Thoughtline april 2010

APRIL 2010APRIL 2010

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ethe Banking & Financial Services -newsletter from Wipro Technologies

Volume VIII Edition XXIX

the Banking & Financial Services -newsletter from Wipro Technologies e

Feedback & Suggestions aremost welcome. Please email to

[email protected]

Editorial Team

Tathagata BiswasRohini Sawant

Volume VIII Edition XXIX

Index

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2the Banking & Financial Services -newsletter from Wipro Technologiese

For Wipro internal circulation only

.......................................................................................................................3• Foreword

• Know your domain terms.............................................................................................4

......................................................5• European Banking Trends – Focus for IT Solutions

...............................................................8• The SEPA Initiative at Lloyds Banking Group

.....................11• Shared Payments Infrastructure Enablement for European Payments

.............................................................13• BGC-Vocalink Payment Processing Expertise

.............................................................15• Differentiated payment services –post SEPA

Fun Corner...................................................................................................................17•

• Kathakali Dance Drama.............................................................................................18

- Andy Fincham

- Sharoakh Charna and Vinayak Dixit

- Prakash Devulapalli

- Vibhav Singh and Abhishek Gupta

- Vinodh Ravishankar and Pradyumna Deshpande

- Tathagata Biswas

Foreword 3the Banking & Financial Services -newsletter from Wipro Technologiese

Dear Readers,

The last 24 months have been, without question, one of the most challenging periods for financial institutions throughout the world. Corporations that were institutions in their own right have shut shop, several have lost their identity by virtue of mergers and the strongest are still standing today. Standing and starting to figure out how to start walking again.

2010 is slated to be the “recovery year”-recovery from a global meltdown aided by governments throughout the globe who have pumped umpteen billions of dollars into their ravaged economies to inject much needed life into them.

While the impact of the crisis was felt globally, in this issue of Thought line, we have tried to focus on the Europe geography and take stock of how the recovery is affecting European Banking Trends. Let us take a look at how the meltdown has shaped trends, affected headwinds blowing prior to the recession and the trends emerging out of the recession. We also intend to explore how Consumer Credit Practices have changed and the measures financial institutions are taking to counter increasing consumer bankruptcies. Last but not the least, we try to explore how IT can innovate to align stronger to changing needs.

We have enjoyed a very high level of support from our colleagues-not only within the Banking domain team but from the larger BFSI team at Wipro. We thank them for sharing their expertise with us. We also have a quiz for the readers and look forward to receiving your answers.

We take pride in presenting this edition of Thought line to you and hope that you will enjoy going through it.

Thoughtline Editorial Team APRIL2010Tathagata Biswas

Rohini Sawant

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The views and opinions expressed in the articles/other contributions by individuals are strictly those of the authors and should not be viewed as professional advice with respect to your business.

Parts of the Images used in this Thought Line is from Kathakali from Kerala


Know your domain terms

UKPA: (UK Payments Administration Ltd)

EMV:

Chip and PIN:

Wirecard:

BACS:

FPS:

is the trade body that conglomerates a group of sub-entities that gives banks, building societies and card issuers a forum where they can work together on non-competitive issues. It manages the payments that businesses and individuals in the UK need to make-covering cash, credit and debit cards, checks, and automated payments such as direct debits, salary payments and online/phone transactions. UKPA was earlier known as APACS.

EMV is an industry standard taking its name from the card schemes (Europay, MasterCard, Visa) that developed it, the standard covers the processing of credit and debit card payments using a card that contains a microprocessor chip at a payment terminal.

This is the name of a government-backed initiative in the United Kingdom to implement the EMV standard for secure payments

West German company provides payment processing, card issuing and risk management services to more than 10.000 corporate customers worldwide- competes with PayPal & Western Union.

This is a United Kingdom scheme for the electronic processing of financial transactions BACS payments takes three working days to clear: they are entered into the system on the first day, processed on the second day, and cleared on the third day.

FPSis a banking initiative to reduce payment UK

times between different banks' customer accounts, from three working days using the existing BACS system, to near real time; essentially as if two accounts at separate banks were held within the same bank.

CHAPS or Clearing House Automated Payment System is a British company established which offers same-day sterling and euro fund transfers. The funds transfer is performed in real-time removing the issue of float or the potential for payments to be purposefully stopped by the sender, or returned due to insufficient funds, even after they appear to have arrived in the destination account.

