iata financial services architecture · iata financial services architecture “think differently...

World Financial Symposium 2016

IATA Financial Services Architecture

“Think differently”

Nicholas CooteFinancial Services Architect


Why have an architect?• Imagine building a house without an architect!

– Rooms the wrong sizes for purpose– Walls in the wrong places– Inefficient use of materials– Expensive to heat or cool– Difficult to maintain– Lack of suitable storage– Unstable additions and extensions– Etc, etc, etc

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We have many financial services…• Developed at different times…

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• With different joining processes…

• Different support teams…

• Different technical platforms…

• Specialised IT support needs…

• Etc…

• Etc…

Presenter

Presentation Notes

Looks like no architect was used…


Financial Services Architecture• If we were starting now, would we do it this way?

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ICH

E&F

ICCS

CASSlink

CASS

BSP link

BSP

TIESS

SIS

IRISTreasury

Dashboard

Presenter

Presentation Notes

Many different systems are involved in providing industry services, not all of which are known to airlines.


Simplify and standardise • Complexity is expensive – we need to find better ways to deliver the

services• Why have so many different customer systems? Can we migrate

towards a single platform? What would it look like?• How can we make it easier for airlines and industry participants to

work with us, and benefit from the industry services we provide?• Can we reduce our service delivery costs through greater efficiency,

and thereby reduce industry costs?• As we look into the future, can we enable even greater efficiencies in

the way we manage our back office?

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Presenter

Presentation Notes

Overall objective – Simplify processes, extend common standards and reduce operating costs, for IATA and the industry Multiple user systems mean more training, less common knowledge, less use of standards, less efficiency and more cost ‘Back office’ means IATA’s back office, and the industry’s back office


Pax/Shpr

Agt/Fwdr

Corp a/cAirline

Airline

Agt/Fwdr

Supplier

Supplier

Service relationshipsIATA

Interline Pax and Cargo,operational services, etc

Equipment, parts, spares,rent, rooms, services, etc

Ticket and AWB sales,adjustments, etc

Rents, IT services, parts,spares, business services

Manuals, events, training,services, consultancy etc

Memberships, training, services, participation, etc

Participations, services, etc

Travel and shippingcorporate sales

Travel and shipping

Rooms, tours, carHire, cruises, etc

Travel and shippingdirect sales

Presenter

Presentation Notes

The value-added part, the part everyone is in business for


Pax/Shpr

Agt/Fwdr

Corp a/cAirline

Airline

Agt/Fwdr

Supplier

Supplier

Back office impactIATA

Travel and shippingcorporate sales

Travel and shipping

Rooms, tours, carHire, cruises, etc

Invoice/reportDetermine balanceEnsure settlement










Direct sale/credit card

Presenter

Presentation Notes

The part we do because we have to, for legal or audit reasons. Effectively, all business to business relationships result in the same basic transactions: Parties invoice for service delivered (or perhaps, present a statement) Parties determine and agree the balance due to the invoicer, after offsetting any credits Debtor makes settlement to creditor according to any terms defined in their agreement The only one that is intrinsically different is the retail one, which in 99% of cases is direct settlement at time of purchase IATA industry services maximize financial efficiency and leverage wide participation to benefit everyone.


So why have so many different platforms?


Simplified architecture

IATA benefits from a global remittance and settlement infrastructure which could be controlled by treasurers

Offsetting wherever possible reduces both cash requirements and settlement risk

Many different services are traded between the various parties in one form or other, and need to be invoiced

Paxtickets and hotels

Goods shipments

MRO services

ATC services

Airport charges and rents

Cateringservices

Hotel rooms for paxand crews

Air transport

Tours and surface arrangements

Logistics

General aviation

Ground handling

Funds control

Remittance and settlement process …

Fuel suppliers


Remittance and settlement process …

Simplified architecture

Transaction Processing

Multicurrency balances

Remittance and settlement

Treasury

Paxtickets and hotels

Goods shipments

MRO services

ATC services

Airport charges and rents

Cateringservices

Hotel rooms for paxand crews

Air transport

Tours and surface arrangements

Logistics

General aviation

Ground handling

Funds control

Fuel suppliers


Impacts on thinking• One customer platform for financial services, regardless of nature of participation• Access to everyone for anything

