Companies constantly have to reposition themselves due to market changes and evolving competitive landscape. We can provide the expertise and capacity required to undertake landmark changes alongside day-to-day operations.
Prospire will support you internationally, from the business strategy to customised implementation. Our advisors work with the necessary tools, expertise and a wealth of experience.
We deliver more than just results. We offer individual and personal support to achieve a sustainable impact and strengthen your company and your employees in the long term.
We focus on the end result. We guarantee professional, company-specific support and rapid implementation. Trends and innovation are incorporated into the overall advisory process.
We will support you in critical situations where quick action is required to bring the company or an important project on track.
We will help you review your strategy, adapt it to new conditions and show you ways to sustainably increase the value of your company.
Market changes and new technologies often require a fundamental revision of the business or operating model. Our experienced advisors implement such transformations in business models, product and service portfolios or optimize innovation capability as well as the operational efficiency. We systematically expand your company's skills "on the job" and support the change process with systemic measures. This enables us to achieve a sustainable transformation.
With the help of smart optimization, we can boost productivity of the company's core areas and create capacity for large-scale investments. Our approach is transparent, our measures are tailored to the corporate goals and are sustainably anchored within the company.
Situations such as the next growth step, the acquisition and integration of a company, the sale of a company or the development of new markets represent exceptional challenges for start-ups and SMEs. With our expertise and know-how we support executives and entrepreneurs in the necessary preparations, and take on selected responsibilities and functions during the implementation phase. Our local and international network helps you to expand into new markets.
The preparation, implementation and review of your project portfolio, programmes and major projects are among our advisors' core competencies. In this case, sustainability means that projects are managed with the necessary effort, while the extra burden on your company is reduced to a minimum. At the same time, results, transparency and controllability as well as professional stakeholder management, are guaranteed.
We are business-minded professionals with many years of practical experience in leading management consultancies and well-known industrial companies. We will support you in your business-related matters and act as your personal sparring partner at management level. We combine our skills and resources with yours in order to achieve a sustainable impact and secure your company's success.
We are surrounded by a network of outstanding industry and functional specialists, project managers, sales managers and partner companies who complement our existing skill-set perfectly and provide additional capacity when required.
Areas of operation:
As a company, we bring together exceptional people from different professional backgrounds with different skills. Are you a business-minded individual looking for an intellectual challenge, ready to assume responsibility, explore new pathways and champion sustainable solutions?
Our management consultancy needs passionate people who deliver the best possible results to our clients, actively contribute their many years of professional experience, share our values and drive our company forward. As a partner in our owner-managed company, you will be expected to demonstrate commitment, expertise, a wealth of ideas and extensive soft skills. Are you ready to help us make a difference? We give you a platform as an equal partner. Contact us!
You value a dynamic environment and appreciate being on the pulse of time. At Prospire you will have the opportunity to impact business strategies sustainably and contribute with your industry know how to numerous interesting projects. Take the next step in your career and apply today.
You value your independence and have your own professional ambitions. You have a passion for projects with concrete sustainable results. You enjoy exchanges and contextual discussions in your work. You have worked in the project business for more than ten years and have experience in leading management consultancies as well as line management functions. We look forward to hearing from you! Contact us!
Zurich, Switzerland May 15, 2019
TrinityP3 the global marketing management consultancy based in Australia and Prospire the strategy and performance management consultancy based in Switzerland are entering a joint venture to provide a broader range of marketing consulting services to the EMEA region.
The two companies currently provide complementary by very different consulting services to organisations wanting to drive growth through marketing. Prospire has build a reputation and practice with creating value through strategic new product development and innovation while TrinityP3 has focused on improving marketing communication performance and productivity.
“We work strategically with our clients to create increased value through identifying and developing new productss and services that provide a competitive advantage to the market. Our frustration and the opportunity was observing how many organisations often struggle with the challenges facing marketing communication in taking those initiative effectively to market. Our partnership with TrinityP3 allows us to offer clients in EMEA an end to end marketing and marketing communications solution” says Dennis Flad, Partner at Prospire.
While TrinityP3 was founded in Asia Pacific it has expanded the offering in recent years to the UK and the USA through joint ventures with like-minded companies and individuals.
“TrinityP3 works collaboratively not only with our clients, their procurement and their agencies, but also with likeminded individuals and organisations to take our philosophy on marketing communications management and methodology to the world. The joint venture with Prospire represents one of those ideal collaborations where the sum of the whole is greater than the two parts” says Darren Woolley, Global CEO of TrinityP3.
The JV will operate from Prospire’s office in Zurich with a remit across EMEA and work collaboratively with TrinityP3 operations in the UK, North America and Asia Pacific. These operations are effective immediately.
TrinityP3 is a Global Marketing Management Consultancy headquartered in Sydney Australia with offices in Singapore, London and New York. Founded in 2000 it provides totally independent consulting and advice in designing bespoke solutions to the six major challenges facing marketing in organisation to deliver improved performance and productivity. Trinity reflect the triparted approach of working with marketing, finance and agencies, while P3 represents their mission of helping these People achieve their commercial Purpose through a creative Process.
Prospire is a strategy and performance consultancy boutique headquartered in Zurich. Founded in 2014 it provides advisory services in strategy development, product management and smart optimizations following a value-driven approach. Prospire believes is a fine formula of diverse thinking, innovative leadership and collaborative evolution enabling its clients and their organization to prosper their business and deliver the respective strategies together. Prospire’s senior partners have year-long hands-on expertise in various industries like financial services, information and communication services, marketing and industrial production.
Hamburg/Zürich, 16. April 2019. Die Strategie- und Umsetzungsberatung Thede Consulting CH und die Boutique-Beratung Prospire gehen eine Kooperation im Bereich Zahlungsverkehr ein. Gemeinsam erweitern die Unternehmen damit ihre Kompetenzen in Unternehmens- und Produktstrategie, Geschäftsentwicklung und Innovation in den Bereichen Payment, Retail und Corporate Banking sowie Loyalty. Damit bieten sie ihren Kunden künftig noch vielseitigere Unterstützung.
Mit ihrer Partnerschaft entwickeln Thede Consulting CH und Prospire ihr jeweiliges Leistungsangebot und Prozesswissen weiter und verknüpfen ihre Schwerpunkte und Fachexpertise mit den Kompetenzbereichen des Partners. Dies kommt insbesondere Kunden in den Bereichen Zahlungsverkehr, Handel, Versicherungen und Automotive zugute, die sich aktuell mit einer Vielzahl von Herausforderungen und neuen Wettbewerbssituationen konfrontiert sehen.
Fokus auf Payment, Retail, Corporate Banking und Loyalty
„Digitalisierung, Regulierungen und Internationalisierung machen das Geschäft für unsere Kunden immer komplexer und vielfältiger. Durch die Kooperation können wir künftig unsere Kunden entlang der gesamten Wertschöpfungskette begleiten“, so Jens Hegeler von TC. „Ein tiefes nationales Verständnis kombiniert mit einem internationalen Netzwerk in unterschiedlichen Branchen stellt die Basis für unseren gemeinsamen Beratungsansatz dar, um mit innovativen Geschäftsmodellen den Erfolg unserer Kunden zu sichern“, ergänzt sein Geschäftspartner Andre Standke.
Beide Unternehmen streben eine langfristige und nachhaltige Zusammenarbeit an und sehen sich als gemeinsame Sparrings-Partner. Prospire profitiert von der langjährigen Expertise seines neuen Partners, während TC für den Marktausbau in der Schweiz einen markterfahrenen Partner gewinnt.
