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RTGS GLOBAL UNVEILS ITS NETWORK TO TRANSFORM INTERNATIONAL PAYMENTS MAKING INTERBANK LIQUIDITY VISIBLE FOR THE FIRST TIME

  • Latest venture from Worldpay and ClearBank founder Nick Ogden takes on global payments and settlement market.
  • Developed with help from Microsoft, the RTGS Global technology will be offered as an automatic add in to Microsoft Azure and available to 43,300 banks around the world from stage two.
  • Follows the G20’s prioritisation of cross-border payments, RTGS Global’s capabilities support this ambition.

 

RTGS Global, the world’s first cross-border liquidity network has launched Stage one of its operational rollout.

RTGS Global has collaborated with Microsoft to develop a transformative new system which enables banks to gain complete visibility of liquidity between their counterparties, for the first time. Built on Microsoft Azure, RTGS.global promises to completely overhaul the machinery of correspondent banking. The network safeguards existing commercial banking relationships, but will change the way they work – in many cases moving from what today still involves manual processing – to one that materially improves efficiency, reduces costs and enables a new level of customer service to be delivered.

The announcement comes in parallel to a move by the G20, under the 2020 Saudi Arabian Presidency, to make cross-border payments a priority in recognition of the widespread benefits for global citizens and economies, that will result from ‘faster, cheaper, more transparent and more inclusive cross border payments’. In July, following the G20’s instruction, the Committee on Payments and Market Infrastructures (CPMI), Financial Stability Board (FSB) and other stakeholders produced a report outlining the building blocks for a solution to this challenge. RTGS Global has subsequently produced a response which it has shared with various regulators describing how the RTGS.global network already dovetails into the identified building blocks.

RTGS Global, the brainchild of Nick Ogden, fintech entrepreneur and founder of WorldPay and ClearBank, brings the benefits and transparency of real-time domestic gross settlement to a global level, delivering instant transactional integrity, security, risk reduction and settlement finality.

RTGS Global enables atomic settlement across both commercial and central banks, authenticating the exchange of funds between banks based on the real-time availability of liquidity. Through its patent pending Liquidity Lock, Lock and Block system, RTGS Global locks available liquidity at two counterparty banks, before sending a Liquidity Block message to complete the transaction. This whole process can take just 50 milliseconds to complete, enabling real-time, bilateral settlement of funds.

The result is RTGS.global, an international system that transforms the challenges of legacy correspondent banking and international banking. Settlement and counterparty credit risk become non-existent; there’s no need to pre-fund a nostro account; and 24/7/365 availability drastically improves the end customer experience dramatically improving commercial cashflows.

 

RTGS Global founder, Nick Ogden, says: “The current interbank infrastructure that supports cross-border payments is much like other corners of the payments industry – legacy technology combined with historic practices. As we become increasingly used to interacting on a real time or instant basis, it’s obvious that the international payments system is nowhere near fit for purpose in today’s global digital economy. In times of economic instability, inefficient processes and slow transaction speeds become even more problematic. Invisibility of liquidity undoubtedly contributed to the last global financial crisis. We believe that we have made significant progress by ensuring that every international transaction is matched to corresponding real-time institutional liquidity.

“Throughout many decades spent working on new technologies to revolutionise the global payments industry, I’ve worked closely with regulators, central banks and commercial institutions. RTGS.global is the culmination of that experience delivering a new network to 43,300 banks around the planet that all now have a unique RTGS.global capability.”

 

Bill Borden, Corporate Vice President, Worldwide Financial Services at Microsoft, says:

“Today’s advanced technologies are enabling new opportunities to modernize outdated aspects of the financial services industry for big gains. Using Azure’s AI and data analytics capabilities, RTGS Global’s new system provides a powerful way for banks to transform their international payments process, delivering enhanced value to their customers while reducing costs, improving efficiencies, and staying secure and compliant. We’re pleased to make RTGS.global available in Microsoft Azure Marketplace and extend its benefits to our banking customers.”

 Delivery of stage one is the first step in making the RTGS Global network available to 43,300 banks globally. Stage two, the technical integration involving Azure, will commence in autumn this year.

 

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FUNDS’ RUSH TO THE CLOUD MUST NOT BE A BOX TICKING EXERCISE

By Ed Gouldstone, Global Head of R&D for Asset Management at Linedata

 

The fund management industry has held up remarkably well against the strains of Covid-19 – from a dramatic spike in market volatility to the sudden shift to remote working. However, the quantum leap in digitalisation spurred on by the pandemic has underscored the disparities between fund houses’ journeys to cloud – some are quite far along, while others are quickly having to play catch-up.

However, the need to rapidly advance digitalisation efforts must not result in cloud migration becoming a box ticking exercise. Some managers may be tempted by the convenience of a ‘lift and shift’ approach. That is, simply building their cloud infrastructure as if it was their existing data centre without optimising it for cloud. This is by far the quickest option but, if rushed, it doesn’t necessarily bring the cost-saving and flexibility benefits that managers are looking for. Cloud provides for advanced levels of security that go beyond traditional deployed models, but only when the necessary tools are put in place. Fund managers therefore need to put in the required thinking beforehand, to ensure the optimisation and any necessary re-engineering of tools whilst accelerating shift to the cloud.

 

The risks of rushing cloud adoption

Elasticity is one particular area where cost savings come from in the cloud, because cloud is designed to scale up and down as and when you need it. When migrating infrastructure to the cloud, fund managers must ensure that the all applications are optimised in a way that enables horizontal scalability, as many legacy applications are built around a fixed number of servers. This could impede the potential to quickly scale up operations in rapidly changing markets, inhibiting fund managers’ growth ambitions and ability to compete.

