Hi there – are you interested in banking projects? Perhaps you want to be a banking project manager, business analyst or tester. Perhaps you want to brush up your knowlwedge of how banking operations.
Well, then I’ll let you in on a secret – one of the best ways to pick up banking knowledge is to do it through banking software. Banking software applications – be they core banking, treasury, reconciliation, trading, collateral monitoring, etc. all teach you a lot about banking. Knowing one or more of these banking suites will greatly enhance your career prospects.
In this article, I’d to share with you my list of the top 5 banking software suites out in the market. Sure, you can find this information on Gartner and other key market research papers. However, those tend to cost you money and can be a bit too academic. What I want to do is to give you a layman and easy-to-understand view of banking software. You can always find out more at the respective vendor’s website.
Banking software is a critical backbone of the banking industry
1. Temenos
Temenos is a Swiss banking software vendor with a huge market share in the banking system space. The Temenos banking software is world re-owned. If you check on the Internet, you will see that many of the top banks around the world make use of Temenos to run their retail, commercial or private banking operations.
The specific product that Temenos is well known for is its core banking system. As at the time of this writing, that product is known as Temenos T24. This is a Java-based platform that is run on a three-tiered web architetcure and has been proven to be scalable to run millions of transactions in banks around the world.
Some of its modules include products (e.g. deposits, loans), customer account management, GL, credit, treasury, etc. These can be configured or customized at various levels to meet a specific bank’s needs.
Find out more about Temenos over here.
Case Study: In my line of work, I was involved in a Temenos T24 implementation for a large global private bank. Temenos T24 is, at its base, a retail core banking system. It does not perform so well “out-of-the-box” for private banking implementations.
The team spent a LOT of time customizing the T24 platform to cater to private banking requirements. Some jurisdictions under the scope of this project managed to go-live, but the launch was seething with issues. It took quite some time for the platform to stabilize.
Having said that, there are other banks out there that have had very successful T24 private banking implementations. The key is to get good requirements upfront, and be relentless in scope control. If you have a good project governance team watching over scope and broadcasting business benefits of the project continuously, it is more likely the project will achieve success. More about scope creep and reasons why projects fail can be found here.
2. Avaloq
The next banking software suite that is prevalent in many banks – especially private banks – is the Avaloq banking system. The Avaloq suite is dedicated to private banks, hence it has modules which cater to portfolio management and performance, derivatives and structured product processing. It is a market leader in the Swiss private banking industry (it beats Temenos in this space) and also increasingly, over in Asia.
Click here to find out more about Avaloq.
3. MarginMan
Banks that do lending of any sort, e.g. mortgages, credit lines, overdrafts, revolving credit – need to have a system to manage and monitor collateral. There are many dedicated systems to do this but one of the best is MarginMan by SS&C Technologies.
A collateral monitoring system like MarginMan will “mark to market” (i.e. tag the current market value) of various assets like equities, bonds, mutual funds or structured products, so that the bank will have a good idea of how much a client’s collateral is worth at any point of time. If the collateral monitoring system is not there, there will be a lot of risk held by the bank – it would not know which secured loans it has on its books could be at risk of not being paid at any time. Find out more about MarginMan by clicking here.
4. Murex The Murex trading system is a powerful engine for tracking trading transactions. Used by banks and asset managers, Murex is the leading platform for trading and treasury.
Its main users are a bank’s traders, who put into trade orders into the system. These are then passed to the middle office (for trade validation) and eventually to the back-office (for trade settlement and reconciliation with counterparties / settlement banks).
Murex is based in France and has a huge market share in Asia. Many of the top banks in Asia simply default to Murex to manage their trading and treasury needs. On top of the base trading transaction engine, Murex also has add-on modules for risk management, collateral monitoring and trading simulation.
Find out more about Murex at this website.
5. SmartStream
SmartStream is a London-based banking software provider that focuses on what is called, in their terms, “Transaction Lifecycle Management (TLM)”. Typically, when a trade is processed in a bank, it goes through trade order capture, validation, settlement and reconciliations.
SmartStream offers solutions which are very strong in the post-trade space, i.e. reconciliations and settlement. For example, if Bank A buys $100,000 worth of Stock A on a particular date (this is stored e.g. in a trading system), there should be an equivalent $100,000 debit in Bank A’s nostro account in its agent bank. SmartStream excels in “reconciling” the cash positions in Bank A’s trading system against its nostro account.
Anywhere where cash or securities positions need to be reconciled, SmartStream can deploy a solution to automate the process. Its objective is to “manage by exceptions”, i.e. only trades which fail to be reconciled by SmartStream are alerted to operations users for manual follow-up and investigation.
Find out more about SmartStream over here.
Case Study: I was once involved in a SmartStream TLM implementation for a global bank in London and also in Singapore. The software basically takes cash balances “feed files” from agent banks and a bank’s internal systems. Then it applies filters and processing business rules (e.g. USD cash balances within the bank’s system and its nostro account must match with a tolerance of USD$5).
Based on these built-in rules, the system can automatically do reconciliation – which is very powerful, because many, many banks out there do reconciliations manually. The accounts which don’t match up result in what are called “nostro breaks” and this type of project aims to minimize these breaks. The specific implementation I was involved in (as a Test Manager) was a huge success in terms of reducing nostro breaks and increasing reconciliation match rates.
Wrapping Up …
I hope the above has helped you understand a lot more about the top 5 banking software suites out there. Banking software skills are in HUGE demand all over the world, and particularly here in Asia where many banks are looking to upgrade or replace their existing systems.
If you invest time to upgrade your skills in these areas – I guarantee that headhunters will be knocking on your door very soon!
That’s all I have for now. Until next time, have fun researching more about banking software!
