Visit TCS at the Demo and Meeting Pod
Experience certainty. IT ServicesBusiness SolutionsConsulting
investec indiadeploys
complete broker-dealer
solution in just nine weeks
plus n top 5 U.s. super-Regional Bank Modernizes Post-trade n emerging Market Bank achieves Global Reach in custody n insurance Repositories: How they Work, Why they Matter
Visit TCS at Stand E10
2016 Number 26
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By n Ganapathy subramaniam President, TCS Financial Solutions
Financial services: Eager to disrupt itself?
TCS BaNCS #BancsDL and #DLGateway to support distributed ledgers side-by-side with vintage systems
Financial institutions have figured out how to originate
and execute trades that entail one firm to sell a share and
another to buy the same. But it still takes two to three
days to settle the trade in most markets. Even so, there is
no guarantee that a buyer can pay for the shares, nor any
regulation in place compelling sellers to confirm, in ad-
vance, a buyer’s wherewithal to pay, even though central
counterparty clearing (CCP) entities provide some guar-
antee, keeping the chain unbroken.
What’s missing is being able to guarantee two things
in advance of a transaction: first, that sellers actually pos-
sess the assets that they claim; and second, that buyers
possess the readily-available wealth enabling them to buy
these same assets. In this age of instant gratification, it’s
time for another “KYC” – “Know Your Counterparty.”
Arthur Levitt, former chairman of Securities and Exchange
Commission, proposed this as a part of a move to same-day
settlement:
“Faster settlement would further reduce the risk of loss to
investors and intermediaries from the insolvency of other
market participants. Same-day settlement would require
market participants to ‘pre-position’ their assets and, if the
transaction involved an extension of credit, to arrange for
that credit at or before the time a trade was placed. This
would reduce ‘fails’ by several more percentage points. In
such an environment, people trading in the market could be
extremely confident that settlement would take place.”
That proposal was almost two decades ago. Not
enough has been done to require market participants to
“pre-position” their assets and, if the transaction involves
an extension of credit, to make sure that credit is solid at
the time a trade is placed.
On the money side, transformation is taking place the
world over for instantaneous transfers of both high-value
and low-value payments.
Recently, India launched the Unified Payments Inter-
face (UPI). The new platform, a brainchild of outgoing
Reserve Bank of India Governor Raghuram Rajan, works
on single-click, two-factor authentication. A smartphone
user can instantaneously send or receive funds, 24x7,
across banks, using only a virtual address and requiring
no other sensitive information. India has prepared the
infrastructure for a cashless economy, and similar efforts
are progressing across the globe.
The markets will continue to grow and transform as
they will. Electronification will make sure that exchanges
of value happen even more rapidly for greater amounts
than ever before. Clearly, there will be more trading
activity, more trading venues and more shares and money
changing hands than ever before, with the electrons of
these electronic transactions traversing both emerging
and established markets in a flash.
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same-second——————— settlement now!
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Financial services: Eager to disrupt itself?
TCS BaNCS #BancsDL and #DLGateway to support distributed ledgers side-by-side with vintage systems
With that comes greater systemic risk until we figure
out a simple way to make sure that a buyer has the funds
on hand (again, “know your counterparty”) without hav-
ing to offload risk with some kind of complex, structured
contract. And the only way to avoid the need for securi-
ties insurance or off-loaded risk contracts is to demand
same-second settlement.
Blockchain technology appears to have the potential
to make this happen, provided there is the will to change.
Throughout the industry, blockchain has become the
centerpiece of innovation, the topic of major board dis-
cussions and a “must-do” agenda item. It seems that if you
haven’t yet made your blockchain-themed presentation
to your board, bosses or employees, you’re way behind
the times, more or less in the path of doom!!
So, we are adding our bit to the world of blockchain.
Over the last twelve months, we at TCS have invested effort
in understanding this technology, creating a sandbox envi-
ronment to test out its potential and building a “Distributed
Ledger” framework. We’ve tested out solutions for several
use cases, including Issuer Data, Know Your Customer and
Know Your Counterparty, and we’ve evaluated what these
use cases would mean for the world of settlement.
Our earlier work on a “Single-Touch Model” for settle-
ment (See TCS BaNCS Customer Newsletter #16) certainly
came in handy. We are also conscious of the vintage land-
scape of various position-keeping systems, messaging
platforms and a plethora of interfaces, along with the in-
herent operational risks of changing them quickly – mak-
ing us believe in the need for distributed ledgers to coex-
ist with legacy systems.
Many in the financial industry believe that the blockchain
technology has the potential to speed up the time needed
to securely clear financial transactions, to render intermedi-
aries and data flows obsolete, and to deliver same-second
settlement. Most financial institutions have some kind
of internally-funded initiatives to this end, and some have
invested in Fintechs and Insuretechs dedicated to the
mission of blockchain.
Why the financial industry is so eager to disrupt itself?
It beats me. Yet the banker in me wants to be ahead of the
game – to innovate by reimagining centuries-old practic-
es to the advantage of our clients.
Our new offerings – #BaNCSDL and #DLGateway – will
be launched shortly. These solutions will enable distrib-
uted ledgers and vintage systems to coexist, enabling
financial institutions to manage a smooth transition to
an integrated ecosystem. We are also looking ahead to
the need for eventual interoperability among multiple
distributed ledgers.
Welcome to the world of #BaNCSDL and #DLGateway.
hope to see you at Sibos 2016, stand E10. n
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For any inquiries: email: [email protected] Phone: +91 80 6725 6963
from the editor
It’s not easy to do an elevator pitch about TCS BaNCS. Where could
we possibly start?
We have the strongest bench of domain experts in every conceiv-
able area of technology in banking, capital markets and insurance.
We’ve built TCS BaNCS on a future-proof, bullet-proof solution
architecture as a componentized solution suite with the flexibility
to support every business opportunity with any variety of business
model in financial services.
We have customers from around the world with unmatched
breadth and variety, including over 370 banks, brokers, exchanges,
central securities depositories and insurance companies.
