Buzuyev group’s competencesBanking and financial solutions KIEV 2015

Executive summary

We are a group of mathematicians and IT specialists, graduates of M.V.Lomonosov Moscow State University, Kyiv Taras Shevchenko National University , The University of Sheffield. we have 20 years history of successful banking automation system development including

creation of Ukraine’s biggest Corebanking system which supported about a third of country’s banking sector;

we have extensive experience of stock exchange and financial market IT support including independent development of functional specifications for National Depository of Ukraine;

we have successfully implemented high-load/high-performance billing systems for regional energy supplying companies across Ukraine;

we created and implemented several generations of retail banking management systems; we created and implemented a number of card processing systems for banks and fuel retail

traders ; we created BDW/BI solutions for the biggest universal banks in Ukraine we have got very extensive experience in creating the Dodd-Frank reporting system for one of

the biggest investment bank in the world;

What we are looking for?

Partners in Canada in order to run together a software development/consulting company (E.g. in New Brunswick)

Software development contracts in areas where we can apply our knowledge and experience efficiently

Investors if no partners, no contracts Existing Canadian or American IT/Software development company

which plans to obtain an additional department inside absolutely ready for business. If no partners, no contracts and no investors

Part ISoftware developmentOUR COMPETENCES

What have we done already?

Those projects we have completed made us understand that all the financial systems have a lot of common features. We have managed to classify typical processes, reporting system elements, user roles, products, services and operations. As a result we were able to create a prototype of innovative industrial framework intended to facilitate implementation of corebanking systems, retail banking solutions, billing systems, clearing and settlement platforms.

Based on this prototype framework we have created a test product - a retail banking system. This system was highly praised by one of “Big 4” Audit Companies and named “one of the most promising projects” in 2008.

Important features of the framework

It is built on the latest industrial-scale base - Java2 Platform Enterprise Edition. Cloud-ready architecture;

100% implementation of Service Oriented Architecture principles , which permits seamless integration with latest software systems;

Has no reasonable limits for the number of clients contracts and transactions while providing high scalability option (more than 50 million of payment transactions dally) ;

Offers built–in mechanism of business process (BPM- engine); Implements a complex decision making mechanism based on BPM; Offers easy integration with all modern digital sales channels; Has built-if front-office subsystem; Has the ability to perform vast majority of operations in remote access regime through common–use

Internet connection channels; True 24x7 operational mode. Allows creation of standardized operations and services on high-level programming language which

allows to launch a new product in a week time; Can be used by a number of independent financial institutions from one (multi-tenant mode) still

ensuring complete and reliable segregation of data. Secured with data segregation mechanism.

Preferable technology stack

1.  Enterprise platform: Java EE7         - JPA (Java Persistence API) implemented by Hibernate.       - EJB (Enterprise Java Beans), JMS (Java Message Service) supported by Application Server       - JAX-RS (Java API for RESTful Web Service) implemented by JBoss 2. Application Servers: WildFly (full Java EE7 certified), JBoss EAP, WebSphere Application Server v8.5, Oracle WebLogic Server 12c. 3. RESTful framework: RESTEasy - It is a fully certified and portable implementation of the JAX-RS specification. 4. Business Intelligence and Reporting Tools (BIRT), IBM Cognos, SAP BO    5. Web Server for proxying, caching static content, balancing: NGINX. 6. Web GUI: Bootstrap7. Database: Oracle, DB2, PostgreSQL   8. Data Store: ModeShape   9. Distributed Cache Engine: Ehcache

Our skill coverage

We keep core team consisting of full set of knowledge keepers covering all the needed skills: Deep knowledge of software development methodologies with intensive experience Deep knowledge of SDLC and Business process improvement Project management, Software development management Requirements change management BAs, FAs, Business architects UML/Database/DWH/BI modelers Full set of JEE architects and JEE developers Full set of ASP.Net, .NET architects and developers QA team (DEV, SIT, Regression. UAT, Performance,…) SL2/SL3 Production support team Configuration/Environment management team

Part IIETL/DWH/BI competences

Main Competences and experience

BI/ DWH/ ETL for banks

RISK MANAGEMENT CONSULTING for banks

Banks

Insurance companies

Retailers

Financial service providers (Invoicing, billing, asset management)

Business directions - Market Segments

Complex ETL/DWH/BI solutions delivery based upon proven and scalable platforms

Consulting support in building of:o CES (Controllability Enhancement

Strategy)o DSS (Decision Support systems)o Enterprise level risk management

systems

Business is in the trend

Gartner Predicts Business Intelligence and Analytics Will Remain Top Focus for CIOs Through 2017http://www.gartner.com/newsroom/id/2637615

Our Solutions BI & DWH, Risk management consulting for banks

Enterprise Risk Managemento Credit Risk Management o Liquidity Risk Management o Market Risk Management o Operational Risk Management

Basel II/ Basel III

We own the following well-known and author's approaches in:

oBalance sheet statement analysisoAsset Liability Management (ALM)oLiquidity and Cash Flow ManagementoFunding Transfer pricing modelsoPortfolio management

Decision-centric system and processes Action-oriented system and processes Predictive analytics

It marks a transition from MIS (Management Information Systems) to DSS (Decision Support Systems)

ENHANCEMENT of CONTROLLABILITY

We propose new generation systems based on :

We provide our customers with: Decision making effectiveness control

at each management level Shifting from rational decisions to

optimal ones

ENHANCEMENT of CONTROLLABILITY

We consider management processes holistically: Finance – Business – Treasury – Risk Management – Marketing.

