go/no-go decision will be made in August 2017.
Q: What needs to change to achieve t+2 settlement?Many market practices will have to occur earlier, ideally
on the trade date. The industry will have to sequence
deliveries to maximize matching and settlement efficiency,
and work to manage the possibilities for settlement failure
or late settlements.
Q: Which settlement processes need to be re-engineered?A good place to start would be to affirm trades on the trade
date.
Proper settlement instructions must be included along
with each trade. Without complete instructions, the risk of
settlement failure increases, as does the need for unwieldy
workarounds such as suspense accounts with internal
transfers handled post-settlement.
Messaging is also critical. In the T+3 world, some mar-
ket participants exchange files at set times, but such an
approach creates artificial delays. Under T+2, trading and
settlement systems should use event-based messages,
triggered automatically upon the completion of the prior
process.
T+2 Settlementin the uSa
Are you ready?
The move to T+2 in the U.S. has the potential to reshape not just settlement, but also corporate actions, financing and collateral management. It’s even a prerequisite for cross-border market harmonization.
Interview with andrew Zelenka, Principal Consultant, TCS Financial Solutions
715
Market participants will have to process higher volumes
in a compressed timeframe. As such, technology infrastruc-
tures, including chipsets, databases, applications and web
servers, will need to be tested and optimized for high avail-
ability processing. It will also be necessary to ensure that
the higher volumes are supported by real-time data backup
and disaster recovery mechanisms that support redundant
processing with no single point of failure, along with the
ability to quickly switch to backup systems with no loss of
transactional data.
Q. how will t+2 affect corporate actions processing ?Banks, depositories and data vendors will need to
ensure that dates and remittances are properly calculated
and communicated. There will be adjustments for how
organizations calculate the ex-date [the cut-off point for
entitlements] for regular-way trades, and the due bill period
[when remittances to investors are due] for both regular
and irregular trades. These adjustments affect processing
for both announcements and remittances. Additionally, the
cover/protect period must be reduced by one business day
after the offer expiration date.
The required changes will ripple throughout the
marketplace. DTCC will be making several changes to
properly process ex-date notifications, and to the DTC
interim accounting process, including bond interest. Firms
with proprietary processing systems will have to check
the way that they derive ex-dates. Exchanges will need to
account for the shortening of the ex-date period and any
associated downstream processing of that information.
Also, any firms that trade around expiration dates of
voluntary reorganization offers will have to review their
processes for claiming failed deliveries, recalling securities
and tracking trades pending settlement.
Q. how will t+2 affect financial firms in other regions outside the U.s.?Many other markets have already shortened settlement
times, and much of Europe and Asia is already on a settle-
ment cycle shorter than T+3.
Aligning settlement cycles across geographies could
help promote harmonization of markets, enabling global
financial firms to better manage cash flows and simplify
financing and collateral needs. However, global harmoniza-
tion may be more challenging to achieve than moving to
T+2 in the domestic market.
Q. how will t+2 affect financing and collateral management?Both will have to become much faster. Trade execution is
measured in sub-seconds, while financing and collateral
management are measured in hours or days. That mis-
match won’t work.
It’s a complicated problem. These transactions involve
multiple financial intermediaries representing multiple
parties, and often use the same position as collateral.
Furthermore, clients may operate across multiple time
zones, and key participants can be on the other side of the
world from the settlement location. Nevertheless, financing
and collateral management transactions are expected to
occur close to the settlement date of an underlying trade.
For T+2 to be effective, the technology and business
processes that support financing and collateral manage-
ment have to be fully updated and rebuilt for speed. n
“
”
firms must look beyond short-term goals and evaluate options to re-engineer their business processes and enhance the IT infrastructures of the affected businesses processes before transitioning to a reduced settlement cycle. They must view this as an opportunity to invest in their technology infrastructure, to achieve the end objective of decreasing risk while enhancing business efficiency.
Ganesh Padmanabhan and Ramakoteswara Roa T., “Shortening the Securities and Cash Settlement Cycle
from T+3 to T+2.” TCS BaNCS Research Journal 2:5, 44-51 (Tata Consultancy Services, 2014).
16
Payments modernization is viewed through one of two
lenses: Either it’s a must-do, akin to compliance, or a more visionary
approach that seeks to do all sorts of new things.
The profile of a specific financial institutions tends to fall along this
spectrum based on leadership. If it’s the CFO who became the CEO, you’re
on the compliance end. If you’re led by the CIO team, you’re going to look
at this as an opportunity.