We have implementation teams ready to get installs up in as little as,
say, nine weeks for an institutional broker-dealer operation (see page 6).
We’ve modernized the operations of top U.S. banks (see page
10), and helped banks in emerging markets to compete with global
players (see page 12) and enabled innovative business strategies for
banks throughout Africa, Asia, Australia, Europe and the Americas
We’ve led innovation in product design, process simplification and
implementation methodologies, as seen by our #BaNCSDL and #DL-
Gateway initiatives for distributed ledger technology (see page 2)
and our recent launch of Insurance Repositories for digitization of
financial assets for Market Infrastructure clients (see page 16).
We’ve been recognized as leaders throughout the industry, accu-
mulating a large collection of awards, analyst recognitions and top
rankings worldwide.
From whatever direction you look through the prism at TCS BaNCS,
the results can be most rewarding for your firm.
We’ll be at Sibos 2016 in Geneva, and so allow me to draw on a few
Swiss-themed metaphors to describe TCS BaNCS:
l We’re like a versatile Swiss Army knife, with the most useful of
functions for every occasion.
l We’re like a tremendous Swiss Alphorn for our clients, assured
that when they sound the alarm, we’ll always come running.
l We’re like the famous Swiss Red Cross, ready to rescue a big
or small FSI facing a (business) crisis.
l We’re like the finest Swiss chocolate, leaving you with the
sweet taste of fulfillment at the completion of an endeavor
we do together.
A bit much for an elevator pitch, but perhaps the perfect length
for a scenic gondola ride to the top of a Swiss mountaintop.
See you in Switzerland!
Until next time…
Dennis Roman
Editor-in-Chief and Vice President
TCS Financial Solutions
Tata Consultancy Services
561 865 3339 office
954 806 6660 cell
561 865 3388 fax
https://www.linkedin.com/in/marketingasitshouldbedone
lett
er
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2 Financial Services: Eager to disrupt itself? TCS BaNCS to support distributed ledgers
6 Investec India Broker-dealer deploys complete solution in just nine weeks
10 Post-Trade Modernized Top-five U.S. super-regional bank deploys future-ready solution for securities settlement
12 Big Win Emerging market bank achieves parity with custody competitors
14 The Future of Custody Four transformations that will define custodian business models
16 Transition to a Digital Ecosystem Life insurance first among many innovative applications for digital repositories
18 Industry Analysts Independent research firm cites TCS BaNCS as a Leader
19 Bank of Bhutan Bank doubles transaction volumes after 10-month deployment of TCS BaNCS for Core Banking
20 IDBI Capital Online brokerage transforms operations with TCS BaNCS
21 National Employment Savings Trust UK pension scheme enrolls 100,000 employers and 3 million members
22 Events TCS BaNCS Dialogues, Upcoming Events and more
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 362,000 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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investec INDIABroker-dealer subsidiary of global bank deploys complete front-to-back-office solution in just nine weeks.
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By Bharat shah, Principal Consultant, TCS Financial Solutions
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credit
INVESTEC, a South African bank co-listed on the Johannesburg
Stock Exchange and the London Stock Exchange, is an interna-
tional specialist bank that provides asset management services,
wealth and investment services, and other diverse offerings for
institutional and individual investors.
In 2010 Investec opened a Mumbai office to conduct re-
search on Indian companies and to advise clients on private
placements. Through its extensive India-wide network, In-
vestec manages global investments in Indian growth com-
panies in sectors including ecommerce and clean energy.
At the start of 2015, Investec’s new objective was to
launch an institutional stock brokerage to enable foreign
investors to participate more fully in the Indian capital
markets. Investec already has broker-dealer operations
in other markets, allowing customers to invest in public
companies. The goal was to replicate these capabili-
ties into India, delivering a full-service offering to for-
eign investors with trading services including direct
market access (DMA), manually-worked orders and
algorithmic trading.
however, Investec’s existing securities trading
and settlement systems were not compatible
with the specific characteristics of India’s capital
markets. Some of the regulations and market
practices are quite different in India — for
example, marketplace participants have not
yet widely adopted the FIX protocol for ex-
changing security trading information.
at a GLancecompany
Investec Capital Services India Pvt Ltd
Headquarters
Johannesburg and London
Business challenge
To connect Investec’s global client base to the Indian
market through a complete broker-dealer offering.
solution
Integrated TCS BaNCS solution for clearing
and settlement, order management
and risk management.
8
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“”
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Given the unique marketplace, Investec needed to deploy a broker-
dealer solution to cater to the complex trading, risk, clearing and set-
tlement capabilities of the Indian markets within a very short time-
frame. “The outsourcing of trading as well as clearing and settlement
is not very prevalent in India, and the cash equities markets do not
yet support third-party clearing,” says Mr. Sridhar Vaidyanathan, COO
of Investec Capital Services India Pvt. Ltd., a subsidiary of Investec
Bank PLC. “Consequently, we had to search for a local product deliv-
ering those capabilities while being tightly coupled with our global
systems for seamless trade processing.”
During the selection process for the institutional broker-dealer
system, Investec management decided to limit the contenders to
those vendors who could provide a single, integrated solution for
back-office clearing and settlement, middle-office risk monitoring
and front-office trading and order management. Furthermore, the
solution had to include direct connectivity with Investec’s existing
global systems so that institutional investors could compile a total
picture of their global holdings, including Indian securities.
“If we had instead assembled a ‘sum-of-parts’ solution from three
vendors, then we would have needed to push data from three cus-
tomer databases into multiple systems,” says Vaidyanathan. “That’s
when we started looking for an integrated solution, and TCS BaNCS
fit our requirements very well.
TCS BaNCS also stood above competitors with a robust architec-
ture capable of handling high volumes at low latency to support ex-
ecution of algorithmic trading strategies. Because the solution was
deployed onto a third-party data center, Investec did not have to
invest in additional technology infrastructure.
