2

True leadership in

At TCS Financial Solutions, we take an active interest in what the business media and industry analysts say, write and tweet

about “fintech.”

That shouldn’t surprise you. After all, our clients include numerous organizations considered “incumbent” providers of

financial services.

What may surprise you is our outlook for the incumbents.

According to the prevailing narrative, it’s the incumbent banks, securities firms and insurance companies most ripe for

disruption by nimble startups.

Based on our close relationships with leaders at financial institutions of all sizes around the world, I can assure you that there

is very little complacency in the industry.

Any fintech business model that relies upon the assumption that “large size equals inflexibility” may find the incumbents

harder to displace than implied by startups’ lofty valuations.

We know fully well that the world of financial services is changing quickly. That’s why, nine years ago, we created TCS BaNCS

to allow financial institutions of any size, geographical footprint or product mix to reinvent themselves for the future.

Judging from the more than 80 customer stories we’ve presented in 25 issues of the TCS BaNCS Customer Newsletter, and

the numerous other stories that have yet to be told, the future of financial services has already arrived.

We’ve enabled banks to participate in the launch of a brand new stock exchange. We’ve automated the operations of an

insurance company across multiple products and customer channels. We’ve helped a global custodian to support 40 countries

through a single platform. And that’s just in this issue alone.

These efforts may not garner the big headlines of the “unicorns” of the startup world. Nevertheless, if you’re looking for

innovation in financial services, look to our customers, large and small.

So far, the biggest impact of “fintech” has been on customer expectations. People now expect the widespread adoption of

cashless payments, IoT-based insurance products, P2P lending platforms, shared blockchain ledgers and more, all made

available through cloud-based platforms.

We also expect those innovations to arrive. That’s why we’ve been quietly working for years on building robust and

extensible core platforms that allow financial institutions to reshape themselves at will, no matter how quickly the marketplace

evolves.

At TCS Financial Solutions, we have always strived to anticipate our customers’ evolving business requirements. That’s why

the component-based, service-oriented architecture of TCS BaNCS has the flexibility to evolve with the financial services

marketplace. Furthermore, the self-healing, highly-available technology infrastructure of TCS BaNCS ensures the enterprise

scalability and robustness needed for widespread deployment. As new business models and technologies reach maturity,

our customers will be prepared.

We don’t view “fintech” through the cloudy glass of a crystal ball.

With TCS BaNCS, “fintech” is in the rear-view mirror.

By N Ganapathy Subramaniam President, TCS Financial Solutions

3

“ ”fintech

4

For any inquiries: Email: tcs.bancs@tcs.com Phone: +91 80 6725 6963

from the editor

It has been a remarkable journey in the nine years since NGS

formed our strategic business unit on April 1, 2007. Way back then,

TCS was at 89,000 employees and $4.3 billion in revenue. With our

latest numbers, we have over 353,000 professionals and revenues

of US $16.5 billion.

Over the course of these 25 issues, we’ve interviewed over 80

of our financial institution customers for in-depth case studies,

sharing the best in business strategy across banking, capital markets

and insurance.

We’ve highlighted customers from six continents, from some of

the largest and most established banks in the world to some of the

smallest credit unions growing with cloud-based services. We’ve

written about our role in supporting market infrastructure powering

the world economy, and about how we’re enabling financial institu-

tions to take part in the capital markets for the first time.

We’ve covered all eight of our annual TCS BaNCS Customer

Forums, from our inaugural event in Vienna to our events in Hong

Kong, Amsterdam, Toronto, Osaka, Dubai, Boston and Singapore

(see page 18).

We’ve delivered numerous briefings with TCS subject-matter

experts for concise insights on a wide range of relevant top-

ics in financial services, from algorithmic trading and wealth

management, and from mortgage compliance to T+2 Settlement

(see page 14).

In this issue, we add two fascinating stories to the extensive set of

customer case studies in our Corporate Library.

First, you can learn how TCS BaNCS helped Myanmar’s two largest

banks to participate in the historic first day of equities trading on the

country’s new stock exchange (see page 6).

Then, read how AlAhli Takaful Company has been able to extend

the reach of its increasingly-popular Takaful insurance offerings to

new customers in the Kingdom of Saudi Arabia and beyond (see

page 10).

It’s been an exciting journey across these first 25 issues, and based

on what’s in the pipeline, we fully expect to have countless stories

to tell about our future successes together.

Dennis Roman

Editor-in-Chief and Vice President

TCS Financial Solutions

954 423 3560 office

954 806 6660 cell

https://www.linkedin.com/in/marketingasitshouldbedone

dennis.roman@tcs.com

www.tcs.com/bancs

lett

er

Welcome to our 25th “Silver Jubilee” issue of the TCS BaNCS Customer Newsletter!

55

6 Bootstrapping an Equities Market Two largest banks in Myanmar first-to-market with retail brokerage services

10 AlAhli Takaful Company Saudi Arabia’s largest provider of Takaful insurance automates multi-channel life insurance

12 TCS BaNCS for Reconciliations Multi-entity, SWIFT-compliant solution reconciles both cash and securities accounts

13 Standard Chartered Update on single-touch custody solution deployed in 40 countries for securities services

14 T+2 Settlement Move to T+2 will reshape settlement and corporate actions in the US capital markets

16 Payments Modernization A payments hub offers a customer-focused response to trends, says CEB TowerGroup’s Andy Schmidt

EVENTS18 TCS BaNCS Customer Forum, FT-TCS Financial Leaders Dinner Forum and Sibos 2015 Singapore