This is the Real Time Gross Settlement system for the Euro currency, and is offered by the Eurosystem, which comprises the European Central Bank and the National Central Banks of those countries that have adopted the Euro currency

CHAPS:

TARGET 2:

Tathagata Biswas Senior Business Analyst, Banking Domain

http://en.wikipedia.org/wiki/United_Kingdom


European Banking Trends – Focus for IT SolutionsAndy Fincham Practice Head, Europe-Business Advisory Services, BFSI

At the present time, perhaps more than any other in the past twenty five years, it will be wise to preface an overview of the banking market with a warning: such a summary runs the risk of over simplification, with any conclusions being too generic.

In the European retail financial services sector there are three good reasons for this; reasons of history, of timing, and of opportunity.

The historic origins of the complexity arise from the political changes across Europe since the collapse of the former 'Eastern Bloc' in 1989 and the subsequent dismantling of the barriers to trade which were represented by the Iron Curtain. As a result, the markets of a dozen countries, including Poland, Hungary, and the Czech Republic, with upwards of 100m consumers, have been opened. These economies experienced significant economic growth over most of the subsequent two decades, averaging over 5% GDP annually and fuelled by significant Foreign Direct Investment as western European companies, along with the US bought heavily into the sector.

Property and financial services led this boom, which helped to equalise regional income inequalities and have enabled most of the nations of 'new' Europe to achieve sufficient levels of stability to gain accession to the political and economic grouping of the European Union. By 2008, the average foreign bank ownership was three quarters of the total banking assets, and over 100% in Estonia and Slovakia. This investment is significant: cross-border loans directly from parent banks to local borrowers, plus local loans exceeded 100% of GDP for a number of economies, not least Hungary. These banks are headquartered in Western Europe, led by Sweden, Austria, Italy and (a united) Germany.

The banks earned well from this - Raiffeisen , Erste, Osterreichishche Volksbanken, Bank Austria and Swedbank made a disproportionate 30% of total PBT from the region, and even the larger players such as France's Société Générale and Germany's Commerzbank took over 10%.

This deepening of financial services helped drive growth, but at a pace, which involved levels of risk which reflected the global appetite for business. Much of this

was conducted in foreign currency – largely Euro and CHF – which appealed to both sides of the transaction.

So far, so good. Western banks sat down to enjoy the feast at a new table, and even the dotcom crash of the millennium gets washed out in the five years from 2003. Growth (if not greed) is good, and the European sector becomes driven by consolidation as acquisition becomes the optimal strategy for local players to become global.

Since the Millennium, the strategists from McKinsey et al had begun to suggest to Banking leadership that by 2020 there would be less than 10 banks in the world. 2000 saw a fascinating fight between BNP and Société Générale in France where SG looked to pick up Bank Paribas and BNP bidding for both of them, and taking the latter. The other European major players, including Royal Bank of Scotland and Barclays, realised that they needed to grow faster than even local property booms and the CEE10 could take them. And thus was the stage set for the battle over AMB-Amro which saw RBS, Belgium's and Fortis and Spain's Banco Santander pay €71bn for the worst part of the Dutch lender, trumping Barclays offer by paying three times the market rate, and this after BoA had snatched the key LaSalle business.

This is the end of history, since it brings us up to date, and introduces the timing reasons for Europe's local complexity. The 'credit crunch' that has dominated banking for the past two years is a direct result of the lending decisions made worldwide by banks in the previous half decade as they pursued this strategy of expansion which was underpinned by the sub-prime boom.

These were global acts of folly, of course, committed in pursuit of the Mc-Strategy dream of domination: HSBC notably spent $15bn to acquire US sub-prime lender Household in 2003, a decision which cost a further $17bn in write-downs by 2007, and at one stage last year was burning over $50m a day.

Timing has raised a new set of issues for both ends of the European banking market. The loan bubble has caused a revaluation of business, and a shift in focus from growth to risk. As economies have shrunk (all except Poland have slipped into recession in Europe), currencies have depreciated driving up the cost of repayments for many of the loans and ratcheting up the ratio of debt to asset coverage.1. New EU member states are known as the CEE10, and consist of Bulgaria, Czech Republic, Estonia,

Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia.


The ABN fiasco saw both RBS and Fortis become effectively nationalised and the forced merger of Lloyds TSB with troubled HSBC in the UK created a bank whose local scake is matched only by BNP-Paribas.