Ed Gouldstone

Another risk of rushing the transition to cloud, is that a lift and shift approach can actually increase costs when computing and storage practises are not rationalised. Migrating existing infrastructure as it is also means migrating all existing inefficiencies along with it, such as zombie servers, duplicated workloads, and outdated records. By not doing the due diligence to ensure excess computing capacity is left behind, companies could seriously diminish the cost savings they would have otherwise enjoyed.

Building resilience into operations is of paramount importance for fund managers who are planning to migrate to the cloud. Although infrastructure is more secure with cloud, the greater accessibility it allows means that points of entry on the client side can be weak spots if not properly protected. This must not become overlooked in a rushed cloud migration. Unlike with private data centres and VPN access where hardware offers protection, extra layers of authentication need to be added to endpoints to ensure the security of the system, while enabling access from any device. This is even more necessary in our highly regulated industry, where fund managers are dealing with large client funds and processing vast quantities of real-time financial data.

 

Realising the opportunities provided by cloud

When handled correctly, a successful migration to cloud offers fund managers a great opportunity to drive digital transformation, scale their businesses and upgrade the technology they rely on. Perhaps the biggest driver for cloud adoption, the pay as you go, on-demand scalability offered by cloud providers, enables rapid growth and reduces costs. Previously, in order to scale up, businesses would have to install new hardware and pay for its maintenance, as well as acquire the physical space that new servers take up. This process is much slower and more expensive than the quickly scalable, pay-as-you-go cloud, but expert guidance is crucial to avoid the aforementioned risk of transferring excess computing power, and ensuring applications are scalable so that potential cost savings are realised.

Another major driver to migrate infrastructure to the cloud is the data analytics capabilities available. The cloud’s ability to support data lakes that can store structured and unstructured data at any scale and operate real-time analytics, provides unique opportunities to create new insights and therefore greater value. The data lakes enable better use of the artificial intelligence and machine learning technologies that are reaching maturity and are increasingly mission critical. This is crucial in a market where margins are getting smaller and traditional investment models are being challenged. Analytics can create value throughout all operations, from the front office through to the back office, whether it is sentiment analysis of client engagement, or reducing operating costs through process automation.

In terms of security, while moving to public cloud does imply some inherent loss of in-house control compared to historic ‘installed’ technology models, the bottom line is that cloud providers offer robust levels of security unmatched by in-house technology installations. But it is still critical that firms have the requisite knowledge about cloud deployment and cybersecurity, or partner with a technology service provider that does, who can protect endpoints with new identity and access measures such as two-factor authentication.

The need to migrate to cloud infrastructure has become more pressing at a time when fund managers are increasingly introducing flexible working for the long-term. While implementing a cloud first business strategy is now considered crucial for longevity, it must not be rushed at the risk of costly mistakes and the perpetuation of outdated operating models that limit adaptability. A rapid, productive cloud migration is still possible, but firms need to ensure they have well-considered plans and strong partnerships with experts in place to ensure success.

 

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MORE THAN HALF OF EUROPEAN SMES CONFIDENT IN 2021 BUSINESS RECOVERY

  • Finland most confident in Europe followed by France, UK and Germany – Spain, doesn’t show the same optimism
  • Hope for the new year comes mainly from the agriculture (60%), real estate (58%), business services (55%), and food & drink (55%) industries

 

Despite continued uncertainty, 57% of SMEs across seven European markets feel positive about the future and think that economies will recover to pre-Covid levels within the next two years, according to a research conducted by CapitalBox, leading online pan-European SME funding platform.

A further 18% are still confident about a recovery, but believe it will take at least two years. However, when it comes to their own businesses’ recovery as opposed to the wider economies, over half of SMEs (51%) feel that their business will in fact recover this year, in 2021.

SMEs in Finland are the most confident in their own business recovery in 2021 (57%), compared to:

  • 50% in France
  • 50% in the UK
  • 48% in Germany
  • SMEs in Spain, with 27%, are the least confident in their own recovery

Optimism for the new year mainly comes from the agriculture (60%), real estate (58%), business services (55%), and food & drink (55%) industries. As hospitality looks towards a new normal in the new year, 52% are confident of their business recovery this year. The least optimistic industries for the new year are healthcare (28%) and wholesale, retail and franchising (31%).

Most of this optimism is reflected in how trusting SMEs are in their respective governments’ support. 53% of SMEs stated that they are certain their governments will continue to provide the right support going into 2021. The most confident in their government support are those most optimistic SMEs, in Finland (58%), France (51%), and the UK (55%). On the other hand, the least confident are SMEs in Spain, with 35% of respondents not feeling like their government will provide the right support moving forward.

 

Scott Donnelly, CEO of CapitalBox commented: “The pandemic continues to have a big impact on businesses and economic recoveries around the globe, and there is certainly a bumpy road ahead to get there. SMEs in Europe, however, are confident that this new year will bring positive changes, and that their businesses will return to growth. As the backbone of many economies, it is great to see SMEs being optimistic about the future and the ‘new normal’, putting effort into getting back on track.” 

“As small and medium businesses look toward a road of recovery, it is critical that the right financing is available to them to help guide them. From government support to alternative lending, they need to feel confident in their recovery in 2021. At CapitalBox, we will always strive to help those financially underserved SMEs.”

 

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