20 TCS Expertise in Capital Markets on display at Sibos 2015

22 TCS BaNCS Dialogues, Carnegie Mellon, CSC Middle East

23 Snapshots, Awards, Upcoming Events

contents

About TCS Financial Solutions TCS Financial Solutions is a strategic business unit of Tata Consultancy Services. Dedicated to providing business application solutions to financial institutions globally, TCS Financial Solutions has compiled a comprehensive product portfolio under the brand name of TCS BaNCS. Our mission is to provide best-of-breed solutions that drive growth, reduce costs, mitigate risk, and offer a faster speed to market for our customers. TCS Financial Solutions delivers state-of-the-art software solutions for the banking, insurance and capital markets industries worldwide. For more information, visit us at www.tcs.com/bancs

About Tata Consultancy Services LTD (TCS)Tata Consultancy Services is an IT services, consulting and business solutions organization that delivers real results to global business, ensuring a level of certainty no other firm can match. TCS offers a consulting-led, integrated portfolio of IT, BPS, infrastructure, engineering and assurance services. This is delivered through its unique Global Network Delivery Model™, recognized as the benchmark of excellence in software development. A part of the Tata group, India’s largest industrial conglomerate, TCS has over 353,000 of the world’s best-trained consultants in 46 countries. The company generated consolidated revenues of US $16.5 billion for year ended March 31, 2016 and is listed on the National Stock Exchange and Bombay Stock Exchange in India. For more information, visit us at www.tcs.com.

Copyright © 2016, TCS Financial Solutions. All rights reserved. No part of this publication may be reprinted or reproduced without the written permission from the editor. TCS BaNCS newsletter is provided to clients and prospects on a regular basis. TCS Financial Solutions disclaims all warranties, whether expressed or implied. In no event will TCS Financial Solutions be liable for any damages on any information provided within the magazine. The information is provided to outline TCS BaNCS general product direction. The editorial is to be used for general information purposes. The development, release, and timing of any features or functionality described for TCS Financial Solutions products remains at the sole discretion of TCS Financial Solutions.

From its inception, TCS BaNCS newsletter has been printed on paper from environmentally responsible sources.

6

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10

BooTSTraPPiNG AN EqUITIES MARKET

6

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Participating in the historic launch of Yangon Stock Exchange, retail investors queue to open brokerage accounts at KBZSC.

BooTSTraPPiNG AN EqUITIES MARKET

117

l TCS Financial Solutions enables the two largest banks in Myanmar to be first-to-market with retail brokerage services

l Full lifecycle deployment of enterprise brokerage software completed in three months

l KBZSC and AYA Trust deploy TCS BaNCS solution for securities trading and settlement, adapting global capital markets practices and standards

Myanmar’s movement toward democracy has also opened the way to the develop-ment of domestic capital markets with the promise of rapid economic growth in the near-term horizon.

KBZ Bank and AYA Bank were licensed to start their securities businesses in Decem-ber 2015, just three months prior to the scheduled first day of trading on Yangon Stock Exchange (YSX). With the assistance of TCS, KBZ Bank and AYA Bank were able set up their respective retail brokerage op-erations from scratch, placing them among the select few banks to participate in the historic milestone for YSX.

KBZ Bank, a technology-forward finan-cial institution named as the fund settle-ment bank for cash settlement on stock trading at YSX, was an obvious contender to become a leading brokerage.

AYA Bank, the second-largest bank in Myanmar, also secured a brokerage license. AYA has been recognized for its governance and sustainability efforts by World Finance magazine, and since 2012 has been a participant of the United Nations Global Compact corporate sustainability initiative.

Both KBZ Bank and AYA Bank turned to TCS Financial Solutions to meet the extraordinary challenge of launching a new brokerage in a new marketplace in the space of just three months, and they were the only large banks to actually meet the deadline.

“We just had three months to go live, progressing through the entire project lifecycle with enterprise software for two new customers, and we did it,” says Ajay Wadkar, Principal Consultant, TCS Financial Solutions.

How the race Was WonKBZ Bank and AYA Bank deployed TCS BaNCS for Securities Trading, which is easily configurable to meet the needs of retail brokerages in any market. Draw-ing upon extensive experience in other advanced and emerging markets, TCS Financial Solutions deployed TCS BaNCS as an integrated trading and settlement solution, delivering turnkey adherence to global capital markets’ best practices and standards. However, the biggest chal-lenge was not in assembling the required components for the Myanmar brokerages or localizing the software for the Burmese language, but rather in establishing reliable connectivity to the exchange. TCS had to solve this critical challenge prior to signing up brokerage customers in Myanmar.

In the absence of terrestrial connectiv-ity options such as leased lines, broker-ages have to connect to YSX using virtual private networks (VPNs) over Internet connections that are relatively slow and unreliable by the standards of highly developed markets. As an example of the present state of telecommunications in Myanmar, market data is exchanged as batch files rather than through a persistent online connection.

In response, TCS engineered intelligent workarounds to maintain reliability and assurance for trade confirmations, settlement and data exchange. This enabled TCS to demonstrate that it was ready to operate in the Myanmar market.

“We were the first to start testing on the exchange,” says Bharat Shah, Principal Consultant, TCS Financial Solutions. “We certified our product in six weeks, proving

By Bharat Shah, Principal Consultant, TCS Financial Solutions

8

inte

rvie

wca

pita

l mar

kets We just had three months

to go live, progressing through the entire project lifecycle with enterprise software for two new customers.

“” Ajay Wadkar, Principal Consultant, TCS Financial Solutions

9

to the market that our software was ready and that our banks would be able to start operations much earlier than others.”

The early preparations paid off, and TCS won the business from both KBZ Bank and AYA Bank.

