By Ana Arxer, Global Head of CLM Sales

Kick-Start your remediation and refresh projects as momentum may have slowed due to the impact of COVID-19 to ensure annual targets and compliance with regulatory requirements are met.

KYC remediation and refresh projects can be challenging in any year but as we all know, 2020 is not just “any year”. The global lockdowns that were put in place to deal with the pandemic have tested existing CLM target operating models in ways that were never foreseen or planned for. As well as managing remediation and refresh portfolios, some institutions have also experienced further strain on “bau bandwidth” for client onboarding as the market volatility experienced during COVID-19 has led them to have an increase in client on-boarding volumes not originally anticipated.  With the 4th quarter soon upon us, additional priority will be focused on meeting year end targets and finalising delivery schedule plans for the coming year, 2021. Many CLM teams are also now facing an additional hurdle in having to urgently incorporate extra remediation portfolio volumes into their production schedules due to strategic changes implemented during the pandemic to ensure regulatory compliance is met. Strategic changes over the last several months include moving client portfolios to new operating jurisdictions or consolidating client portfolios into one operating jurisdiction, resulting in the need to update KYC profiles in line with local jurisdictions.

Based on feedback shared by clients during the beginning of the lockdown period, many CLM teams were successful in implementing short term processes and procedures to assist the KYC analysts in working remotely, with the KYC analysts demonstrating how agile and adaptable they can be. Maintaining the level of productivity has been challenging for some as the lockdown phases continued to be extended. The focus is now being directed to transitioning to the “New Norm”, which may be a slow and bumpy journey due to possible renewed COVID-19 outbreaks. As CLM teams take the opportunity to review their target operating models and transition to the “New Norm”, it remains equally important to maintain the priority and urgency in completing the remediation and refresh portfolios due for completion this year as regulatory timeframes and deadlines have not changed.

CLM teams should be focused on meeting their respective deadlines and avoid incurring a knock-on-effect of having their 2020 remediation and refresh portfolios moved out to 2021. The risk of incurring a knock-on effect can lead to a never-ending spiral of remediation projects, negatively impacting the future target operating models being formed as well as the ability to remain compliant with current AML regulations, which in itself may lead to costly fines. To minimise the risks, CLM teams can consider working with a partner who has the capability and capacity to seamlessly implement a remediation project that delivers quality data and can meet the set timelines ensuring the business remains compliant with both its own business standards and global AML regulations.

Learn how Delta Capita’s CLM services can assist in picking up the momentum to meet the set delivery schedules through delivering high quality data via bespoke remediation projects led by senior practitioners and KYC operating teams with domain expertise in KYC/AML

To find out more you can email us at marketing@deltacapita.com or by clicking on the banner below.

Delta Capita By Karan Kapoor, Head of Regulatory Change and Technology

As debates on key CSDR Settlement Discipline issues remain unresolved and the expectations of the delay come closer to realisation, the industry understandably remains in a state of flux. However, regardless of precisely what happens with the timing of the regulation, it is now the time to get more disciplined about settlements, which is strengthened further by the latest ESMA Trends Risks and Vulnerabilities (TVR) report.

The study shows a dramatic surge in the level of settlement fails during the second half of March. According to the report, fails climbed to around 14% for equities and close to 6% for government and corporate bonds.

Although, one can argue that COVID-19 induced volatility and adaptations to work environments have driven, what the study states to be, the most significant rise in European trade settlement fails since 2014. The truth, however, is that these numbers put into sharp focus the longstanding operational and structural issues that have hung over trade settlement processes like a dark cloud for far too long now.

Identifying and remediating the root cause of any settlement delay or failure in time to avoid CSDR consequences wastes on average 4-6 hours of capacity. Market participants, therefore, need to shift their attention away from how to deal with trade fails, towards pre-emptively reducing the number of transactions that are failing to settle through internal efficiency improvement and collaborative approaches.

Achieving the above objective is by no means a straightforward task, as most financial institutions still operate with an inherited legacy technology architecture and highly complex operating models.

Firms should explore solutions that could address the issue of settlement fails that do not require wholesale changes to their existing architecture at unmanageable costs.