– Same basic platform for airlines to deal with suppliers, agents, forwarders, corporates…• Local or global settlement – your choice

– Receive or pay in ICH global currencies or BSP/CASS local currencies (but exchange control still applies)

– ICCS service integrated, so Treasurers can move funds to where they are needed• Local settlement of local invoices – rents, handling etc

– Invoiced through SIS, netted where possible, and settled out of funds from BSP sales, or as transferred from elsewhere

• Integration of upcoming strategic programmes, like NDC and ONE Order

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Presenter

Presentation Notes

Think holistically – what are we trying to achieve overall? Are we doing it the most efficient way? Are we providing simplicity for our members and customers? Everyone should be able to work with everyone else with a common platform, with other services (settlement; currency conversion, etc) provided as an option to anyone that wants it, without needing different platforms and user interfaces to do it.


The impact of NDC on BSP• NDC reporting is a fundamentally different process, but simpler in concept• Remember why BSP exists!

– To enable consolidated reporting of agent ticket issues, and facilitate collection and remittance of sales

– HOT file of ticket sales data to load into revenue accounting systems

• Key words – “Agent ticket issues”

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Presenter

Presentation Notes

BSP is a sales reporting process The agent makes the sale, and the BSP reports it to airlines


The big difference• In NDC, the airlines issue the tickets on behalf of the agents

– No need for HOT files of ticket data, as you already have it!– No ADMS, as offer has been accepted by agent/passenger?

• What airlines need is to be able to collect the money efficiently• Simplified process is now possible:

– Airlines issue bills to agents in SIS, listing the tickets sold on their behalf– SIS consolidates by agent/location, net of any ACMs or other credits, and feeds the result to the local

settlement process– Results are consolidated with legacy sales for simplified collection from agents and remittance to

airlines– NOTE: Same process would apply for billing corporates, with or without settlement

• Key is making sure we retain the valued parts of the process, such as agency management, risk management, and simple, standardised remittance and settlement calendars

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Presenter

Presentation Notes

In NDC the airline makes the sale, and has its own internal sales report It does not need another one from IATA What it really needs is the money collection service, and the agency management service, and other parts of the overall IATA BSP service, but not the data reporting part! SIS is the industry process for billing – why not use it to bill agents, with an SMI for local settlement in the BSP?


Data processing diagram (simplified)

Agent Agent Agent

GDS DPCs

Airline

Airline

Airline

BSPlink

R&S

RET fileSales/refunds

HOTfiles

Billingstatements Settlement

data files

$$$

$$$Billing statements, ACM/ADM

BSPlink

Billing adjustments

Acquiring banksand IATA EasyPayaccounts

$$$

WEBlink - sales/RET files


Data processing diagram (NDC initial)

Agent Agent Agent

GDS DPCs

Airline

Airline

Airline

BSPlink

R&S


Consolidated HOTfiles


data files

$$$


BSPlink

Billing adjustments


$$$

NDClink/WEBlink sales/RET files

Presenter

Presentation Notes

Airline has to create RET files for input to DPC so that money can be collected from agents While this works, it could create duplicate records in the HOT file, which the airline will need to correct


Potential future process

Agent Agent Agent

GDS DPCs

Airline

Airline

Airline

BSPlink

R&S


GDS-only HOTfiles


data files

$$$


BSPlink

Billing adjustments


$$$

SIS Invoices/debits/credits

Settlement data files

Billingstatements

Presenter

Presentation Notes

A more efficient process uses SIS to drive a billing to agents for cash collection, without going through a second sales reporting process SIS posts a debit to the remittance and IATA settlement process. IATA would consolidate legacy and NDC collections from agents and remit funds as now


Logical conclusion?

