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THE IMPORTANCE OF ACCURATE AND TRUSTED TIMESTAMPING IN FINANCIAL SERVICES

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Richard Hoptroff, CTO, Hoptroff

 

Recent global financial regulations such as MiFID II require that all stock exchanges, credit institutions, investment firms and other trading venues, and their members or participants, must synchronise their server clocks to Coordinated Universal Time (UTC) to be able to record the date and time of any reportable event.

Stock exchanges, futures, investment firms and banks within the financial services industry require accurate timestamping to track transactions across networks. When networks lack clock synchronisation, the involved end users on the network become out of sync. If there is no precise and trusted timestamping solution present on the network, then every device is at risk of being out of sync.  The aim of the clock synchronisation requirement is to, amongst others, make sure there is consistency in reporting and to assist market surveillance in the event of suspected foul play.

Current solutions for accurate and trusted timestamping in fintech services rely almost solely on Global Navigation Satellite Systems (GNSS) for their time source. These GNSS signals, whilst free at the point of use, are often susceptible to interference from a variety of human-made and natural sources. This is a risk that can indirectly and directly affect multiple industries, including global financial services. Typical interference occurs when additional radio waves are generated via non-essential equipment ranging from ovens to faulty antennas. These signals begin to drown the GNSS signals causing false information on the position, navigation or timing of a device connected to the GNSS network.

Richard Hoptroff

A second risk of inaccurate time to the global financial services is the ability to be sure of, and to be able to prove, traceability. If you had two clocks, each with distinct, independent chains of comparisons back to different Stratum Zero sources, you would at least know if one was wrong, but you wouldn’t know which one. For complete traceability, three clocks are needed, each with independent chains of comparisons back to different Stratum Zero sources e.g. NIST/NPL. This additionally offers resilience against the failure of any individual chain of comparisons as well as failures in GNSS outages.

In global financial services, accurate and trusted timestamping is a legal requirement. These requirements come in the form MiFID II in the EU, and Consolidated Audit Trail (CAT) in the USA.

Both require sub-second accuracy and up to 100 microseconds for certain entities. Therefore, every device on a bank,  stock exchange, or investment firm network needs to be accurate and trusted within this margin. If not, the records produced from the events taken place on the network will be incorrect, causing reputational and authenticity issues for the banks, stock exchanges, fintech companies and other trading venues respectively.

Terrestrial timing solutions only have one stratum source zero grandmaster clock (GMC) that controls one individual network. Banks and stock exchanges would have to buy a terrestrial timing hub for each of their networks to ensure accurate and trusted clock synchronisation between networks. The problem with this is that these GMCs are not cheap to install or maintain. Every 3-5 years they need to be changed and require human labour to operate and manage their timing solution. As the popularity amongst cloud-based fintech solutions increase, software-based solutions must become the standard for global financial services.

Timing and timestamping solutions need to be cost-effective and forward-thinking. With the shift to the cloud, fintech firms will need to adopt a resilient cloud network architecture such as a Cloud Timing Hub. This Hub creates resilience and accuracy through simultaneously comparing multiple timing sources to confirm the time is always correct. In effect, the solution will maintain timing accuracy and traceability to a higher standard than local installations that generally rely on one connection to primary UTC.

Satellite signals crashing and losing connectivity would be considered to most, a ‘black swan’ event. However, if anything was learnt from the coronavirus pandemic it was that preparation and fall-back options are now necessary. In early 2020, US Executive Order 13905 mandated that all critical infrastructure in the United States must be able to function reliably in the event of disruption or manipulation of GNSS services. A similar approach was taken in the UK with the UK government announcing £36 million investment in a new National Timing Centre to provide additional time resilience to financial services and other key industries against the potential impact of satellite systems failure.

Governing bodies, at the highest level, are committing to reducing their vulnerability to these risks by implementing necessary legal requirements. However, this risk must raise the question on an industry basis, do we need to back up our sensitive data and time feeds and not rely on one fragile satellite system?