Kundennutzen durch breiteres Know-how
„Die Zusammenarbeit in Netzwerken ist der wichtige Eckpfeiler im Beratungsmodell von Prospire. Zusammen mit TC können wir für unsere Kunden immer die richtigen Teams und Spezialisten für die Herausforderungen im Payment und Loyalty stellen“, so Dennis Flad von Prospire. „Innovation ist immer das Ergebnis von mehreren Parteien entlang einer gemeinsamen Wertschöpfungskette“, fügt sein Geschäftspartner Nikolaus Guido hinzu.
Mit ihrer gemeinsamen Herangehensweise an die Strategie und die Umsetzung von Programmen wollen TC und Prospire neue Maßstäbe in der Betreuung ihrer Kunden im Kartengeschäft, Zahlungsverkehr und Distanzgeschäft setzen. Auch im Bereich Loyalty ergeben sich Synergien durch die Erfahrung mit komplexen Datenanalysen auf der einen und die darauf basierende Entwicklung von zukunftsfähigen Geschäftsmodellen auf der anderen Seite. „Gerade in unseren Unterschieden ergänzen wir uns hervorragend“, so das gemeinsame Credo.
ÜBER THEDE CONSULTING CH AG
Thede Consulting arbeitet an der nächsten Generation nahtloser und kanalübergreifender Zahlverfahren. Als Strategie- und Umsetzungsberatung unterstützt TC europaweit Entscheider aus den Segmenten Financial und Mobility Services sowie Retail und Loyalty, um schnelle, quasi unsichtbare Bezahlprozesse zu entwickeln. Unsere Kernkompetenz ist der Einsatz neuer Techniken, beispielsweise für das Bezahlen im Auto (Connected Car), mit Wearables oder per Sprach-Assistenten sowie die Auswertung wertvoller Customer Insights zur Kundenbindung.
ÜBER PROSPIRE AG
Prospire ist eine inhabergeführte Boutique für Strategie- und Performanceberatung. Prospire Berater nutzen ihre langjährige, fachspezifische Berufserfahrung und ein Expertennetzwerk für individuelle Problemstellungen des Kunden. Prospire entwickelt Strategien in sich wandelnden Märkten, übersetzt diese in stimmige Dienstleistungen, Produkte und Marketingpläne und hilft Organisationen, sich fit zu machen, um diese Pläne zu liefern. Prospire unterstützt Unternehmen im Finanzbereich sowie im Payment und Transaction Banking im Speziellen.
|THEDE CONSULTING CH AG|
Pressekontakt: Kay Schöning
T +41 41 7103747
|PROSPIRE AG |
T +41 44 2197700
Crypto currencies and initial coin offerings (ICO) provide attractive service and revenue opportunities but come with compliance and operational risks. Gazprombank Switzerland, Synpulse and Prospire reveal how crypto currency accounts and ICO support can be offered in corporate banking in a compliant, efficient and secure way.
Authors: Edouard Hurstel | David Steiger | Dennis Flad | Heinrich Frankenbach
Among cryptofriendly nations, Switzerland has positioned itself in a top rank. Proof of this is the «Crypto Valley» in Zug. It has become a globally recognized center of crypto innovation and domicile of some of the most recognized initial coin offerings (ICO). Especially the vehicle for ICO has become very popular in the start-up scene. ICO enable young companies to raise funding by issuing tokens as digital assets. Buyers of such tokens gain tradeable assets. These assets, in turn, grant access to a future service of the start-up (like a voucher) promise a certain return based on predefined rules (like a smart contract). Often, the funding is paid in established crypto currencies (e.g. Bitcoin, Ethereum). After collecting the funds, the start-ups have huge amounts of crypto currencies in their wallets. But they face three key issues during the process:
These examples highlight the demand for banking services for ICO start-ups in the blockchain and crypto currency environment.
Regulatory framework for crypto banking
In February 2018 the Swiss Financial Market Supervisory Authority (FINMA) published «guidelines for enquiries regarding the regulatory framework for initial coin offerings (ICOs)». It provides the first regulatory framework for crypto currencies and, hence, reduces the risk of banks not being compliant when doing business with the ICO sector. Some banks see great opportunities in the crypto area and believe the guidelines are a starting point for developing service offerings. For banks, the opportunities in this space are attractive as they can leverage their banking license as well as their core capabilities, that is extend them to the specifics of crypto currencies.
Crypto banking services To address the demand of institutional and corporate clients in the blockchain space, three crypto banking services must be established:
Safekeeping of crypto currencies and providing crypto wallets is similar to providing and securing bank accounts. Investing in crypto currencies is already well established in the Swiss financial market (e.g. Falcon Bank, Swissquote). Here, bank clients can buy and sell crypto currencies by debiting their fiat currency accounts and exchanging them for crypto currencies. We see the transfer of crypto currencies as the next step for crypto banking. This can be done by transfer to a beneficiary’s crypto currency wallet (outbound) from an originator’s crypto currency wallet (inbound) outside the bank. Essentially, this service is like a crossborder payment with traditional fiat currencies.
Approach for a Successful Crypto Initiative
Based on these three crypto banking services, banks can provide a variety of services to their client base. Or they can serve blockchain and crypto start-ups. Such service could include ICO execution, ICO financing and ICO investment banking.
Five challenges for crypto banking services
Banks who want to offer cryptorelated services need to be aware of the specific challenges and risks. This is especially true when it comes to offering inbound and outbound transfer of crypto currencies. We identified several issues that banks need to solve to be legally compliant
1. Safekeeping and segregation of wallets
2. Unknown counterparty and legal framework
Unlike with current fiat payments, the beneficiary or originator is not an account holder at a regulated bank respecting the same standards like «Know Your Customer» (KYC), «Anti Money Laundering» (AML) and «Financial Action Task Force» (FATF). The beneficiary or originator is an unknown identity hidden behind a public wallet key. To bring crypto transfers into a regulated environment, due diligence on the beneficiary or originator needs to be done. Unmasking the originator would also make the crypto transfer similar to today’s payments.
3. Use of crypto coins from illicit sources
To comply with AML regulation, the history of transactions needs to be explored in the fiat world. The client needs to declare this history to the bank. The blockchain, however, offers an advantage that can be used to increase the level of confidence among regulators and compliance specialists regarding the transfer. The blockchain stores every transaction in a history that can be analyzed. It can be identified from which wallets a specific coin has been transferred. If this wallet was connected to illicit activities in the past, the blockchain can reveal this by analyzing the transaction history and then calculating an AML risk score. This score indicates whether it is recommended to execute the transfer with the beneficiary’s or originator’s wallet.
4. Core banking integration of cryptos
Crypto currencies need to be integrated into existing core payment processes and systems. Our view is that existing payment processes may be used for crypto payments after being slightly adjusted. an overview of the outbound transfer process and the difference between current payment processes is highlighted.
5. Investor protection of crypto currency specifics
Crypto currencies are more volatile than fiat currencies. Additionally, liquidity might be an issue if the crypto currency is not well known and therefore not traded frequently. In order to protect its clients, a bank should carefully select among the crypto currencies provided. Additionally, clients must be made aware of the risks before they invest in crypto currencies. Other measures to mitigate risk to the client are limit orders, loss reporting and investments without leverage.
Success factors for new services-setup
Based on our experience, it is crucial for banks to find viable solutions for the challenges presented. These must be checked with their clients, the regulator and those responsible at the bank. We have identified some general factors behind the success of a crypto initiative.
Educating the bank’s leadership and all project managers at the beginning of the initiative is crucial so that they all understand the basic concepts of blockchain and crypto currencies. This will enable an assessment of the opportunities and risks related to blockchain, distributed ledger technology and crypto currencies. The bank’s solution should also focus on leveraging existing processes and frameworks for payments. While the technology and many of its features are new, the payment services essentially remain the same. It is, however, necessary to adapt the processes to comply with regulatory requirements and to take into account crypto currency specifics.