Which brings us to the third reason for complexity: opportunity, which arises from ownership factors driven by the timing and historic issues described above.

Two main drivers underpin the ownership opportunity: performance and regulation. Continuing uncertainty about financial services regulation continues to complicate IT budgeting and forces banks to consider innovation and efficiency as well as caution and flexibility (Figure 1).

Regulation arises from the fact that within the European Union, government subsidies are not permitted. The extent of support for the banks in several countries has caused the EU competition commission to demand enforced divestments by both RBS and LBG as compensation for the aid received. Thousands of bank branches are up for sale, including brand names which have been lost from the high street for some years. In France, a nimble BNP-Paribas picked up the troubled Fortis unit in Belgium and most of Luxembourg, in the UK several consortia are looking to set up a number of new consumer banks to deal direct with a customer base of taxpayers increasingly disillusioned by the failed banks they now 'own'.

All owners of non-performing banks are looking for ways to redress the losses caused by the loan bubble, and to replace the growth that no longer is forthcoming

from CEE10. Even with the expected level of (enforced) M&A activity toward a more integrated EU banking market, strong indications are that banks are looking to more significant commitments from partners to drive down costs and realise efficiencies in service delivery.

Robust growth is predicted by Datamonitor in banking BPO, with the banks currently outsourcing the most likely to outsource further. The move from CapEx to OpEx. along with partner expertise are the top two reasons to realise technology-led transformation for operational efficiency, not least as maintaining legacy systems still absorbs more than ¾ of IT budgets.

The main functional drivers for the banks converge on global concerns, mainly around P2P payments, mobile apps (online, mobile and voice channels served by a single database on one set of business logic) and the fear of competition.

The need to enhance service functionality lines up naturally with a hope that technology can make existing legacy systems more efficient. However, this dream is no more real because a CIO wants it to be, the modernization of legacy systems remains the complex and risky project it has always been – an option which is only marginally less attractive than re-plat forming.

Figure 1 Source Forrester Research 2010

Not Interested

20%

Expand/Upgra

de Existing

7%

Implementing/I

mplemented

12%

Piloting

12%

Don't Know

9% Interested/Con

sidering

40%

At what stage is your enterprise in adopting utility/cloud computing Infrastructure Services

(Figure 2) Source: Enterprise IT Services Survey-North America & Europe Q2 2009

But as new, regional, and community banks begin to move in to the traditional global banks' core market space, there are compelling reasons to act now, both to reduce costs and increase reach. And interestingly, it seems that technology is again a differentiator with cloud-based service models for Auto Finance, Personal and Asset finance driving service over a shared cost base (Figure 2).


As more clients consider the use of Saas and Cloud than the outsourcing application maintenance, and both consolidation of platforms and modernisation remain high on the list, then the move towards a utility model of banking service delivery looks a strong contender for a 2010 market positioning.

The Business Advisory Service focus for BFS is focused precisely on this segment. Addressing both the demand from CEE10 banks with a need to re-platform and reduce costs, as well as western European banks arising from the forced divestments from the larger players, we have deployed a Utility concept based on local alliances with global brands of core banking software, plus our recognised ADM and SD skills wrapped around a TIS base. This is backed by WCS advisory services and a multilingual CEE BPO capability.

Our offer appeals to both sides of the European banking market. Already we have a number of opportunities from clients who see that vertical

platform based services; focussed on delivering to business demand (rather than IT) will enable clients to focus on acquiring service delivery capability rather than technology asset building.

These are early days: but we have history, timing and opportunity on our side. Our European Utility is on the agenda, and it is there to stay.


The SEPA Initiative at Lloyds Banking GroupSharoakh Charna (Lead Consultant & Architect) & Vinayak Dixit (Senior Business Analyst)

Single Euro Payments Area (SEPA) is an initiative of the European Payments Council (EPC) to establish an integrated European payments environment where euro payments are subject to a uniform set of standards, rules and conditions. With this initiative, payments within the Area will be considered domestic with no differences between national and cross-border Euro payments.

The countries that are part of the SEPA initiative are the 27 European Union countries and Iceland, N o r w a y , S w i t z e r l a n d a n d Liechtenstein. The SEPA initiative is expected to benefit about 500m customers and impact about 9000 European banks and financial institutions.

