CBA Wins Further Islandsbanki Contract on Global Payment Factory and Forex Automation (STP)

CBA, the Oslo based International banking automation software developer, has signed a new contract with Islandsbanki, Iceland's leading private bank. The latest agreement represents a continuation of an eleven year supplier-customer relationship between the two organisations, and covers the supply of a broad spectrum of new Straight Through Processing (STP) products.

One of the main objectives of this latest contract for additional IBAS components is to further improve Islandsbanki's already impressive STP automation, by involving STP more centrally in the bank's foreign exchange trading activities. Products ordered by Islandsbanki include a Continuous Linked Settlement (CLS) third party solution for FX Spots, Forwards & Swaps, a new application for Forward Rate Agreements, components to further strengthen the STP interface between IBAS and Islandsbanki's front office system Kondor+, and an automatic approval system for FX Spots, Forwards & Swaps.

The automatic approval components and additional interfaces ordered by Islandsbanki build on the deal chain to enable complete STP (without human intervention) to be achieved when the customer enters the deal via Islandsbanki's customer front-end system. If the bank enters the deal on behalf of the customer using its own front end system Kondor+, the STP chain begins after input.

Islandsbanki expects that in this first phase, 85% to 90% of the forex and money market deals will be STP. Apart from increased security, better service and higher speed, the bank has estimated that pushing STP up to this level will reduce the need for staff in this area of the back office by 35% to 40% initially.

CBA's new automatic interfacing components to Islandsbanki's Kondor+ system have given the bank a single front office solution that offers coverage of most products through one system. This in turn is interfaced online with one back office system - IBAS, which can automatically handle and process all the aspects of a deal, including confirmation matching, all relevant types of accounting, messaging and reconciliation. Although such an optimal one to one relationship is rare in the industry, Islandsbanki is committed to the investment to enable the bank to compete effectively and efficiently in today's market.

Both Islandsbanki and CBA regard this latest contract as the continuation of a successful and mutually beneficial partnership. Pall Kolka Isberg, General Director, Project Management Office at Islandsbanki said, 'IBAS has earned its place at the core of the bank; it has provided the best return on investment and consistently provides the best results.'

STP Forum notes that, 'Only 14% of all institutions trading foreign exchange actually "used" STP in 2002.' They go on to advise that 'complete STP - in the sense of pushing a button and getting a trade executed, confirmed and entered into the books - does not exist yet.' However, according to Pall Kolka Isberg, 'with these new components from CBA, Islandsbanki is well on its way to making complete STP a reality.'

Islandsbanki has been a CBA customer bank since 1992, and made the decision to upgrade to IBAS NGS back in 2000. One of the main reasons for the decision was that CBA has the necessary competence and experience the bank deemed necessary to build an advanced banking solution, with the exceptionally high functionality, flexibility and operational stability that would be required by the banking and finance community in the future.

Equally important was that the system, project, operation and support costs were well contained. It was decisive that CBA's Global Payment Factory could guarantee a minimum STP rate of 80%, while Islandsbanki is currently reporting STP rates of around 95%.

Íslansbanki was selected bank of the year in Iceland in 2002 by three well respected global publications; Euromoney, The Banker and Global Finance. The criteria used to make the selection included market position, financial performance, technology, range of products and services, plus others.

CBA's IBAS software comprises a modular suite of products, encompassing functions such as core banking, internet banking, trade finance, accounting systems, loan management, clean payment and forex & money market. Functionality is based on a single core system, which uses a series of integrated common tables, rules and objects, presented within a graphical user interface.

The IBAS Global Payment Factory (IBAS GPF) offers banks Straight Through Processing (STP) quality levels up to 100%. IBAS is a fully component-based and object-oriented software package. It is designed and developed so that it can be implemented in any bank without the need for programming projects to be carried out in order to meet different banks' requirement. The system's functionality can be easily adapted by using parameterisation and rules, without altering the fundamental package philosophy.

CBA is also expert at creating interfaces between IBAS and a bank's other systems. The necessary interfaces are based on international standards.

IBAS is Java based, platform independent, and can integrate with any existing bank operating systems, including Unix and Windows. IBAS uses industry standard SQL databases, and only requires the installation of a Web server to facilitate access the HTML documents. IBAS' Java architecture provides key benefits that include integrated security, easy scalability and extremely low distribution and operating costs.

In developing its latest version of IBAS, CBA started from first principles, by devising a system that uses Java to access relational databases based on International standards such as SWIFT and ISO. This allows banking clients to adopt the IBAS system throughout their organisations, using a single solution for accessing and controlling payment message origination. The databases accessed include country databases, International Bank Account Number (IBAN) codes, currency & fund codes, accounting references and the ISO Data Field Dictionary for messaging.

IBAS can be installed and implemented swiftly to provide a rapid return on investment. Advanced parameterisation capabilities enable specific client requirements to be addressed at low cost, without large development projects. Moreover, system behaviour can easily be adapted to deal with any changes in market conditions, allowing banks to maintain their competitive edge.

IBAS's operational stability and STP message processing rates have already been proven in existing installations, underlined by CBA's willingness to guarantee STP rates using IBAS for outward SWIFT payments - making it the only developer that can offer such a warranty. To enable CBA to achieve this, IBAS automatically corrects the top five offended STP rules, particularly important where there is a growing demand from banks and customers for End-to-End processing as a supplement to STP.

IBAS has consistently been awarded the SWIFTReady Gold Multi-Market label from the introduction of the labels in 1998 to date - six consecutive years. IBAS is currently the only software to hold SWIFTReady Gold in the Multi-Market category.

For more information on IBAS from CBA, visit www.cba.no.