bankingtech.com

Banks can reduce the headaches associated with cost pressure, tough new regulation, legacy business complexity and changing customer demands by outsourcing non-core areas of business. That is the idea behind two new corporate actions products launched by financial technology vendor SunGard.

The first offering is a cloud-based risk dashboard called XSPosure, which is for the visualisation of corporate actions risk. Red and green triangles light up a simple graph; red represents risks that haven’t been dealt with, green the risks that are in hand. Their position on the chart tells the user how close the risk is to the present. A position on the left side suggests immediate danger, while a position on the right denotes a risk further into the future. The triangles are also different sizes, depending on the severity of the risk. “If you see a big red triangle on the far left, you have a problem,” said Brendan Farrell, head of XSP at SunGard. “The idea is to help bank executives to see exactly the amount of risk they have, at a glance.”

The second offering is a managed service called Corporate Actions BPAAS (business processing as a service). Farrell said although SunGard had been managing technology for customers in a hosted environment for a long time, now the company was going a step further and processing the data for them. “This is a big departure,” he said. “Data drives all the processes in corporate actions, but customers struggle to get to it. We will do it for them.”

One of the main drivers for both services is the tremendous cost pressure facing banks during the past few years. While many banks might wish to focus on providing the best services possible, a concurrent onslaught of regulatory changes makes doing so difficult. Farrell suggested that many bank executives were being told to make their business units work and adjust to the new regulation with the same or reduced headcount and the same resources as before. “Something’s got to give,” he said. “Either you focus on regulatory changes and therefore there is no budget left for innovation, or you try to keep innovating – in which case, if it’s not core to your business, why not outsource? These processes offer zero value-add, everyone has to do them and nobody is making money from doing it themselves.”

Farrell acknowledged that data security was an important issue for clients and traditionally had been a major point of concern for cloud-based offerings. But he now believes the pendulum has swung in favour of hosted services. “If you have an experienced cloud services provider, the data may be safer with them than in the customer’s own internal systems,” he said. “A lot of the problems our customers talk about relate to trying to keep current, to avoid being hacked and to keep up with technology which gets out of date very quickly. Cloud concerns have dissipated as banks have large chunks of their technology outsourced already. Having your data with us may be more secure than leaving it where it is at the moment.”

He added that initiatives such as the DTCC’s transformation project, which involves adoption of Swift ISO 20022 messages, would also cause issues in the US as many firms weren’t using Swift, while many of those that did were used to the old ISO 15022 standard. By outsourcing business areas, the burden of these types of problems could be lifted from the shoulders of bank executives and left for the technology specialists to worry about.