Since our March newsletter we have continued to experience growing demand for both our VolPay suite of payments products and Volante Designer as firms face the challenges around integration, customer payments on-boarding, processing and orchestration. As always, our teams have also continued to closely monitor the effect of changes to regulation and evolving standards and ensure that our products are always in step with these changes so that our clients can stay focused on their business.
Since the last edition of Volante Insights we have gained new clients and experienced more product acquisitions from existing clients – for this we are, of course, delighted and will continue to serve our client community with complete dedication and passion.
Of particular interest in this edition is a focus feature on our Latin American business region which has gone from strength to strength in recent years. We also look at how the Volante product roadmap is managed, and what you may expect from us as we look forward to the end of 2016 and beyond. Finally, there has been a lot of industry activity in the world of regulation and changing standards, and it is always good to share our observations with you and perhaps feed your thought processes into these activities. So as usual, we start this edition with a market update.
I hope you enjoy this edition of Volante Insights. It has been exciting year so far, and we look forward to continuing to share our news with you as we move through 2016.
As ever, there is a lot happening in the markets that is impacting banks and financial institutions’ technology. Of course regulatory and proposed market infrastructure changes continue to prove a challenge, but the rapid emergence of new, almost revolutionary technologies such as blockchain, are keeping banks on their toes in new ways.
Regulatory and proposed market infrastructure changes continue to prove a challenge, but the rapid emergence of new, almost revolutionary technologies such as blockchain, are keeping banks on their toes in new ways.
Immediate payments is a topic of significant interest as many countries look to adopt schemes similar to those already in place in the UK, Singapore, Sweden, and Poland among many others. In Europe, the SCTInst program is well underway with an infrastructure provider already selected to build a pan-European immediate payments system. The US is also rapidly moving towards immediate payments as part of the FED Payment Improvement program. At the same time, the privately operated US ACH, The Clearing House (TCH), is partnering with VocaLink to generate an immediate payments system for the US using ISO 20022 based standards. Indeed, ISO 20022 has now published formal schema for ISO 20022 Real-time payment messages with additional related messages due for publication later this year.
Closely linked to the increase in consumer demand for immediate or real time payments, is the rise of Open Banking and in particular the PSD2 initiative in Europe (SEPA) and UK’s Open Banking initiative. Both projects will see a significant change in the way banks interact with their customers, with third party providers (TPPs) being allowed secure access to consumer accounts via APIs. For PSD2, this covers payment initiation and account information services as a minimum. The big challenge, as discussed at the recent EBADay meeting, is that the Regulatory Technical Standards (RTS) are not expected to be standards as such, but more a framework set of rules. Some concerns have been raised that FIs will generate different APIs and thus interoperability issues will arise. The UK Open Banking initiative will be live next year and this could be somewhat of a guinea pig for how such APIs are implemented across Europe.
Another significant regulatory change impacting the transaction banking business will be the implementation of the Financial Action Task Force (FATF) changes; in particular, recommendation 16 on Wire Transfers which sees FIs having to clearly identify originator and ultimate beneficiary for cross border wire payments. Plans for adoption are scheduled in the EU’s forthcoming wire transfer regulations in June 2017 and we may see changes to the SWIFT MT103.
In the Capital Markets, significant news sees the delay to the MIFID II regulation in the EU, in response to concerns that the technical challenges were underestimated. The implementation deadline for the EU is now pushed back to 3rd January 2018.
And what of the new kid on the block, Blockchain? This technology is drawing huge attention as a wide range of technology vendors receive large amounts of venture capital investment to build blockchain or distributed ledger technology (DLT) solutions in the FS space. In April, the R3 consortium of banks announced its Corda platform which is due to be available in open source very soon. Furthermore, Digital Asset Holdings announced significant deals with the ASX and the DTCC to develop solutions in the equities market and post-trade repo clearing and settlement respectively. Of great significance, was the announcement that Santander was utilizing the Ripple DLT for use by its staff to make international payments with the express intention of extending the use of the Ripple solution in due course. And finally a quick note on Bitcoin, the Granddaddy of the blockchain family; June saw it reach $700 a coin. There were many factors cited for its surge in value, one of which being the imminent halving of the bitcoin reward for mining, a significant event in the life of the preeminent cryptocurrency.
And finally, with the dust still settling on the decision by UK voters for Brexit, it remains to be seen how much long term impact there will be on financial markets regulation and market initiatives arising from the EU, but as it stands, major projects such as PSD2 and MIFID II noted above, continue as planned with the FCA stating it's business as usual for now.
Recognizing that there were excellent business prospects in Latin America, Volante Technologies made the strategic decision in May 2013 to acquire a regional Mexico City based software company after it had successfully executed projects using Volante software; building a complete integration layer between front and back office in only 3 months - a fact that raised eyebrows at the time, as that kind of speed was very unusual and still is to this day. While we have experienced great success since the merger, it has not come without some industry and regional challenges.