SEPA requires the harmonisation of diverse national and cross-border euro payment systems, both at a technical level and in terms of customer services and procedures. To this end, the EPC has created a

portfolio of SEPA Schemes, which it defines as sets of Interbank “rules, practices and standards”, providing a common understanding of “how to move funds from account A to account B” using a SEPA payment instrument. These Schemes then form the basis around which banks (payment service providers) and payment institutions can develop competitive products and value-added services to offer to their customers.

The SEPA Credit Transfer Scheme was the first to be launched in January 2008. At the same time, the EPC introduced a new framework for plastic cards – the SEPA Cards Framework - ensuring that they are accepted in more places throughout the eurozone. The SEPA Direct Debit Schemes (Core and Business-to-Business), which will enable direct debits in euros to be transacted on a SEPA-wide basis, have also now been developed.

SEPA Schemes

The SEPA Payment Services Directive (PSD) provides a legal framework for payment services in the internal market of the EU and the European Economic Area (EEA). The PSD applies to payment services between payment service providers (PSPs) and payment service users (PSUs) within the EU/EEA and entails changes to many payment-related processes that are in place today. Banks must comply with the PSD and are impacted by increased obligations vis-à-vis customers, such as the responsibility to inform customers of the PSD, and by the maximum execution times and value dating rules stipulated by the PSD.

The Lloyds Banking Group (LBG) is one of the major UK banks that are participating in the SEPA initiative. LBG plans to implement and provide the full range of SEPA compliant payment solutions for its customers. LBG also aims to be PSD-compliant so that its obligations to its customers are met by its systems and processes.

As part of the above two aims, two important programmes have been/are currently being implemented at LBG - SEPA Direct Debit and SEPA Payment Service Directive. Wipro has been heavily involved in the implementation of these two projects.

SEPA Direct Debit (SDD) is a new payment instrument for Collection processing in Euro throughout SEPA from bank accounts designated to accept Collections. The SEPA Direct Debit scheme defines common rules and procedures for direct debits in euro between banks (an "interbank payment scheme. The scheme defines a certain service level and maximum time frame under which banks must be able to process the payment.

The key features of the SEPA Direct Debit Scheme are SEPA-wide reachability, coverage of both recurring and one-off payments in Euro and automatic handling of rejected and returned payments. Within the broader SDD scheme, there are two schemes; Core for personal transactions and B2B for commercial transactions. A bank's minimum obligation is to be able to receive under the Core Scheme; i.e. origination of SEPA Direct Debits within the Core Scheme. Participation in the Business-to-Business (B2B) Scheme (participation restricted to Business customers as debtors and creditors) is not mandatory.

SEPA DD, PSD and the Lloyds Banking Group

SEPA Direct Debit Scheme


A typical flow of events for a SEPA Direct Debit is depicted below.

Wipro's involvement in LBG's SEPA Direct Debit ProgrammeWithin Lloyds Banking Group, Wipro was responsible for development and implementation of the processing engine for all SEPA DD transactions and for enhancing middleware applications for transformation and routing of all SEPA transactions. The Wipro team liaised with LBG stakeholders in business & architecture teams and implemented changes on multiple payment platforms to implement the new payment scheme in parallel with existing Faster Payments and BACS payment schemes.

Central to SEPA DD implementation were enhancements to the Straight Through Processing engine for all LBG payments to also support SEPA DD payments. For the first time, the engine was designed to handle large number of direct debit payments in Euros, reconcile across multiple currencies and carry out foreign exchange conversions. In addition, to that the solution designed and implemented by Wipro was compliant with the new sanctions checking standards.

The solution implemented by Wipro is a fully functional SEPA DD solution - not only allowing the LBG to provide the Core scheme to its customers but also the business-to-business scheme to its commercial/business partners, and its agency relationships whereby LBG can act as the recipient and the originator of a SEPA Direct Debit payment.

SEPA Payment Service Directive (PSD)

Wipro's involvement in LBG's SEPA Payment Service Directive Programme

The Payment Services Directive (PSD) is the enabling legal framework developed by the European Parliament necessary to support SEPA. The framework was implemented into local country law in November 2009 by all Member States within the European Economic Area. This includes the 27 members that comprise the European Community plus Norway, Iceland and Liechtenstein of the European Free Trade Association.

The scope of the directive is much wider than SEPA as it impacts all payments, both retail and business, within and across borders in all local currencies, including GBP. The objective of the PSD is to:

• Remove the barriers to entry into national payment markets, increasing banking competition

• Increase pricing and service transparency for providers and users of payment services

• Provide consistent rights and obligations of providers and users of payment services.

