Category Archives: fintech

Blockchain specialist Digital Asset gets $50 million to create a global digital ledger

Dollar SignsDistributed ledger maker Digital Asset has announced $50 million funding to further its expansion of blockchain technology for the financial sector.

The start up’s thirteen fintech investment specialist backers included ABN AMRO, Accenture, BNP Paribas, Deutsche Börse Group and JP Morgan. Launched in 2015, Digital Asset is aimed at banks, exchanges, settlement and clearing firms, central securities depositories and financial services provider who need faster, but more secure and accountable electronic financial settlement systems.

Digital Asset founder Blyth Masters, a former JP Morgan banker, told Bloomberg that the technology is a ‘form of database’ technology that could a single ‘common source of the truth’ for every single aspect of every transaction in synch. The single source authoritative record of every stage of a transaction could obviate the need for the ‘questionable trade’ investigations conducted by Wall Street, the city and all global financial institutes.

The inventor claims its Distributed Ledger Technology cuts costs through a combination of business logic apps, privately permissioned networks and a cryptographically secure shared infrastructure. Digital Assets’s software will improve post-trade processing and lower the latency, error rates, risk and capital requirements.

“Our investors are putting their capital to work to prove out and drive global adoption of this technology because they see it will be very significant for their businesses in cost avoidance, capital reduction, risk reduction, regulatory compliance – these are big strategic issues for financial firms today,” said Masters.

Included in the round of investment was a contract to speed up settlement in Australia’s stock market ASX, in return for $10.5 million. “We can now trade equities in 150 microseconds, then it takes two days to settle. That makes no sense,” said Elmer Funke Kupper, chief executive officer of ASX. “This is the first opportunity in 20 years to re-engineer the way the market operates end-to-end. We should not miss that opportunity.”

Digital Asset beat 400 applicants for the contract to remake ASX’s clearing and settlement system.

Earlier this week, R3, a blockchain startup backed by 42 banks, said it successfully simulated trades of digital assets on a private network made up of 11 of its members. Meanwhile is expected to unveil the first securities-trading system using blockchain. Nasdaq has reportedly used the technology to complete and record a private securities transaction for the first time.

FCA aims to clarify fin-tech cloud legality issues

Money cloudA new guide from The Financial Conduct Authority (FCA) has helped clarify some of the legal issues surrounding financial technology and could lead to a boom for cloud service providers catering for the money markets.

The draft guidance briefs readers on the key areas regulated firms must consider when researching into outsourcing to the cloud and covers regulatory issues, data protection and security and business continuity. It also includes a section on how to manage risk and how to ensure regulators have effective access to data.

In the guide the FCA concludes there is “no fundamental reason why cloud services (including public cloud services) cannot be implemented, with appropriate consideration, in a manner that complies with our rules”.

Cloud outsourcing can help improve competition in the financial services sector, the regulator said, because it can “increase the ability” of financial services providers to renew their IT systems more efficiently. Greater choice and innovation in outsourcing should deliver “commensurate benefits for firms and consumers,” says the guide.

The FCA warns about the risks of outsourcing to cloud providers, however, and it briefs financial technology buyers to be vigilant on where data is stored and to check hidden sub-contracting arrangements which may obscure data residence arrangements.

The regulator advises that financial services companies must establish if and how their cloud contracts are governed by UK law and subject to UK court jurisdiction. Even when UK courts do not have jurisdiction financial service companies will have to ensure that their auditor and the FCA have “effective access” to their data, to the cloud provider’s business premises and even to the company’s Human Resource vetting procedures and audit trails. Although the definition of business premises includes head offices, operations and data centres, regulated firms do not have to ensure they have access to all of their cloud provider’s premises.

Writing on the Out-Law blog of law firm Pinsent Masons, fin-tech legal expert John Salmon said the FCA guidance is a “positive recognition that the financial services sector can move ahead with plans to use cloud services as long as appropriate safeguards are put in place.”

The FCA’s guidance is open to consultation until 12 February 2016.

“The consultation period over the next few months will provide a good opportunity for businesses affected to set out clear views about how existing regulation can be addressed in a way that enables cloud products,” said Salmon.

NCR offers cloud control for Android-based ATMs

NCR says Kalpana can nearly halve the time it takes to deploy new services

NCR says Kalpana can nearly halve the time it takes to deploy new services

NCR has announced a radical new approach to ATM network deployment, with a cloud-based enterprise application allowing banks to control and manage thin-client devices running a locked-down version of the Android operating system.

Called Kalpana, the software can result in a 40 per cent reduction in cost of ownership and halves the time it takes to develop and deploy new services, the company claims.

Robert Johnson, global director of software solutions at NCR, said banks are under pressure to improve services and reduce costs and so are “making very careful technical choices”. With increased emphasis on digital mobile and internet banking the ATM channel “has started looking a little disconnected”, he added.

ATM architecture development has been relatively static over the past 10 to 15 years, and while the devices have become more sophisticated in terms of features such as cash deposit and recycling, colour screens and online chat capabilities, essentially they are all customised PCs, creating problems of management, security and cost.

According to Andy Monahan, vice president of software engineering and general manager for Kalpana at NCR, the recent migration from Microsoft Windows XP to Windows 7 “has forced a rethink” and a few years ago the company decided that Monahan’s team at NCR’s Global R&D centre in Dundee, Scotland, should “take a blank sheet of paper and ask ‘what should we build next’”.

“There are two main discussions that we have with CIOs,” says Monahan. “One is whether there a viable alternative to Windows and the second is about the fact that the banks have a fairly clear idea of the IT architecture they want, and they want it to be consistent.”

The choice of operating system was relatively straightforward, he said. “When you look across the spectrum of embedded operating systems Android is pretty standard.”

By having a thin-client Android based device “everything that is customised is removed from the device and taken into the enterprise”, from where it can be configured and managed remotely. It also dramatically improves security. “By removing everything from the ATM thin-client and taking it into the cloud you create a locked-down environment that is very secure: there’s no BIOS and there’s no hard drives, just a secure boot loader that validates the kernel and checks all the certificates,” said Monahan.

By having the management systems in the enterprise software stack it is easier to develop new applications and services alongside other channels such as mobile and internet, ensuring a faster time-to-market and a more consistent customer experience, as well as to simplify management and maintenance tasks.

The first ATM to work in the Kalpana environment is NCR’s new Cx110, which uses Android tablet technology. Cardtronics, the world’s largest retail ATM owner/operator, has already taken delivery of the Kalpana software and Cx110 ATMs and plans to pilot them at locations in the Dallas-Fort Worth area, beginning “in the next few weeks”.