Our assessment shows that by dealing thoroughly with the challenges described and applying the success factors, banks can access the field of crypto product and service offerings.
This analysis is based on an initiative of Gazprombank Switzerland Ltd. (https://gazprombank.ch/)
2008 wurde das Whitepaper «Bitcoin: A Peer-to-Peer Electronic Cash System» von Satoshi Nakamoto veröffentlicht. Seit nunmehr zehn Jahren sind Kryptowährungen in aller Munde. Sie ermöglichen neue Geschäftsmodelle, bergen aber auch Risiken. Die Akteure brauchen neue Konzepte, um ihre gesetzlichen Sorgfaltspflichten zu erfüllen.
Autoren: Eric Stehli | Dennis Flad
Compliance-Regelwerke dienen vor allem dazu, kriminelle Geldflüsse, Geldwäsche, Terrorfinanzierung, organisierte Kriminalität sowie Steuerhinterziehung oder -vermeidung zu unterbinden. Entsprechend ist deren Umsetzung kein Selbstzweck. Vielmehr ist es aus dem Bedürfnis der Gesellschaft entstanden. Die Ausnutzung des Finanzsystems durch kriminelle Subjekte soll damit bekämpft werden. Die Geschäfte müssen so geführt werden, dass dies sichergestellt wird. Banken und Finanzinstitute sind die Akteure, die diese Regeln vertreten und umsetzen.
Eine Frage der Werte
Es ist daher anzunehmen, dass die Gesellschaft die etablierten und erforderlichen Regeln gegen Geldwäsche und Kriminalität auch in der neuen Welt der Kryptowährungen und im Handel mit «Digital Assets» umgesetzt sehen will. Finanzinstitute müssen sich dabei bei der Umsetzung der Sorgfaltspflichten jedoch einigen Herausforderungen stellen. Die Haupteigenschaften und Stärken der Blockchain-Technologieliegen in der freien Zugänglichkeit, dezentralen Datenhaltung und Unabhängigkeit von Intermediären wie zum Beispiel Clearinghäuser oder Börsen. Transaktionen können direkt zwischen Teilnehmern einer Blockchain abgewickelt werden. Jede Transaktion wird mithilfe von einem autonomen Algorithmus nach mathematischen Regeln auf ihre Echtheit, Deckung und Finalität validiert. Ein Vorteil, aber auch ein Problem, bei der Blockchain-Technologie ist, dass die Inhaber von Konten, sogenannten Wallets (deutsch: Brieftaschen), anonym sind. Transaktionen werden lediglich durch die Eingabe eines privaten Verschlüsselungskennworts(Private Key) in Auftrag gegeben. Daten zu den Inhabern von «Wallets» werden bei den meisten aktuellen Blockchain-Lösungen nicht mitgeliefert. Sie bleiben unbekannt. Dafür sind alle ein- und ausgehenden Transaktionen eines Wallets in der Blockchain chronologisch gespeichert und für alle Teilnehmer an dieser Blockchain einsehbar. So lässt sich zum Beispiel die Deckung einer Transaktion mit den notwendigen digitalen Vermögenswerten einfach überprüfen.
Herausforderungen bei der Umsetzung regulatorischer Anforderungen
Unter geltendem Schweizer Recht – und auch in umliegenden Staaten – sind virtuelle Kryptowährungen keine gesetzlichen Zahlungsmittel und kein Buchgeld, das durch ein gesetzliches Zahlungsmittel unterlegt ist. Die Schaffung und Herausgabe von virtuellen Währungen sind nach Schweizer Recht bewilligungsfrei zulässig. Die Nutzung virtueller Währungen für Zahlungen sind grundsätzlich ebenfalls nicht dem Bankengesetz unterstellt, sofern ein Kontext zur Gegenleistung (Erwerb von Waren und Dienstleistungen) gegeben ist. Auch mit Bezug auf das Betreiben einer Handelsplattform gilt: Es erfolgt keine Unterstellung unter das Bankengesetz, wenn die Plattform lediglich die Parteien des Grundverhältnisses (Kauf von Gütern, Erbringung von Dienstleistungen) zusammenführt bzw. die Transaktionen den Parteien zuordnet. Gewisse Geschäftsmodelle erfordern hingegen eine Bankbewilligung. Dies kann insbesondere dann der Fall sein, wenn beim Wechsel von virtuellen inoffizielle Währungen und umgekehrt die Währungen von Kunden gewerbsmäßig auf eigenen Konten entgegengenommen werden. Können die Einleger nicht jederzeit ohne Mitwirkung des Verwahrers über die Währungseinheiten verfügen und bleiben daran lediglich obligatorisch berechtigt, entstehen Verbindlichkeiten gegenüber den Einlegern im Sinne von Art. 5 Bankverordnung, sodass es sich um Publikumseinlagen handelt. Dasselbe gilt, wenn der Verwahrer die Währungseinheiten verzinst und auf diese Weise Gewinn erzielt. Auch wenn keine Bankbewilligung erforderlich ist, unterstehen gewerbsmäßige Tätigkeiten mit virtuellen Währungen dem Geldwäschegesetz. Letzteres hat einen weiteren Anwendungsbereich als das Bankengesetz, weil es für alle sogenannten Finanzintermediäre gilt. Unter diesen Begriff fallen sämtliche natürliche und juristische Personen, die berufsmäßig fremde Vermögenswerte annehmen, aufbewahren oder helfen, sie anzulegen bzw. zu übertragen. Darunterfallen gemäß Art. 52 in Verbindung mit Art. 2 littera c der Geldwäscheverordnung der Eidgenössischen Finanzmarktaufsicht FINMA auch Händler von virtuellen Währungen oder anderen digitalen Vermögenswerten wie «Initial Coin Offerings». Als relevante Geld- oder Wertübertragungsgeschäfte in diesem Zusammenhang gelten der Transfer von Vermögenswerten durch Entgegennahme von virtuellen Währungen oder sonstigen Zahlungsmitteln und die Auszahlung einer entsprechenden Summe in virtuellen Währungen. Daraus folgt, dass die für virtuelle Währungen einzuhaltenden Sorgfaltspflichten denjenigen für die Geld- und Wertübertragung gleichgestellt sind. Außerdem bedeutet dies, dass Händler von virtuellen Währungen und Vermögenswerten sich einer Selbstregulierungsorganisation anschließen müssen bzw. die Direktunterstellung bei der FINMA für erforderlich ist. Die Pflichten eines Finanzintermediärs werden unterteilt in sogenannte Sorgfaltspflichten zur Verhinderung von Geldwäsche und Terrorismusfinanzierung und Pflichten bei Geldwäscheverdacht. Eine konsequente Umsetzung der jeweils anwendbaren Sorgfaltspflichten ist jedoch aufgrund der technischen Besonderheiten und Anonymität bei Blockchain-Transaktionen mit großen Schwierigkeiten verbunden. Die Handelstätigkeiten im Zusammenhang mit Kryptowährungen und digitalen Vermögenswerten ziehen potenzielle Risiken im Bereich der Geldwäsche und Terrorismusfinanzierung nach sich, die gemäß der gesetzlichen Sorgfaltspflichten zu kontrollieren wären. Dies wird noch dadurch verschärft, dass nicht festgestellt werden kann, in welchem Land die Wallets gehalten werden. Somit müsste jede Transaktion als potenzielle grenzüberschreitende Transaktion(Cross-border-Transaktion) angesehen werden, und die anspruchsvolleren Regeln der internationalen Financial Action Task Force (FATF) müssten angewendet werden. Doch die üblichen KYC- (know your client) und KYT- (know your transaction) Anforderungen können ohne weitere Zusatzdienste und Deklarationspflichten der Auftraggeber oder Empfänger nicht sichergestellt werden. Zudem ist fraglich, ob die Identität des Auftraggebers oder Empfängers einer Zahlung im Verdachtsfall nachträglich von den Strafverfolgungsbehörden in Erfahrung gebracht und für die Ermittlungen verwertet werden kann.