In the post CSDR era, every hour will matter when it comes to settlement efficiency, as the luxury of ‘another day’ to resolve a failing trade will not be possible. Increasing the control organisations have over their trade lifecycles and identifying settlement delay or potential failure warning signs on T+0 will give participants a considerable advantage. Detecting and being alerted to transaction event anomalies in real-time will provide impacted teams valuable time to prevent failures before CSDR consequences materialise.

Improving the discipline around internal settlement processes and encouraging counterparts to follow suit through collaboration, incentives or slaps on the wrist where relevant, is where we see the market trending. 

Whether the European Commission confirms the delay of CSDR or not, it will be irrelevant as long as the industry conforms to find a solution to ensure penalties and buy-ins do not occur in the first place.

If you want to discover more about CSDR or want to know how we can help you with your CSDR transformation then click on the banner below or email us at marketing@deltacapita.com.

London, 30th June, 2020: Delta Capita, a global provider of managed services, fintech solutions, and consulting, has launched a client lifecycle management (CLM) platform that enables financial institutions to cut their operational costs by up to 40%.

Technology and operating costs typically run into the millions of dollars every year and banks have traditionally deployed thousands of people across multiple locations to carry out Know Your Customer (KYC) tasks. Using advanced AI/machine learning tools, Delta Capita’s CLM platform, Karbon, speeds up the process of gathering information and decision making from days to minutes.

Karbon provides automated sourcing and aggregation of client information with ongoing monitoring (enabling perpetual KYC). This capability combined with its configurable workflow, rules, screening and reporting, ensures that AML prevention is significantly enhanced.

Commenting on the launch of Karbon, Gary McClure, former HSBC executive now Head of Delta Capita’s CLM business said: “Until now, a typical  bank analyst has spent far too much time gathering information on the suitability of current and potential clients.”

“Our new Karbon platform structures data in a way that means analysts can focus their efforts on carrying out detailed due diligence on company data, adding real value to the analysis, instead of spending much of their time inputting data into a system.”

The CLM managed service and Karbon solution is part of Delta Capita’s strategic managed services strategic suite of offerings including Structured Products, Pricing & Risk and Post Trade Services.

Joe Channer, Chief Executive Officer at Delta Capita, commented: Following Delta Capita’s success in bringing to market several recognised industry managed service solutions, I am delighted at the launch of Karbon, which reinforces our drive to provide innovative capital markets technology, enabling utility efficiencies and cost mutualisation.”

Delta Capita Group recently secured a $150m investment from Prytek Holdings, enabling the firm to further expand as one of Europe’s leading service providers and fintech hubs.

Andrey Yashunsky, Managing partner of Prytek Investment Holdings, added: “We are very pleased to be working with Delta Capita, creating innovative technology such as Karbon.”

Karbon is live and operational, supplementing Delta Capita’s existing Client Lifecycle Management (CLM) business. The managed services business involves Delta Capita’s expert practitioners carrying out KYC operations for banks on the Karbon platform, while the remediation service assigns the practitioners work on-site with the banks existing KYC team.

Interested parties can click here to visit the website, where they can watch a short intro video, and request a demo.

How banks can finally reduce their Karbon footprint

By Gary McClure, CEO KYC Business Services

Imagine this, you are a COO of a major bank managing hundreds, sometimes thousands of people globally on Know Your Customer (KYC) and Anti-Money laundering (AML) tasks. Time that could otherwise be spent focusing on the better risk decisions is instead used to run an army of people gathering information on clients, all before inputting the information (often incorrectly) into multiple systems.

For those that work on this daily, it will no doubt sound familiar, but when one actually steps backs and looks at the bigger picture, all KYC is really about is harvesting and inputting data into a system before then deciding on whether or not to on-board or retain a customer. Sounds simple when put in these terms, so why do so many banks still have KYC processes in place that are costing millions in additional tech and operational expenditure per year?

