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Self-monitoring on global scale

ING Bank offers a broad range of retail and commercial banking services to a large and diverse customer base. Operating globally across emerging and developed markets, ING has to meet a wide array of regulatory requirements that are complex, dynamic and ever increasing. Failure to comply with any of the required deadlines can result in stiff penalties.

Recent years’ events in the global financial markets have significantly heightened the pressure from regulators to enhance supervision. There is a clear push for “self-regulation” and to ensure companies monitor their trading activities as fully as possible. The European Market Abuse Directive is just one example of increasing regulatory controls that ING has to implement within a specified timeframe.

“With Software AG there is a very real understanding of what we are talking about. It is very much a mutual conversation, a common vision of how the technology can move us forward and how we can leverage it for the future.

-Colin Brooker | Business Manager at ING Commercial Banking Financial Markets

A new approach

As a leading European bank, ING draws on its experience to continually improve its position. “Our objective is to move with the global markets,” said Colin Brooker, business manager at ING Commercial Banking Financial Markets. “We could see that the requirements for enhanced monitoring and controls would grow into market-wide demands, so this is a critical initiative for us. Naturally our approach has to be global, but must address regional needs at the same time.”

The fact is that monitoring traders is harder today due to the increasing scale, complexities and round-the-clock nature of the global financial markets. To manage this, ING knew it needed more than the existing controls. “We had to move into the area of data analytics,” said Brooker. “We have far too much data to analyze using traditional mechanisms of reports and supervision. We needed the right technology to support us and the solution had to be robust and scalable.”

Leveraging knowledge

The goal was to enhance controls with an automated solution that could monitor for rogue trading activities and market abuse. As the regulatory landscape is quite dynamic, flexibility is an important criterion for ING to support future business needs.

ING opted to seek an external solution because it:

  • Leverages market-wide knowledge now and in the future
  • Speeds time-to-market with minimal customizations needed
  • Reduces ongoing risk and frees up internal resources to focus on where it adds most value

The goal was to enhance controls with an automated solution that could monitor for rogue trading activities and market abuse. As the regulatory landscape is quite dynamic, flexibility is an important criterion for ING to support future business needs.

Full solution

The project schedule was very tight—less than six months from selection to full solution deployment. Challenges for ING’s small project team were the work volume and complexities, short delivery timeframes and global distribution of the team itself. It was a difficult but straightforward deliverable: be live by the deadline with a fully capable monitoring solution that generates alerts for a defined product and rule set.

ING had to ensure the alerts generated were genuine cases to be investigated based on accurate rule definitions. “Genuine alerts are mainly false positives, trades that upon investigation are fine and not market abuse,” explained Brooker. “Obviously the assumption is we don’t have market abuse and all our alerts should fall into the false positives category—but those false positives have to be real rather than problems with the data or the rules applied.”

Incremental approach increases flexibility

The team defined and implemented a considerable scope in the initial project: 14 surveillance scenarios and supporting rules for one business region. “We use an Agile-Scrum approach to achieve short, sharp deliveries versus employing an all-encompassing approach,” said Brooker. “So we built our core global monitoring functionality and foundation in less than three months—something that would take almost 18 months to do using traditional methods. This included gathering data, design, building and testing rules and deployment. Certainly the scope is different, but our business has changed significantly in 18 months with new requirements from regulators, the next marketplace scandal or our need to focus on a different product. Coping with that level of dynamic change doesn’t work using a traditional approach.”

Releases every six weeks along ING’s threeyear road map incrementally expand the rule sets and product coverage. This enables the business to continually realize benefits and avoid long waits for critical functionality. Enhancements and regional roll outs are being phased in releases until the solution covers all of ING’s global networks.

The Apama infrastructure works particularly well with the incremental approach. Creating new surveillance rules is independent of existing system rules, so rule sets for different patterns of behavior can be easily added. At the same time, alerts can be fine-tuned and the level of sophistication increased when needed.

Smooth delivery

ING project success has been supported by a clear mandate, the right sponsorship and an effective team. “Software AG fits into our team very well,” noted Brooker. “We work in close cooperation and delivery is completely integrated, not at all like typical hand-offs with an external vendor. The Software AG consultants are extremely responsive and bring clear expertise and skills in the areas we need.”

Project perception from the steering committee, financial markets management and across ING is very positive. Many were surprised by what the team accomplished in so short a time. “Issues were resolved quickly and efficiently, deliveries simply worked and very little rework was needed,” said Brooker. “The go live was extremely smooth and project aftercare has been minimal.”

A common vision

ING required a solution that was cutting edge, flexible and scalable for its global business. “We were very convinced that the Apama technology met all this and now having implemented it, know that this is the case,” said Brooker. “We are also impressed with the organizational responsiveness and that people understand our need and urgency. With Software AG there is a very real understanding of what we are talking about. It is very much a mutual conversation, a common vision of how the technology can move us forward and how we can leverage it for the future.”