KBZ Bank and AYA Bank each established a separate brokerage entity to serve the retail marketplace as well as to underwrite new listings.

KBZ Group, the parent company of KBZ Bank, formed a joint venture with Stirling Coleman Capital Ltd., an independent corporate finance advisory firm based in Singapore. The joint venture, called KBZSC, provides broker-dealer and investment advisory services, and will also underwrite new company listings on YSX.

AYA Trust Securities Company, or AYA Trust, the underwriting and broker-dealer business of AYA Bank, will provide corporate finance, advisory and underwriting services.

Despite several operational and technologi-cal risk factors, in the end KBZSC and AYA Trust both went live, as planned, before the end of March 2016.

Next StepsTCS Financial Solutions will continue to work with KBZSC and AYA Trust to enhance the brokerage offering for retail customers, including support for online trading.

In addition, TCS Financial Solutions will con-tinue to serve Myanmar financial institutions with TCS BaNCS brokerage readiness solutions, as well as complementary solutions in financial inclusion, insurance and core banking.

The TCS BaNCS brokerage solution for KBZSC and AYA Trust was deployed on private clouds managed by the banks’ respective IT depart-ments. To support newer organizations that may not yet have the same level of IT capabili-ties, TCS Financial Solutions, with its domestic partners in Myanmar, will make TCS BaNCS available through a hosted, cloud-based deployment. This turnkey approach will enable rapid and low-cost deployment for other brokerages trading on YSX.

Global implicationsThe increased economic integration be-tween Myanmar and the rest of the world has tremendous implications not only for the welfare of the people of Myanmar, but also for the country’s trading partners throughout the region and the world. Given Myanmar’s bounti-ful natural resources and its central positioning between the key markets of China and India, the commercial prospects are excellent for domestic companies going public, as are the investment possibilities for retail and institutional investors alike.

Both KBZSC and AYA Trust expect to be leading players in what is expected to be a high-growth business in helping domestic companies to go public on YSX.

For companies seeking to expand, the high cost of bank funding in Myanmar makes equity funding an extremely attractive proposition. The pipeline of companies slated for new listings on YSX will include several that are already traded through OTC markets or in private equity deals. New listings will also come about from entrepreneur-led ventures seeking to capitalize on the fast-growing Myanmar marketplace.

The introduction of a public market for equities smooths the way for domestic com-panies to enter into joint ventures with foreign partners, further facilitating the flow of foreign direct investment into Myanmar. Also, the availability of publicly-listed equities expands the pool of institutional investors that can participate in the growth of the market.

From the point of view of retail investors, the launch of a new equities market opens up a new asset class having the promise of better long-term returns than bank deposits can offer. As investment opportunities expand with new listings, the equities market will provide greater diversification compared to other investment opportunities available in the marketplace.

The initial response to the launch of retail brokerage services has been highly encourag-ing. At the opening of KBZSC, there were lines around the block for people signing up for new brokerage accounts.

Through the establishment of democratic institutions and capital markets, the gradual opening of Myanmar to the outside world promises to inaugurate a new era of peace and prosperity in the region. n

Launching ceremony of AYA Trust Securities Company Ltd., held at AYA Bank Head Office on 30th January 2016

At left: TCS team in Myanmar: Bharat Shah, Principal Consultant, Ravindra Joshi, Consultant, Ajay Wadkar, Principal Consultant, Karthik Krishnamoorthy, Assistant Consultant

10

alaHli TakaFul COMPANYMulti-channel, multi-lingual solution for group programs and life insurance automationBy kaushik ravishankar and Vijay ramachandran, TCS Financial Solutions

ALAHLI TAkAfuL CompAny (ATC) is the kingdom of Saudi Arabia’s largest provider of Takaful Insurance, a cooperative form of insurance permitted by Sharia Islamic Law.

ATC offers two main product lines: life insurance products

for individuals including unit-linked investment products, and

group life programs for organizations.

National Commercial Bank (NCB) offers ATC’s life insurance

products through its bancassurance channel. As the largest

bank in Saudi Arabia and the leading financial institution in the

region, NCB represents the main distribution channel for ATC’s

retail business.

ATC distributes group insurance products through a

broader set of channels, and until recently, the group business

relied upon highly manual processes. “Our strategy was to start

growing our business from the group side, which requires a

dynamic system to support that growth across different

channels,” says Mr. Abdulrahman Al-Obrah, CEO of ATC.

In late 2013, ATC began the process of selecting a new ven-

dor, with the objective of deploying a single solution for life

and group products that could be distributed across multiple

channels. “We looked for a reliable vendor with international

experience, a proven track record with successful implementa-

tions, and ongoing good relationships with customers,” says Mr.

Abdulrahman Al-Obrah. “We also wanted to find an application

reflecting the overall best practices in the market without the

need for doing a lot of customization.”

Out of nine companies invited to participate, three were

short-listed for the final stage, during which time ATC

executives visited customers of the finalists. “We asked decision-

makers in each of those companies, from top management and

IT management, for their experience and feedback, and even

their suggestions and recommendations,” says Mr. Abdulrah-

man Al-Obrah. “Based on our evaluations and the feedback we

received, we decided to select TCS.”

TCS BaNCS, in addition to supporting life insurance with

unit-linked investment products and group life programs, also

included a feature that some of the other contenders lacked—

a multilingual interface. “We thought that would be a basic

feature in a Takaful application, but we were surprised to see

that some of the vendors in the market were unable to provide

Arabic language support,” says Mr. Abdulrahman Al-Obrah.

