Capital Markets Chamber - The Financial Services Club This house believes Cloud Computing is just...

PJ Di Giammarino, JWG‐ITNick Davies, CTO, Lombard Risk ManagementAndrew Douglas, Securities Market Infrastructures Manager, SWIFTChris Skinner, Chairman, the Financial Services Club

Capital Markets Chamber

This house believes Cloud Computing is just outsourcing in disguise13 October 2009

• Established 2004 and meeting regularly ever since

• A ‘rotary club’ for financial services

• Focus is the future of financial services

• Usually a keynote from an industry practitioner, government policymaker, regulator or someone who’s really interesting

• Covers all areas of the financial markets: retail and investmentbanking, capital markets, insurance, brokerage

• Aimed at any organisation interested in these markets: banks, insurers, vendors, consultants

• Presentations, Debates, Question Times, Dinners, Roundtables

• Chatham House rule

What the Club does

The Chatham House Rule

"When a meeting, or part thereof, is held under the Chatham House Rule, participants are free to use the information received, but neither the identity nor the affiliation of the

speaker(s), nor that of any other participant, may be revealed".

The world‐famous Chatham House Rule may be invoked at meetings to encourage openness and the sharing of information. ... with the aim of providing anonymity to

speakers and to encourage openness ...

• The Financial Services Club England

• The Financial Services Club Scotland

• The Financial Services Club Ireland

• The Financial Services Club CEE

• The Supply Chain Forum

• The Capital Markets Chamber

Six Groups

This house believes

Cloud Computing is just

outsourcing in disguise


The Impact of Cloud Computing on Financial Services

A Progress Report bythe Financial Services Club

Autumn 2009

©Chris Skinner/The Financial Services Club, 2009. All rights reserved.

Types of firms

235 responses from a variety of banks, payments institutions, infrastructure providers, technology firms, consultancies, corporates and more*

Other: Academia, Bankers´ Associations, Data Vendors, Law firms, NGOs


Which of these is most important when making a purchasing decision?

Capital Markets Retail Markets

Providers


Cloud computing is a general term for anything that involves hosted services over the internet.

It gets its name from the cloud symbol used to represent the internet in flow charts and diagrams.

A cloud service has three distinct characteristics: it is on demand, elastic ‐ a user can have as much or as little as they want ‐ and it is fully managed by the provider.

The Survey Definition


Clouds getting bigger

Now

Future


What is driving that need?


Who is driving that need?


Who is driving that need?

Capital Markets Retail Markets

Providers


Which statement do you agree with the most?

OverallCapital markets

Retail markets

Providers

Cloud computing's on‐demand capability plays a strong part in building a variable cost model for a financial provider

39.0% 42.3% 28.6% 40.9%

The ability to use cloud computing as an operational expense is a major driver towards the take‐up of cloud computing in financial services.

22.0% 11.5% 25.0% 23.6%

Capital expenditure is harder to justify for IT expense these days 19.5% 19.2% 35.7% 15.5%

After the financial crisis, managing the business using operational rather than capital expenditure is the most critical factor in our business

19.5% 26.9% 10.7% 20.0%


What is the biggest barrier for Cloud Computing?

OverallCapital markets

Retail markets

Providers

Concerns over security of information 44.4% 50.0% 50.0% 41.6%

Too early in technology cycle to be appropriate

17.0% 10.0% 17.9% 18.6%

Using cloud would create unmanageable risks

14.0% 13.3% 10.7% 15.0%

The dependency on external providers 12.3% 10.0% 14.3% 12.4%

Lack of internal capability to use it 8.2% 6.7% 3.6% 9.7%

Lack of business need 4.1% 10.0% 3.6% 2.7%


Front Office Applications

#1 CRM

• Claims

• Collaborative market intelligence sharing

• Core Banking

• CRM– Account opening CRM

– Know your Customer CRM

– Identity Verification and Authentication ‐ name, address, etc

• Customer facing apps

• Data verification through Trusted Third Party data certification agencies

• Desktop Direct data capture from client/ potential client.

• Distribution of FX price and the ability to buy and sell on that price

• Exchange trading and broker trading applications.

• IOI, reference data, market data

• Market data analysis

• Mobile Services across the bank at retail and corporate level

• Monte Carlo simulations, options pricing, risk valuations

• Multifactor authentication

• News services

• Offshore sales support

• Online trading

• Order management, order processing, order matching

• Personal Financial Management

• Portfolio analysis and simulations. Risk management and regulatory reporting

• Pre‐trade analytics on the buy side where low latency is not a problem

• Pricing systems and applications

• Research ‐ all products and corporation data.

• Retail banking ‐ a/c access on mobile, trading through mobile

• Self assist sales of financial products.

• Sell side on demand services to hedge funds

• Social network and community based apps.