These will give customers a standardised experience for all transactions across Europe, supported by a common legal framework.

At Lloyds Banking Group, the Payment Services Directive Programme's immediate focus surrounds the requirement to provide the customer 'immediate' visibility of funds across 'all' the customer channels. This includes commercial customers and agency relationships of the bank. In the first schedule of the programme the scope is limited to a more frequent report/file generation related to the credits received for the agencies. This will enable the agencies to pass on the credit to their account holders.As part of the PSD programme, the SEPA PSD project – inbound faster payments to Agency Banks required a change in the aggregation mechanism and reporting of information to agencies. Agency payments were aggregated and reported only once at the end of the day and were hence not PSD-compliant. A significant change was required to aggregate these payments several times a day and send them on to the agencies to enable faster reporting to end customers and hence PSD compliance. Wipro, as the chosen vendor on the faster payments platform, implemented the changes required to make the systems PSD compliant. The changes were done ensuring no disruption to critical faster payments processing for LBG customers


and agencies. As part of the changes a feed to agencies was sent after each settlement cycle of the Faster Payments scheme, as was a report for posting entries into agency accounts on LBG accounting systems. The PSD project was successfully implemented by the Wipro team and went live in November 2009.

1) European Central Bank - SEPA Payment Instructions: http://www.ecb.int/2) HSBC Single Euro Payments Area: Key Facts:

http://www.hsbcnet.com/transaction/attachments/pcm/pdf/sepa_key_ facts.pdf

3) LloydsTSB SEPA Guide:http://www.lloydstsbcorporatemarkets.com/media/pdfs/lloydslink_online/ SEPA_guide2008.pdf

References:


Shared Payments Infrastructure Enablement for European PaymentsPrakash Devulapalli Practice Head (Cards), Banking Domain Team

Current Situation:

Wipro solution to address these challenges:

Banks across the globe are re-investing into the core payments technology and bringing back life into Transactional banking services. Banks are not doing this by choice but because of need. It is not just an important element of the investment pie, but also a substantial investment to survive in the competitive world as well as differentiate themselves in the commoditized payments services offerings by the banks.

While European banks have traditionally built infrastructure to suite every country needs from payments services perspective, the whole concept of “International Payments” within the Euro zone is quickly vanishing and regulators are looking making Euro-zone transactions just look like Domestic transactions. The initiative as we all know has a technology angle as well as operations and compliance angle. This is a significant change as it involves lot of fundamental changes to the IT, operations and compliance. The existing infrastructure has many problems today:

• Multiple in-country processing systems and point-to-point connections • High exceptions (STP issue) and lack of centralization in managing these

exceptions• High cost associated to maintaining and adopting to change • Disintegrated offering to the customer and low self service offering.

While banks in the Eurozone and outside have made modifications to the existing platforms to comply and meet the regulations, there is a need for re-architecting the entire infrastructure and operations to gain competitive advantage in the new market place (The new market place is the new harmonized Euro zone which is the battle ground for business growth). Which means the banks will have to let go their legacy, move to a new strategic infrastructure which can offer integrated payments solutions as well reduce the cost of processing.

At Wipro, we have conceptualized a solution framework for helping the financial institutions and carefully walk them through this path for addressing the problems mentioned above.

The following business-technology architecture represents the high level roadmap of the solution. Even though it is a grand vision of what will be final target architecture, the approach will be in creating those fundamental blocks for future scalability and long-term competitive advantage.

Wipro solution framework approach is to create point solutions addressing this target architecture and we are building this solution using partnerships as well as developing components in-house which will address this change.

Payments Origination

Corporate / SME CM Systems

Enterprise Service Bus

Retail Payment Systems / Channels

LOB applications

Business Services Layer

Message Transformation

Message Validation

Pricing

Process Analyzer Monitoring Services

Fraud

Foundational Services Block

Order ManagerIdentity & Access

ManagementMIS

Exception Management

Automated Resolution Engine

Manual Resolution Mechanism

Approval Mechanism

Audit Mechanism

Internal Gateway Systems & Core Banking systems

Domestic ACH, NEFT & RTGS Swift & International PaymentsCore & Other Accounting

systems

Front End Systems – Payments Initiation

Payments Data Storage(20022 based Data Model)

Enterprise Service Bus

We are taking a very customizable approach for addressing the specific requirement of the financial institutions. Since each bank has a different priority in addressing their client and business needs our approach is very modular. The solution is built based on following four pillars:

1. Unified Data Model: The unified data model built on ISO 20022 formats helps the bank to create a common payments repository for all incoming and outgoing payments. This greatly helps in reducing the point-to-point


format conversions and helps the bank build a common repository of payments transactions

2. Services based Business components: The common transaction treatment services– Validation, Transformation, Routing, Exception Management, negative check etc and can deployed in a central location for reducing the complexity of change

3. Centralized monitoring: This architecture provides the ability to monitor the payments centrally and measure the efficiency parameters – like STP, Throughput, Channel performance etc through a single window

4. Scalable and ability to differentiate: Easily extendible to accommodate future channels as well as new payment schemes and methods. This architecture also provides the ability to offer differentiated pricing models for each customer through a pricing engine

This framework allows banks to concentrate on both increasing the payments back-office efficiency as well as enhancing customer experience when it comes to offering integrated payment solutions to bank's corporate customers.

(Please get in touch with Meenu Bagla – for additional information for this solution)

[email protected]


BGC-Vocalink Payment Processing ExpertiseVibhav Singh (Business Analyst) & Abhishek Gupta (Business Analyst), Banking Domain

About the “BGC – Vocalink” Project

New dimension in the Payment Industry

In 2007, in what is described as the world's first payment processing outsourcing deal, BankGiroCentralen or BGC (An Automated Clearing House in Sweden, and the central player in Sweden for payment and information services between banks and their customers) entered in a strategic partnership with VocaLink (a leading payment service provider based in the UK) for processing all its payments. This is the first time the processing for a national payments scheme has been transferred to a non-domestic player.

The key drivers for BGC to sign this strategic deal with VocaLink were:• To enable BGC to provide cost efficient payment services to their customers.• Allow BGC to deliver new products and services to the market, faster and

cheaper. • Although Sweden is not a part of the 'EUROZONE' it is still affected by SEPA

and the PSD. An important driver of this deal was to minimize the impact of SEPA and PSD on BGC.

• If Sweden were to adopt the Euro in the future, BGC should be well positioned and equipped to remain competitive vis-à-vis other European payment processors.

• To leverage Vocalink's proven systems expertise and recent experience of undertaking major systems implementations. In 2006, VocaLink delivered a complete technology refresh which culminated in the delivery of a new payments platform for the UK banking industry.

The project is ground breaking project from the perspective that for the first time in the world any country has allowed and followed the approach of outsourcing the processing of domestic payments to a non-domestic player and marks a significant change in the payment processing landscape. This project impacts the payments landscape across the world in following ways:

• Clear step forward in the consolidation of the European payment market. • Provides Payment Processing a 'commercial perspective' and allows

leveraging the best available expertise anywhere in the world.• A good model to follow in the case of replacement of Legacy payment

Figure 1

Figure 1 above illustrates how the processing of a payment is routed through Vocalink in the UK, when the seller's bank seeks to obtain payment from buyer's bank for a purchase made by a buyer in a shop in Sweden. BGC maintains all the customer facing systems, the arriving payments are routed to VocaLink for Clearing and Settlement. The settled payments are returned to BGC for reporting to the customer (Banks, Businesses, other customers subscribing to the BGC Service).

processing systems with the latest cutting edge systems and still achieving cost benefits.

• Introduction of a new and efficient operating model in the payments landscape.

Wipro and Vocalink relationship goes back about 3 years. It started in April 2007 Wipro's Relationship and Role


with the testing of VocaLink's SEPA related services and systems. Wipro's involvement in the BGC-VocaLink Project started in February 2008 and Wipro is playing a critical role in this major assignment as the preferred testing partner of Vocalink.

Wipro has been actively contributing in the following:• Wipro had the responsibility to

conduct end to end Functional Testing of the VocaLink Systems and Services developed as a part of this project. Wipro was chosen as the preferred vendor due to the strength of its Testing Services in the areas of Data Driven and SOA (Service Oriented Architecture) Testing.

• System Testing – Wipro is also one of the vendors selected to participate in the System Test Phase of the Project. This phase involves testing the entire integrated platform i.e. the combined platform comprising of BGC's customer facing systems and VocaLink's core processing backend. Wipro's involvement revolve around the following:

o As a part of this phase, the Wipro Team has been involved in a preliminary knowledge gathering and documentation phase. In this phase the team is responsible for gathering knowledge on the BGC-VocaLink system (the combined platform) and associated end to end processes that the various payment products will follow through the system. The knowledge produced as a result of this knowledge gathering exercise will serve the following purposes:

- Creation of a single source of knowledge for the end to end payment processes based on the Moodle Tool.