Read more

High-Touch in a Low-Touch Environment Series: Wealth Management – Webinar Summary & Key Takeaways

By Rezwan Shafique – Head of Consulting, UK

The time is ripe for high-touch and low-touch environments to converge for the wealth management sector. On May 20, I had the pleasure of participating on the panel of Delta Capita’s High-Touch in a Low-Touch Environment webinar. Hosted by Delta Capita’s commercial officer, Julian Eyre, I was joined by industry experts Anand Rajan from UBS Wealth Management U.S., Hugh Adlington from Close Brothers Asset Management and Barclays’ James Penny. (Please click here to hear the full recording of the webinar).

Julian did a great job of chairing the panel. As I expected, the panelists shared similar views about convergence between high-touch, low-touch and the future of digital client services in the wealth management industry.  We discussed strategies to reduce costs and increase revenues in a wider digital engagement context. We also pondered what tools are missing from our current portfolios to bridge the gap between low-touch and high-touch client engagement, and the roles of mobile, machine learning and AI. Furthermore, we talked about how the recent Covid-19 lockdown affected our client engagements and we introduced our digital client engagement services.

Following are some of my takeaways, with credit to my friends and colleagues’ insights.

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London 19 May 2020 – Delta Capita, the international business & technology consulting and managed services firm, today announced that it has extended its collaboration with The Depository Trust & Clearing Corporation (DTCC), the premier market infrastructure for the global financial services industry, to help market participants meet their Securities Financing Transactions Regulation (SFTR) trade reporting requirements. Through this collaboration, clients of DTCC’s Global Trade Repository (GTR) service for SFTR will be able to directly leverage Delta Capita’s buy-side data test pack, streamlining the testing process for DTCC’s GTR users to promote readiness for the forthcoming mandate.

The Delta Capita industry standard test pack, developed with a consortium of banks and agent lenders, is now available for asset managers, hedge funds and other buy-side firms for their SFTR testing. Clients of DTCC’s GTR service who license the test pack will have access to securities financing transactions life-cycle event test scenarios, including the expected results, to help identify issues and accelerate testing ahead of SFTR go live.

The pack comes with an online traceability module – linking SFTR test cases to the regulatory and industry technical standards, European Securities and Markets Authority (ESMA) rules and industry best practice. Firms can also benchmark their testing progress within their peer group.

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London, 27 April 2020 – Delta Capita, the international business & technology consulting and managed services firm, today announces that it will collaborate with UnaVista, London Stock Exchange Group’s regulatory reporting platform, to help firms meet the requirements of SFTR. Through the collaboration UnaVista customers will be able to access Delta Capita’s SFTR data test pack.

As announced in 2019, Delta Capita has created a consortium of sell-side banks to establish a standardised SFTR industry test pack.  SFTR regulation mandates buy-side firms to report SFTR transactions from 12th October 2020, following the postponed go live of the regulation from July 2020.

The Delta Capita industry standard test pack gives firms a comprehensive model of SFTR scenarios, events, reports and validation rules. It’s fully traceable to the RTS / ITS, ESMA rules and best practice. So it’s immediately faster, lower cost and more robust compared with firms doing it for themselves.  The pack includes all the trade and reference data that firms need for testing – plus expected results, so firms can confidently diagnose issues that need fixing. Firms can also benchmark how their testing compares against their peer group.

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The banking industry operating model is broken and needs dramatic reinvention for banks to survive in the longer term.

The clear parallels

As we look at the banking industry operating model today, it looks similar to that of the airline industry in the late 1980s.  The entire business value chain proprietary owned and operated by the airlines themselves, including non-core functions, such as ticketing, luggage handling, ground services and catering etc. This model resulted in little to no recurring investment in the non-core functions that were considered low value, cost centres. In reality, these functions were instead subject to continuous cost challenge without investment. This approach did little for client experience, operational efficiency and risk management. Morale of the staff who had the thankless task of managing and maintaining service continuity in these functions was extremely low (sound familiar?). Further, this model distracted investment and management focus from delivering differentiation in the airline’s core proposition. The outcome – poor quality services, customer dissatisfaction and consistent failure to deliver on a strategic return on equity; and in some cases business failure.