In addition, TCS BaNCS offered a flexible approach to adapting
regulatory changes, which is critical in a fast-evolving market that
has seen at least two regulatory changes per month. “Regulatory
changes can be very drastic,” says Vaidyanathan. “TCS has demon-
strated its ability to respond to any changes in the compliance and
regulatory regimes, without delay.”
For example, regulators recently imposed new restrictions on or-
der size that limited how much an investor could invest in a given
sector on an exchange. In response to the new regulation, Investec
was able to draw upon the market knowledge of TCS subject-matter
experts in order to roll out an entirely new set of parameters. “TCS
has experts in each of the key areas of trading, settlement and risk
management, and they’ve worked in the industry and understand
our language,” says Vaidyanathan.
nine-WeeK dePLOYMentThe deployment began in 2015 and was scheduled to take three
months. From start to finish, the deployment process took just
nine weeks.
The TCS project management team played a key role in the suc-
cess of the deployment. “The project managers were stupendous
– very hands-on, able to manage multiple stakeholders in a very
composed way, and yet moving very fast and efficiently. They under-
stood the requirements and pulled together resources on our behalf
without major discussions,” says Vaidyanathan. “Also, the product was
completely fit-for-purpose, which also played a key role in the quick
deployment as no customization was required.”
Investec has been using the new solution for just under a year, and
it has already proven its robustness and scalability.
As an integrated single system for trading and trade processing,
TCS BaNCS handles high volumes with low latency with trading on
both the Bombay Stock Exchange (BSE) and the National Stock Ex-
change (NSE) of India. In addition, the solution supports algorithmic
trading and direct market access, enabling better execution for end
clients. The solution framework is future-ready, in line with Investec’s
growing business need for handling higher volumes, enabling new
segments like equity derivatives, delivering low-latency co-location
services and achieving other benefits.
From an operational standpoint, Investec has been able to handle
higher volumes without having to add significant headcount. This was
a key consideration for Investec, which wanted to build a high-volume
trading operation with a minimal operational team. “Most of our pro-
cesses have been automated, and so we’re able to scale up very easily,” says
Vaidyanathan. “We’re confident that our clients can trade with ease.” n
Mr. Sridhar Vaidyanathan, COO of Investec Capital Services India Pvt. Ltd., a subsidiary of Investec Bank PLC.
credit
Fast Factsl Investec is an international specialist bank
and asset manager that provides
a diverse range of financial products and services to a
niche client base in three principal markets, the UK and
Europe, South Africa and Asia/Australia as well as certain other
countries. Investec focuses on delivering distinctive
profitable solutions for its clients in three core areas of activity:
Asset Management, Wealth & Investment
and Specialist Banking.
l Investec India supports mid-market entrepreneurs,
corporates and private equity; and is a leading provider
of exceptional equity analysis, ideas and
execution services for investors investing
in Indian equities.
aBOUt tcs Bancs FOR secURities tRadinG and PROcessinGl Supporting institutional and retail brokerages for over 17 years
l Processes 30 percent of equity trades in local capital markets
l Front-office: Supports multiple access channels: dealing and advisory desks, web-based trading, high-speed trading terminals, streaming market data
l Middle-office: Centralized, real-time risk management across asset classes and currencies
l Back-office: Integrated capabilities for equities, equity-based derivatives, currency derivatives, securities lending and borrowing, and mutual fund distribution
l Supports retail brokerage, institutional brokerage and clearing members
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MOdeRnizedTop-five U.S. super-regional bank deploys future-ready solution for securities settlementBy daniel Garcia, Senior Consultant, TCS Financial Solutions
Alongside its regional retail banking presence, one of the top five U.S.
super-regional banks offers a full range of capital markets solutions
to corporate and institutional clients, including securities sales and
underwriting, foreign exchange, derivatives, M&A advisory and other
services. The bank also provides personal wealth management services
to high-net-worth, ultra-high-net-worth and institutional clients. Capital
markets represent a core pillar of the bank’s business, generating about
half of its net income.
In 2014, the Wealth Management group’s legacy back-office settlement
system was still based on batch processes. Risk and settlement managers
determined the firm’s settlement exposures with screen-scraping, spread-
sheets and other manual workarounds, and were unable to calculate ag-
gregate intraday financing and credit exposures or optimize settlement
obligations.
Such outdated practices, while all too common in the U.S. market-
place, have become wholly unsuited for global capital markets. Given the
movement to faster settlement times and real-time risk management to
better manage capital, those banks that fail to keep up with new technol-
ogy and industry trends expose themselves – and their clients – to higher
levels of settlement risk.
Also, there were questions about the viability of the bank’s legacy
vendor, as well as a shortage of qualified talent available to develop on
the underlying C++ technology platform. The pool of experienced IT pro-
fessionals who had been maintaining the system for years was starting to
shrink, and their specific skillsets were hard to replace.
On top of these challenges, the bank’s legacy IT solutions were not
ready to handle new and complex business requirements including
the Dodd-Frank Act, the adoption of ISO 20022, the move to a two-day
settlement cycle (T+2), and several DTCC-mandated changes to securities
processing. Further in-house development was considered, but ruled out
due to prohibitive costs that were out of line with the bank’s IT strategy.
narrowing the fieldThe bank’s search committee sought a
solution that could satisfy an extensive
set of criteria including technology
innovation, extensibility of solution,
vendor investment in the product, cost,
product fit and ongoing compliance with
industry practices and standards.
Members of the search committee
visited the New York offices of a longstand-
ing TCS BaNCS client in the U.S. providing
custody and securities services. Through
multiple interactions and client hosted
demos of the system in a live environment,
they were able to personally assess the fit
and potential value of the TCS BaNCS
solution to their own operations.
