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E-Commerce Banking Solutions and FX Direct Internet Trading╚
Royal Bank of Canada Dominion Securities
Category: Finance, Insurance & Real Estate
Nominating Company: Hewlett-Packard Company / Sybase, Inc.
||Advanced internet security techniques support the buying and selling of
foreign currencies over the internet, supporting billions of dollars of
business in the first year of operation.
There are two components to this initiative. The DealSecure╗ connectivity
solution provides high security over the open Internet for large financial
transactions, and has given RBC DS proprietary advantage in
E-Commerce by having a seamless security solution that requires no
involvement from client systems administration staff. The FX Direct
Internet Trading╗ initiative is the first business application to go live within
the DealSecure╗ connectivity umbrella. It allows clients to check prices
and enter large FX deals over the open Internet, and has already allowed
RBC DS to penetrate new and significant markets.
advanced encryption and unique proprietary software, the client does not
need to make adjustments to their own Internet environment. With a
server in England, and a certificate authority and settlement systems in
Toronto, subsecond response time has been attained over the public
Evidence of value:
? The number of deals on
DealSecure╗already constitute 6% of the business, and are growing
? The volume of transactions is over 4 billion dollars
? 13 sales positions are no longer needed and have been
? 1 office has been closed and two offices have
? 3 U.S. tier 2 banks (so far) have decided to use RBC DS
to manage their own FX dealing over FX Direct.
response has been excellent. On this basis, the trading desks across
Canada have been consolidated, a new help desk has been established,
and significant savings have been attained. The percentage of electronic
deals is increasing weekly, and RBC DS is positioned to increase market
share in the coming consolidation among North American providers.
? Has your project helped those it was designed to help?
Yes. In the
old business, clients would frequently phone the desk with requests for
prices. When the price was agreeable , and after the trader checked their
current credit limit and existing outstanding transactions, they would do a
deal over the phone. The business was expensive ▄ dealers were
spending much of their time giving prices over the phone. Disputed deals,
while uncommon, were expensive to resolve. The business was limited
by the number of dealers and phone lines, and complicated for global
clients by the problems with international toll-free services.
the FX Direct world, clients check prices through their browsers, and when
they are ready to deal, enter the deal through their browser (Microsoft IE or
Netscape). The customer does not need to speak to a person unless the
deal is outside pre- determined parameters.
the transaction has been transformed from a time consuming and
expensive process to a simple economical click on a browser. For RBC
DS the potential market has been expanded and all clients (globally) are
now within reach.
? In your opinion, how has it affected
The customer does not need to speak to a person
unless the deal is outside pre- determined parameters. Accuracy is
greater, and time is saved. It encourages customers to deal with RBC DS
simply because it is easier and more economical.
? What new
advantage or opportunity does your project provide to people?
provides opportunities to the customers to check prices more easily, and
to verify their deals and positions by themselves. It provides RBC DS the
opportunity to get more customers, especially outside Canada, by using
the Internet as a low-cost service.
FX Direct is first, but others
For the customer, it pioneers a way that will permit
the freedom of choice to deal with any institution, in any language,
anywhere, without being held captive by the institution. It is the forerunner
to freedom of choice that will foster open competition in the marketplace.
For RBC DS it is a window to expand the client relationship
with additional services.
? Has your project fundamentally
changed how tasks are performed?
This has completely
changed the customer interface to be more of a help-desk than a sales
desk. The settlement process was re-engineered to eliminate most
manual processing needed for tickets and branch-settled deals. The
payments process is currently being re-engineered to eliminate most
manual processing. This move has replaced high-cost dealers with less
costly help desk staff, and streamlined the operations for the
? In your opinion, have you developed a technology
that may lead to new ways of communicating or processing
Yes. The success of FX Direct has also proven
the DealSecure╗ initiative, which is to be an umbrella connectivity solution
to provide all RBC DS products through a single, highly secure
All the business units are now
aware of the importance of the Internet, offering web based services and
the potential for revenue generation, and several more DealSecure
offerings are on the boards or in development.
will not be lost to our competition. All institutions will evolve to do
business in this fashion.
? How might that change
The change will almost certainly affect the entire
businesses of RBC DS as well as our competition on a global basis. As
a proven E-Commerce application, DealSecure DealSecure╗ already has
prodded other businesses into planning for the Internet world. More and
more of the business will move to the Net, with significantly better service
for all people, around the globe, at lower costs, and will let RBC DS reach
many more new customers around the world.
Information Technology is central to the success of the
The DealSecure╗ connectivity solution is totally
innovative and provides significant competitive advantage to RBC DS. We
would be pleased to present the architecture and technology descriptions
to the Smithsonian judges that are able to sign confidentiality
agreements, but are not able to attach much detail to the
The FX Direct Internet Trading╗ portion of the
solution is a complex set of servers distributed in Toronto and England.
The web server is in England, with the client interface written in Java.
Behind the web server is the pricing and base deal capture system,
running on a DEC Alpha. This server is networked to the core dealing and
prime pricing applications running on HPUX servers in
Technically, the system is very innovative. Special
software was written for the client end to allow remote diagnosis of
connectivity problems with the Internet. It was also built to be highly
secure, without requiring clients to have specially configured firewalls. We
know of no other application like this, with such high security. New clients
can be set up in as little as 30 minutes.