Thankfully with the benefit of hindsight, we can also look to the airline industry for the solution – adoption of a supply chain model.  Integration into an eco-system of specialist providers/strategic business partners providing non-core services and functions. By developing standardised services on multi-tenanted platforms to multiple airlines, these specialist providers were able to achieve utility scale and the platform investment not possible for a single airline operator. In turn, this allowed the airlines to focus on differentiation of proposition. The outcome – improved cost income ratios, better quality support services and enhanced customer experiences, resulting in improved returns on equity.

However, despite these clear lessons, and banking industry executives agreement on the topic, industry body research and advice from leading strategic advisory firms over the years – the industry still remains lethargic and little action has been taken.

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London, 22 March 2020 – Delta Capita Group, a global consulting, solutions and managed services provider, has secured a $50m equity investment from Prytek Holdings and gained access to over $100m of capital for future acquisitions and funding for client transactions. The investment enables Delta Capita to further expand as one of Europe’s leading service providers and fintech technology hubs.

Prytek, the multinational corporation headquartered in Singapore, focuses on technology investments and operations-as-a-service companies, with a $300m diverse portfolio across fintech, edutech, artificial intelligence, cyber security and human resources. Following this transaction, Delta Capita will become the financial services arm of Prytek, bringing a range of innovation and technology to its clients.

Prytek’s Managing Partner, Andrey Yashunsky says, “Delta Capita has a unique combination of experience in Financial Services and technology innovation capability allowing it to offer outstanding managed services and solutions to its clients. Delta Capita will now benefit from access to the 35 innovative technology companies across the Prytek Group.”

Delta Capita’s CEO Joe Channer says, “Access to Prytek’s capital and growing portfolio, provides further leverage for Delta Capita and its growth as one of Europe’s largest fintech solutions and service providers.”

Delta Capita has recently been recognised by the Financial Times as one of the fastest growing businesses for 2020. This announcement follows the recent appointments of a number of high profile industry leaders including:

  • David Long (Board Member)
  • Philip Freeborn (Head of Pricing and Risk Services)
  • Gary McClure (Head of KYC Services) and
  • Gary Bullock (Head of Post Trade Services)

For further details please contact:

  • Prytek: Hedan Orenstein (hedan@ohpr.co.il)
  • Delta Capita: Lindsay Jones (lindsay.jones@deltacapita.com)

London, 9 September 2019 – Delta Capita, the international business and technology consulting and managed services firm, has today announced it is collaborating with The Depository Trust & Clearing Corporation (DTCC), the premier post-trade market infrastructure for the global financial services industry, to help market participants meet their Securities Financing Transactions Regulation (SFTR) trade reporting obligations.

Delta Capita’s banking consortium is creating a standardised SFTR industry test pack. Under this new collaboration, Delta Capita will make the test pack available to DTCC to test its own SFTR matching and reporting service prior to launch. DTCC opened user-acceptance testing with industry vendors on August 30, 2019.

Clients of DTCC’s Global Trade Repository (GTR) service for SFTR – who independently license the consortium’s test pack – will benefit from knowing the service has already been tested, reducing their own testing effort and costs and ensuring readiness for trade reporting. Furthermore, DTCC will make its data transformation services available to Delta Capita’s banking consortium to assist with the creation of trade repository (TR)-ready ISO 20022 SFTR reports.

David Field, head of securities finance practice at Delta Capita, said: “Our test pack will provide full traceability to the European Commission’s regulatory technical standards (RTS), the European Securities and Markets Authority (ESMA)’s guidance, and best practices across repo, sell/buy-back and stock borrow/loan. It will provide users with the test data, test instructions and expected results to conduct their user acceptance testing (UAT), and to test with their counterparts, trading venues, service providers, central counterparties (CCPs), tri-party agents and trade repositories. Consortium members will be able to benchmark their testing run and pass rates to highlight any areas for review and remediation.”

Val Wotton, managing director, product development and strategy, repository & derivatives services (RDS) and collateral management at DTCC, said: “This new collaboration will provide a first-class testing experience for our clients. We are delighted to continue working with Delta Capita to ensure that our clients are well-prepared to meet their SFTR obligations.”

The consortium output can help any firm strengthen their SFTR testing in line with industry leaders. To find out more please see https://deltacapita.com/news/delta-capita-forms-sftr-testing-consortium and contact david.field@deltacapita.com.