Agent Agent Agent

GDS DPCs

Airline

Airline

Airline

R&S


GDS-only HOTfiles

Billingstatements


$$$


SISlink?


$$$

SIS Invoices/debits/credits


Presenter

Presentation Notes

In the end, as the NDC migration completes, SIS would replace BSPlink, though this is likely to take many years. Agents would need to see in SIS what they generally see in BSPlink, and back-office reporting standards would need to be maintained for them. This process is consistent with a ONE Order process without tickets, when airlines migrate to it.


Extending the concepts – ONE Order• Same logic applies for ONE Order transactions

– Process order– Bill customer/agent– Receive settlement

• No ticket, so how would this be handled in our current BSP systems?• Services have been offered and prices agreed at offer acceptance – this is

much more like a normal transaction!– Note that pre-agreement means virtual elimination of rejections/ADMs in both NDC and ONE

Order

• Impact on airline revenue accounting activities to be assessed• Are we arriving at the time when ERP systems can support airline revenue

accounting directly?

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Presenter

Presentation Notes

Revenue accounting remains, but simpler processes make it easier to run the process from an ERP system, without the need for a separate revenue accounting system, which is designed to support ticket-based activity Reissues, exchanges, proration, etc…


Payment services• Key focus area – payment costs are often >2% of revenue for card sales

– IATA EasyPay is a valuable way to reducing those costs– GDSs will enable connections to the EasyPay service providers

• For NDC, airlines would need to enable direction connections to EasyPay providers themselves

– Globally, this is a significant load• Planned Financial Gateway service will enable single channel connectivity to EasyPay

providers– Architecture objectives of simplification and standardisation

• Other capabilities are also being designed in:– Links to other payment service providers– Pre-validation of agent BSP status in real-time– Support for non-ticket processes

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Presenter

Presentation Notes

Simplify airline adoption of EasyPay


And CASS?• CASSNext project now starting up to look at the future of CASS• CASS and SIS are both invoicing processes – are they combinable?• Supply chain participates in either, sometimes both, services• Greater efficiencies from using a common platform

– Reduced charges for all participants due to reduced infrastructure costs– Enables freight forwarders, GHAs, suppliers and airlines to invoice customers and partners

through the same channel• Multiple settlement options would be possible, e.g.:

– Bilateral settlement – Local settlement with formal settlement calendar (current CASS process)– Local settlement without formal calendar (bilateral terms managed between the parties)– Global settlement (via ICH)

• More on this as the project develops

Presenter

Presentation Notes

Should we migrate CASSlink to SIS? Common platform for airlines, forwarders, handling agents, airports… Travel agent can bill forwarder for ticket sales; forwarder can bill agent for cargo shipments, etc More consistency, more flexibility


Blockchain technology• A secure online ledger system that underpins crypto-

currencies like Bitcoin• Could enable real-time settlement, and facilitate cross-

border settlement– Concept of ‘self-executing’ contracts– Increase in speed, reduction in cost, more transparency

• Project team looking at possible application in IATA settlement processes

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Presenter

Presentation Notes

New concepts, need to be evaluated for airlines. Could lead to new infrastructure and simpler processing, but proof of concept required.


Points to remember• The future is never the same as the past• Change is inevitable – this has been true for 2500 years, and

probably for ever• “We’ve always done it this way” is usually a good reason not

to do it that way• Getting the architecture right is critical to reduced energy,

reduced cost, and greater efficiency• And finally…

Presenter

Presentation Notes

“The only constant is change” - Heroclitus of Ephesus, c500 BCE Reduced energy = reduced hassle


Architecture – the differenceArchitecture No architecture!

Presenter

Presentation Notes

On the left is a building in harmony with its surroundings On the right is something that looks ugly, and delicious, but is a trap! (see fairy tale of Hansel and Gretel)


Thank you - any questions?

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Nicholas [email protected]

mailto:[email protected]

iata financial services architecture · iata financial services architecture “think differently...

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