Another main concern was the data migration from earlier

technology solutions. “That’s always the biggest challenge that

any company goes through in deciding to change system, and

one of the factors that we considered in selecting TCS was their

previous experience in data migration,” says Mr. Abdulrahman

Al-Obrah.

insu

ranc

e

One of the factors that we considered in selecting TCS was their previous experience in data migration.

“

”

11

ATC formed a project steering committee consisting of all

of the business unit heads, supported by resources from

operations, finance and IT.

In addition, ATC hired a dedicated project manager to work

with the offshore and onsite teams from TCS. “The high level of

engagement from the offshore and onsite teams, as well as from

management, helped to mitigate the risks that we faced during

the project,” says Mr. Abdulrahman Al-Obrah. “That’s what made

it a successful implementation.”

The first phase of the implementation was completed in

2015 with full migration of legacy retail policies to TCS BaNCS,

including distribution enabled through NCB’s bancassurance

channel. The group life module was launched in February 2016.

The new solution allows ATC to grow across both sides of the

business, retail and group.

Automation of the manual processes that had been used to

deliver group policies has been a major change. “We can now

grow our business, while also ensuring that we provide our

customers with the required high level of servicing, starting

from policy issuance through to invoicing and reporting to all

stakeholders,” says Mr. Abdulrahman Al-Obrah.

ATC’s retail capabilities have also been boosted by full

automation. “The turnaround time for policy activation has

been significantly enhanced,” says Mr. Abdulrahman Al-Obrah.

Based on these results and the experience throughout the

project, ATC management gave TCS high marks for profes-

sionalism and engagement. “TCS showed their dedication and

willingness to work with us, as the customer, to find solutions,

and that makes it a partnership rather than a vendor-customer

relationship,” says Mr. Abdulrahman Al-Obrah.

“We’re looking for TCS to be a partner for the long-term,”

he adds. n

FaST FacTSalaHli TakaFul comPaNy (ATC) specializes in

offering Takaful insurance products and services

in the Kingdom of Saudi Arabia.

Takaful, as an insurance concept, means to

“guarantee each other.” A Takaful contract is

based upon the core principles of co-operation,

protection and mutual responsibility for all

participants.

aT a GlaNcEcompany

ALAHLI TAKAFUL COMPANY

Headquarters

Jeddah, Saudi Arabia

Business challenge

Migration to a highly-automated,

Takaful-compliant insurance solution for life

and group programs, to be delivered across

multiple channels, including bancassurance

Solution

TCS BaNCS for Takaful Insurance

We’re looking for TCS to be a partner for the long-term.

“”

Mr. Abdulrahman Al-Obrah, CEO of ATC

TCS Financial Solutions has added Reconciliations to the TCS

BaNCS product suite.

TCS BaNCS for Reconciliations is a multi-entity, SWIFT-

compliant solution that covers reconciliations for both cash and

securities accounts. Built on the robust, reliable, secure and scal-

able architecture of TCS BaNCS, the Reconciliations solution can

be deployed either as an integrated component of other

TCS BaNCS solutions, or as a standalone.

The first customer of TCS BaNCS for Reconciliations was

Mercantile Bank Ltd., a bank serving business and commercial

clients in South Africa, a highly innovative market in financial

technology. With the new TCS BaNCS solution in place,

Mercantile Bank has increased automated matching by 70

percent, which in turn has sped up the reconciliations process by

80 percent.

Furthermore, drawing upon unparalleled depth of experience

in product deployment, TCS completed the implementation in

eight weeks, three weeks ahead of schedule and to the delight of

the bank.

“The TCS BaNCS implementation heralds another milestone in

our journey towards providing solutions that anticipate customer

and market needs,” said Karl Kumbier, CEO of Mercantile Bank.

Additional implementations are progressing at banks in Israel,

Kuwait, Singapore and the United States.

Aligning the booksReconciliation ensures that the financial records of any

organization as maintained in their bank accounts are precisely

aligned with the records maintained in their accounting systems.

On the securities side, reconciliation ensures that the internal,

post-settlement record of holdings of shares, bonds and other

financial instruments are consistent with the records at the

depository. This has to be done for every security holding in

every account. When there are position mismatches or breaks,

the settled trades can be matched to identify the reason for

the break. These crucial back-office processes usually require

significant manual intervention, which is a time-consuming and

error-prone approach to reconciliation.

TCS BaNCS for Reconciliations uses sophisticated business rules

and patent-pending artificial intelligence (AI) algorithms to match

accounting entries and balances maintained in the two systems.

Future releases of the product will enhance the AI-based

“deep learning” techniques, for it to learn from historic matching

patterns and to make the process more effective over time.

Many straightforward business rules will be generated

automatically, minimizing the number of rules that users have

to create themselves.

The improved user experience of TCS BaNCS ensures faster

identification of exceptions through online alerts, color-coded

records and online audit trails. Exception items, or “breaks,” are

grouped into priority buckets based on user-defined parameters

such as amounts and aging, so that users can configure alerts as

appropriate to the underlying business.

Users are assigned specific accounts through a unique work

allocation hierarchy that ensures the appropriate segregation

of accounts with configurable access controls, and fine-grained

workflow authorizations.

TCS BaNCS is fully integrated with standard SWIFT message

types appropriate to the reconciliation process.

With a combination of intelligent features that are unique

within the industry, TCS BaNCS has given financial institutions

a new approach to managing reconciliations, one of the most

fundamental operations in financial services. n

Eight-week deployment in South Africa; further implementa-tions in Israel, Kuwait, Singapore and USA.

tCs banCsfor

reconciliations

80% faster

By Hema Thomas, Senior Consultant, TCS Financial Solutions

12

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2113

“We had to roll out initially to 17 markets, but within the space

of 12 months, Standard Chartered went through two major

acquisitions, which changed the 17 to 40. We had to have a dif-

ferent approach on how we would manage to roll out to a larger

number of markets within the same timeframe – which, in our

case, was about four years.

