Co-operative Financial Services, as it went through a major core system replacement at the same time as seeking to implement a payment hub, albeit unsuccessfully. UK-based Co-op was implementing Infosys’ channel
solutions (the corporate banking front-end is live) and Finacle core banking system. A replacement of the bank’s treasury system was also planned. ‘To deliver products to market faster, we needed more flexible platforms,’ said Simon Cox, head of business systems strategy at the time at the bank (he subsequently departed). ‘When we moved into the detail of the core system replacement, we found that some parts were more intensive and challenging than others.’ One of the more difficult areas to integrate was payments and the Co-op wanted to mitigate the risks, he said. ‘We recognised that a payment hub was a good way to go.’
The aim was to implement OPF with the existing legacy systems, for a cut-over in 2011, ahead of the roll-out of Finacle. The emphasis would be on high volume, low-value payments, although the ultimate aim was to have a single payment platform. This would take payment processing out of the core systems, with the Co-op aiming to do the same with other functional areas, including accounting, as part of a hub-based application strategy. There was a selection process, looking at a number of payment system vendors with hub platforms, and this included a proof of concept phase. ‘A flexible design for us was key, and whilst the modern hub vendors are less functionally rich than more established vendors, this wasn’t a major area of differentiation for us,’ said Cox. There were a number of other
Other notable projects
At Bank of Tokyo-Mitsubishi UFJ in the UK, OPF had already been taken for SDDs and the bank’s experiences here led to a more strategic project for a pan-European payments hub, across both Euro and Sterling with the decision made in the second half of 2010. During 2009, Clear2Pay had its first win in Portugal, at SIBS
Processos. This was firmly linked to SEPA. It is an interbank processor mainly centred on ATM and POS transactions, management of the domestic RTGS, and BPO services. It was seeking to set up a payments hub and to this end acquired OPF modules for domestic and international payments, SCTs and SDDs. It looked at all of the main players, said Hartley. ‘It was looking for a product, not a build type of framework.’ Its aim is to take over payments processing from domestic banks in a number of areas, so breadth was also important. There was also a first OPF win in China, at Bank of East Asia, stemming from a central move to automate the country’s commercial draft system (ECDS). This is for inter-company trade and is effectively in place of invoices and purchase orders, which do not exist. Clear2Pay’s country manager, Mun Kiat, likened it to a ‘mini LC’ (letter of credit), a commercial draft that represents a guaranteed instrument of payment. A government initiative under the auspices of the Bank of China was seeking to come up with an electronic system to automate the drafts. One incentive, he suggested, was to give the government full transparency of B2B commerce for tax
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reasons for the selection of OPF. There was already significant use of IBM middleware which Clear2Pay exploits. Co-op was also reassured when it spoke to CBA. Clear2Pay was also felt to be an easy organisation to do business with and it performed well in the proof of concept. OPF was also felt to support innovation, which could include mobile payments or corporate financial supply chain management. This project was subsequently thrown into doubt,
however, as the bank harboured aspirations of taking over the 632 branch network of fellow UK high street bank, Lloyds. The latter was named as the proposed technology provider for the merged entity, supplying the main platforms on a managed service basis. This was then followed by a write-off of £150 million relating to the development of the new banking systems at Co-op. The acquisition plans then fell through in the first half of 2013, following the departure of Co-op’s CFO, James Mack, and annual losses of £673.7 million (before tax), as the bank lurched into crisis, culminating in acquisition by private equity firms.
Nordea Bank
Nordea embarked on a major core banking software overhaul (one of the largest in Europe, post financial crisis) but it is also investing heavily in a new centralised payments hub. The hub will be underpinned by the Open Payments Framework (OPF) platform from Belgian vendor Clear2Pay.
purposes. Full connectivity was scheduled by the end of 2010 for all 2500 or so domestic banks. An additional interesting dimension, said Mun Kiat, was that the drafts could be traded, so there was likely to be a secondary market. The solution for Bank of East Asia was built on top of OPF by
Clear2Pay’s Shenzhen office (the company that was acquired to form this included a number of ex-Bank of China staff and had early sight of the requirements for the new central system). It provides connectivity for Bank of East Asia’s corporate customers, including a view of the status of the transactions, and manages those transactions and connectivity with ECDS. It reflected Clear2Pay’s model of building country-specific solutions on top of the platform. BNP Paribas set about implementing a regional payments hub for cash management in Asia based on OPF, with an initial three countries due to go live in December 2010. BNP Paribas was already a customer of Clear2Pay in France on the e-banking side and, via Fortis, in Belgium, but this was a completely separate selection. The payments hub is in Singapore and will ultimately support at least 13 countries. First to go live were intended to be Thailand, South Korea and Taiwan. Vietnam, China and Japan were among other countries expected to be within early phases. There will be a large number of interfaces, with links to external clearing systems, to SwiftNet, and to the bank’s settlement systems and other applications, including its Connexis corporate internet banking offering. No one from the bank was available to comment but it is
understood that a main aim was to gain a consolidated view of all payment transactions from each country. ‘BNP Paribas is a
Payment Systems & Suppliers Report |
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