By Terry Erisman, Vice President of Marketing, GridGain Systems
Multiple trends in the banking industry are making a high-performance technology infrastructure critical to ensure success. Terry Erisman, Vice President of Marketing at GridGain Systems, looks at the key challenges facing financial institutions as they become increasingly reliant on in-memory computing technology to stay competitive and agile.
Real-time financial regulatory compliance and fraud prevention
Fears of another 2008-style financial meltdown and concerns over privacy, including the implementation of the EU’s General Data Protection Regulation (GDPR), have created an evolving and increasingly complex regulatory environment. To ensure compliance, financial institutions must now monitor, collect, and analyse vast amounts of data from multiple, disparate sources in real-time to calculate and report on their regulatory compliance status.
Similarly, fraud prevention requires the real-time analysis of incoming data and, frequently, the ability to apply machine learning to identify unusual activity. Fraud strategies appear in every area of financial services, from the theft of credit card numbers and personal financial information, to document forging and mortgage manipulation, to fraudulent computerized banking and securities trading. Financial services firms can suffer financial loss and damage to their reputations from such activities. According to Juniper Research, the problem is getting worse as online transaction fraud alone is expected to climb from $10.7 billion in 2015 to $25.6 billion in 2020.
The evolution of asset and wealth management
Asset and wealth management services are also changing dramatically. Today’s investors typically eschew the advice of a single investment advisor and reject the idea of a limited trading day. Instead, they want their investment services providers to offer 24/7 access to trading services and an ever-widening array of real-time data that they can explore themselves. This is requiring financial firms to update their technology capabilities and performance in order to provide real-time, high performance 24/7 access through a variety of new distribution channels, including online, mobile, and social. As more customer interaction channels have opened, transaction volumes have increased and providing real-time services has become more challenging.
Support for blockchain
Banks, enterprises and consumers continue to adopt blockchain, bitcoin and other digital-ledger technologies. A 2016 Deutsche Bank survey of 200 participants in the global financial industry found that 87 percent expect blockchain to have a major impact on the securities services market, while 75 percent expect widespread adoption over the next three to six years.
Supporting blockchain’s decentralised architecture typically requires a high-performance infrastructure. When a bitcoin transaction occurs, a record of the transaction is added to the ever-growing blockchain, which must be updated in real-time. Depending on the specific application, as the size of the blockchain and the number of subscribers continue to grow, the demands on the infrastructure to maintain the real-time ledger can become extraordinary.
Spread betting is increasingly popular, especially in the UK. A spread betting platform which can accurately price wagers while providing users with the required services and access to information from multiple channels can place tremendous demands on computing infrastructure. For instance, spread betting bookmakers and host venues must be able to stream tremendous amounts of data into advanced statistical and mathematical models. They must then quickly compute event relationships and outcome probabilities in order to set prices in real-time. To improve the trader experience, spread betting platforms may also need to provide customers with access to real-time data services and news analysis so traders can gain insight into trends that impact their positions.
The role of in-memory computing
While financial services companies are under extraordinary pressure to meet evolving customer demands, prevent fraud, and comply with increasingly complex regulations, a variety of technologies are already in use to address these challenges. However, many such systems are limited by the performance of disk-based databases that are slowed by constant disk reads and writes. Overcoming these limitations today is not only possible, but also potentially less complex and less expensive than one might guess.
Upgrading IT infrastructure to enable real-time processing and massive scalability can be a highly advantageous solution. By maintaining data in memory for rapid processing across a distributed computing cluster, an in-memory computing platform can process huge volumes of data in real-time. Such a platform can scale simply by adding additional nodes to the cluster, enabling firms to keep pace with the rapidly evolving environment and increasing threats. In fact, inserting an in-memory computing layer between existing application and data layers can increase processing speed by 1,000 times versus disk-based databases and support millions of transactions per second, all with minimal integration requirements. Such in-memory computing platforms can include an in-memory data grid, an in-memory database, streaming analytics and a continuous learning framework for maximum flexibility to address a wide variety of computing challenges. On-premises, cloud, and hybrid deployments are all possible.
For example, Wellington Management is an investment firm with more than US$1 trillion in client assets under management. They created their investment book of record (IBOR)on an in-memory computing platform as their single source of truth for investor positions, exposure, valuations and performance. All real-time trading transactions, all related account activity, third-party data such as market quotes, and all related back-office activity flow through the IBOR in real time. The IBOR also supports performance analysis, risk assessments, regulatory compliance and more. To handle the extreme processing challenge of the IBORwhile also controlling costs, Wellington deployed their in-memory computing platform as a hybrid transactional/analytical processing (HTAP) system. The HTAP configuration enables real-time analysis on the live data, offers massive horizontal scalability, and supports ANSI-99 SQL. In various tests, the new platform performed at least 10 times faster than the company’s legacy Oracle database.
While the cost of memory is still slightly higher than disk-based storage, an in-memory computing solution offers a tremendous increase in performance and much greater flexibility to incorporate new capabilities in the future.