Following the visit, and reassured by the
extensive U.S. experience of TCS subject-
matter experts, the bank selected TCS in
the 4th quarter of 2014.
at a GLancecompany
Top 5 U.S. Super-Regional Bank
Headquarters
United States
Business challenge
To modernize a legacy securities processing platform
for post-trade settlement and risk management.
solution
TCS BaNCS for Securities Processing
1111
sOLUtiOn OveRvieWtRade caPtURe & PROcessinG:
l Capture and map trades using multiple formats and protocols
l Validate and enrich trades to meet settlement requirements
l Deliver trade authorizations
settLeMent PROcessinG:
l Settle trades in line with confirmations from DTCC and Federal Reserve
l Track and resolve failed trades
l Reconcile trade settlements and end-of-day cash obligations
l Manage settlement of internal trades
POsitiOn ManaGeMent:
l Manage real-time bookkeeping of trading positions
l Receive, process and post principal and interest (P&I) payments
OtHeR cOMPOnents:
l Maintain interfaces to local market infrastructure
l Manage core and reference data
l Provide technology architecture services
Future-ready solutionThe scope of the initiative was extensive. At
the highest level, the TCS BaNCS solution had
to streamline the bank’s post-trade securities
settlements for DTCC-eligible securities, includ-
ing equities and bonds, and for the Federal
Reserve for GNMA and FNMA securities, U.S.
Treasuries, repurchase agreements and other
financial instruments. The solution also had to
address Dodd-Frank, T+2 settlement, ISO 15022
and DTCC mandates.
After an aggressive 18-month, phased-in
implementation, the project went live over the
summer and was completed in August 2016,
on schedule and within budget.
With these completely modernized capabili-
ties on the solid foundation of TCS BaNCS for
Securities Processing, the bank is well prepared
for the future. n
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The competition for custody has intensified in virtually all of the
world’s most dynamic emerging markets.
It’s a common theme – Global custody banks rush to the
hottest markets, bringing with them foreign investments from
the largest global funds. At the same time, domestic banks
expand their respective custody offerings, making it easier for
local investors to diversify globally, and for foreign investors to
work directly with local bankers.
This combination – foreign money seeking local investments
and local money seeking foreign investments – makes for an
extremely challenging environment for local custodian banks
that fail to adapt to changing circumstances.
For a top commercial bank in one such dynamic emerg-
ing market, the situation as described above demanded an
immediate strategic response. As new competition mounted,
the bank remained a local player, providing service only to local
financial institutions in local capital markets. Furthermore, their
technology platform was based on an outdated legacy system
built around manual batch processes and a cost structure
that was no longer sustainable or scalable. As a result, their
customer experience no longer measured up to that of various
competitors’ offerings.
When the bank’s management team looked into upgrad-
ing their technology, they discovered that two of their biggest
competitors – one of the largest global banks, and one of the
up-and-coming local banks – had something in common: TCS
BaNCS. These new competitors were gaining strength on a
foundation created by the Custody and Corporate Actions solu-
tions of TCS BaNCS.
Based on the proven capabilities of TCS BaNCS and its well-
defined product roadmap, the bank’s leadership decided to
put themselves on par with the competition. By deploying
the Custody and Corporate Actions solutions of TCS BaNCS,
the bank would be able to equalize with competitors on the
technology while taking advantage of deep, longstanding rela-
tionships with local financial institutions and corporates across
key domestic industries.
cOLLaBORative MetHOdOLOGiesThe bank signed with TCS in late 2013. At that time, the TCS
team, including subject-matter experts and local market
experts, met with the executives and an implementation team
from the bank. Together, they planned out a comprehensive
“Waterfall” deployment schedule, including separate phases for
solution analysis, solution alignment, system integration, train-
ing, acceptance, rollout and support.
By the end of 2014, the bank went live, on schedule and on
budget.
In mid-2015, the bank accelerated its market growth strategy
by acquiring the domestic assets of a global bank. In order to
minimize the disruption to customers, the acquisition had to
be completed as quickly as possible. In this case, the “Waterfall”
approach would not have sufficed, as there were too many
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BiG Win: achieving parity with local and global playersTop commercial bank in dynamic emerging market matches competitors by deploying TCS BaNCS By d.K. tiwari, Principal Consultant, TCS Financial Solutions
713
uncertainties involved with managing the acquisition.
To manage the uncertainty, TCS employed “Agile” methodolo-
gies to ensure a rapid rollout. In contrast to the more measured,
sequential stages of the “Waterfall” approach to software develop-
ment, “Agile” has small, cross-functional teams working iteratively
to make incremental improvements. Analysts worked in “sprints”
to define requirements for the highest-priority items, which were
then sent offshore for development and testing. By having differ-
ent teams working throughout a 24-hour workday, TCS was able
to significantly shorten the time required to meet the bank’s busi-
ness requirements. In parallel with the development effort, TCS
also worked with the client to define the migration strategy, and
performed trial runs of the solution to ensure a smooth transition.
Through this approach, the bank was able to achieve a baseline
level of capability quickly and efficiently, while also effectively
uncovering gaps and new areas for development.
Even though the “Waterfall” and “Agile” approaches have
major differences (and avid proponents of each), TCS has the
flexibility to work with either set of implementation methodolo-
gies depending on the underlying business requirements and
with the culture and characteristics of the client organization.
TCS started working on the activities supporting the system
readiness for the acquisition in late 2015. By mid-2016, the deal
was finalized. Three months later, the acquired customers went
live on the bank’s TCS BaNCS-powered custody and corporate
actions solutions.
Drawing upon the new capabilities enabled by TCS BaNCS,
the bank now intends to recapture local market share while also
establishing a global footprint for the first time.
With their recent acquisition completed and their systems
built to scale, the bank – already a commercial banking leader in
its domestic market – is ready to pursue an expanded footprint
with exponential growth in assets under management and
customers around the world. n
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BiG Win: achieving parity with local and global players
2114
RegulationWith the intent to bolster banking system stability and investor
protection, regulators are focusing on operating risk and capi-
tal adequacy across the financial services industry.
That regulatory focus will cause a shift away from the cur-
rent pricing models, which are largely based on the level of
efficiency and automation by participants in a given market.
Instead, the new pricing models will be risk-based.
