Perspective
10 October 2014
CGI delivers enhanced products and benefits for banks
Jonathan Bell at TXF talks to Kitt Carswell and Frank Tezzi at CGI about the enhanced development of CGI’s platform for trade finance banks.
Jonathan Bell at TXF talks to Kitt Carswell and Frank Tezzi at ~CGI^ about the enhanced development of CGI’s platform for trade finance banks.
TXF: What sort of reception have you had from clients over the past year with the use of CGI Trade360? What feedback have you had and how important is this dialogue?
Frank Tezzi, vice president, trade and supply chain solutions at CGI, says: “One of the things that CGI’s Trade and Supply Chain group is known for is our deep and collaborative relationship with our clients. Our client banks tell us that this is our brand. This is not an accident. We have fostered very close relationships with our client banks individually and also as a community, where we meet in person twice yearly in working committees to discuss trends, agree on service and product direction and to improve every aspect of our day to day interactions. This creates a hugely positive dynamic that both our clients and CGI deeply value.”
In addition to this functional aspect, Tezzi says from a market perspective over the past year they are noticing some distinct changes. He notes: “We have also seen more banks look to leverage the assets they have. Our client banks are looking to see how they can consolidate their structured trade finance, how they can bring their commodity trade finance on to the platform, how they can bring their trade receivables into different groups and overall consolidation across a single solution whether that be for a single market jurisdiction or on a regional basis.” Kitt Carswell, senior offering manager and executive consultant, trade and supply chain solutions at CGI, adds: “Some of the recent results of this collaborative relationship with our clients are web services for mobile platforms and corporate banking portals, integrated payables, and collateral management. We are also beginning the use of automated testing in collaboration with clients.”
Tezzi adds: “What does speak volumes is when our clients renew contracts with us and they not only do that without fail, but seek to bind in those contract extensions for the long term. Our biggest client has just renewed with us till 2022 and this is the third time they have extended with us, BMO has renewed till 2021 and BTMU till 2020. This shows our delivery excellence and operational excellence, and the power driving the product.”
TXF: What has CGI done to enhance and add to the good performance based on that feedback?
Says Tezzi: “In addition to the ideas that CGI brings to the table, CGI takes the collaborative lead with clients to define requirements and design enhancements whether from the community or individual client banks.”
TXF: You have always valued further product development through its usage can you explain the concept of software as a service (SaaS) and the CGI offering?
“Simply put, the Trade360 SaaS delivery model frees the client bank from managing its own trade technology to focus on its business, while CGI takes responsibility for the application, infrastructure, operation and support of the platform on the bank’s behalf. The fee structure is based on transaction volumes, so costs are predictable and aligned with business activity. The SaaS model allows unparalleled speed to market with three functional releases a year delivered directly to production,” explains Tezzi.
TXF: Is this something that is easily adaptable for clients, without having to undergo more of the learning curve?
Tezzi responds: “Providing these releases keeps our clients ahead of the curve relative to the market demands and competitors, but because client banks can choose which new capabilities to use immediately and which they will use at a later time, they only need to climb the learning curve when they are ready.”
TXF: Have you rolled out new functionalities (i.e., integrated payables), add ons or products to the core offering, and how have those been received?
“CGI delivers at least three functional releases a year into production. It is one of the great benefits of the SaaS model that banks no longer need to be concerned with justifying an upgrade project competing with the bank’s other priorities. CGI does everything but the final user acceptance testing (UAT), and then the new release is deployed into production shortly after and available immediately across the client bank’s entire trade footprint,” states Tezzi.
In addition, Carswell adds: “People tend to focus on the parts of the system they are using the most. Testing for everyone happens at the same time. Absorbing the new functionalities within an organisation though tends to be less critical. An institution may choose to absorb a certain part of a new release as it may help them bring in additional revenues, while other parts of the release can be left till they need to use that detail.
“As a result of this and CGI’s close collaboration with its clients, there is a continual evolution of new capabilities that are aligned with the real needs of our clients’ customers and the market in general. Recent examples, as already mentioned, are:
● Web services: Our new web service server exposes the power of our CGI Trade360 Portal’s data and business services to the bank’s mobile or proprietary corporate portal. This allows banks to deliver rich and proven functionality across its customer channels.
● Integrated payables: Building on Trade360’s numerous existing payables products, this solution takes payables to a new level of simplicity for customers and portfolio based straight through processing for banks. Customers provide payables data in one common format to pay invoices on its due date, pay a buyer discounted amount to capture the invoice discount terms or as the result of dynamic discounting or processing under an approved payables finance programme. The latter includes automatic eligibility assessment, supplier finance instructions, the Supplier Portal for the bank to offer invoice purchase and automatic invoice financing.
Due payments for a day are automatically aggregated across the portfolio by payment method and then by supplier (up to 10,000), making the process both efficient for the bank and cost effective for the customer.