Gemeinsame rechtliche Rahmenabkommen schaffen Vertrauen
Im traditionellen Bankgeschäft ist ein wesentlicher Erfolgsfaktor die Bildung einer gegenseitigen Vertrauenskultur. Diese Regel ist auch zentral für die Zweckerfüllung bei Blockchain-Lösungen. Die Teilnehmer an einer Blockchain müssen auf ein gemeinsam gültiges Regelwerk für die Verarbeitung und Finalisierung von Transaktionen vertrauen können. Medienmitteilungen, dass Handelsplatzbetreiber gehackt oder Blockchains«geforked»i wurden, tragen dem Vertrauen in die zugrundeliegende Technologieanwendung nicht gerade bei. Damit für die Erschaffung und Markteinführung sowie für das Halten und die Verbreitung von Kryptowährungen nicht eine staatliche Kontrolle erforderlich wird, müssen dieMarktakteure ein gemeinsames rechtliches Rahmenwerk(Legal Framework) und damit eine Vertrauenskultur zwischensämtlichen Beteiligten an einer Blockchain schaffen. Straftaten wie Geldwäsche oder Terrorismusfinanzierung sollen schließlich nicht durch Kryptowährungen verschleiert werden können. Soweit regulierte Finanzmarktteilnehmer auf die Blockchain als Technologie zurückgreifen, böte die Beaufsichtigung des Instituts eine Grundlage für solche Legal Frameworks.
Von der alternativen Anlageklasse zu Transaktionswährung
Bisher ermöglichen Banken ihren Kunden, Kryptowährungen als Asset für die Anlage zu nutzen. Die direkte Möglichkeit, Zahlungen in Kryptowährungen über Banken zu tätigen, ist bisher erst in der Entwicklung. Unter anderem wird eine Erweiterung des «Whitelisting»-Ansatzes diskutiert. Sender und Empfänger von Kryptowährungen identifizieren sich gegenüber den am Netzwerk teilnehmenden Banken und können so zweifelsfrei einem (nichttransferierbaren) Wallet zugeordnet werden. Damit könnte man die regulatorischen Sorgfaltspflichten im Zahlungsverkehr innerhalb dieser Kundengruppe korrekt abwickeln. Das Wallet- und Transaktions-Whitelisting kann vorerst nur durch die klassische Kundenidentifikation mittels persönlicher Identifikation zustande kommen. Somit fordert es einen Umweg aus der digitalen in die analoge Welt und ist nur innerhalb eines durch die Teilnehmer zertifizierten Netzwerkes umsetzbar. Denn das Konzept macht nur dann Sinn, wenn die Wallets kontrolliert gehalten werden, also nicht jederzeit an eine dritte, nicht identifizierte Person übertragen werden können. Des Weiteren muss die Herkunft der Coins (Geldeinheit einer Kryptowährung) hinter einer Transaktion geprüft werden. Dies wird unter Zuhilfenahme von dedizierter Analyse-Softwareangegangen. Einer der Vorteile der Blockchain besteht ja darin, dass Transparenz über alle historischen Transaktionen im Zusammenhang mit einem Wallet besteht. Dies kann zur Bekämpfung von Geldwäsche ausgewertet werden. Anhand spezialisierter Algorithmen werden Aktivitäts- und Transaktionsdaten abgeglichen und analysiert, ob die Coin seines Wallets ganz oder teilweise aus unrechtmäßigen Transaktionen stammen. Die Analysesoftware berechnet dann für jedes Wallet ein Risikoprofil. Je nach technischem und vertraglichem Setup kann eine Bank dann kontaminierte Wallets, die «Bad Coins» enthalten, aus dem Verkehr ziehen bzw. für weitere Transaktionen sperren. Schnell wird klar: Damit klassische Finanzdienstleister ihren Kunden eine Verwendung von Kryptowährungen als Asset oder Zahlungsmittel anbieten können, müssen die Anwendungsfälle klar eingegrenzt, die Regeln für die Anwendungsfälle eindeutig definiert und deren Einhaltung überwachtwerden. Nur so können die banken- und geldwäscherechtlichen Pflichten umfassend erfüllt werden. Somit sind auch bei einer dezentralen Technologie einzelne gemeinsame zentrale Komponenten nötig – insbesondere in der Compliance.
Aufwand und Ertrag
Falls das Interesse an einer Verwendung von Kryptowährungen als Asset oder Zahlungsmittel auf Kundenseite genügend groß ist und sich immer mehr Akteure an einem solchen Netzwerk beteiligen, ist es natürlich möglich, dass die heutigen «Early Adaptors» die Spitzenreiter von morgen werden. Eine solche großflächige Beteiligung ist momentan noch nicht im Markt umgesetzt worden. Es ist jedoch ein für die Zukunft denkbares Szenario. Aus der Blockchain-Technologie kann sich durchaus ein künftiges weltweites Netzwerkentwickeln, das die Nutzer als Standard betrachten werden – so wie heute das Internet. Es wird die Art und Weise, wie wir Geschäfte miteinander tätigen, fundamentalverändern. Die Rede ist gar von einem weltumspannenden «Internet of Value», wo Akteure (Menschen oder Maschinen) autonom und direkt digitale Werte austauschen können. Wie dieses weltweite Netzwerk und die darin agierenden Teilnehmer jedoch reguliert und kontrolliert werden sollen, ist aktuell noch spekulativ. Ob sich der Aufwand für die Lösungsfindung – die Kosten und das eingegangene Risiko – schlussendlich lohnt im Vergleich zu den möglicherweise erzielbaren Erträgen, wird sich zeigen; ebenso, ob unter den «geschützten» Umständen immer noch ein großes Bedürfnis seitens des Marktes bestehen wird. Wir glauben, dass diejenigen Unternehmen, die die Blockchain aus Sicht der Bedürfnisse ihrer Kundennutzen, erfolgreich sein werden.
Am Anfang der Reise
Das grundsätzlich große Potenzial der Blockchain-Technologiewurde schon vielfach beschrieben. Damit die Vereinbarkeit von Blockchain und Compliance gegeben ist, istjedoch die Einhaltung gemeinsamer Standards in einem rechtlichen Rahmenabkommen notwendig. Solange die Mehrheit der Akteure eine Blockchain als bloße Technologie und nicht als gemeinsames Netzwerk sieht, werden sich keine Standards zu den gesellschaftlichen Sorgfaltspflichten entwickeln. Noch sind die Anwendungen der Blockchain-Technologie und damit eigentlich auch die Kryptowährungen weiterhin auf dem Weg, sich von einer Randerscheinung in die gesellschaftliche Normalität zu bewegen. Wünschenswert ist insbesondere, dass die gesellschaftlich verankerten «Sorgfaltspflichten» auch in der Blockchain gewährleistet werden. Damit eine interoperable Lösung mit weniger Reibungsverlust und Kompromissen möglich wird, empfiehlt sich eine enge Zusammenarbeit der Vorreiter dieser Entwicklung mit den Regulierungsbehörden. Dabei sollte das Know-how im Bereich Blockchain, Kryptowährung, Recht und Compliance effizient und effektiv vereint werden. Mit vereinter Expertise und Kraft könnten valide Lösungen entwickelt werden.
i Eine «Fork» ist eine technische, bewusst herbeigeführte Spaltung der Blockchain. Je nach Philosophie arbeitet danach ein Teil der «Miner» auf Basis der ersten Version, um den nächsten Block zu finden; der Rest auf Basis der zweiten. In der Blockchain landet stets der Block, der die meisten Nachfolger aufweist. Somit sind zunächst beide Blockchains gültig. Wenn sich die Mehrheit der Miner infolge auf die Richtigkeit einer Version der Blockchain-Kette einigt, stirbt die zweite Version ab und wird zu einem sogenannten «Stale Block». Einigen sich die Miner nicht, gibt es plötzlich zwei parallele Blockchain-Welten, wie dies z.B. bei «Ethereum» mit Ethereum und Ethereum Classic nach dem «DAO-Hack» passiert ist.