The benefit? A far superior return on investment (ROI), especially when competitive advantage and customer experience is taken into account.
Terry Erisman serves as the Vice President of Marketing for GridGain Systems. An industry veteran with more than 25 years of experience, Erisman has initiated and driven high revenue growth for a multitude of award-winning companies in the SaaS, open source, and enterprise software sectors.
RegTech 2020: The rise of Open Banking
This month on the RegTech 20:20 podcast, host Alex Ford is joined by industry experts Gavin Littlejohn, Chairman of The Financial Data and Technology Association (FDATA) and Jamie Leach, Regional Director of FDATA ANZ and Founder of Open Data Australia, to discuss developments in Open Banking, and the place of RegTech.
Today, the focus is on the digital customer experience and the insight offered indicates that there has been a major shift in the FinTech ecosystem as a source of potential innovation for banks, rather than being a direct competitive challenge.
In the podcast, Alex quizzes Jamie on the concept of sharing data and the impact of the introduction of Open Banking rules under the Consumer Data Right (CDR) in Australia. Jamie shares that it is an exciting time to be involved in the sector:
“…what we really need to consider is that Open Banking in Australia is very different to Open Banking in the UK. Really, what has spurred Open Banking in Australia under the Consumer Data Right is the pursuit of creating greater competition and greater innovation, while allowing consumers to do more with their data.”
Gavin, who has many years of experience in the industry and, as well as his role with FDATA is also a key member of the UK Open Banking Implementation Entity, speaks on the theme of advocating Open Finance in the UK.,’
Delving deeper into Open Banking, he highlights the fact that it has been an interesting journey and states that “the important thing to understand is the difference between the UK’s Open Banking order and the wider payment services directive.”
Not only concentrating on Australia, Jamie also works across the sector in the UK and, also looking at its evolvement here, she suggests that the people creating the rules are now taking notice, adding: “We are just getting started – the UK has been at it for nearly three years and it is still gaining momentum.”
With regards to future predictions, Jamie believes “It’s going to take 12, 18 or 24 months before we see any mainstream major adoption and where the potential of Open Banking can go in this market”
Moving to the differences between Open Finance and Open Banking. Gavin defines the latter as “payment initiation and access to payment data, which enables a third-party provider or fintech with a customer relationship to initiate a payment and get access to the data relating to transactions.”
“…the concept of Open Banking is a bit like electricity – you don’t use it directly; you use an appliance that uses it. This could mean loans, money management apps, or cloud accounting platforms, which all use Open Banking.”
Throughout the episode, both guests provide interesting insights and hint at the significant potential of Open Banking.and the connection to RegTech within this domain.
It is clear that what we see today is only the beginning. Despite the industry still being in the early stages of implementation in almost all cases, there is increasing interest in moving beyond this to include a far broader spread of financial products.
You can listen to the full episode at https://www.encompasscorporation.com/regtech2020-podcast/ or across all major platforms, including Apple Podcasts, Google and Spotify.
New digital first bank – Monument – announces its key technology providers
- Monument selects Mambu, Salesforce, Amazon Web Services, Persistent Systems and Accenture as key providers for its technology build
- Monument is the first challenger bank in the UK to service the unmet demands of more than 3.5 million mass affluent clients: professionals, property investors and entrepreneurs
- It is building a modern, unique, lego-like technology platform which takes best of breed SaaS providers and integrates them in a cloud based microservices architecture
- This will deliver an exceptional client experience and enable Monument to innovate and to introduce new components on a frequent basis
- Monument today announces that Mambu will be the central core banking engine in the platform alongside Salesforce for CRM, and AWS for cloud services
- Monument has also engaged Persistent Systems and Accenture Interactive to support the platform build
Following receipt of its banking licence with restriction on 6 October 2020, Monument has now signed agreements with a number of key technology providers to enable the build of its bespoke technology platform.
Monument wants to deliver exceptional client experiences by using technology solutions that are modern, flexible, easy to integrate and ultimately, if necessary, able to be replaced should the need arise. The design of its lego-like technology platform is Monument’s solution to the huge challenges faced by the legacy systems of established banks. Having assessed the market over many months, Monument concluded that no appropriate single solution existed in the market for the products and services that Monument will launch in 2021.
In addition, Monument only wishes to develop its own technology where it can deliver significant competitive advantage, for example in the mobile and web services to be used by clients. Much of the technology platform is therefore based on best of breed solutions from modern, cloud-based providers.
Mambu has developed the leading cloud banking engine which is an excellent fit for the platform that Monument is building. Similarly, Salesforce provides an industry leading CRM (customer relationship management) solution which can easily be integrated with Mambu and other solutions. AWS, as a leading provider of cloud-based infrastructure, provides a range of components to ensure the platform is reliable, scalable, secure and flexible.
To support Monument in building and integrating a platform with more than 18 different components/providers, Monument has chosen to work with Persistent Systems, a leading global solutions provider specializing in digital with extensive experience in software as a service (SaaS) solutions. To support Monument in rapidly building its mobile app and web-based channels, Monument has chosen to work with Accenture Interactive, which has significant expertise in building innovative digital experiences in both the financial and non-financial sectors.