- Consolidation of all knowledge of the BGC Product and Services Specialists into the Knowledge Base (Moodle Tool). This will be handed over to BGC at the conclusion of the Project.

- Training of the System Testers across all vendors participating in the System Testing Phase.

o Participation in the System Test phase, to evaluate the integrated platforms' (BGC Customer Facing systems and VocaLink Core Processing Systems) compliance with the requirements as specified by BGC.

1. http://www.bgc.se/Default_4938.aspx 2. http://www.vocalink.com/en/Pages/Default.aspx

Functional testing of Vocalink Systems –

References:

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Electronic Manual

Cost Per Transaction (Cents)


Differentiated payment services –post SEPAVinodh Ravishankar (Business Analyst-Banking Domain) & Pradyumna Deshpande (Senior Consultant-Securities)

Business CaseBusiness houses of different sizes have evolved in the market place and the number of B2B transaction between trading entities is on the rise. B2B transactions have grown in volume from 8 billion in 2002 to 10 billion in 2009. At an estimated cumulative average growth rate of close to 20%, the number would possibly hit the 14 billion mark in 2012. In terms of geography, the developed countries have caught up well with electronic payment methods, with the pace being relatively slow in the US. Europe and Canada have been front runners in the race marked by early adoption. An evidence of this is a 95% penetration of non-cash transactions in Germany, Netherlands and Switzerland as early as 1999. What become apparent from these numbers are the intensity of the volumes game in the payments arena and the wealth of information available for leverage in a potent payment offerings strategy.

Courtesy: Aberdeen Group

Specific to Europe, initiatives like the Single Euro Payments Area (SEPA) have resulted in a reduction of cross-border payment fees. Payment instruments like the letter of credit are being replaced with open account trading in international trades. Given this business landscape, transaction-based revenues from corporate payment services are being driven down by an increased interconnectivity of payment systems and developments like SWIFT. Profit margins are getting thinner and corporate payments are becoming commoditized. Financial institutions can

engage in a price war but it would not give them a sustainable edge. They need to embark on a differentiation strategy and take value delivery to the next level.

EIPP at the core of a payments value proposition

Buying organizations which can flex their financial muscle have channelled large amounts of available funds into the development of Electronic Data Interchange (EDI) systems to stay connected with the supplier-bank network. For smaller organizations which transact heavily using commercial cards, , in addition to the cost involved in building the infrastructure, there is the burden of cost of compliance with Payment Card Industry (PCI) security norms.

Banks and acquirers which have strong financial relationships with these trading organizations have been able to satiate their payment needs effectively – thanks to their extensive settlement networks. When it comes to the upstream requirements of invoice/purchase order presentment, validation, approval and payment release, financial institutions have been shopping in the market for (Electronic Invoice Presentment and Payment) EIPP vendors. The story is not very different with third party payment processors either. Financial institutions have begun to see EIPP as an information-generating platform for cross-sell opportunities and integrated service offerings.

Gaining insights into valuable information all across the payments chain is crucial to the development of a differentiated servicing strategy. In today's world, financial

The lure for financial institutions

B2B Transaction Volume

26%

74%

Electronic Manual

Issue Purchase Order

Receive Electronic

Invoices

Invoice

Validation

Payment Approval

PaymentRelease

Settlement

EIPP

Supplier

Receipt of

Funds


institutions have visibility limited just to payments made and received. In order to leverage untapped opportunities, financial institutions need to stay engaged in corporate transactions as early in the process as possible. A tight integration between banking applications and corporate accounts payable, accounts receivable and treasury management services gives them the unique advantage of gaining visibility into the client's financial position at every stage in the financial supply chain. Geared with this information, financial institutions can structure products and services to suit a client's need at different stages of a business transaction. They have a bigger cross-selling opportunity with a better risk assessment. By stretching their presence across the supply chain of their customer, financial institutions will be able to deepen the relationship with better retention and repeat business as positive fallouts.

Cash management Funds consolidation is a strong value proposition when targeted at corporates with a national or global foot print. Financial institutions that are continuously aware of the time, volume, value and status of payments have an even more compelling

story to take their “Cash Concentration Services” to their clients. Selling organizations that are part of the trading network provide a wealth of opportunities for financial institutions to position their collections, cost management and risk management services.