“Once we got over the initial hurdles [in the first year], within

the second year, we developed and delivered successfully 17

markets.

“We have a platform now which delivers a standard service

across many markets where only Standard Chartered plays in

that market. We have clients who receive the same level of ser-

vice, whether it’s in their asset servicing or their custody servic-

ing. That’s a great achievement, which I don’t believe any other

international bank has been able to fulfill.”

— Peter OkaneProduct Development Head, Transaction Banking,

Standard Chartered Bank

“We’re present in the markets of Asia, Africa and the Middle East,

and we cover 40 different countries for securities services.

“Last year, we entered a new market, Jordan — which we

managed to do start-to-finish within 60 business days. That

would not have been possible had we not been on a single

platform.”

— Alan Naughton Head of Securities Services and Corporate Agency & Trust,

Transaction Banking, Standard Chartered Bank

Then... The custody project commenced in late 2010, and thus far, the updated, single-touch core custody

solution has been deployed in three markets: the Philippines, Vietnam, and Singapore.

TCS BaNCS #16 (2012)

...and Now

There are several factors that you need to consider in choosing

a partner, and I use the word “partner” deliberately.

You need to ensure that within the space of the overall project,

you have somebody who’s going to be there for the good times –

and more importantly, for the bad times.

There will always be bumps in the road, and the depth of your

partnership is challenged when you have these difficult times.

You need to identify somebody who’s going to be there — for the

whole duration of the project.

That strong partnership does not come overnight. The level

of trust has to be built from the personal level and from the

professional level.

That’s what we’ve achieved from this program with the key

partners that I deal with at TCS. Peter Okane n

Experience certainty. IT ServicesBusiness SolutionsOutsourcing

2012 Number 16

Artwork provided. Please do not recreate.

Date : 31 I 01 I 2007Title : Tata and TCS Marks - Stacked with TaglineDesign Magger : Gargi SharmaProject Co- ordinator : Vishal JhunjhunwalaColour : Pantone 2427 CSoftware Formats : CorelDraw 11, Adobe Illustrator CS2

IMPORTANT : COLOURS USED TO CREATE THIS MECHANICAL ARE FOR VISUAL SUGGESTION ONLY. USE PANTONE COLOUR SWATCHES TO MATCH FOR CORRECT COLOURS. EVEN THOUGH THIS MECHANICAL HAS BEEN CHECKED FOR ACCURACY, PLEASE DOUBLE CHECK PRIOR TO RELEASE TO THE VENDOR. IF INSTRUCTIONS ARE FOUND DEFICIENT, PLEASE CONTACT corporate.o�ce@tcs.com

Tata and TCS Marks - Stacled with TaglineFor use in 2D applications

Tata Consultancy Services Identity Guidelines I Jan 2007

Guide-sheet developed by Design Services, Corporate MarketingCopyright © 2007 Tata Consultancy Services Limited

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One WOrld, One TOuch

Standard chartered Bank provides

an innovative “single-touch” custody model

Visit us at Stand 4B05

TCS is #2

in FinTech100 Ranking

Briefing on regulatory compliance in the United States

Credit Union Australia deploys mobile app

SOFGEN joins TCS BaNCS Global Channel Partner Program

Savvis hosts TCS BaNCS for North American clientspl

uS n n n n

Advice on selecting a Partner for a Major Project

Standard charteredAn update on the “single-touch”

custody model deployed in 40 countries

Peter Okane

Alan Naughton

14

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Q: What is t+2?It’s a rule change that speeds up settlement in the US

financial markets from three days to two days. Current

practice allows three days (“T+3”) between the trade date

when an order is executed, and the settlement date when

the  securities are typically exchanged for payment. The

proposed implementation moves that up a full day, to “T+2.”

Q: Which entities and financial instruments are covered by t+2?The shorter settlement cycle will affect any entity that

facilitates trading, including retail clients, investment

managers, hedge funds, custodians, broker dealers and

markets/depositories. Financial instruments covered by

T+3 settlement include equities, corporates, municipal

bonds and unit investment trusts (UITs) in the U.S. market.

Q: When will t+2 implementation occur? Industry testing is scheduled to occur in the first half of 2017,

with the implementation scheduled for September 5, 2017.

The go/no-go decision will be made in August 2017.

Q: What needs to change to achieve t+2 settlement?Many market practices will have to occur earlier, ideally

on the trade date. The industry will have to sequence

deliveries to maximize matching and settlement efficiency,

and work to manage the possibilities for settlement failure

or late settlements.

Q: Which settlement processes need to be re-engineered?A good place to start would be to affirm trades on the trade

date.

Proper settlement instructions must be included along

with each trade. Without complete instructions, the risk of

settlement failure increases, as does the need for unwieldy

workarounds such as suspense accounts with internal

transfers handled post-settlement.

Messaging is also critical. In the T+3 world, some mar-

ket participants exchange files at set times, but such an

approach creates artificial delays. Under T+2, trading and

settlement systems should use event-based messages,

triggered automatically upon the completion of the prior

process.

T+2 Settlementin the uSa

Are you ready?

The move to T+2 in the U.S. has the potential to reshape not just settlement, but also corporate actions, financing and collateral management. It’s even a prerequisite for cross-border market harmonization.