In Latin America, business is done in a different way; firms prefer local expertise over remote services or support.
In Latin America, business is done in a different way; firms prefer local expertise over remote services or support. A local presence with local face to face relationships are also important in order to understand the different rules and nuances of each culture or country in the region. To address this, and deal with the growing number of projects, we have chosen to work with key partners with regional expertise to use Volante’s technology and implement into our client systems’ environments. This approach has worked very well for us and as a result, we have experienced impressive growth in Latin America. Two years ago, we had three clients and three projects; now we have more than fourteen clients with around nine live projects at any one time. At the same time, we have hired the best people in the market to ensure a solid pace of the growth – as a result, our team has doubled in size during the past year. We have also extended our reach further into Latin America securing clients in Chile.
Key to meeting the needs of our Latin American client base is our investment in forming strategic local partnerships with other financial service providers in the region. This enables us to provide the knowledge base excellence required by our clients. One of the ways we are looking to support our partners and clients yet further, is the development of a training and certification program, available in both Spanish and English, which will ensure clients have full confidence when hiring recommended third party companies to implement Volante products. This entire process of course, is very closely monitored and managed by Volante Technologies.
Latin America is an up and coming, developing and exciting market. When compared to other financial centers around the globe, Latin American banks aren’t necessarily restricted by legacy systems, and have the appetite for deploying nimble, scalable software based on the latest technology. Their priority is to gain the business agility to deal quickly with the complexity of change and take advantage of business opportunities as they arise in the region and internationally – and this is certainly the case in Latin America! This requirement fits 100% with the Volante ethos, as we strongly believe in creating powerful and yet easy to use software, that is business-led through configuration rather than code-led software solution creation. This is evident within the full range of Volante software products with features such as automatically generated code and documentation and guided streamlined configuration rather than coding.
While it is clear that Latin America operates differently compared to other financial markets, there is much that can be gleaned from this relatively new, vibrant and exciting market. For Volante, having this diversity of clients across geographies in payments - be it financial message integration, payments on-boarding, processing or orchestration, we are able to absorb best practices from this diversity and build it into our core products for the benefit of our entire global community of clients.
As a technology firm, we understand the world moves quickly and our clients need to be as agile and flexible as possible in order to meet their own client and market demands, while remaining competitive in the work they do. When developing our product roadmap and strategy, we look primarily at three main areas: client needs, changes in the industry such as regulation and standards, and of course, new trends in technology.
As financial technology evolves, so too must firms be able to quickly adapt and interface with it in order to take advantage of the new features to enhance their business offerings and gain the additional business agility needed to continue to thrive and stay ahead. A good example of this is distributed ledger technology (DLT) which is currently being considered for use in the payments space, which is why we engaged with Ripple last year to give clients easy and rapid cloud-based access to the new technology. In October 2015 we announced that the VolPay suite of products are Ripple ready and in June 2016 we went further by announcing the availability of a Ripple interface that is payment system agnostic. Meanwhile in the securities market, blockchain is still in the exploratory stage – so our product teams continue to monitor new developments in order to be ready either for when it is more widely rolled out, or used in smaller, well-defined business applications.
It is no surprise that regulatory demands continue as always to be a pain point for so many firms, particularly around reporting transactions. Firms must send the required data after specific business processing in some form, to the regulators in very specific formats containing key information. This undoubtedly requires money, resources and man-hours to understand the requirements and implement in a timely manner. One of our longstanding and on-going focuses is to provide technology that allows compliance with changing standards without making significant changes to clients’ own internal systems – in effect ‘insulating’ core systems from the complexity of change in standards and regulation thereby enhancing business agility while keeping the clients’ focus on the business rather than changes in technology.
Since our last newsletter, Volante has introduced support for REST, to provide a more flexible and open application architecture and support apps for mobile phones and tablets to access online services. Volante has also added support for MongoDB to allow clients to store and query large repositories of unstructured data.
When planning our product roadmap, we are constantly looking to new trends, regulation and client needs to bring solutions to market that make life easier for financial institutions. Collaboration is also key to gaining a holistic view of the industry, which is why we believe in maintaining our dialogue with various organizations and associations within the industry, whether they are industry analysts, new start-ups, clients, prospects, academic institutions or complementary technology providers. Through our research and development, we ensure that no matter what the requirement, we’re always ahead of the market and ready!
In January, Volante Technologies announced it was first out of the gate to support the SWIFT Standards Release 2016, offering support for the new standards within 3 days of the release from SWIFT. The first SWIFT draft updates were issued in December 2015, with the final, refined standards release issued on Friday, 26 February 2016. The updates included a number of significant changes to messages used within the securities market, as well as the introduction of a new version of SWIFTRef called ReachPlus. To accommodate these changes, Volante updated its core SWIFT plug-in, available for automatic and immediate download by all clients.