Prospire is pleased to announce a strategic partnership with Synpulse Management Consulting and the merger with Arevos, a former Synpulse subsidiary. Through the merger, Prospire and Arevos bundle their know-how in advising on business development, corporate strategy and product design under one brand.
With the partnership, both Prospire and Synpulse are expanding their respective service portfolios with each other’s expertise to offer a broader range of services to jointly served customers in a constantly changing market and competitive environment.
The expanded Prospire AG complements Synpulse' portfolio with advice in corporate strategy, business development and product design. Synpulse, in turn, enlarges the common expertise in project management, business process engineering and technology with its competence centers «Digital Banking», «Operational Excellence» and «Regulatory & Compliance».
«The partnership with Prospire is another perfect match in the Synpulse growth plan. With Prospire we broaden our capabilities in strategy and product management advisory and access new customer segments. The fact that the company is owned by Synpulse alumni makes the long-established collaboration extremely effective», says Raphael Jung, Managing Partner at Synpulse.
«The merger with Prospire, our boutique approach plus our cooperation with Synpulse as a strong partner will accelerate our plans to enter new customer segments. This puts us on the right track for successful growth in strategy consulting for financial service providers, technology providers and start-ups», says Dennis Flad, Managing Director of Arevos and future partner of Prospire.
«The merger with Arevos paired with the closer Synpulse collaboration is the perfect opportunity to grow Prospire’s franchise and reach with top notch people and expertise. I’m looking forward to our joint ventures», says Nikolaus Guido, founder of Prospire.
Arevos will merge with Prospire and operate under a single entity and brand going forward. The new company will be owned by Nikolaus Guido, founder of Prospire and alumni of McKinsey and Synpulse, Dennis Flad, former Managing Director of Arevos and Andreas Mentel, entrepreneur and founding partner of Synpulse.
The merger of Arevos with Prospire will be completed by January 1st, 2019. The new company will be headquartered in Zurich.
Prospire AG is an owner-managed consulting boutique that works closely with a specialized network to reposition companies in changing markets and evolving competitive conditions. It supports its customers on an international level, from business strategy to tailor-made implementation. Among the clients are mainly companies from the financial industry. Other clients include telecommunications, healthcare, automotive, transportation, logistics, IT services and commodity trading.
The former Arevos AG specialized in advisory on product strategy, product delivery as well as business development. Its clients included financial service providers, corporate treasurers, technology providers and fintechs. Areas of practice were blockchain technology, trade finance, payments, cash management as well as joined collaboration with fintechs.
Synpulse is an internationally established management consulting company and a valued partner of many of the world’s largest financial services companies. Since its formation in 1996, Synpulse has supported banks and insurance companies along the entire value chain, from the development of concepts and their operational realization through to technical implementation and handover. Synpulse stands out due to its profound industry know-how as well as the passion and commitment of its more than 350 employees. Synpulse is represented with offices in Zurich, Geneva, Dusseldorf, Frankfurt, Bratislava, Vienna, Singapore, Hong Kong, New York, and London.
Trade finance with its manual, cumbersome and often expensive processes, provides a major field for adopting emerging distributed ledger technologies (DLT). Not surprisingly this has led to various market initiatives and consortia over the last years. Yet, an early adoption of any of these concepts presents substantial operational and financial risks for any party involved. Therefore, banks must decide on a suitable adoption strategy for DLT, first.
Worldwide trade finance is a multi-billion-dollar market for banks and expected to grow steadily over the next years. However, procedures of executing open account and documentary trade finance transactions still involve long winding manual efforts and paper-based processes. Therefore, the trade finance market in particular qualifies for technological innovation, making its processes easier, faster and cheaper. It is currently evaluated whether the recent emergence of blockchain and distributed ledger technology (DLT) could lead to some pain relief and additional profits in the trade finance industry. This evaluation is undertaken by various consortia (joint programs of participants such as banks, exporters, importers, ports, shipping companies, etc.) along different parts of the trade value chain. Based on our market assessment, these consortia still operate in the experimental stage: First proof of concepts were presented in 2016 and 2017, initial pilot transactions have been successfully completed in 2018 and some consortia target a productive state as early as 2019. To attain a first mover advantage these consortia often race each other to reach the productive state as fast as possible, set standards for the industry, and position themselves as innovation leaders.
Market radar for trade finance consortia
With new projects being announced every month, the plethora of ongoing market initiatives is difficult to oversee. Hence, we have developed our market radar, it categorizes the most prominent trade financing initiatives with strong bank participation and compares them based on their product emphasis. The market radar features four consortia categories, focusing on:
The market radar compares its use cases along the expected transaction amounts (Figure 1 provides a high-level overview on the compared consortia.).
In terms of progress, we see some consortia with early success stories reported whereas others already appear to vanish. The overall outcome of the race to success is still open. Major investments by banks are still required in order to transform these concepts from first test transactions into production state and marketable offerings.
Challenges for banks
Besides the required technical development to make productive use of DLT for trade finance, banks face additional challenges in adapting the technology to their current business model. At this level of maturity, the technology adoption requires high investments whereas it is yet unclear if such an adoption will solely lead to cost reduction or will also open up new sources of income. Only a solution that reaches a sufficient range and number of participants can replace the existing processes and procedures with the new technology. Currently there is no standardized solution on the market, nor are the ongoing initiatives and platforms known to be in any way interoperable. . It is likely that the battle for first mover advantage will quickly result in first productive solutions, which may create a considerable network effect thus attracting numerous early adopters. With every additional network participant and successful executed trade on a DLT solution the respective consortium may strive for becoming the new industry standard. While a high degree of standardization of the trade finance sector is desired by end customers, it comes with various disadvantages for some of the service providing banks. With greater transparency of the services provided and fewer opportunities for differentiation (e.g. correspondent banking coverage, service levels, handling speed etc.), competition could be driven solely by price, which could ultimately drive some banks out of the trade finance market. Furthermore, as DLT are not yet part of the daily business of bank’s trade finance departments it will be a challenge for the employees to get involved in such a new initiative next to their daily tasks. Even in technologically advanced banks, DLT topics are often driven by the more tech savvy innovation and IT teams. In many cases fueled by innovation hype, marketing opportunities or simple fear of missing out. Trade finance teams often face other and more immediate challenges such as increased regulation, cost saving targets and a growing competitive landscape. On top of that, it is very time consuming for banks to acquire the required knowledge about DLT to proactively participate in the definition of future industry standards. Banks therefore need to develop strategies on how to deal with this growing trend.
Adoption approaches for banks
We have identified the following strategies:
This strategy simply ignores all efforts in DLT for trade finance. Banks stick to their current business model and wait without joining any consortium that develops a DLT based solution. While this is certainly the cheapest of the identified strategies, it misses out on any opportunity to ramp-up the bank’s knowledge and skill on this topic and access gains from new technology adoption.
In this case banks do not join a consortium due to the challenges discussed. Yet they actively observe the market to keep abreast of current developments in this field and to become one of the early movers. Thus, they can detect additional successful test transactions or production announcements at an early stage. Moreover, direct activities of competitors are monitored in order to not fall behind in competition whenever the other banks move towards DLT adoption. While this strategy involves minimal efforts, it also lacks on the build-up of internal know-how and makes implementation difficult, while benefits of an early adoption should remain.