An integrated AP automation solution has the ability to link purchase order and invoice data to a trade finance instrument. This provides a stronger basis for extending credit at a higher percentage of the trade value or at a better rate of interest. It also improves the quality of trade instrument advisory, inspection and guarantee services offered by financial institutions.

The corporate quest for intelligence on their trade related finances can be best satisfied by financial institutions that render services all along the financial supply chain. Real time information on cash positions and float improve the quality of cash forecasting, zero balance accounting and interest reallocation services provided by financial institutions. Business analytics and decision support solutions become an attractive proposition for the target when the basis for such solutions is information that is gathered across the spectrum from order generation to supplier receipt of funds.

There has never been a better time in the market for financial institutions to take a closer look at differentiation in payment services. Those that pursue a wait-and-watch strategy will miss out on the first mover advantage and in the long run a lion's share in the market. Those that take an immediate plunge will not only enjoy a new revenue source, but will also be heralded as “innovators”.

Trade finance

Business Intelligence

Conclusion

Fun CornerFun Cornerthe Banking & Financial Services -newsletter from Wipro Technologiese

For Wipro internal circulation only

Rush your responses to: [email protected]

17

Tathagata Biswas Senior Business Analyst, Banking Domain

The winner of the fun corner (March edition) is: Abhishek Gupta

The answer key to March month Funcorner is:

Across1. standingorder3. Creditcard4. interest7. withdraw9. depositaccount12. balance13. bankdepot14. current

Down2. exchange rate5. statement6. branch8. mortgage10. overdraft11. teller

For Fun Corner, we have a small quiz. To go with the theme of our Thought line-and as a hint to all who attempt to solve it, this quiz is Europe centric. And yes, some of the answers will NOT be in the first page of the search-engine results. Dig deep, don't lose patience, have fun and mail the answers to [email protected]

1. Which is the oldest surviving bank in the world today? 2. Which is the world's first insurance company?3. Which is the biggest European bank in terms of assets held currently?4. What was the name of the world's first bank credit card and which year was it

introduced?5. When & by whom was the magnetic stripe system first used on a card?6. Which is the only bank to have an Automated Teller Machine in the basement of

the Buckingham Palace?7. Which was the first bank in Europe to print banknotes on its own? (Hint: It still

prints banknotes today)8. Where did the name “piggy bank” come from? (Hint: It has nothing to do with

the animal)9. Which was the first bank in the world to offer an “overdraft facility”?10. This one is easy-Which country currently has the highest per capita credit cards

in Europe?

Feedback &Suggestions aremost welcome.Please email to

[email protected] by: [email protected]

Kathakali The Classical Dance DramaBy Channakeshava

Kathakali is the classical dance-drama of Kerala, South India, which dates from the 17th century Kalamandalam Ramankutty Nair and is rooted in Hindu mythology. Kathakali has a unique combination of literature, music, painting, acting and dance. In the following pages we have placed photographs and videos of Kathakali performances and songs by famous Kathakali singers.

Kathakali originated from a precursor dance-drama form called Ramanattam and owes it share of techniques also to Krishnanattam. The word "attam" means enactment. In short, these two forerunning forms to Kathakali dealt with presentation of the stories of Hindu gods Rama and Krishna.

One of the most interesting aspects of Kathakali is its elaborate make-up code. Characters are categorized according to their nature. This determines the colours used in the make-up. The faces of noble male characters, such as virtuous kings, the divine hero Rama, etc., are predominantly green. Characters of high birth who have an evil streak, such as the demon king Ravana, are allotted a similar green make-up, slashed with red marks on the cheeks. Extremely angry or excessively evil characters wear predominantly red make-up and a flowing red beard. Forest dwellers such as hunters are represented with a predominantly black make-up base. Women and ascetics have lustrous, yellowish faces.

The technique of Kathakali includes a highly developed language of gesture, through which the artist can convey whole sentences and stories. The body movements and footwork are very rigourous. To attain the high degree of flexibility and muscle control required for this art, a Kathakali dancer undergoes a strenuous course of training, and special periods of body massage.

The dancers wear large head dresses, and the contours of the face are extended with moulded lime. The extraordinary costumes and make-up serve to raise the participants above the level of mere mortals, so that they may transport the audience to a world of wonders.

Thoughtline april 2010

Technology

Transcript of Thoughtline april 2010