? How quickly has your
targeted audience of users embraced your innovation? Or, how rapidly do
you predict they will?
Customer reaction has been excellent, with
almost all qualified clients signing up. With 6% of the FX deals already
moved to the net (in less than 6 months) the target over the next few
months is to get to 40%. This does not include the new business being
done in the United States.
? Does your work define new challenges
for society? If so, please describe what you believe they may
Yes. All over the world, the way people and companies
handle their money is changing. DealSecure DealSecure╗ is an early
example of how banks can reach out to new customers, and provide
services and choices that never existed before. It is an early example of
how customers can switch their business to a new, far away supplier,
with little effort. It is breaking the personal relationships in trading, and
making the handling of money just another commodity service. This will
affect the banking institutions, all the people that work in them, and all the
people that are their customers ▄ everyone.
? What are the exceptional aspects of your project?
the system is very innovative. The client software described earlier is
critical for customer support due to the remote diagnostics capability. It
was also built to be highly secure, without requiring clients to have
specially configured firewalls. We know of no other application like this,
with such high security. Organizationally, the project was very innovative. A
community was built from FX traders, managers, securities settlement
staff, bank settlement staff, two Information Technology (IT) groups, and
three vendors, who all worked as a team to bring the project to fruition.
This was new for RBC DS. In particular, the vendors acted in real
partnership, and went the extra mile without firm commitments in place.
? Is it original? How? Is it the first, the only, the best or the most
effective application of its kind?
It is original since the idea did not
exist before. It is currently the only fully operational Foreign Exchange
? How did your project evolve? What is its
Roger Mahabir was the driving force behind the
implementation of DealSecure╗.
Roger fostered a strategic
partnership with a key user, Jamie Barton, desk head for Commercial FX
at RBC DS who came to him with the idea to expand and change his
business. A strategy was developed to reduce costs, streamline
operations, and penetrate new markets without the added costs of new
offices. Roger assembled an IT team which proceeded to evaluate and
acquire the base software from a small Irish firm, Cognotec. Their product
proved to have the right building blocks for DS═s end clients and for North
American practices, a key requirement for RBC DS.
sought sources for funding with Jamie and got final approval in the fall of
1997. The team was expanded to include other senior business users,
Senior IT management, Cognotec (to customize and develop a browser
version), AT&T (to build a leading-edge connectivity solution for rapid
deployment to clients with any type of internet access), and Visioneering
Partners (to provide project management and planning). He appointed Ian
Corbett, Vice-President Information Technology, to build the core deal
capture and settlement interface.
An internal pilot began in May
1998, using the fat client with basic Internet connectivity. Based on this,
vendors were sought for leading-edge security applications, and
TimeStep and Entrust were selected to provide key components. The first
external pilot went live in October 1998, still with the fat client, but with the
next generation of Internet security. In February 1999, the web beta was
delivered, and the last steps of the connectivity solution began. In May
1999, the first clients went live with browser trading capability.
? Has your project achieved or exceeded its goals?
Yes, it has
exceeded the projected goals. Revenue, customer acceptance and
transaction volume have surpassed the original estimate by wide
? Is it fully operational?
Yes, it is currently the
only fully operational Foreign Exchange autodealing system.
How many people benefit from it? If possible, include an example of how
the project has benefited a specific individual, enterprise or organization.
Please include personal quotes from individuals who have directly
benefited from your work. Describe future plans for the
Trading desks across Canada have been
consolidated, a new help desk has been established, and significant
savings have been attained. The percentage of electronic deals is
increasing weekly, and RBC DS is positioned to increase market share in
the coming consolidation among North American
According to Jamie Barton, ´customer reaction has
been excellent with almost all qualified customers signing up for the
system and the company has increased its market share as a result.═
In addition to the current success, some tier 2 U.S. Banks
have decided to use RBC DS to manage their own FX dealing using the
FX Direct system.
This is an excellent example of a "win win"
between business and customers. RBC DS expands market share and
revenue while the customer shares the benefits of reduced margins.
´For the first time business and IT are collaborating on a major
initiative. Roger and I have been joined at the hip throughout this entire
process.═ says David Gibbins.
? What were the most important obstacles that had to be overcome in
order for your work to be successful? Technical problems? Resources?
Expertise? Organizational problems?
There were a number of
problems. The most important were:
* Technical ▄ the product is
designed to work between companies. The clients often had their own
firewall configurations which made it impossible for the product to work.
An entire connectivity layer had to be built and added to the project while it
was being rolled out.
* Organizational ▄ the business had to
reengineer its customer service operations. The result of this was where
before traders had been sitting at trading desks talking to clients, there
now were technical/business cross-trained staff working with clients on
connectivity and installation type technical problems.
the most innovative projects encounter the greater resistance when they
are originally proposed. If you had to fight for funding, it would be useful to
include a summary of the objections you faced and how you overcame
There were a number. The major objection was the
degree of uncertainty about the sales projections ▄ would the clients take
to it? Another major objection was the funding for connectivity ▄ the
executives had difficulty understanding the technology, and the need for it.
Success was in a large part due to the strong partnership
between business and Information Technology fostered by Roger. This
presented a powerful force which successfully secured the required
The concern that RBC DS was investing in a solution
that would benefit existing clients, but not penetrate new markets had to