The third strategic option advises banks to join an existing consortium. By evaluating in advance which consortium is developing a relevant use case, the strategic fit of consortium and bank, the expected benefits for the bank and the value that a bank can add to the consortium, banks thoroughly assess their strategic roadmap to DLT adoption. This strategy demands banks to actively invest and participate in testing the new technology and defining future business models as well as industry standards.
Last but not least, we see a strategic option for banks to create their own consortium, find players along their value chain, secure a technology provider and partner with their most important clients of their trade finance business. By leading this initiative and participating in the race to build a new solution, they might become the future industry standard. This option is surely the most costly and risky one, but offers banks the greatest potential for exploiting and defining new business opportunities.
Finding the right approach
Banks need to asses which of the proposed strategic options are best suited to their situation and risk appetite. The assessment must take the bank’s own growth strategy into account as well as customer requirements, product range and international presence. Please refer to figure 2 for other advantages and disadvantages of the discussed approaches.
The assessment criteria are:
Conclusion & recommendation
Banks are required to assess their current situation along with their view on DLT and blockchain potential and strategic fit for adopting this technology. Banks should create scenarios to start an ideation process of possible outcomes and impact of the new technology on their operating model. As a basis for a profound ideation phase we recommend an initial enablement and education session to develop DLT and consortia know-how within the organization.
Please get in touch with us to discuss the right approach for your organization.
Next month, the Payment Service Directive 2 (PSD2) by the European Commission enters into force. In addition, the European Commission and the European Banking Association (EBA) published the new Regulatory Technical Standards (RTS), which – after it has been approved by the European Parliament and the European Commission – has to be implemented by September 2019. How do the PSD2 and RTS impact a bank’s product portfolio and where will they change the current rules of the game in the payments and cash management market?
Authors: Dennis Flad | Damien Taets van Amerongen
On 13 January 2018, the PSD2 officially enters into force in the member states of the European Union. The European Economic Area countries follow with a delay of nine months. There are still many different interpretations of the PSD2. These range from a complete denial in terms of relevance up to a doom and gloom perspective on one’s bank business model. Which one is the more realistic view and what is important to consider in order to understand the PSD2?
More than just “Open Banking”
The PSD2 is viewed by many as an extension of the previous PSD with the additional requirement of the Open Banking interface for so-called Payment Initiation Service Provider (PISP) and Account Information Service Provider (AISP). This perception however does not fully grasp the PSD2 as it has several further objectives:
The PSD2 has extensive requirements with regards to fee transparency and information for consumers. The costs for a payment should be transparently disclosed and be easily understandable for bank customers. In doing so, the Commission indirectly expresses its displeasure with the current opacity in fee structures. By requiring customers to confirm all fees before concluding a contract and after each transaction, the Commission aims at facilitating price comparisons between service providers and thus increasing market efficiency. Banks with complex fee structures are therefore well advised to fundamentally rethink their pricing models. Another issue is the strengthening of consumer rights. With the PSD2, comprehensive obligations for risk and fraud monitoring are imposed on banks. In addition, payment service providers are ultimately liable in the event of fraud. If a customer denies having authorized a payment, the bank must be in the position to prove that it has authenticated the customer correctly, that the transaction has been properly processed and that there have not been any technical errors in their systems. Concerning these liability and monitoring rules, the PSD2 makes no distinction between electronic and non-electronic payment channels. This means that payment orders, which are given in person or via phone, post, fax or email, must be similarly checked. While the PSD2 mandates strong client authentication (SCA) for orders over electronic and remote channels (e.g. email), a bank can choose a risk-based approach for traditional channels. This means that it can do without testing two independent identification features. However, in the case of fraud, it must compensate the customer for the wrongly paid amount.
Strong user authentication across all channels?
This raises the question as to whether banks should not apply SCA comprehensively across all channels. In doing so, a customer is authenticated by means of at least two independent identification features, which may be something the customer knows (e.g. password), something the customer has (e.g. token device), or something the customer is (e.g. biometric identification). The rules on transparency, risk and fraud liability will come into force on 13 January 2018. They apply to all accounts that can be used for payment transactions, regardless of whether they belong to the retail, corporate or private customer business. The PSD2 does not differentiate between bank types.
Open interfaces nationwide from 2019
The PSD2 also includes rules that oblige banks to meet certain technical requirements:
These requirements are explained in detail in the RTS of the EBA. The RTS does not define the technical standards per se. Instead, it explains what the standards that the national and international standardization bodies create must fulfill. In principle, each bank is free which standards it wants to apply if they have been issued by a recognized body. The RTS are complementary to the PSD2 and must be implemented by Payment Service Providers within 18 months of their entry into force. It is important to note that a shorter timetable applies to the provision of open interfaces, as banks must publish their specifications and provide a testing platform at least six months before the launch of the new interface. Again, the PSD2 makes no differentiation between different types of banks. The conditions apply to all banks with payment capable accounts.
Open interfaces as opportunities for banks
With open interfaces available, technology providers and third-party banks can initiate payment transactions and obtain account information. This is fundamentally changing multi-banking as we know it today. Instead of using e.g. SWIFT, it will now be possible to manage one’s accounts across various banks via open interfaces. Since transactions via the open interfaces must be offered at the same pricing as transactions through online banking, multi-banking will become massively cheaper and more attractive for internationally active companies and private individuals. SWIFT is not the only intermediary affected by the new open interface competition. In addition to the free interfaces under the PSD2, banks could introduce fee-based interfaces, for example for debit card issuers. Instead of going through schemes such as Mastercard or Visa, authorization requests and payments could be initiated via direct API interfaces by the card issuer. The difference to the mandatory interface that a bank under the PSD2 must offer for so-called “card-issuing payment service providers” (CIPSP) and such a debit card interface is marginal. These are just two examples where open interfaces can change the business model sustainably and not only posing threats to individual institutions. Open interfaces can also be used for a broader distribution of banking, credit and investment products. Of course, there are also negative aspects. The competition between banks, financial intermediaries and technology providers will intensify. Also, customers will increasingly adopt traditional functions of banks themselves. Already today, many companies operate professional in-house banking, which hardly differs from the services offered by a traditional bank. It therefore pays off to rethink and re-evaluate the product strategy and the product portfolio and to start adapting to a new world with various open API interfaces, regardless of the current business model applied.
Banks are slowly losing the primary banking relationship to their clients. More and more non-banks and payment service provider are taking over market shares through innovation, competitive prices and high quality service.
Authors: Dennis Flad | Moritz Falck
Before the age of the internet and modern digital technology, banks had the primary financial relationship to their clients. All financial needs were covered by the traditional house bank, whether it was current or saving accounts, payment transactions, mortgages or portfolio management. For quite some time, this exclusive ‘access’ has been under pressure. Several non-banks and special service providers are spreading out in various areas of banking: Apple, Google or PayPal offer new opportunities in payment transactions; internet banks provide current accounts at no charge; or automated investment algorithms such as WealthFront, manage assets in an «autopilot-mode». What does the gradual loss of client touchpoints mean for the bank and how can this be seen in the market?
Why Does the Main Banking Relationship Dissipate?