Custodians will have to consider several risk factors when
establishing prices:
l Creditworthiness of the underlying agent banks
l Characteristics of underlying asset classes
l Modes of trading, clearing and settlement
l Stability of market infrastructure entities involved
in trading, clearing and settlement.
Pricing will vary based on all of the aggregate risks involved
throughout the chain of custody. Activity involving higher-risk
areas will be priced at a premium. Custodians will need to de-
velop the systems and analytical capabilities to manage this
new, risk-based pricing model.
Investor protection is also a key theme for regulators, as a
growing level of pension and investment savings are leverag-
ing direct and indirect investment vehicles; in turn leveraging
a complex supply chain. Custodians are dealing with new re-
sponsibilities in terms of compliance reporting and ultimate li-
ability for their supply chains, and this is driving new models in
outsourcing, with more internalization of functions as a means
to reducing third-party dependency and risk.
anal
ysts
Four transFormations: br
eifin
g
CompetitionCustody operates with a multilayered model involving global
custodians, local custodians, and local or international cen-
tral securities depositories. All of these layers face increased
competition and potential disintermediation, and the indus-
try push toward lower end-to-end costs, more real-time data
and new technologies has forced custody players to develop
new business models. There’s significant overlap between the
activities of global custodians and local custodians, and firms
on both levels are integrating their services into more unified
propositions without the historical divisions in focus. Global
custodians are increasing the levels of internalization of local
custody, while local custodians are expanding their direct rela-
tionships with the investment community.
The organizations responding the most effectively to the
competitive trends are those that can rebundle traditional
product sets; deploy more integrated operating solutions; em-
ploy data more effectively and take advantage of their respec-
tive geographic and business footprints.
3the Future of Custody
Business models transformed by regulation, competition, market infrastructure and technologyBy Giles elliott, Principal Consultant, TCS Financial Solutions
15
4TechnologyCustodians have become huge data repositories, and have to
design new ways to commercialize that data. There’s a grow-
ing trend for fund managers looking to outsource more of
their data management to custodians, who can rapidly con-
solidate, scrub and evaluate market data feeds on behalf of
multiple clients.
Also, as fund managers automate decision-making with
robotic tools they will need to automate their back offices to
truly achieve lower cost investment solutions. In response, cus-
todians will reorient their services towards total automation
across the entire custody supply chain.
Finally, the industry is clearly fascinated with blockchain
and distributed ledgers. Blockchain has theoretical benefits in
enhanced security at a time of heightened concern on cyber-
crime, and leaner capital markets models are also driving us
to explore new solutions. The concepts are exciting, but given
the complexity of the industrial model and vested interests,
initial projects are going to be more component based rather
than holistic. n
3Market infrastructureIn Europe, T2S has brought more competition to local custo-
dians, and increased costs of operations as a result of height-
ened compliance standards. In response, CSDs are moving
away from solely offering market utility functions. Instead,
they’re expanding into higher-valued services, including ex-
panded coverage of asset classes including derivatives, and
collateral management for fund managers.
Another change in market infrastructure is the growing ac-
ceptance of utilities. In areas that do not provide competitive
differentiation, the industry is increasing support for utilities in
areas including KYC/AML compliance, derivatives clearing and
collateral management, and this will extend further into core
operating processing in the coming years. Industry players are
recognizing the benefits of collaborating around those areas,
rather than working in isolation for little benefit.
With more than 20 years’ experience in the securities services industry Giles Elliott recently joined TCS BaNCS to direct the Capital Markets
sales focus and Go-To-Market agenda. Prior to joining TCS, Giles worked for Standard Chartered Bank, HSBC, and JP Morgan Chase,
among others, both in Asia and Europe.
Giles will be presenting “The Future of Custody” at the popular SIBOS Open Theatre presentation area on Tuesday Sept. 27, 17:00-17:30.
Giles will also be presenting “The Impact of the Digital Agenda for Custodians” at the TCS booth at Sibos on Wednesday, Sept. 28 at
10:30-11:00 and again Thursday, Sept. 29 at 12:00-12:30.
the Future of Custody
16
inte
rvie
win
sura
nce
transition to a diGitaL
ecOsYsteM
Twenty years ago, many segments of the securities industry
relied upon paper documents ranging from share certificates
to prospectuses, contract notes and trade tickets. Today, it’s all
digital. For exchange-traded assets including equities, bonds,
ETFs and money market instruments, Central Securities De-
positories (CSDs) provide consolidated, secure and resilient
holding, apart from facilitating guaranteed delivery vs. pay-
ment (DvP).
Yet paper documents still circulate widely in other areas and
asset classes in national economies, some in areas more risk
heavy than in listed securities.
For example, life insurance policies are still issued on paper
in many regions. In the wake of a disaster such as a flood or an
earthquake, the problem with paper becomes evident, and it’s
following a disaster that policyholders most need protection
and assurance. When policy records are destroyed, policyhold-
ers or their beneficiaries may have trouble collecting the sum
assured due to lack of documentation. Furthermore, given a
sufficiently large calamity, the records of the insurance com-
pany could be damaged or destroyed too. The risks of lost or
unclaimed policies are entirely avoidable using digital tech-
nologies.
That’s one reason governments around the world are awak-
ening to the public benefit of having life insurance contracts
stored electronically within an Insurance Repository. In the
coming years, we expect to see the launch of Insurance Repos-
itories around the world. Already, TCS is working with organiza-
tions in India and Nigeria to implement Insurance Repositories.
Essentially, an Insurance Repository is a CSD for insurance
documents. Both facilities offer similar service capabilities,
ranging from centralized bookkeeping and settlements to KYC
verification and auditing. (For more on the comparison, read
“Insurance Repository and ‘ePolicies’” in TCS BaNCS Research
Journal #11.)
The repository concept works not just for financial instru-
ments, but for assets including any insurance policy (e.g. health
policies and medical records) and any real assets (e.g. land,
houses and vehicles).
