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Real-time information, real-time visibility
Everyone will remember the well-publicised collapse of Barings Bank. What was not made quite so public was the fact that it took most banks weeks to finalise their global position post Barings liquidation. This was because there were no means to automatically consolidate all the information together from the various different branches and subsidiaries, there was no one single real-time view of liquidity!
in an increasingly competitive world
Today, it is not uncommon for banks to offer a variety of services such as currency dealing, multiple currency settlement, trading of various financial instruments, equity and custody trading as well as other additional services. Until recently major clients, such as financial institutions, would be happy with information daily or up-to-date give or take an hour or so, but this is all changing. Clients will 'shop' around for the most competitive deal and are less loyal and much more dema- nding. And, unless banks improve their services they will loose their clients to those that do. The issue is real-time visibility for both the banks and their clients to enable quick and informed decisions to avoid a recurrence of the Barings episode as well as take advantage of intra day trading opportunities.
Speed, accuracy of information and integrated services, backed by guarantees through a service level agreement are the core elements in the game plan to gain, retain and sustain satisfied clients.
This article explores some of the issues that are preventing banks from providing these services to their clients. It looks at the changing face of the client and provides one answer to effectively manage Intra and Inter-bank trading.
The need for
real-time integrated information
will maximise operations & profitability
visibility to effectively manage rapidly changing circumstances
The expansion of web technology over the last few years is rapidly changing this. The Internet, extranet, or Intranet are providing a common low cost way of communicating between client and provider, and browser access is becoming the standard means of access. The benefit of using web technology is significant in keeping costs down as the nature of the web means it is easy to retrieve information from any organisation. The universal nature of the Web allows access from anywhere in the globe.
Most banks offer a range of services to clients but they are not necessarily tailored to the client. Tailored services will potentially maximise returns. A consolidated view of a client's position will assist it to understand its global situation. A key factor to build into facilities that are on offer is to provide a consistent means of access for the client. Today, with web technology the task is easier.
account information between banks
Nostro account information forms a fundamental building block for many intra- and inter-bank transactions. By its nature, Nostro account information needs to be accurate, secure and available to those whose profits depend on it. The fact that it could only be accessed by a daily batch-run motivated several international banks to define a standard means of exchanging real-time Nostro data.
Gresham Financial Services (GFS), a major player in the Banking Operations and Payments market was the catalyst in this partnership to help define a standard mechanism for exchanging Nostro information between banks. As a result, a revolutionary new product has been developed, NostroDirect. NostroDirect will provide the information necessary to improve risk management, reduce the cost of collateral and liquidity to support foreign exchange settlement processes, and it will demonstrate to regulators that action is being taken to reduce settlement risk. Nostro direct enables fast secure access to Nostro information via the Internet or any IP network.
A transaction time-stamp indicates the actual time that the account was credited. This allows the accurate measurement of settlement exposure of a client, by comparing when payments are made, versus when payments are received. This is important for risk management and allows credit lines and collateral requirements to be set based on the true intra-day position, rather than the traditional end of day measurement. Even better cash and risk management is possible when aggregating information across various currencies and business units which supports centralisation of management functions.
The software satisfies the need for client access to their information in the way they want it and when they want it. The information is provided in a standard format using XML over IP and allows the client to automatically route the information received to back office systems for further straight through processing
The software also has web-enabling capability as standard for the distribution of information over a web network ; an Intranet, VAN, or even Internet. Connection to in-house systems can be achieved through any host adapter or Enterprise Appli- cation Integration (EAI) software, as long as it supports synchronous connectivity.
The future of
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