Ostensibly, internet and digitalization have softened up the formerly exclusive relation between bank and client. That is certainly an accurate statement, but it doesn’t exactly capture the essence of the issue. The classic banking model is based on the unique position of the bank as an intermediary between the supply and demand of financial services. That is the main task of a bank. Whether this means bringing deposits together with loans, debiting and crediting payment accounts or purchasing and selling securities. In all cases, banks ensure that supply and demand come together. In the broadest sense, the bank is therefore a marketplace. As finances are a very important «good», the bank must satisfy high standards of reliability and trustworthiness. This she ensures through compliance with regulation, business specialization and the development of a long-standing reputation. However, internet and digitalization challenge this classic model. Digital technologies offer standardized platforms where the forces behind supply and demand can interact without time delay and the physical presence of involved parties. Furthermore, prices and costs are often significantly lower. Due to the high adaptability of digital technologies and the ongoing improvement of security measures it has also become possible for alternative financial intermediaries to win customers’ trust. If these companies can also offer products and services simpler, faster and at lower costs than their traditional banking counterparts, then the client has little incentive to continue doing business only with his house bank. Bringing together supply and demand for financial services is no longer an exclusive «service». Therefore the traditional bank is losing market shares.
Payment Services Directive 2 (PSD2) and its Impact
In November 2015, the EU Council decided to introduce PSD2. The EU wants to boost innovation in payment services and also enhance consumer rights. Extensive information duties, cost transparency, «two-factor» client authentication and the reassignment of liabilities are all important components of PSD2. The access to account information and payment processing infrastructure by third parties is arguably the major novelty. Ultimately, the key component of PSD2 is to create access points to client accounts for payment initiation and aggregation of bank account data. Banks must provide third parties with unhindered access that is also free of charge. Third parties can implement new multi-banking compatible payment methods and financial services, such as personal finance managers for private clients or cross-border cash management solutions for SMEs. PSD2 distinguishes two types of third parties. First, the AISP (Account Information Service Provider), who can obtain account information. Second, the PISP (Payment Initiation Service Providers) who can use the access to financial correspondence data to develop new payment innovations. For the bank this does not only mean greater competition, but also higher infrastructure costs. It must provide the aforementioned account and financial data through an application programming interface (API) platform. This entails some substantial expenses and will require an own implementation project. As a result of PSD2, bank account, customer and seller will be even more interconnected. Supply and demand therefore move closer than ever before. Importantly, all of this takes place in the supervised EU and EEA environment, thus guaranteeing a high degree of legal security and consumer protection.
From the Account Information Service Provider to the Market Place
Although the many implications of PSD2 still need to be understood, more and more concrete business possibilities are emerging. PSD2 for example enables account information service providers to provide customers with a single portal view of several accounts and portfolios. In return, the AISP gets full disclosure of the respective bank’s fee structure as well as valuable insights into the customer’s purchasing behavior and financial situation. Data that can be used to create comparison portals or new cross-selling channels and market places. We’ve already witnessed a similar development in the e-commerce business. Originally, small and peripheral portals such as Comparis have become important brokers for cars, consumer goods, mortgages or insurance policies, including the appropriate credit rating procedures. An interesting aspect in this regard is the introduction of the new data protection law (GDPR). It remains to be seen, how the business models under PSD2 will be compatible with the provisions of GDPR. PSD2 is likely to heavily affect the actual payments business as well. Open access for payment initiation service providers promotes payment options, based on the principle of transfer. This has an impact on the classic card business, above all the debit card business. Thanks to the open interfaces, parallel systems to current clearing houses can be created quickly and are easily fed with liquidity (e.g. PayPal). Payments between buyer and seller are thereby be processed in real time, without the involvement of a bank at all. As a result, margin loss and customer churn increase.
Strategies for the New World
Banks can choose between two strategies when dealing with PSD2. They can be passive and dutifully implement the legal requirements, namely in cost transparency, consumer protection, strong authentication as well as open banking interfaces. Partner companies of Synpulse and Arevos offer modular and flexible middleware solutions in this context that make the implementation of PSD2 efficient and easy. This kind of strategy can be adequate depending on the customer base and core business of the bank. The majority of banks should however should consider an active strategy. Banks can use PSD2 as an opportunity to offer private and corporate customers better multi-banking services – a potentially lucrative revenue source. Banks do not always have to provide such service by themselves. They can also opt to cooperate with innovative FinTechs. These FinTechs might also be interested in partnership models as they face competition from the «tech giants» out of Silicon Valley. With Arevos, Synpulse has created a specialized boutique consultancy in the field of payments with experienced product managers. This allows us to support our clients through innovative collaborations along the entire payments value chain.
After thirty years of successful operation, the Swiss Interbank Clearing Solution has been renewed. The Swiss financial industry also uses this event to migrate on international formats and to harmonize payment and e-invoicing solutions between banks and Postfinance. However, what started as a harmonization project was overtaken by the market dynamics in the meantime. New digital solutions challenge the initiatives. The harmonization strategy must turn into a comprehensive digitalization strategy that affects the product portfolios of all banks. Otherwise, the banks emerge as losers in the “battle of the portals”.
The future has been overtaken by the future
Every powerful and market critical IT platform like the Swiss Interbank Clearing (SIC) must be renewed on a regular basis. Within the framework of this large-scale project the Swiss banks and Postfinance have also discussed, whether and where the payment systems can be harmonized and standardized. Thereof a comprehensive program was established, which provides:
In recent years the world has changed dramatically. New solutions and concepts have emerged along the value chain of payment transactions. Today the cloud-based accounting system offers digital invoicing and presentation. The invoice details are uploaded on protected Internet portals. Then the invoice recipient receives a personal email with a so-called Smart link to his account and/or invoice on the portal. Moreover, such portals also simplify the interaction between the biller and his external accountant responsible for the bookkeeping, especially in SME. Today such invoices are still paid via classical transfer in online banking (cut and paste). Some banks are planning or already have direct application programming interfaces (API) in their online banking – a technical approach which seems to be becoming a standard with the introduction of the EU Payment Service Directive II (PSD2). Mobile payment solutions such as Twint can probably also be used in the future for the invoice payment. In this case, the consumer scans a QR code with the payment details presented to him in the portal and authorizes the payment in his mobile payment app. If the app is directly attached to the consumer’s bank account, the difference in a classic mobile banking transfer is marginal. The new Electronic Bill Presentment and Payment (EBPP) solutions have a significant impact on existing banking service such as e-invoicing, mobile banking and e-banking interfaces. For example, if I present all my invoices on a portal of Swisscom or Swiss Post and get them archived, why would you still need e-banking? When I can sign all my bills directly on the portals of the invoicing party and deliver them via API, why do I need an online banking? If I have deposited the credentials of my mobile payment app on the accounting portal – so-called Card on File process – why do you need a direct debit procedure? And the most important question: if alternative solutions deduct volumes from the existing community works like e-billing or direct debiting, how do we still bear the fixed costs of these existing solutions?
«Old wine in new bottles» is no longer enough
Swiss banks and Postfinance are fundamentally reconsiding their existing solutions in EBPP. Only a renewal and harmonization of traditional solutions is not enough. New solutions are needed in order not only to promote the digitalisation of payment transactions, but also to process it. The replacement of the payment slips with the QR-bill is an important step. It forces the billers and consumers to deal with digital solutions of the banks and to set aside old behavioral patterns in the invoicing and payment. The Mobile Banking Apps like QR code scanners obtain a central role here. With the introduction of the QR-invoice, every biller must also change his processes. This gives an opportunity to discuss between bank and biller, if they do not want to transpose their entire invoicing process on digital channels. A combination of e-billing and email invoicing appears here most useful. The e-bill solution is currently being renewed within the project LEON of SIX Paynet. In addition to the creation of a common e-bill portal, which the banks can integrate in their online banking, the registration processes for e-invoicing will be also simplified. In the future, consumers will also be able to register for e-invoices directly via the billers and not only indirectly in the bank’s online banking as it is done today. Thanks to this new product feature the invoicee can be fully converted to digital billing: e-bills for the bank customers, who have registered themselves for this service at their bank, and email invoices for all customers, who have not yet registered for e-bills.