One example with tremendous potential is a repository for
real-estate title documents, which would eliminate fraudulent
paper documentation and outdated duplicates of title docu-
ments. By giving property owners and lenders stronger assur-
ance of the validity of ownership claims on real estate, it would
become far easier to buy and sell property, and to borrow and
lend against property. This unlocks value by removing the fric-
tion involved with real estate transactions, eliminating many
kinds of fraud and reducing the overhead and risk involved
with processing paper.
Life insurance first among many innovative applications for digital repositories By R. vivekanand, Vice President, TCS Financial Solutions
ISTOCKPh
OTO
17
tHe cHanGinG ROLe OF FinanciaL institUtiOns
Once repositories are put into place, financial institutions will
have to develop new competencies and strategies for a paperless
world.
Repositories are typically government-sponsored initiatives
that require the participation of insurers in the market, and ef-
fective legislation. This affects everyone in the market, and each
organization will have to make the transition to a paperless world.
Not all will do so with the same level of success.
For insurers, the good news is that they will no longer have
to issue paper documents, pay for postage, maintain extensive
document libraries, or manage extensive workflows associated
with document storage and retrieval. The primary recordkeeping
functions will be managed by the Insurance Repository. Claims
will also be simplified, with payouts deposited directly with a poli-
cyholder upon verification of a claim.
The bad news is that many legacy insurers have become spe-
cialists at managing the legacy paper and money flow, and much
of their investment in document management and vaults – their
biggest overhead – will become unnecessary. Similar to how the
securities industry dematerialized over the past decades, now it’s
the insurance industry’s turn to shrink their operations.
Meanwhile, the introduction of Insurance Repositories will
make it easier for new players to enter the marketplace without
having to recreate an unwieldy system for managing paper docu-
ments. Legacy insurance companies are likely to see new com-
petitors with innovative business models taking advantage of
digital technology.
Insurance companies and other financial institutions will have
to prepare for the future of digital repositories in an electronic
ecosystem without paper.
The opportunity at hand is to offer repository-based services
to citizens and to help governments create a digitized environ-
ment. Financial institutions already work in concert with reposito-
ries (CSDs) for exchange-listed assets. This means that they already
have the necessary infrastructure to bring other asset classes onto
repositories, and to work with customers using those repositories.
For financial institutions with the vision to invent new value
propositions in a digital ecosystem, the future will be bright in-
deed. More importantly, the end customers of financial institu-
tions can look forward to a better future with greater financial
security available at lower cost. n
ISTOCKPh
OTO
18
anal
ysts
strategy day Guest Jost Hopperman, Vice President and Principal Analyst at Forrester Research,
participated in a day-long strategy session with TCS executives and subject-matter experts at the TCS Digital Reimagination Studio in Santa Clara, California, USA
Back row (from left to right): Ganesh Srinivasan, Rahul Kulkarni, S Samba, Shanoo Maniar, Sunil Karkera and Sathish VallatFront row (from left to right): Sri Sundar, R Vivekanand, Jost Hoppermann, Ashvini Saxena, Satya Ramaswamy and Thomas Mathew
Forrester Research, one of the most influential research and
advisory firms in the world, cited TCS BaNCS as a leader in
The Forrester Wave™: Customer-Centric Global Banking Platforms,
Q3 2016. The report, authored by Jost hoppermann, along with
Christopher Andrews and Joseph Miller, covered TCS BaNCS
along with eight other vendor firms.
The report said: “Today’s TCS BaNCS has various strong points:
It comes with proven business capabilities for retail, corporate,
and private banking, and its architecture builds on ingredients
like SOA, components, SOAP and RESTful APIs, and API manage-
ment. […] Reference clients expressed a high degree of satisfac-
tion with TCS, particularly when it comes to top management’s
attention to large scale projects. […] A large share of TCS BaNCS
revenues drives a well-defined strategy comprising enhance-
ments and topics such as blockchain, support of partner ecosys-
tems, and self-healing systems that will be essential for banks to
stay competitive.”
Commenting on the citation, N Ganapathy Subramaniam, Presi-
dent, TCS Financial Solutions said: “We are committed to the journey
of ‘simplicity’ in our banking platform, that results in faster roll-out,
best-in-class operating model and enviable customer experience.
We are pleased to be cited as a leader by Forrester and it is cer-
tainly a source of inspiration to continue our focus on simplifying
the technology landscape of banks through managed evolution,
adoption of cloud and digital-centric strategies.” n
http://on.tcs.com/2cqYvBQ
independent RESEARCh FIRM
cites TCS BaNCS as a Leader in Customer-Centric Global Banking Platforms
news
Bank of Bhutan deployed TCS BaNCS for Core Banking in 10
months, resulting in ability to handle increased transaction
volumes and improved success rate of delivery channel
transactions. All existing customers, accounts, lending
and internet banking subscribers were migrated from the
erstwhile Oracle FLEXCUBE system to TCS BaNCS as part of
this transformation initiative. The Bank selected TCS BaNCS
for Core Banking, a market-ready, fully componentized and
scalable solution for core and internet banking, in June
2015 and went operational in March 2016.
Mr. Pema Nadik, CEO and MD, Bank of Bhutan, said, “We
selected the TCS BaNCS solution for its superior design
and advanced breadth and depth of functionality, and in
keeping with our vision of enhancing— and enriching--
customer experience levels at our Bank. Designed around a
component model, this solution has transformed our bank-
ing technology ecosystem, empowering us to service the
evolving business needs and objectives of our customers.
The solution went successfully operational in a short span
of 10 months.
N Ganapathy Subramaniam, President, TCS Financial
Solutions, said, “We congratulate Bank of Bhutan on this suc-
cessful banking transformation exercise. The deployment
of TCS BaNCS at Bank of Bhutan signifies a critical milestone
for TCS, as the Bank is our first customer in the country. We
look forward to a long and rich partnership with Bank of
Bhutan and in deepening our relationship with the financial
services industry in Bhutan in the future.”