Steve Britain, Monument’s Chief Operating Officer said:
“We have been working closely with our chosen providers for some months now, to lay the foundations for the build of our platform. We are delighted at how much we have already achieved, particularly as much of the work has been done by a highly distributed team because of COVID-19. We are now focused on completing the work to build a unique configuration of best in class software components that will make us highly flexible for the future and deliver market leading client service.”
More announcements will be made shortly as other key components of the architecture are confirmed.
Sudip Dasgupta, Monument’s Chief Technology Officer added:
“It was essential to me that we selected the strongest providers available. Those that offer us modern technology solutions with the best degree of integration that we need, together with flexibility for the future and proven operational reliability. In Mambu, Salesforce and AWS we have certainly achieved that objective and we are excited about our future engagement with them. Equally, as we rapidly build our platform for launching with clients in early 2021, we wanted support from providers who have been on this journey before and in Persistent and Accenture Interactive, I am delighted to say we have found that.”
Monument will be the only bank to offer its clients an entirely digital journey for buy-to-let and property investment lending of up to £2million. It will offer market leading, top quartile savings rates and its model is designed to reward loyalty. So, if a saver deposits money for a subsequent fixed term, they will get a better rate than a new customer. And a borrower who renews their loan will also be offered a favourable rate.
UKRSIBBANK, part of BNP Paribas Group, announces a strategic partnership with financial wellbeing startup Dreams, to enhance the digital user experience of its 2 million customers in Ukraine
- The technology powering popular consumer app, Dreams – which has helped 460,000 users save over 440M EUR – will be made available to UKRSIBBANK’s users in Ukraine.
- Through the integration of the Dreams platform within UKRSIBBANK’s own digital tools, customers of the bank can set and achieve money-saving goals, track and improve their financial lives.
Dreams (https://www.getdreams.com/en/b2b/), the Stockholm-born fintech empowering millennials to save and feel better about their money, today announces a strategic partnership with Ukrainian commercial bank UKRSIBBANK, a subsidiary of French international bank BNP Paribas Group.
This partnership follows the announcement earlier this year of Dreams’ first enterprise partnership with banking software provider Silverlake Symmetri, and the recent unveiling of a new department in Stockholm dedicated to the development of Dreams’ B2B partnerships. The announcement marks an expansion of the company’s business model as it consolidates its B2B offering and evolves its services as a provider of white label solutions for financial institutions.
Through the integration within UKRSIBBANK’s own digital tools of the Dreams Platform – which is rooted in scientific principles – customers can set and achieve money-saving goals through clever, automated saving features, in addition to nudges and saving hacks.
The Dreams Platform will be included as part of UKRSIBBANK’s digital banking offering for its 2 million+ customers, and is set to grant millions of potential consumers across Ukraine access to products which will help keep their finances on track and improve their financial lives.
The rise in digital self-help tools has long been anticipated by Dreams and forward-thinking financial institutions. The current global economic uncertainty brought about by the COVID-19 pandemic has also placed significant strains on people’s finances, and the demand for better personal finance tools has only accelerated. The partnership with Dreams is welcomed by UKRSIBBANK which is currently striving to equip its customers with the best possible banking solutions whilst helping them achieve a more sustainable lifestyle.
Dreams is firmly established as an authority in its industry, having launched its consumer-facing app in its native Sweden in 2016 and Norway in 2018 – where it has already achieved a 16% market share of all 20-39 year olds.
Henrik Rosvall, CEO and founder of Dreams, comments: “It’s a true honour to be partnering with UKRSIBBANK and BNP Paribas Group, and we’re incredibly excited to be introducing the Dreams solution to UKRSIBBANK’s customers and the wider Ukrainian market.
“Dreams and UKRSIBBANK can now lead the charge, with BNP Paribas Group’s corporate strategy having shifted in recent years to focus on guiding customers towards responsible consumption and sustainable personal finance management. I’m confident that our mission of helping millennials save more and feel better about their money makes us the ideal partners.
“Our financial wellbeing platform – which is built upon behavioural science and personal finance management principles – will provide the perfect tool for UKRSIBBANK to help its customers make better financial choices and become more sustainable in the way they handle their finances. This partnership will also help UKRSIBBANK safeguard the loyalty of its customers and futureproof its digital banking offering against a growing number of challenger banks and fintechs.”
Konstantin Lezhnin, Head of Retail at UKRSIBBANK BNP Paribas Group, comments: “I believe that banks have a role to improve their customers’ lives. Planning and saving for important life events improves our quality of life by reducing stress levels, and we wish to make our customers feel more confident and in-control of their lives.
“UKRSIBBANK has always applied innovative ways to assist our customers in financial planning, so we are very happy to now be working with Dreams, the best European player in behavioural savings. They have an extremely solid track record in Sweden and Norway based on scientific research, so we are confident that this partnership will work positively for our customers in Ukraine. This also demonstrates our strategy to cooperate with startups and innovative companies that seek ways to expand their operations.”
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