Interview with andrew Zelenka, Principal Consultant, TCS Financial Solutions

715

Market participants will have to process higher volumes

in a compressed timeframe. As such, technology infrastruc-

tures, including chipsets, databases, applications and web

servers, will need to be tested and optimized for high avail-

ability processing. It will also be necessary to ensure that

the higher volumes are supported by real-time data backup

and disaster recovery mechanisms that support redundant

processing with no single point of failure, along with the

ability to quickly switch to backup systems with no loss of

transactional data.

Q. how will t+2 affect corporate actions processing ?Banks, depositories and data vendors will need to

ensure that dates and remittances are properly calculated

and communicated. There will be adjustments for how

organizations calculate the ex-date [the cut-off point for

entitlements] for regular-way trades, and the due bill period

[when remittances to investors are due] for both regular

and irregular trades. These adjustments affect processing

for both announcements and remittances. Additionally, the

cover/protect period must be reduced by one business day

after the offer expiration date.

The required changes will ripple throughout the

marketplace. DTCC will be making several changes to

properly process ex-date notifications, and to the DTC

interim accounting process, including bond interest. Firms

with proprietary processing systems will have to check

the way that they derive ex-dates. Exchanges will need to

account for the shortening of the ex-date period and any

associated downstream processing of that information.

Also, any firms that trade around expiration dates of

voluntary reorganization offers will have to review their

processes for claiming failed deliveries, recalling securities

and tracking trades pending settlement.

Q. how will t+2 affect financial firms in other regions outside the U.s.?Many other markets have already shortened settlement

times, and much of Europe and Asia is already on a settle-

ment cycle shorter than T+3.

Aligning settlement cycles across geographies could

help promote harmonization of markets, enabling global

financial firms to better manage cash flows and simplify

financing and collateral needs. However, global harmoniza-

tion may be more challenging to achieve than moving to

T+2 in the domestic market.

Q. how will t+2 affect financing and collateral management?Both will have to become much faster. Trade execution is

measured in sub-seconds, while financing and collateral

management are measured in hours or days. That mis-

match won’t work.

It’s a complicated problem. These transactions involve

multiple financial intermediaries representing multiple

parties, and often use the same position as collateral.

Furthermore, clients may operate across multiple time

zones, and key participants can be on the other side of the

world from the settlement location. Nevertheless, financing

and collateral management transactions are expected to

occur close to the settlement date of an underlying trade.

For T+2 to be effective, the technology and business

processes that support financing and collateral manage-

ment have to be fully updated and rebuilt for speed. n

“

”

firms must look beyond short-term goals and evaluate options to re-engineer their business processes and enhance the IT infrastructures of the affected businesses processes before transitioning to a reduced settlement cycle. They must view this as an opportunity to invest in their technology infrastructure, to achieve the end objective of decreasing risk while enhancing business efficiency.

Ganesh Padmanabhan and Ramakoteswara Roa T., “Shortening the Securities and Cash Settlement Cycle

from T+3 to T+2.” TCS BaNCS Research Journal 2:5, 44-51 (Tata Consultancy Services, 2014).

16

Payments modernization is viewed through one of two

lenses: Either it’s a must-do, akin to compliance, or a more visionary

approach that seeks to do all sorts of new things.

The profile of a specific financial institutions tends to fall along this

spectrum based on leadership. If it’s the CFO who became the CEO, you’re

on the compliance end. If you’re led by the CIO team, you’re going to look

at this as an opportunity.

We see the proper response being modernization through a payments

hub. This has the potential to improve customer service and customer

experiences, improve processes, increase sales and improve customer

acquisition.

In the early days, the idea was to have a high-value hub and a low-value

hub. That’s hard to manage in today’s environment. Instead, the majority of

banks want a single hub in place for all their payment types.

Take an approach where you can accept any payment type in any for-

mat, put it through a common process and deliver it to any endpoint. It

gives you so many opportunities to be able to control your infrastructure

through a common interface, and to push rules out once rather than

dozens of times.

Remarks by andy Schmidt, Principal Executive Advisor, CEB TowerGroup, on payments modernization, given at the 8th Annual TCS BaNCS Customer Forum

paym

ents PAYMENTS

modErNiZaTioNA single payments hub is the answer,

according to CEB TowerGroup research

the market for payments hubs is still open for investment36% HAve A pAymenTS Hub

64% Do not HAve A pAymenTS Hub

Source: CEB Enterprise Payments

Showcase Survey

17

the market for payments hubs is still open for investment

the Races are onThe race to payments modernization is actually three races

One l Banks are racing to zero in terms of transaction

pricing. Digital commerce and person-to-person (P2P) transactions—

which customers expect for free—have increased sharply. Therefore,

financial institutions must be able to meet this rise in transaction vol-

ume with lowered transactions costs in order to retain profit. At the

same time, financial institutions must still combat fraud and other

issues with the same vigor as before. Features such as automatic rules

and automatic routing of problem payments to repair and/or exception

queues will help separate items that need greater attention from items

that can pass straight through, and can help decrease costly manual

oversight.

Two l Banks are racing to real time. Financial institutions are

expressing a greater need to process and post transactions in real-

time across all channels. This need will require investment not only in

payments initiation in real time, but also in creating real-time

capabilities for other payments-related activities like balance-checking,

fraud screening, and liquidity management. While these additional

investments may seem daunting, forward-looking banks are using

these investments to create new revenue-generating, value-added

services, such as liquidity management services for correspondent

banks.

Three l Banks are racing for new revenue. And finally, banks

are racing for revenue in terms of creating new revenue streams,

preserving profit margins, and protecting against disintermediation.

Financial institutions are challenged with developing payment

products and services that customers will use, at a cost that is competi-

tive with more agile and risk-tolerant financial technology companies

(“fintechs”). To accomplish this, many larger banks are partnering with

fintechs to bring innovative technology solutions to their customers.