Bank of Bhutan is the largest and most profitable com-
mercial bank in the Kingdom Of Bhutan. Prior to the TCS
BaNCS deployment, the Bank faced challenges with slow
responses in some delivery channels, and staff had to spend
considerable amount of time in reconciling transactions
and settling customer complaints. Employees had to be
trained for long hours on common operations due to a not-
so user friendly interface that slowed customer service at
the Bank. The inability to parameterize mandated changes
to the Bank’s legacy core system caused delays in the roll
out of new products.
With this deployment, the Bank now has an enhanced
and responsive user interface and new digital banking
functionality that supports up load features. TCS BaNCS is
designed around a business component model thereby
empowering the Bank with a faster time to market for new
products alongside automating key business processes,
supporting multiple currencies and improving reporting,
auditing and compliance. With TCS BaNCS, Bank of Bhutan
was able to simplify end-of-day and end-of-period runs and
reduce manual intervention and related errors. The avail-
ability of industry-standard SOA compliant APIs facilitated
seamless integration with various customer delivery chan-
nels. The Bank is now able to respond faster across all its
delivery channels, resulting in higher transactions volumes
and greater accuracy. n
Bank of Bhutangoes operational with tcs Bancs
for core Banking in 10 monthsTransactions doubled and failure rates reduced
19
aBOUt BanK OF BHUtanBank of Bhutan Ltd. was incorporated by a Royal Charter in 1968, and is now incorporated under the Companies Act of Kingdom of Bhutan 2000. Bank of Bhutan was established as a public sector commercial bank and until the establishment of the Royal Monetary Authority of Bhutan; it also rendered the functions of the central bank in Bhutan. Bank of Bhutan started with only 20 account-holders and currently has about 400,000 accounts. The Bank was established with a paid-up capital of Nu. 2.5 million; today its paid-up capital & reserves have crossed Nu. 4 billion. Today it stands as the largest and most profitable commercial bank in the Kingdom of Bhutan with a network of 47 branches, including extension branches and an enviable network of 82 ATMs spread across the Kingdom, a growing Credit Cards business, a state-of-the-art mobile banking solution, internet banking and a dedicated Contact Centre, fulfilling the banking needs of a young and tech-savvy population, a demanding business community and the Royal Government of Bhutan.
20
new
sidBi CAPITAL
Online brokerage transforms operations with TCS BaNCS
IDBI Capital, a division of IDBI Bank Ltd., India’s youngest new-generation, public-sec-
tor universal bank, has gone operational with the Securities Trading and Processing
solution from TCS BaNCS for its online brokerage business.
With the implementation of TCS BaNCS, IDBI Capital has been able to expand its
business by offering new products, enhancing operational efficiency and improving
risk management.
IDBI Capital had embarked on a core securities transformation program to exploit
the potential of digitization, rationalize its application landscape, and simplify its
technology infrastructure. Their objectives were to improve customer centricity, sup-
port multiple channels and align with digital trading developments and trends.
As part of this transformation project, TCS BaNCS implemented its integrated front-
to-back-office brokerage solution; a comprehensive multi-asset, multi-channel solu-
tion with centralized risk management; mobile trading using iOS and Android de-
vices; and multiple bank and online depository interfaces.
Commenting on the transformation program and the implementation of TCS
BaNCS, Nagaraj Garla, Managing Director and Chief Executive Officer, IDBI Capital,
said: “We needed a robust, high-performance, integrated trading platform, which
would give us the capability to create and offer innovative solutions to our custom-
ers in an operationally efficient, cost-effective
and timely manner. A market-ready solution
that enables niche capabilities on smartphones
and tablets in this increasingly mobile and con-
tact-less trading world is what we needed. The
implementation of TCS BaNCS at IDBI Capital is
testimony to the product’s strengths, proven
capabilities and global customer footprint.”
Bharat Shah, Principal Consultant, TCS Finan-
cial Solutions, said: “TCS BaNCS has enabled
IDBI Capital to deliver an intuitive, interactive
and insightful digital trading experience across
multiple channels, thereby fulfilling its growing
business needs. IDBI Capital is leveraging the
product suite’s comprehensive functionality,
superior performance and high availability to
gain significant traction in the market.”
TCS BaNCS replaced multiple trading and
trade processing platforms at IDBI Capital with a single, front-to-back office broker-
age platform. The new solution has enabled digital trading functionality over the in-
ternet and mobile channels for retail clients. The solution is channel agnostic, allows
for trading across asset classes and facilitates a central view of orders placed across
different types of channels. n
aBOUt idBi caPitaL IDBI Capital Market Services Ltd (IDBI Capital) is a wholly owned subsidiary of IDBI Bank Ltd and is a leading Investment Banking & Financial Services Company. IDBI Capital offers a full suite of products and services to Corporate, Institutional and Individual clients. The range of services include investment banking, private equity, corporate advisory services, mergers and acquisitions, stock broking (institutional and retail), distribution of financial products, research and underwriting, among others.
ISTOCKPh
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In May 2016, NEST reached a milestone: More than 100,000
employers signed up to its automatic enrollment pension
scheme, up from approximately 50,000 at the start of the
year.
Membership figures have experienced similarly rapid
growth. NEST signed up its first million members by April
2014, and two years later, the program reached three mil-
lion enrolled members.
NEST was established in 2010 as part of the UK govern-
ment’s workplace pension reforms, which require all UK
employers to enroll their eligible workforce into a qualifying
workplace pension scheme. The reforms began in October
2012 and are being introduced in stages through 2018.
As NEST’s IT solutions partner and scheme administra-
tor, TCS is responsible for delivering outcome-based, end-
to-end administration services across all aspects of the
scheme. TCS set up the IT platforms that underpin NEST’s
operations including front and back-office, IT infrastructure
hosting and overarching management and governance of
the scheme administration. TCS BaNCS – a suite of bespoke
solutions designed for the banking, insurance, pension and
capital markets industries – sits at the heart of the NEST
scheme, with additional technology, business process and
infrastructure services also being provided by the TCS team.