We see the proper response being modernization through a payments
hub. This has the potential to improve customer service and customer
experiences, improve processes, increase sales and improve customer
acquisition.
In the early days, the idea was to have a high-value hub and a low-value
hub. That’s hard to manage in today’s environment. Instead, the majority of
banks want a single hub in place for all their payment types.
Take an approach where you can accept any payment type in any for-
mat, put it through a common process and deliver it to any endpoint. It
gives you so many opportunities to be able to control your infrastructure
through a common interface, and to push rules out once rather than
dozens of times.
Remarks by andy Schmidt, Principal Executive Advisor, CEB TowerGroup, on payments modernization, given at the 8th Annual TCS BaNCS Customer Forum
paym
ents PAYMENTS
modErNiZaTioNA single payments hub is the answer,
according to CEB TowerGroup research
the market for payments hubs is still open for investment36% HAve A pAymenTS Hub
64% Do not HAve A pAymenTS Hub
Source: CEB Enterprise Payments
Showcase Survey
17
the market for payments hubs is still open for investment
the Races are onThe race to payments modernization is actually three races
One l Banks are racing to zero in terms of transaction
pricing. Digital commerce and person-to-person (P2P) transactions—
which customers expect for free—have increased sharply. Therefore,
financial institutions must be able to meet this rise in transaction vol-
ume with lowered transactions costs in order to retain profit. At the
same time, financial institutions must still combat fraud and other
issues with the same vigor as before. Features such as automatic rules
and automatic routing of problem payments to repair and/or exception
queues will help separate items that need greater attention from items
that can pass straight through, and can help decrease costly manual
oversight.
Two l Banks are racing to real time. Financial institutions are
expressing a greater need to process and post transactions in real-
time across all channels. This need will require investment not only in
payments initiation in real time, but also in creating real-time
capabilities for other payments-related activities like balance-checking,
fraud screening, and liquidity management. While these additional
investments may seem daunting, forward-looking banks are using
these investments to create new revenue-generating, value-added
services, such as liquidity management services for correspondent
banks.
Three l Banks are racing for new revenue. And finally, banks
are racing for revenue in terms of creating new revenue streams,
preserving profit margins, and protecting against disintermediation.
Financial institutions are challenged with developing payment
products and services that customers will use, at a cost that is competi-
tive with more agile and risk-tolerant financial technology companies
(“fintechs”). To accomplish this, many larger banks are partnering with
fintechs to bring innovative technology solutions to their customers.
In this symbiotic relationship, banks can gain access to cutting-edge
technologies quickly and cost effectively while technology
companies gain access to the bank’s greater customer reach and
knowledge of the financial regulatory environment.
l CEB TowerGroup, “Winning the Payment Triathlon: Racing to Zero,
Real-Time, and Revenue, Payments Hubs Market Update,”
CEB, 2015.
Ceb towergroup Analysts’ view
“TCS BaNCS for Payments offers banks the flexibility
to integrate with existing and new/upcoming market
infrastructure and manage multiple payment formats.
This payments hub solution focuses on re-routing
and standardizing payments to help improve
a bank’s efficiency and workflows.”
l CEB TowerGroup, “Winning the Payment Triathlon:
Racing to Zero, Real-Time, and Revenue,
Payments Hubs Market Update,”
CEB, 2015.
You can read the full report here:
http://www.tcs.com/news_events/analyst_reports/
pages/Winning-payment-Triathlon.aspx
“TCS’ recent additions, including drag and drop
dashboard elements and conditional white listing im-
prove the usability of its offering. Likewise,
the ability to consolidate alerts creates
a clearer picture of the threats the bank faces,
both for the institution, and, its regulators.”
l CEB TowerGroup, “Threats with Aging Infrastructure:
Anti-Money Laundering Systems Market Update,”
CEB, 2016.
WebinarTCS BaNCS with CEB TowerGroup recently
hosted a webinar, “Driving Small Business
and Corporate Engagement through
Digital,” hosted by Jason Malo, Research
Director, TowerGroup Retail Banking, and
Debbie Buckland, Consultant, TCS BaNCS
Financial Solutions
Watch the webinar at:
http://on.tcs.com/24gCRcF
18
Left: N. Ganapathy Subramaniam. Below: Attendees at the 8th Annual TCS BaNCS Customer Forum
even
ts tCs banCs customer Forum
The 8th Annual TCS BaNCS Customer Forum was held at the Fullerton Hotel in Singapore
on Wednesday, October 14, 2015.
