EU 260/2012 Regulation affects not only banks, but corporates as well
Raiffeisen Bank Romania, in its continuous efforts to be one step ahead of competition and offer world class services to their business clientele, chose to offer its corporate customers a plug and play solution for ensure compliance to SEPA regulations. Raiffeisen Bank Romania partnered with Allevo to deliver this solution and embarked in an against the clock process to have it promoted live before October 31st 2016.
The bank’s business analysts and legal department agreed that the EU 260/2012 regulation, with its latest updates (Romanian law 231/2015), does not only affect banks in relation to their correspondents, but corporates as well. Thus it becomes mandatory as of October 31st 2016 for corporate customers in non-Euro countries to communicate with banks using the pain 001 message type, a subset of the ISO20022 standard.
Allevo proposed a stand-alone application that the bank would be able to deploy at their corporate customers, to ensure conversion to this standard. This approach ensured minimal impact on the corporate’s existing systems and processes. On the bank’s side, this initiative achieved a unification of communication at business customer level, making one step ahead towards more interoperability, automation and standardization. It also brought more efficiency in day to day business.
The model Allevo chose for creating this application was inspired by FinTP and its existing feature for SEPA compliance. Allevo created an open source application that processes transactions achieves conversion from proprietary or existing formats to the pain 001 format. The GPL v3 distribution model allows banks to offer this white label solution to their corporate customers, without any dependence on the vendor who initially created it, Allevo.
“We chose Allevo, not only based on the history of collaboration, but also because of the open distribution model, which was not provided by other vendors. The GPL v3 licensing frame brought Raiffeisen Bank Romania full control over the source code of the application and the possibility to offer it to as many customers as we want.”, said Laura Cristea, Business Analyst, Raiffeisen Bank Romania.
She added “We conducted a thorough analysis of the impact of the 260/2012 EU Regulation and concluded the regulator makes it mandatory for corporates to send their payment messages to banks using the pain 001 message type. This is why the Raiffeisen Romania team came up with the idea to create this solution that makes a very smooth and non-intrusive transition on the customer side, while ensuring full compliance to the regulatory requirements.”
“It was one of the most interesting projects we have recently worked on, mainly because of the openness to discuss alternatives for finding the best solution that would not only please the bank, but also its corporate customers. We at Allevo are very proud this is another example the business model we practice is fit for this industry. Had we been using a different licensing model, it would have become cumbersome to find a way to offer this type a solution to the customer’s customer, without introducing unnecessary friction and unwelcome costs.”, says Sorina Bera, Allevo CEO.
Allevo went on stage in an Open Theatre session called “The Trendsetter Bank”. A moment to share why we promote the concept of Banking On Open Source Technologies and what the trendsetter bank would look like, a perspective presented by our Business Development Manager, Ioana Guiman.
The session presented ways to help banks to become a role model. In a period full of challenges, the banking industry needs to take advantage of each opportunity and more than ever try to be relevant. With so many technology companies who have the advantage of starting from scratch and who provide new services people find convenient and easy to use, banks need to design better products to win back the preference of consumers and implement new technologies to offer a better experience of the process, while keeping their licenses.
It became crucial to understand and learn the behavior of customers and develop personalized offering over a short period of time. To compete on the market, banks could simplify products and services and focus on user experience from early design stage.
A bank’s top priority is being compliant and being safe. A bank is first and foremost supposed to be compliant to regulation. In this context, it is often being said that FinTechs are disrupting banks. In fact, they are sending a call for collaboration in offering joint services together to people who use them. FinTechs are today only supplementing banking services, they do not compete with them. And this is because FinTechs simply do not have the capability to displace banks. Ideally banks and FinTechs work together to deliver world-class services to people. Ideally banks and FinTechs work together to solve the issue of financial inclusion and thus win new customers, not steal customers from competition.
For Allevo this is a huge opportunity to provide our banking customers excellent automation and integration solutions, allowing banks to focus less on their ‘internal kitchen’, and more on designing attractive services and products for clients. We provide solutions that represent the very DNA of banking. Our proposition is FinTP, a versatile open source solution aimed to lower TCO and provide faster and better compliance.
The role of FinTP is to provide process and flow automation, seamless integration between various internal systems and external market infrastructures or networks such as SWIFT and to provide operators with relevant information in a one-window approach. You cannot set to create a bank without putting together a reliable infrastructure, able to support operations and to evolve at a steady pace. One very important aspect of FinTP is that its open source distribution model allows for banks who use it to contribute updates and improvements to benefit all users.
Banks should spend most on software that brings new customers. You cannot bring new customers just by deploying the best automation tool there is. It is simply not enough, nobody cares about what’s behind the scene. They only begin to care if something goes wrong and their money is inaccessible, so a lot of care and attention to detail needs to be invested in servicing people as best as possible.
Banks should not focus their best resources on back-office infrastructures. It does not mean these extremely important systems have to be neglected, it only means that they don’t bring in any new business. They need to ideally be fully automated, up and running 24/7/365, flexible and scalable. They need to be able to accommodate frequent changes in compliance requirements, industry standard updates, software and hardware upgrades. Last, but not least, they need to be secure, especially in this day and age when attacks happen less in the form of a person with a hoodie pointing a gun at the cashier, but go at a more despicable and devious level, covering their trails and provoking bigger damage than ever before.
We believe that open source is the future of software and that, even if late, banks should embrace it as well. We are looking forward to the day when most banks are doing banking on open source technologies and not only use open source software, but also contribute back to the community. It will be a moment of shifting from we only compete with each other to we can work together to solve common issues where there is no competition between us. . In open source, contributing is an essential concept because if you only use and not contribute back, you do it at the detriment of the community and every entity who does this, does it at the detriment of progress.
Allevo invited Sibos guests to attend a Romanian Wine Tasting event, accompanied by a selection of Swiss cheese. Day three ended in good smiles and good vibes.