The rapid growth in employer numbers is testament to
a strong working partnership between TCS and NEST. TCS
has worked in collaboration with NEST to enhance the ser-
vices and experiences offered to employers and members.
The scheme was built to be a digital-first offering for em-
ployers and members, which means that it can be quickly
and efficiently scaled up as demand increases. The digital
infrastructure in place makes it possible to continually
improve the user experience delivered through rapid de-
ployment of additional services, such as payroll integration
with IRIS, Moneysoft, QTAC and Sage platforms as well as
the wider payroll industry. These new services also include
enhanced customer service channels such as an online
help center, webchat, NEST Connect (for 3rd parties) and
interactive voice response (IVR).
helen Dean, CEO, NEST, said: “From a standing start in
October 2012, NEST now has 100,000 employers signed
up to the scheme and more than three million members.
Managing such high volumes in such a short space of time
is no mean feat. It is vital that our IT infrastructure and digi-
tal services are able to flex and scale to meet demand as
auto enrolment continues to roll-out. The systems, process-
es and technology that TCS has developed as a pension
scheme administrator have been essential to getting us to
where we are today. Our partnership with TCS has been in-
valuable, allowing us to innovate, handle high growth and
helping us bring pension saving to millions of UK workers.
We’re delighted with the success of the scheme to date
and will be working closely with TCS as we continue to
grow our membership and develop additional offerings.”
Shankar Narayanan, Country head, UK & Ireland, TCS, said:
“As a pension scheme conceived and built in the digital era,
NEST is a fantastic example of what is possible when you
put digital technology and advanced IT infrastructures at
the heart of your organization. It simply would not have
been possible to deliver the same quality of service and
customer experience without the scalability, agility and
efficiency that a digital-by-default approach can enable.
We’re extremely proud to have been a NEST partner since
2010 and look forward to continuing our work together
to offer the UK’s most innovative, user-friendly auto enrol-
ment pension scheme.” n
NATIONAL EMPLOYMENT
savings trustUK pension scheme enrolls 100,000 employers and
3 million members on TCS BaNCS-powered solution
22
london, January 2016
new york, January 2016
singapore, march 2016
london, July 2016
new york, July 2016
tcs Bancs diaLOGUes TCS BaNCS users share best practices and contribute to product roadmap
Throughout the year, financial institution users of TCS BaNCS
are invited to meet with TCS subject-matter experts and
invited guests from industry organizations. To foster global
participation, these meetings are held successively in five
locations — Brazil, Singapore, South Africa, U.S. and U.K.
These are more than just user group meetings. These are
TCS BaNCS Dialogues.
TCS BaNCS Dialogues facilitate continuous engagement
among TCS BaNCS users through discussion topics covering
key activities including specific products, client working
groups and operational issues. Clients also exchange their
experiences and share information about benefits achieved
through continuous upgrades across the TCS BaNCS
product line. In addition, TCS product specialists dem-
onstrate new developments in TCS BaNCS, including risk
dashboards and client servicing apps.
The face-to-face meetings complement the ongoing
discussions that take place on Finterest, the online portal
for the TCS BaNCS community. Clients also exchange their
experiences and benefits achieved through continuous
upgrade(s) on the Product line.
The objectives of TCS BaNCS Dialogues are twofold:
l To provide a platform for TCS BaNCS users to share
their best practices and to discuss industry trends,
market changes and topics of common Interest.
l To influence the TCS BaNCS product roadmap with
inputs from the full range of client segments and
geographies.
In recent meetings, guest speakers have presented on
DTCC’s Corporate Actions Transformation Initiative, ISO
20022 adoption and industry enhancements to custody
services. Also, at the London TCS BaNCS Dialogues, guest
speakers from Swift have shared information about recent
updates.
Upcoming TCS BaNCS Dialogues for the 4th quarter of
2016 will be held in Johannesburg and Sao Paulo. n
even
ts
23
UPCOMING EVENTSSibos 2016September 26-29, 2016
GENEVA, SWITzERLAND
Giles Elliott from TCS Financial Solutions will be presenting
“The Future of Custody” at the Sibos Open Theater (see page 14), and
TCS subject-matter experts will be holding presentations at various
times throughout the conference at the TCS booth (Stand #E10).
Book a meeting: http://sites.tcs.com/sibos-2016/
The 6th Annual FT-TCS BaNCS Financial Leaders Dinner ForumSeptember 28, 2016
GENEVA, SWITzERLAND
Keynote address from Marcus Treacher, Global head of Strategic
Accounts at Ripple, followed by a panel discussion featuring
executives from the Monetary Authority of Singapore,
BNY Mellon and the European Payments Council.
Apply to attend: http://on.tcs.com/2cFu7uv
BAI Beacon 2016October 5-6, 2016
ChICAGO, ILLINOIS, USA
On a panel at Fintech Forward, a collaboration between
American Banker and BAI, Joe Reilly, Chief Technology Strategist
at zions Bancorporation, will join Ashvini Saxena from
TCS Financial Solutions to discuss the ongoing TCS BaNCS
implementation and how the core transformation is allowing
the bank to become more agile for digital. The Fintech Forward
panel will be held at BAI Beacon, a new event focused on
the most important issues facing financial services leaders.
TCS BaNCS is a proud to be a sponsor of BAI Beacon.
Book a meeting: [email protected]
Banking ciO OUtLOOK
TCS was recognized by
Banking CIO Outlook
magazine as one of the
Top 10 Core Banking
solution providers
globally for 2016.
digital Banking 2016
TCS BaNCS was a Gold Sponsor at American
Banker’s Digital Banking Conference 2016
in New Orleans. At the event, Lee Wright
from TCS Financial Solutions demonstrated
the Online Account Opening capabilities
of TCS BaNCS.
reengineer the Bank & the digital way Forward
Fintech Forward panel featuring:Joe reilly, chief technology strategist at Zions Bancorporation
Ashvini Saxena, TCS Financial Solutions
Bai BeaconChICAgo
october 5-6, 2016