● Collateral management: Collateral for commodity finance and structured trade finance has long been managed on spreadsheets, but today’s regulatory environment, emphasis on risk management and desire to grow the business demand a higher degree of deal and portfolio visibility and control. Moving from spreadsheets to a collateral application takes collateral out of a fragmented world of spreadsheets into one with global and realtime visibility across deals, portfolios and geographies. Deeper control and management become possible including automatic market pricing, automatic reconciliation to collateral managers (e.g., warehouse), and automatic ratio and limits calculations, plus much more.”
Carswell adds: “In addition to providing robust functionality and real time visibility, having collateral management on the same integrated platform as the LC and finance products that are already used to support the commodity finance and structured trade finance businesses, will lead to the complete end to end life cycle for these businesses. Our collateral management functionality will go live with clients in December this year.”
TXF: What changes are you seeing in the overall open account frame and requirements of corporates in their dealings with banks, and what is CGI doing to meet the demands of constant evolution in this space?
Tezzi notes: “Open account continues to be the avenue for growth for trade banks, yet so many banks have no open account capability or a collection of standalone applications accumulated tactically to resolve individual customer demand. Either case does not leave the bank in a good position to give customers a seamless experience across trade products or a cost effective way of delivering them. CGI has taken the integrated platform approach to resolving both of these constraints to business growth.”
Adds Carswell: “Rather than developing separate solutions for open account, CGI has been adding open account solutions to its integrated Trade360 global transaction platform since 2007. Now, over 20 of the nearly 50 products supported on the platform are open account solutions, which we categorised as buyer centric payables solutions and seller centric receivables solutions. As such, the Trade360 SaaS integrated platform approach provides banks with a strategic growth path at no additional cost, since the bank is only charged for what it is using.
“There are additional phases for integrated payables and collateral management to add functionality to the portal and link all the relevant products into the end to end commodity finance and structured finance businesses that will be delivered in upcoming releases.
“Our client banks are even able to outsource this or any other Trade360 capability to smaller banks that are not able to deal with open account processing. The native ability of Trade360 to insource ‘out of the box’ makes this an attractive source of revenue for our clients. BMO for example outsources to certain small US banks. And because the overall platform and system is really flexible they can tailor the services they offer themselves.”
Tezzi remarks: “If you look at the market place, there are a number of small banks out there that are trapped they don’t have open account capability and are running outdated applications at a time when their corporates are asking for more. So the question for those small banks is do they buy in new systems or do they outsource. This gives our client banks an advantage as they can market to these institutions the Trade360 integrated capability they already have.”
TXF: Banks are increasingly conscious of the cost of overheads, how are you as a banking technology provider collaborating with the banks to ensure that the costs of their trade operations are kept as low as possible?
Says Tezzi: “Trade operations are costly, which is why from its inception the design of the CGI Trade360 global transaction platform was driven by the concept of creating the most efficient operations possible. Truly global processing, flexible operating models, workflow and imaging, streamlined transaction processing an straight through processing were integral to its business architecture. These guiding principles continue to lead to greater efficiencies and reduced operating costs.
“In addition, the SaaS delivery model provides cost reductions through shared infrastructure and reduces investment for new capabilities.”
TXF: National Bank of Canada has very recently implemented CGI Trade360, what criteria led them to adopt the platform and can you outline how the trials and implementation process takes place with a new customer?
“National Bank of Canada needed to provide a modern front end to its customers, improve the efficiency of its back office and extend its open account business,” states Tezzi.
Carswell states: “Interestingly, National Bank of Canada has a pretty strong open account business. By bringing additional capabilities on board with Trade360 it has allowed the bank to not only upgrade capabilities considerably, but will also permit these businesses to scale in a greater way.” He adds: “CGI has an unblemished record of successful implementations, which we attribute to our implementation methodology that emphasises joint accountability and a collaborative approach to the project work. “An implementation normally begins with a frame workshop to flush out any gaps and to assess the work efforts for configuration and integration, leading to a project plan and prioritised customisations, if any. The project is normally organised into two phases:
● Phase I (2 4 months) includes set up,training, and configuration of bank’s environments;
● Phase II (7 8 months) includes integration, development, and testing (potentially in parallel with phase I).
Equally important is close management attention through executive steering committee and ongoing management meetings.”
TXF: How do you see the further evolution of the CGI Trade360 platform overall?
Carswell concludes: “Trade has become a quickly evolving business that will require continuous evolution of the platform. Some areas that we see in the short term is rapid expansion of mobile, continued progress to deploy corporate portals, higher demand for SWIFT for corporate as a customer channel, further BPO enhancement, platform support for supplier on boarding, expanded buyer/supplier collaboration and multi bank portals to name a few.
“On the broader horizon is the development of efficient sourcing of funds for approved payables finance and other open account financing solutions and the convergence of GTB (global transaction banking) platforms to provide seamless customer experience and efficient technology and operations. Trade finance growth is moving at such a pace that it is likely to outstrip available sources of funding available through traditional bank funding methods unless new avenues are found. As those new funding mechanisms develop within the industry, will we seek to plug into them in keeping with our philosophy of interoperability.”