We base our solutions on Decision-making and Optimal automatic control and modern finance theories.

Based on Gary Cokins cash flows models we developed an author’s Complex Risk Management System for banks which integrates all the following risks:

Credit risk Deposit risks Market risks Operational risk Liquidity risk

Using the system ensures the target return on equity, liquidity and coverage of risks.

ENHANCEMENT of CONTROLLABILITY

Retail Deposit Portfolio management

the construction of arbitrage-free and risk-free zero-coupon yield curves

building up marketing supply curves of deposits (total and across to maturities)

assessing the early withdrawal and rollover risks of deposits based on "cash flow at risk“ approach

deposit pricing taking into account the mutual influence of early withdrawal and rollover risks, migration between the deposit products and embedded options

We have competence in addressing the full range tasks of managing a portfolio of retail bank deposits, including :

Retail Deposit Portfolio management

building the dynamic optimal pricing of deposits based on automatic control theory that allows increasing the controllability of attracting the retail deposits

an novel estimates of lifetime of cash on non-maturity accounts, and their present value (which differs from the well-known Jarrow-van Deventer model)

Thus, we can solve daily problems - how to achieve planned, target volumes (or deposit market share) with a minimum interest expense and controlled levels of deposit risks.

We have competence in :

The application of these approaches in the largest Ukrainian banks allows increasing its competitiveness by providing planned inflow of deposits at lower interest expense and controlled levels of deposit risks. Interest rates fell by 0.2 ... 0.5% at a general level interest rates of 18%.

Retail Deposit Portfolio management

pricing loans based on "cash flow at risk“ approach and the continuous time model (continuous accrual of interests and assessment of default) taking into account the liquidity premium (otherwise the loan remains undervalued as Bohn & Stein said)

obtaining direct, explicit analytic function for the borrower’s survival probability that is free of assumptions about the type of default process, unlike the standard approaches suggesting that the default process subjects to the Poisson, Cox, Markov laws or others; assessment of the new unified measure taking simultaneously into account the both prepayment and default events

stochastic modeling defaults by Monte Carlo Techniques for the first time the dynamic optimal pricing and cut-off scoring for the

retail loan portfolio based on automatic control that allows increasing the controllability of retail lending including the quality of the loan portfolio

We have the competencies to meet the challenges of portfolio management of retail loans, including:

Forecasts based on Financial activities models

We have experience in modeling of the bank’s financial activities including the prediction of the balance sheet, income and cash flow statements

In particular, the original models for the forecast of the bank's ability to create provisions for loan losses taking into account the balance sheet and profitability requirements were developed

Due to using these models the large (by the Ukrainian standards, with a balance-sheet of 2.6 BLN US dollars) Ukrainian bank was successfully restructured its debt to international financial institutions (80% discount)

Liquidity cushion

Construction of internal models for integrated assessment of liquidity cushion for coverage of credit, deposit, market and off-balance sheet risks

It fully meets the requirements of Basel III

This approach declares principle: having this cushion “may sleep quietly”

Asset and liability management (ALM)

This is the only method that uniquely distributes cash flows from assets and liabilities between them by terms remaining to maturity

It allows directly allocating the funding cost on the loan price It takes into account the specific characteristics of a bank to

attract and allocate resources. The approach seamlessly integrates risks, in particular, credit

risk and liquidity risk, as well as the capital requirement imposed RAROC-approach

We have competencies in the building a two-dimensional funding matrix for solving problems in asset and liability management :

Asset and liability management (ALM) It is suitable for both pricing of new assets and liabilities, as

well as to evaluate the effectiveness of existing deals for performance measurement

The matrix is useful for funding transfer pricing The method is applicable to both the banks and insurance

companies

Using the matrix in control of a large Ukrainian bank allowed it to optimize the pricing assets and liabilities taking into account the regulatory requirements of the Central Bank to the capital adequacy. We developed rigorous mathematical integral models to modeling cash flow streams occurred in banks.

Basel II

Building internal models to estimate capital under credit, market and operational risks including creditworthiness ones

Assessment of provisions for credit losses from non-homogeneous loan portfolio with dependent defaults

Collateral management

Liquidity and liquidity risk management (Basel III)

The estimation of the Liquidity Coverage Ratio (LCR) and the Net Stable Funding Ratio (NSFR) in accordance with the requirements of Basel III

Building the internal models for integrated assessment of liquidity cushion size for coverage of credit, deposit, market and off-balance sheet risk, that is fully compliant with Basel III

The development of bank’s cash flow models The evaluation of behavioral streams of cash flows

The LCR and NSFR calculations were implemented in a large Ukrainian bank and worked successfully during 2008-2013

Building yield curves

The direct, explicit extraction of forward and spot yield curves from fixed coupon bond prices

The evaluation of survival probabilities of bond issuers that is free from any assumptions about kind of default process

The estimation of credit spreads from fixed coupon bond prices

We own knowledge and experience in :

Solution architecture example (IBM)

We know what to do with the data

Our contacts

Vasyl (Vassily) Buzuyev Skype ID: buzuyev Tel. +380672321645, +380919596253 E-mail vassily.buzuyev@gmail,com

CVs will be provided on demand.Accomplished projects’ details will be provided on demand.