In this symbiotic relationship, banks can gain access to cutting-edge

technologies quickly and cost effectively while technology

companies gain access to the bank’s greater customer reach and

knowledge of the financial regulatory environment.

l CEB TowerGroup, “Winning the Payment Triathlon: Racing to Zero,

Real-Time, and Revenue, Payments Hubs Market Update,”

CEB, 2015.

Ceb towergroup Analysts’ view

“TCS BaNCS for Payments offers banks the flexibility

to integrate with existing and new/upcoming market

infrastructure and manage multiple payment formats.

This payments hub solution focuses on re-routing

and standardizing payments to help improve

a bank’s efficiency and workflows.”

l CEB TowerGroup, “Winning the Payment Triathlon:

Racing to Zero, Real-Time, and Revenue,

Payments Hubs Market Update,”

CEB, 2015.

You can read the full report here:

http://www.tcs.com/news_events/analyst_reports/

pages/Winning-payment-Triathlon.aspx

“TCS’ recent additions, including drag and drop

dashboard elements and conditional white listing im-

prove the usability of its offering. Likewise,

the ability to consolidate alerts creates

a clearer picture of the threats the bank faces,

both for the institution, and, its regulators.”

l CEB TowerGroup, “Threats with Aging Infrastructure:

Anti-Money Laundering Systems Market Update,”

CEB, 2016.

WebinarTCS BaNCS with CEB TowerGroup recently

hosted a webinar, “Driving Small Business

and Corporate Engagement through

Digital,” hosted by Jason Malo, Research

Director, TowerGroup Retail Banking, and

Debbie Buckland, Consultant, TCS BaNCS

Financial Solutions

Watch the webinar at:

http://on.tcs.com/24gCRcF

18

Left: N. Ganapathy Subramaniam. Below: Attendees at the 8th Annual TCS BaNCS Customer Forum

even

ts tCs banCs customer Forum

The 8th Annual TCS BaNCS Customer Forum was held at the Fullerton Hotel in Singapore

on Wednesday, October 14, 2015.

The TCS BaNCS Customer Forum gives TCS BaNCS clients the opportunity to hear

success stories directly from their counterparts at other financial institutions. n

a

19

Left: N. Ganapathy Subramaniam. Below: Attendees at the 8th Annual TCS BaNCS Customer Forum

FT-TcS Financial leaders diNNEr ForumThe art of the possible: digital innovation in payments and securities

The 5th annual FT-TCS Financial Leaders Dinner Forum, organized with

The Financial Times, was held in Singapore concurrent with Sibos 2015.

The panel forum, titled “The art of the possible: Digital Innovation in

Payments and Securities,” featured (in photo below, left to right):

l Karin Fliinspach, Head of Cash Products, Transaction Banking,

Standard Chartered

l Paolo Cederle, CEO, UniCredit Business Integrated Solutions

l Nick Scott, Vice President, TCS Financial Solutions

l Rhomaios Ram, Managing Director, Deutsche Bank

l Cardiff Garcia, US Editor, FT Alphaville, Financial Times n

SiBoS 2015SINGAPORENGS joins Technology Forum panel on digital identity

N. Ganapathy Subramaniam, President of TCS Financial

Solutions, participated in the Sibos Technology

Forum in a panel titled: “Spotlight on Digital ID.”

Topics covered the latest developments of trusted

digital identity, including the possibility for banks to

play a central role.

“It’s a great opportunity for the banking industry,”

said Subramaniam. “Banks can come together to

create a unique offering and make it convenient for

end users on a trusted basis.”

The panel was moderated by Julian Gorman,

Strategic Engagement Senior Director at GSMA.

Also on the panel:

l Usama M. Fayyad, Ph.D., Chief Data Officer

at Barclays

l Sean Gilchrist, Managing Director of

Commercial Digital, Lloyds Bank

The entire video of the panel can be viewed on

YouTube. n

20

on display at Sibos:tCs expertise in

Capital MaRKEtS Demonstrating excellence in innovation, settlement,

digital trading, asset servicing and end-user reporting

Firms are increasing iT budgets and

allocating spend to innovation. One example of

innovation being pursued by TCS is the integration of

online trading with social media, which will yield

benefits in usability, personalization, decision support,

rich content and peer-to-peer networking.

The benefits of moving to the T+2 settle-

ment cycle far outweigh the perceived drawbacks.

However, there will be impacts to consider in terms

of failed trades, reduced timeframes for securities

lending transactions, required modifications to liquidi-

ty and collateral management, changes to multi-listed

securities, and increased complexity of cross-border

transactions.

We may expect an even shorter settlement cycle in

the future, and moving to T+2 would be the first step.

However, T+0 or T+1 poses high risk and challenges

to market participants due to the lack of key enablers,

technology limitations and increased investments

required for implementation.

The “online social” world requires organizations to move from a perspective focused on the single customer

view to a broader picture of the universal social experience. That’s why online trading firms will have to offer not only any-

where, anytime capabilities, but also a user experience fully integrated with social channels across trading, research and ana-

lytics. Just as investing occurs in a borderless world, so do conversations and interactions surrounding investment decisions.

The supporting technologies have to deliver access to multiple devices and multiple platforms. That’s why the “Hybrid App”

approach, as used by TCS BaNCS Digital Trading, offers cross-platform services that tap into native APIs for peak performance.

l Securities Trading: “Trade Digital - Omni-channel Experience,”

delivered by Bharat Shah, Principal Consultant

l Custody: “Shortening The Settlement Cycle - The Way

Forward,” delivered by Kamal Khurana, Principal Consultant

l Capital Markets: “Default is Digital: Future innovation in

Capital Markets,” delivered by Nick Scott, Vice President

even

ts

21

an effective solution for end-user reporting

has to capture data from multiple applications and make

it available to a powerful big-data ecosystem. Then, the

resulting data has to be made accessible via flexible re-

porting tools through a wide variety of channels and form

factors.