In April, Volante announced its partnership with Turkish banking and payments experts Payfessional, to bring Volante’s technology to the Turkish and regional markets. It was clear to us that banks in the region may not necessarily have had to deal with legacy systems, but do still have to contend with ever-changing payment messages, formats and channels – especially in this rapidly evolving digital payments age. The tie up enables firms in the region to benefit from reduced payment integration project costs and times, and insulates their systems from changing message standards brought about by regulation and new technology.
Also in April, Volante became the first vendor to deliver immediate support for the ISO 20022 Real-Time Payment Group (RTPG) global practice guidelines. The support came hot on the heels of the announcement by Payments UK in which they published their ISO 20022 message guidelines for use in real-time payments initiatives. Volante had been steadily working away in the background to ensure those guidelines are instantly supported in our extensive library of message standards.
In June, Volante announced it had created a solution specifically designed to accelerate the process of integrating with Ripple, the global provider of distributed financial technology solutions offering real-time settlement of cross border payments. Building on the VolPay Hub Ripple integration capability announced in October 2015, Volante’s new Ripple solution, available as a component of the VolPay Foundation payments development platform, offers the same functionality across any bank, treasury or payment platform.
Volante continues to engage with the press and contribute blogs and thought leadership pieces to various publications. Recent coverage includes:
Volante has been busy offering comments on the state of the financial industry, with several blogs being picked up by different publications.
The redefinition of the financial messaging landscape is continuous and is not stopping any time soon.
Across asset classes, the structure of markets is changing with new information flows between traders, venues clearers, depositories and regulators. The redefinition of the financial messaging landscape is continuous and is not stopping any time soon. High on the agenda for U.S. investment firms is MiFIR, and in his blog for Finextra, Ganesh Srinivasan, Director of Financial Services Solutions at Volante Technologies, looked at the ten steps required to achieve MiFIR success.
In March, Ganesh reviewed the results of the Accenture 2016 Compliance Risk Study, which raised some important points to consider, specifically the action points suggested by Accenture including:
The new digital challenges facing banks (open access banking, distributed ledger technology, to name but a few) as well as on-going regulatory change, continue to be hot topics of discussion across the globe. In his blog for FinancialIT, Neil Clarke looked at how banks in Turkey are addressing these challenges, and how they can best insulate their applications from change.
Some pretty powerful words were shared at this year’s NACHA Payments 2016 conference. In a world where faster payments are coming, forget about thinking big. It’s all about creativity. In his blog for Finextra, Ganesh explored this topic and other key takeaways from the event.
Having spoken to banks and corporates at ACT 2016 in Liverpool, and the banks in Milan at EBADay, the same sentiments and stories continued to emerge in the corporate on-boarding space. To on-board or not toon-board and/or how to enable rapid on-boarding continues to trouble our industry – both for thebanks and the corporates. In his blog for Finextra, Nadish Lad, Director, Head of Payments Product, explores this topic further.
In February we published a video interview entitled: ‘Volante’s principal consultant explains how VolPay can help the payments industry‘ in which Chris Stares, Principal Technical Consultant, Volante Technologies, explained in how Volante’s VolPay suite of payment integration, processing and orchestration software helps firms attain a competitive advantage in its payments related business. The theme of payments was explored again in April with Nadish Lad, where he discussed how new regulation, technology and customer preferences are disrupting the payments landscape with Grant Thornton.
In the past few months, Volante published several executive briefings, with the aim of exploring problem areas in the industry, and what can be done to address these challenges. The first briefing looked at the challenges around implementing new payments hubs. This was followed by executive briefings on the challenges associated with real-time payments in the United States, and Next Generation Host to Host (H2H) customer onboarding.
2016 has proven to be a busy year for Volante on the industry events and conference circuit. This year so far we have participated in the following events:
Engagement with clients, prospects and specialists in the markets we serve has been excellent this year so far. These events were perfect opportunities for us to gain further insight into industry activities and needs, and intelligence gained fed back into the product management process.
We look forward to attending several more events throughout the remainder of 2016, including our main industry event again this year, Sibos 2016 in Geneva, September 26-29. We are currently designing and building our stand and we think that we will look better than previous years. 9 Volante specialists, including our CEO, will be manning the stand representing all regions globally in which Volante operates. We look forward to greeting you and discussing all matters relating to the latest news, views, challenges and solutions in the arena of payments and financial message integration and processing. We will be demonstrating our full product suite, so please do take the time to stop by. In doing so you will have the chance to win an attractive gift or two! We expect, as every year, to be pretty busy, so If you wish to make a firm appointment then please contact Allan Spalding at email@example.com - he would be delighted to hear from you.
In April 2016 the Hyderabad office celebrated its one year anniversary. The team in the Hyderabad office has grown significantly over the past 12 months and is focused on providing services, consultancy and support to Volante clients around the globe, working in tandem with our product teams based principally in Chennai and Mexico City.