• Statistics related to Industry

• Targeted marketing communications based on data mining

• Ubiquitous communications and computing model for employees


Middle Office Applications

#1 Enterprise Risk Management /Enterprise Data Management

• Access to 'hot leads' expressing an intention to buy a product or service on a 'Permission Based Marketing' basis

• Adapting transaction formats to specific standards

• Any application that can be Citrix enabled is a suitable candidate for Cloud Computing ‐ Process as a Service

• Archived historical portfolio accounting systems

• Back end trace trail in Banks and Financial Institutions

• Branch Connectivity for transaction processing at the point of initiation in respect of payments, cash remittances etc.

• Business intelligence and automation

• Cash management

• Confirmations and settlements through Swapswire.

• CRM

• Data Protection Act and European Human Rights Directive compliance

• Document generation/fulfilment Fraud detection

• Enterprise data management: data processing, data mining, data consolidation, business logic, segmentation, BI

• Enterprise risk management

• ERP

• Evaluation of financial product application from clients

• Finance, accounting, legal

• Global Credit Risk Monitoring

• Maintaining robust information about customers

• Matching records

• Mobile access to risk / alert monitoring and authorisation as part of business processes

• Mobile banking, electronic payments

• Normalization of exchange and prime brokerage customer connectivity

• Office collaboration tools

• Order matching and risk management

• Portfolio allocation and affirmation processes.

• Pricing services

• Reconciliations

• Replacements of grid for risk management

• Technologists and Consultants


Back Office Applications

#1 Everything

• Accounting

• AP invoice processing. Order Management. Expense management.

• Archived historical portfolio accounting systems

• Bearer settlement

• BPMS, Document storage and collaboration, project collaboration apps

• Cards Management and Switching

• Cheque processing

• Claims assessment

• Clearing

• Collaborative non‐competitive data validation and sharing, e.g. time‐series, IBAN / BIC, etc.

• Confirmations of trades.

• Confirmations, accounting, attribution management, performance measurement, client reporting

• Core banking applications

• Credit card, payment transaction.

• CRM

• Custodial and clearing activities

• Data aggregation excluding personal information

• Data processing

• Digital Notary

• Document management/generation/fulfilment

• End of day batch processes

• ERP

• Financial analysis of large volumes of data

• Fraud detection

• Global risk and financial reporting

• Gobal trade processing

• HR management

• Load balancing for transaction processing

• Online client service and query tracking.

• Order to pay process.

• Outsourced payments and e‐invoice exchanges

• Outsourcing is more prevalent in the back office so all applications are viable subject to security issues, especially portfolio calculations.

• Payment factories

• Payment/Settlement processing

• Queries between counterparties

• Reconciliation and exception management

• Regulatory reporting

• SEPA processing

• SWIFT processing

Cloud Computing & Capital Markets

Andrew DouglasOctober 2009

Is Cloud Computing relevant to Capital Markets?

What do participants want?- Competitive advantage

- Cost optimisation

- Risk reduction

- Scale-ability


What can Cloud Computing give you?- Rapid access to new applications

- Rapid access to additional capacity

- Conversion of capital investment into operating expense


What else does Cloud Computing give you?- Dependency on others

- Less need for creativity

- Increased transaction risk- Identity- Confidentiality- Availability

* SWIFT August 2009 user survey


The greatest IT challenges of the next 2-5 yrs*?- Automation – 63%- Capacity and cost effectiveness – 57%- Security – 28%- Cloud Computing – 3% (7% in payments)

But 56% considering outsourcing……

* SWIFT August 2009 user survey

Clearly yes but……

- Further market education is necessary

- Risk related weaknesses need to be addressed


Q & A

• Is Cloud Computing just for commercial and retail banks and for payments processing, but not for capital markets?

• Is putting your on‐premise services in private domains different to outsourcing?

• If so, why should you care?

• Have we missed the point or is this a load of rubbish?

This house believes

Cloud Computing is just

outsourcing in disguise

What do YOU think?


10th November

This house believes first mover advantage in liquidity risk was a good idea. The Chamber has had several debates about the merits of the FSA’s new requirements for liquidity risk management. This meeting will review whether those who moved early gained the upper hand.

Capital Markets ChamberOur Agenda, 2009

• Education through hearing from top industry speakers

• Networking with peers from all of the firms associated with finance

• Socialising with a wide range of operational, strategic, marketing and management personnel

• Being recognised as a Member through the Club badge

• Discounts on most industry events, conferences, magazines and books – up to 30% off many

Benefits of Membership

26th October

The New World Order for Financial Markets

Dr. Vincent Cable, Shadow Chancellor for the Liberal Democrats

10th November

Creating a financial market fit for the future

Jim Champy http://www.jimchampy.com/

26th November

The latest in mobile financial innovations

Thomas Borgensen, CEO, Lup

Main London ClubAgenda, 2009

http://www.jimchampy.com/

PJ Di Giammarino, JWG‐ITNick Davies, CTO, Lombard Risk ManagementAndrew Douglas, Securities Market Infrastructures Manager, SWIFTChris Skinner, Chairman, the Financial Services Club


This house believes Cloud Computing is just outsourcing in disguise13 October 2009

Capital Markets Chamber - The Financial Services Club This house believes Cloud Computing is just...

Documents

Transcript of Capital Markets Chamber - The Financial Services Club This house believes Cloud Computing is just...