TCS BaNCS Objects, the reporting tool of TCS BaNCS,

allows users to write reports in minutes, fully incorporat-

ing the latest information from Corporate Actions and

Securities Processing databases. This approach reduces

time to market for new reports, generating fast benefits

at reduced risk.

l Capital Markets: “Can End-user Reporting

become a strategic tool?” delivered by Kamal Khurana

The traditional asset servicing model

faces cost, risk and revenue pressures, along with market

and regulatory compliance challenges, high market vol-

atility, and increased complexity of asset classes. To im-

prove the model requires a high degree of automation,

self-repair and customer self-service.

One example is enabling customers to access informa-

tion and issue instructions on corporate actions through

their mobile devices. Clients should be able to generate

reports and resolve queries “on the go,” with operations

managers capable of taking action anytime, from any-

where.

l Corporate Actions: “Trends in Asset Servicing,”

delivered by Devesh Gupta, Principal Consultant

22

tCs banCs DialoguesExpanded geographic reach and product coverage for TCS BaNCS User Groups

TCS BaNCS Dialogues, formerly known as the TCS BaNCS User Groups, will now

encompass a wider range of topics across a broader geographic range. This

expansion will enable greater and more frequent participation by the entire

TCS BaNCS user community.

Recent meetings have been held in South Africa, Brazil, London, New York and

Singapore. n

even

ts

At left: N Chandrasekaran

(“Chandra”),

CEO and Managing

Director, TCS.

At right: Subra Suresh,

President, Carnegie

Mellon University,

with Chandra.

TcS @

cmu In August 2015, Carnegie Mellon University in Pittsburgh, Pennsylvania announced a $35 million gift from Tata Consultancy Services

to the internationally ranked research university.

Representing the largest corporate gift to CMU and the largest gift from outside the U.S., this donation will fund a new facility,

the Tata Consultancy Services Building, which will support education and cutting-edge research by CMU faculty and students.

“TCS is proud to invest in this landmark partnership with CMU to promote market-driven innovation and accelerate advance-

ments in technology, “ said TCS CEO and Managing Director Natarajan Chandrasekaran. “As global leaders, Carnegie Mellon and

TCS have the intellectual power, creativity, institutional nimbleness, and global reach to capitalize on new opportunities and have

a lasting impact on society and industry through cutting-edge digital research and a long-term commitment to education.” n

Clearing, Settlement & Custody middle East

TCS BaNCS was a sponsor of Clearing, Settlement & Custody Middle East, the only event in the region

focused on post-trade services. Conference topics covered Middle East regulations and standards, market

trends, and opportunities in the asset management sector.

23

Upcoming Events

siFMA oPsMay 2-5, 2016miami beach, fla.the AsiAn bAnkeR sUMMitMay 10-12, 2016Hanoi, vietnam tCs innovAtion FoRUMMay 24, 2016LondonissA syMPosiUM May 24-27, 2016ermatingen, Switzerland AMeRiCAn bAnkeR’s DigitAl bAnking sUMMitJune 20-22, 2016new orleans, Louisiana

Snapshots from Singapore

1. nGS with Arvind Singh, khan bank. 2. marco Tempest, magician and

Techno-Illusionist. 3. Tess Ravalo, philippine Depository & Trust

Corporation. 4. L-to-R: murray Stocks, Dewald Smit and Louise Currie

from nedbank, with Rachit Tayal and nGS from TCS. 5. entertainment.

6. nicole Walker, postfinance.

1 2

3 4

5 6

awards Skoch order of merit

In December 2015, TCS was awarded the Skoch Order

of Merit during the 42nd Skoch Summit in New Dehli,

India, based on the TCS BaNCS implementation for

New India Assurance Co. Ltd. The Skoch Awards

celebrate human excellence and agents of change in

Indian society.

The asian Banker implementation awards

Letshego Holdings, based in Botswana, won the “Best

Regional Core Banking Implementation in Africa” award

at The Asian Banker Implementation Awards. TCS BaNCS

supports Letshego Holdings in Botswana, Swaziland,

Tanzania, Uganda, Zambia, Namibia and Mozambique.

TcS ranked #1 in FinTech

Tata Consultancy Services has been recognized as the

leading global financial technology provider in the 2015

IDC Financial Insights FinTech Rankings Top 100. TCS

moved into the top position after being ranked second

since 2012, and maintaining a top-ten ranking for the

past eight years.

BNP Paribas Securities set out to consolidate custody operations. They found a certain way.

BNP Paribas Securities Services (BNP Paribas) is the leading European provider of securities services for fund managers, financial institutions and businesses. To keep pace with the ever-changing sector, BNP Paribas required real-time information in corporate actions. It needed a solution that would facilitate the management of all kinds of corporate events and also automate reporting of these events. Tata Consultancy Services (TCS) implemented the Corporate Actions solution from TCS BaNCS, an integrated product suite for financial services, to consolidate the global and local custody operations onto a single IT platform. As one of the world’s fastest growing technology and business solution providers, TCS enabled a high degree of standardization to upgrade business processes to support higher volumes, and facilitate the processing of 150,000 corporate action events in a year, thus pushing up STP alongside accurate client reporting and scaling up of their business.

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BNP Paribas__240314_Prepress.pdf 3/24/2014 10:49:54 AM