The future of timing solutions and trusted timestamping in the global financial services and fintech ideally needs precise and accurate clock synchronisation across the major industries, such as, stock exchanges, banks, and data centres. These solutions must include multiple time feeds that effectively distribute data across a network, with accurate time synchronisation that meets legal requirements, and most importantly, validation and traceability right back down to multiple stratum zero sources.

Business

IS SCARCITY OF TALENT THREATENING THE UK’S FINTECH CROWN?

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To be attributed to Rafa Plantier, Head of UK and Ireland at Tink

 

From the Square Mile to Canary Wharf, London has been the historic centre of global finance, with long-established trading exchanges and trusted financial institutions. In the digital era, it has also ensured that it’s moved with the times to become a thriving hub for fintech.

But the UK financial services sector is now at an inflection point. In the past year, London’s position as a global fintech leader has been under threat. Earlier this year, Amsterdam overtook The City as the largest European share trading hub. The European Banking Authority moved from London to Paris. And Dublin, Paris and Frankfurt are all competing to win a greater share of the European financial marketplace.

The culprits of the shift are the twin challenges of the pandemic and Brexit, combined with the speed of technological transformation in financial services – disrupting the traditional flow of people, capital and ideas. So the pressing question for the industry is: how do we maintain and, more importantly, accelerate momentum to retain London’s fintech crown?

The answer revolves around one key thing — people.

 

Diverse talent drives innovation

Attracting the best talent is crucial if the UK financial services sector is going to continue to thrive and retain its global position as the preeminent financial centre.

In February 2021, the Kalifa Review laid out a strategy and delivery model for the UK to lead the fintech revolution, covering five key areas. These included skills and talent, investment and international attractiveness and competitiveness. But what became clear was that access to the right level of highly skilled talent was one of the biggest challenges for UK fintech, with barriers spanning both domestic skills shortages and the need to access foreign talent seamlessly.

As a native Brazilian in the UK, working for a Swedish-owned fintech, I understand these challenges as well as anyone. I love London, but we must recognise that fintech firms need unique talent and skills, and such a talent base can’t be met by a single city – not even one as resourceful as London. Not only do fintechs require technology and data specialists, but also experienced managers with good knowledge of high-growth companies and financial services.

As someone lucky enough to have worked with startup and scale-up fintechs across the world,  I understand the unique grounding that comes from being a part of a high-growth global company. That’s why I believe it’s vital that we attract people from across the world with commercial experience at ambitious, rapid-growth businesses — so they can bring this experience to bear on the UK financial services sector.

At the same time, many companies face renewed pressure to create new services and products to meet expectations for growth. That is why it’s critical that the UK has access to people with the right technical skills in areas such as software engineering, DevOps, Cybersecurity and data science.

Put simply, having the smartest minds delivering the best products is good for everyone. It drives efficiency, productivity,  growth and, ultimately, prosperity.

 

The UK is open for fintech

The UK should be proud of being a fintech pioneer and the driving force behind legislation that helped usher in the era of open banking. There is now an exciting opportunity to take this even further. Having access to a diverse pool of talent and skills will empower the financial services industry to create innovative products to tackle complex social challenges, such as better B2B payments, financial inclusion and climate change.

The good news is that the UK government clearly recognises the role the industry has to play in driving growth and innovation. The 2021 Autumn Budget reaffirmed commitments to reskill the nation. With £3.8bn budgeted for skills and a formal criteria for the long-awaited Scale Up Visa, the Chancellor announced a set of proposals that will support the breadth of our sector — from startups right through to unicorns and incumbent banks. This will be essential for fintechs like ours to continue to trailblaze and for the UK to differentiate itself on the global stage.

In an increasingly competitive global landscape, and to sustain momentum, we must keep talent avenues open to attract the best of the best in the industry. As one of the fastest-growing areas of the UK economy, the benefits of nurturing UK fintech to drive productivity, growth and lead the UK’s post-pandemic recovery, cannot be overstated. 2021 has seen a surge of activity in the industry and I am eager to see what London’s fintech sector can achieve in 2022.