«Battle of the Portals» – Who takes the lead position in digitization?
Every Swiss bank faces an important question: should they use the introduction of the QR-bills and the LEON project to actively promote the digitization in the field of billing or should the limited resources be used for other initiatives? The digitalization is taking place in invoicing. Cost savings for the email account are too attractive for the billers, so they will sooner or later convert. In order for banking solutions to remain competitive in Electronic Bill Presentment and Payment, they need not only to increase the simplicity and «convenience» for the bill recipient, but also the volumes of transactions to realize economies of scale and offer lower costs. If the e-billing costs for billers do not fall to a price level of email invoices, the solution is not attractive. Banks should also be aware that the competitors of e-bill are not only startups like PEAX, but also established brands such as the Swiss Post (see e-post offering), Swisscom (see Docsafe) or software companies such as Abacus (see Abaninja).
Don’t underestimate the impact and cots
The introduction of the QR-bill and the new e-billing solution of the Six Paynet should be taken as a chance to support the digitalization, increase the customer retention and win the “battle of portals”. But even if a bank decides to take a more passive approach, they should not underestimate the costs of the upcoming migration. With the QR-bill comes a new procedure, which relates to the front- and backend processes and applications. Scanning and processing lines for paper-based payment transactions must be adapted and tested. The processes at the customer interfaces (e.g. Mobile Banking App) must be changed. And in the end, a comprehensive information campaign is needed for billers and bill recipients. The clients need to be motivated to change their traditional behavior fundamentally and to digitize of their billing and payment processes. This is a challenging and tricky campaign. Arevos is a specialized boutique consultancy of Synpulse for product management and business development in Fintech and innovation field. Arevos gives advice to the banks on the forthcoming migrations. Synpulse and Arevos also support the introduction of the QR-billing or the new collaborative EBPP solutions with impact analysis, implementation support in the front- and backend systems and in the migration of customers to the new solutions.
Over the last few years, Blockchain and distributed ledgers have become the new buzzwords accompanied with the idea that it will change the world for good since it will help to reduce fraud risk, enable better compliance and ensure faster transaction finalization. But what is the real impact of these buzzwords on us? While it is undisputed that these topics create significant new opportunities for everyone involved, distinguishing current reality from hype remains a battle for most of us and one on which we seek to shed some light.
The Importance of Trust
Trust forms the foundation of our society and can be defined as «assured reliance on the character, ability, strength, or truth of someone or something» or simply put «one in which confidence is placed». Whether you are crossing the road, flying in a plane or paying a bill, you trust the people and systems to act and behave as you expect them to, without thinking too much about it. Trust is, however, not always easily established or maintained and additional measures are needed to strengthen confidence in a specific system, e.g. the police and legal systems to maintain law. If money or assets are involved, trust becomes even more difficult to obtain, especially in transactions outside our own society or legal framework. For centuries, banks have stepped into this gap and have been responsible for not only providing trust in the global financial system, but also building trust with the participants in the system. While people may not know or trust the other participant in a transaction, they will still often complete the transaction if they trust the bank. However, numerous scandals involving banks have harmed the trust not only of consumers and corporates in the banking system, but also of the regulators and politicians. The establishment of new peer-to-peer services mainly in the areas of lending, foreign exchange and payments are as much a result of a more digitalized and interconnected world as a consequence of the banking trust crisis.
The vision of Bitcoin, for example, was to deliver a currency to transact on a peer-to-peer basis, globally, without a central party like banks being involved. The digital currency itself was not the revolutionary part, it was the cryptographic protocol that allowed for each unique transaction to be externally and automatically validated by multiple independent notaries (in Bitcoin terminology so-called “Miners”) that was of most interest to the world. Cryptography validates transactions prior to execution and increases the trustworthiness of transactions for all parties involved, thereby ensuring that transactions are unique, true, performed by the real owners, irrevocable and as a consequence of these criteria, final. Each transaction is locked on a decentralized ledger called «the blockchain», which eliminates the risk of failure in a single location, since all the ledgers are mirrors of each other. Changing one ledger would therefore not result in «adjusted» truth, since all ledgers should be consistent at all times. Blockchain is, however, not the only technology and protocol to allow externally validated transactions. Solutions from the Swiss-based company Monetas, or the US-based company Ripple, do not work with blockchain, but follow a similar principle as they are also a cryptographic protocol and external validators verify each transaction. In comparison to the concept of one, multiple stored «blockchain» ledger, these alternative solutions permit transactions between accounts in different private or public ledgers. Apart from allowing interoperability between different networks and central or decentral ledger solutions, one of the reasons for these alternative solutions was to address the perceived risk regarding unauthorized access to sensitive personal data. With localized ledgers, and the Interledger Protocol, better protection of client sensitive data for a transaction can be ensured since it is only stored in controlled locations and the accountability of the data protection is clearly defined.
The security and speed with which transactions are performed using blockchain and cryptography highlighted opportunities for which we are only now starting to see some of the solutions in the proof-of-concept or pilot phase. Only a few solutions are in production and none have yet reached the mass market, including Bitcoin. In banking, these solutions include transforming payments, FX derivatives, securities, and loans, and allowing the decentralized tracking of transaction statuses as in Trade Finance. Outside of banking, solutions currently focus mainly on protecting property rights like verification and history of diamond ownership, decentralized property registers to fight corruption, managing the transfer and settlement of music rights and repositories of digital keys to unlock physical assets (such as bikes, cars, houses). The list of new opportunities seems almost endless. But the solutions have one common aspect: They are all brought to market as a network and based on the collaborative efforts of different parties in the value chain.
Three Key Success Factors for Distributed Ledger Solutions
Fundamentally, blockchain is a technology as much as a network of blockchain participants. Although the technology is decentralized and not operated by a central authority, a blockchain or distributed ledger must follow common standards to operate successfully between the participants. These are relatively simple and can be defined as technical and operative standards. The most important technical standards are those which refer to the standardization of the cryptographic blockchain protocol, validation mechanisms, and the rules to calculate the «source of truth» behind a transaction. Because of the standardization of these technicalities, the solution is scalable, increases trust in the system, and is available to all. Successful networks need not only technical standardization but also operative standards. In simple terms we talk about schemes in which operating standards and obligations between the parties are agreed on a multi-lateral basis. Even Bitcoin is a very simple scheme with clear rules and responsibilities in terms of how a Bitcoin transaction happens. Everybody can participate in Bitcoin, as long as they accept certain rules when a transaction is irrevocable, undisputable, and final. Standards alone are, however, not sufficient to guarantee the success of a network or technology. A successful network can be scaled to the number of its participants. New solutions must be able to be integrated into existing systems with minimal effort. If this is not the case, adoption will be low and participants will instead find alternative technologies and networks based on their legacy systems.
The Reality of Blockchain and Distributed Ledger Solutions
Blockchain and other similar solutions unfortunately still struggle with the three success factors mentioned above. For most solutions, increasing the reach of the solution has also been a challenge, as it can be hard to convince customers to take the risk. While it is fundamental to invest in new solutions and innovation, it can be challenging to build a business case for investment, since it will not immediately increase the customer base, reduce cost, or increase efficiency. Purely cost-saving cases will be difficult to argue as the existing systems will remain productive for a number of years. Defining where to start, who the partners will be and how to build a pilot are the next challenges. Picking the wrong partner may result in an incorrect bet on the future network. It is also important to remember that a pilot program does not address all challenges of a larger roll-out: Customer offerings, contracts and processes need adjustment, existing systems may have to be upgraded and «teething-issues» with new solutions have to be resolved. This is a growing field, so expect that technology solution providers may struggle at times to deliver on implementations if there are several ongoing at the same time.