The TCS BaNCS Customer Forum gives TCS BaNCS clients the opportunity to hear
success stories directly from their counterparts at other financial institutions. n
a
19
Left: N. Ganapathy Subramaniam. Below: Attendees at the 8th Annual TCS BaNCS Customer Forum
FT-TcS Financial leaders diNNEr ForumThe art of the possible: digital innovation in payments and securities
The 5th annual FT-TCS Financial Leaders Dinner Forum, organized with
The Financial Times, was held in Singapore concurrent with Sibos 2015.
The panel forum, titled “The art of the possible: Digital Innovation in
Payments and Securities,” featured (in photo below, left to right):
l Karin Fliinspach, Head of Cash Products, Transaction Banking,
Standard Chartered
l Paolo Cederle, CEO, UniCredit Business Integrated Solutions
l Nick Scott, Vice President, TCS Financial Solutions
l Rhomaios Ram, Managing Director, Deutsche Bank
l Cardiff Garcia, US Editor, FT Alphaville, Financial Times n
SiBoS 2015SINGAPORENGS joins Technology Forum panel on digital identity
N. Ganapathy Subramaniam, President of TCS Financial
Solutions, participated in the Sibos Technology
Forum in a panel titled: “Spotlight on Digital ID.”
Topics covered the latest developments of trusted
digital identity, including the possibility for banks to
play a central role.
“It’s a great opportunity for the banking industry,”
said Subramaniam. “Banks can come together to
create a unique offering and make it convenient for
end users on a trusted basis.”
The panel was moderated by Julian Gorman,
Strategic Engagement Senior Director at GSMA.
Also on the panel:
l Usama M. Fayyad, Ph.D., Chief Data Officer
at Barclays
l Sean Gilchrist, Managing Director of
Commercial Digital, Lloyds Bank
The entire video of the panel can be viewed on
YouTube. n
20
on display at Sibos:tCs expertise in
Capital MaRKEtS Demonstrating excellence in innovation, settlement,
digital trading, asset servicing and end-user reporting
Firms are increasing iT budgets and
allocating spend to innovation. One example of
innovation being pursued by TCS is the integration of
online trading with social media, which will yield
benefits in usability, personalization, decision support,
rich content and peer-to-peer networking.
The benefits of moving to the T+2 settle-
ment cycle far outweigh the perceived drawbacks.
However, there will be impacts to consider in terms
of failed trades, reduced timeframes for securities
lending transactions, required modifications to liquidi-
ty and collateral management, changes to multi-listed
securities, and increased complexity of cross-border
transactions.
We may expect an even shorter settlement cycle in
the future, and moving to T+2 would be the first step.
However, T+0 or T+1 poses high risk and challenges
to market participants due to the lack of key enablers,
technology limitations and increased investments
required for implementation.
The “online social” world requires organizations to move from a perspective focused on the single customer
view to a broader picture of the universal social experience. That’s why online trading firms will have to offer not only any-
where, anytime capabilities, but also a user experience fully integrated with social channels across trading, research and ana-
lytics. Just as investing occurs in a borderless world, so do conversations and interactions surrounding investment decisions.
The supporting technologies have to deliver access to multiple devices and multiple platforms. That’s why the “Hybrid App”
approach, as used by TCS BaNCS Digital Trading, offers cross-platform services that tap into native APIs for peak performance.
l Securities Trading: “Trade Digital - Omni-channel Experience,”
delivered by Bharat Shah, Principal Consultant
l Custody: “Shortening The Settlement Cycle - The Way
Forward,” delivered by Kamal Khurana, Principal Consultant
l Capital Markets: “Default is Digital: Future innovation in
Capital Markets,” delivered by Nick Scott, Vice President
even
ts
21
an effective solution for end-user reporting
has to capture data from multiple applications and make
it available to a powerful big-data ecosystem. Then, the
resulting data has to be made accessible via flexible re-
porting tools through a wide variety of channels and form
factors.
TCS BaNCS Objects, the reporting tool of TCS BaNCS,
allows users to write reports in minutes, fully incorporat-
ing the latest information from Corporate Actions and
Securities Processing databases. This approach reduces
time to market for new reports, generating fast benefits
at reduced risk.
l Capital Markets: “Can End-user Reporting
become a strategic tool?” delivered by Kamal Khurana
The traditional asset servicing model
faces cost, risk and revenue pressures, along with market
and regulatory compliance challenges, high market vol-
atility, and increased complexity of asset classes. To im-
prove the model requires a high degree of automation,
self-repair and customer self-service.