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THE EVOLVING TECHNOLOGY NEEDS OF THE FINANCE DEPARTMENT

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THE EVOLVING TECHNOLOGY NEEDS OF THE FINANCE DEPARTMENT

Jennifer Sims, Senior Consultant at Xledger

 

The world of finance software is evolving quickly, but with many new software contenders entering the market it can be a mindfield for organisations. Many finance teams are already using multiple accounting apps and software packages for bookkeeping, payroll and invoicing to service individual needs. Whilst it may work fine for now, this segregated approach isn’t sustainable for long-term growth. The world is swiftly moving to agile, automated ways of working. As a result, there is a growing need to choose suppliers that can fulfil multiple functionalities within the one platform.

Financial software is evolving at such a pace that it can be difficult to keep up. Changing up a finance solution is a big step and ease of migration can be a substantial factor in determining which solution provider to go with. But how do you choose a solution that will grow with your business and still offer something innovative in five or ten years down the line? The fear is always that non-techie organisations will end up falling behind, but in such a highly concentrated industry, how do you decide which solution would work best for you?

 

Cloud-first: the term that makes all the difference 

You could find a ‘cloud-based’ service with an application that comes with automated audit trails to make it easier to meet compliance and record-keeping obligations, for example. But for a solution to offer all of the many future benefits promised by the cloud, it needs to have been built specifically for a cloud environemt from the outset – ie. not an on-premise built system that has been later adapted. Cloud-first services (true cloud) were always intended to leverage economies of scale, cope with live updates, be accessible from anywhere with an internet connection, and to scale rapidly, to name just a few of the many benefits.

When we talk about innovation in financial technology, we’re not just talking about software that makes it easier for the financial controller to create reports. If eliminating reliance on Excel spreadsheets is the only tangible benefit you have to really shout about, you are missing out on the real deal. With ‘true’ cloud finance software the sky is the limit.

Finance and accounting technology needs to directly meet the needs of the finance function and support the wider business needs.  When looking at accounting software platforms you’d be hard pressed to find one that doesn’t now promise ‘cloud-based’ enterprise resource planning (ERP) capabilities. The cloud is nothing new, but it’s the way that a solution harnesses this environment that makes a real difference. And here is where there is a need to read between the lines.

 

Automate more with true cloud 

Historically, repetitive and manual tasks are typical of the finance role – from invoice postings to expense claims handling – these can overwhelm the finance team. Research by Xledger[1] has found that an enormous 91% of CFOs and finance decision makers are carrying out at least one of these repetitive tasks as part of their job. What’s more, senior finance leads are averaging a whopping 25 hours per week carrying out repetitive and manual tasks, compared with 15 hours for other finance decision makers.

A modern, true cloud finance system can enable your business to automate repetitive tasks and provide one source of truth so that teams can make informed business decisions that will help to scale a business. Bank reconciliation, dashboard creation and reporting are just some of the tasks that can be handled automatically.These capabilities are aiding overtasked finance teams and saving hundreds or thousands of hours a year.

Whilst different companies are at different stages in their digital transformation what is clear is keeping up with the latest technology is fundamental to the future success of an organisation.

Xledger is a true cloud finance solution. The basics include invoicing, robust general ledger accounting, detailed slice and dice reporting, purchase orders, billing, VAT reporting, and cash and bank payments. It also adds process and structure to the enterprise with procurement and inventory, budgeting and forecasting, and project accounting. Users are always on the latest version of the software and with regulation more stringent than ever today, Xledger is ISO 27001 accredited.

Choosing the right provider for your financial ERP solution comes down to whether it has the fundamentals right. When hosting all of your vital data in the providers’ own servers, it should evidence a highly tested security process that comes with backup services as standard.

As our demand for technology capabilities grows and as ERP models progress, innovation will become the structure for growth – and there is no end to the possibilities.

 

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