One example is enabling customers to access informa-
tion and issue instructions on corporate actions through
their mobile devices. Clients should be able to generate
reports and resolve queries “on the go,” with operations
managers capable of taking action anytime, from any-
where.
l Corporate Actions: “Trends in Asset Servicing,”
delivered by Devesh Gupta, Principal Consultant
22
tCs banCs DialoguesExpanded geographic reach and product coverage for TCS BaNCS User Groups
TCS BaNCS Dialogues, formerly known as the TCS BaNCS User Groups, will now
encompass a wider range of topics across a broader geographic range. This
expansion will enable greater and more frequent participation by the entire
TCS BaNCS user community.
Recent meetings have been held in South Africa, Brazil, London, New York and
Singapore. n
even
ts
At left: N Chandrasekaran
(“Chandra”),
CEO and Managing
Director, TCS.
At right: Subra Suresh,
President, Carnegie
Mellon University,
with Chandra.
TcS @
cmu In August 2015, Carnegie Mellon University in Pittsburgh, Pennsylvania announced a $35 million gift from Tata Consultancy Services
to the internationally ranked research university.
Representing the largest corporate gift to CMU and the largest gift from outside the U.S., this donation will fund a new facility,
the Tata Consultancy Services Building, which will support education and cutting-edge research by CMU faculty and students.
“TCS is proud to invest in this landmark partnership with CMU to promote market-driven innovation and accelerate advance-
ments in technology, “ said TCS CEO and Managing Director Natarajan Chandrasekaran. “As global leaders, Carnegie Mellon and
TCS have the intellectual power, creativity, institutional nimbleness, and global reach to capitalize on new opportunities and have
a lasting impact on society and industry through cutting-edge digital research and a long-term commitment to education.” n
Clearing, Settlement & Custody middle East
TCS BaNCS was a sponsor of Clearing, Settlement & Custody Middle East, the only event in the region
focused on post-trade services. Conference topics covered Middle East regulations and standards, market
trends, and opportunities in the asset management sector.
23
Upcoming Events
siFMA oPsMay 2-5, 2016miami beach, fla.the AsiAn bAnkeR sUMMitMay 10-12, 2016Hanoi, vietnam tCs innovAtion FoRUMMay 24, 2016LondonissA syMPosiUM May 24-27, 2016ermatingen, Switzerland AMeRiCAn bAnkeR’s DigitAl bAnking sUMMitJune 20-22, 2016new orleans, Louisiana
Snapshots from Singapore
1. nGS with Arvind Singh, khan bank. 2. marco Tempest, magician and
Techno-Illusionist. 3. Tess Ravalo, philippine Depository & Trust
Corporation. 4. L-to-R: murray Stocks, Dewald Smit and Louise Currie
from nedbank, with Rachit Tayal and nGS from TCS. 5. entertainment.
6. nicole Walker, postfinance.
1 2
3 4
5 6
awards Skoch order of merit
In December 2015, TCS was awarded the Skoch Order
of Merit during the 42nd Skoch Summit in New Dehli,
India, based on the TCS BaNCS implementation for
New India Assurance Co. Ltd. The Skoch Awards
celebrate human excellence and agents of change in
Indian society.
The asian Banker implementation awards
Letshego Holdings, based in Botswana, won the “Best
Regional Core Banking Implementation in Africa” award
at The Asian Banker Implementation Awards. TCS BaNCS
supports Letshego Holdings in Botswana, Swaziland,
Tanzania, Uganda, Zambia, Namibia and Mozambique.
TcS ranked #1 in FinTech
Tata Consultancy Services has been recognized as the
leading global financial technology provider in the 2015
IDC Financial Insights FinTech Rankings Top 100. TCS
moved into the top position after being ranked second
since 2012, and maintaining a top-ten ranking for the
past eight years.
BNP Paribas Securities set out to consolidate custody operations. They found a certain way.
BNP Paribas Securities Services (BNP Paribas) is the leading European provider of securities services for fund managers, financial institutions and businesses. To keep pace with the ever-changing sector, BNP Paribas required real-time information in corporate actions. It needed a solution that would facilitate the management of all kinds of corporate events and also automate reporting of these events. Tata Consultancy Services (TCS) implemented the Corporate Actions solution from TCS BaNCS, an integrated product suite for financial services, to consolidate the global and local custody operations onto a single IT platform. As one of the world’s fastest growing technology and business solution providers, TCS enabled a high degree of standardization to upgrade business processes to support higher volumes, and facilitate the processing of 150,000 corporate action events in a year, thus pushing up STP alongside accurate client reporting and scaling up of their business.
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BNP Paribas__240314_Prepress.pdf 3/24/2014 10:49:54 AM