case

stu

dy:

case

stu

dy: n

wb IBS Journal Supplement October 2015

16 © IBS Intelligence 2015 www.ibsintelligence.com

by Antony PeytonDon’t rest on your laurels. In fact, don’t even stop for a moment.

With the first stage of implementation completed in May 2015, and the dust not yet settled, Temenos is already planning phase two with NWB, which is focused on the delivery channels.

For its regulatory reporting and anti-money laundering (AML) operations, the bank is using Wolters Kluwer Financial Ser-vices’ OneSumX.

NWB got its restricted licence – mean-ing it can take deposits from members of the public in amounts of HKD 500,000 ($64,500) and above without restriction on maturity – earlier this year and only opened for business in early summer.

NWB is based in Hong Kong and is a wholly-owned subsidiary of OJBC Co Ltd, and an associate of Shinsei Bank.

Martin Frick, regional director, Asia Pacific, at Temenos, explains how things evolved.

‘Being a start-up, NWB had progres-sively ramped up its team for IT, operations and front office,’ he says.

‘The system requirements were to be frozen ahead of ramp up. The risk was understood by both Temenos and NWB during the initial stage itself.’

To ensure minimum changes to the scope of the project, Temenos’ team included consultants with knowledge of market practices and regulatory require-ments. In turn, NWB had senior members as

part of the project team to define and agree on the requirements.

Call me the breeze

Speed was always of the essence during the implementation.

Frick says: ‘NWB was keen to launch the operations as soon as it could get the restricted banking licence. In order to meet this objective, it was essential they could adopt T24 model bank.’

He stresses this was the ‘key principle’ for the project. As a result the customisa-tions were restricted to regulatory require-ments, customer- centric requirements such as AML, on-boarding and statements.

While recent events moved with some alacrity, NWB actually issued a request for proposal in Q2 2013 and the selection pro-cess lasted for about six months.

NWB shortlisted Temenos in Q4 2013 and Frick believes ‘to the best of my under-standing’ that it competed against Oracle FSS during this process.

A final decision was made in Q1 2014. Implementation started in April 2014 and went live in May 2015.

In a highly competitive market, how did Temenos come out on top?

‘I think our capability in the area of private banking and wealth management helped,’ Frick says.

‘We also received testimony from dif-ferent banks in Hong Kong and Singapore,

Nippon Wealth Limited (NWB), a restricted licence bank, based in Hong Kong but with Japanese roots and ambitions, launched a few months ago. As a start-up vying for success it went with Temenos’ T24 to fuel its push to power and glory in Asia.

A new sun rises in the east

case

stu

dy: n

wb IBS Journal Supplement October 2015

18 © IBS Intelligence 2015 www.ibsintelligence.com

who are successfully managing these areas using Temenos T24.’

Less vanilla, more flavours

NWB requested some key customisations, which included customer risk profiling – namely a risk questionnaire and scoring calculation; and trade validation for bonds, mutual funds and dual currency deposits for vulnerable customers. In addition, NWB

asked for an interface with its AML system, Citibank, Bloomberg, MassMutual, the client statement system and the HKMA (Hong Kong Monetary Authority) reporting system.

In terms of functionality in the initial phase, the system covers, but is not limited to, banking services, remittances, fixed incomes, mutual funds, FX-linked structured products, structured notes and foreign exchange.

Frick says Temenos is in the planning stage for phase two of implementation with NWB – such as ‘how to enable their channel capability’.

From NWB’s perspective, Ryutaro Uehara, chief administrative officer, who is responsible for the technology integration for NWB, explains more.

‘While the satisfaction of functional requirements are always important, for a start-up company like us, the time to market and cost efficiency were even more critical elements,’ he says.

NWB made some comparisons in terms of ‘major banking packages’ but felt the ‘posi-tives’ from Temenos outweighed the others.

‘T24 already had a few footprints in Hong Kong,’ Uehara says.

It also had business consultants with the right regional knowledge.

He adds: ‘On top of plain vanilla T24, Temenos also offered a Hong Kong regional module, which is a collection of common customisations specific for the region.’

Universal challenges

Uehara has been involved in many system implementations in Japanese as well as international financial institutions and says they are ‘always challenging’.

NWB’s one had its ‘own unique challenges’.‘Since we were a new restricted licence

bank without any existing operations and processes, we fully adopted classic package implementation methodology,’ he says.

NWB started off with a ‘fit and gap analysis’ and quickly identified major custo-misation areas.

Uehara notes: ‘On the other hand, without having existing operations, it was extremely challenging for us to visualise the process and business logic in detail in the analysis and design phase; and we tended to realise additional detailed requirements at the later phase.

‘Our advantage of establishing brand new operations is also our disadvantage

Kowloon, Hong Kong© Ryan Cheng, Wikipedia

‘Our advantage of establishing brand new operations is also

our disadvantage – where we have to think and decide

on every single operation and every detail.’

Ryutaro Uehara, NWB

IBS Journal Supplement October 2015

© IBS Intelligence 2015 www.ibsintelligence.com 19

– where we have to think and decide on every single operation and every detail.’

NWB managed to ‘overcome a lot of these obstacles’. But there were more.

‘The management of the delivery sched-ule and resource plan was also particularly challenging because our timeline depended on a few external factors – in particular the HKMA licence approval,’ Uehara says.

These issues were smoothed out as NWB had weekly discussions with Temenos’ management team to adjust and optimise the level of resource deployed based on the latest outlook of the licensing situation.

Uehara also says the quality control was another challenge due to the ‘limited time schedule and critically important cost’.

‘We went through a numerous amount of bugs during our testing phases,’ he explains. ‘Some of them are due to a lack of the pack-age functionalities and capability, which we did not realise till the testing phase.’

He adds: ‘Some of them are due to a lack of clarity by Temenos consultants or a lack of our understanding in the analysis and design phase, which we came to know in the testing phase.

‘Some of them are due to the miscom-munication of the requirements. Or some of them are simply something users could not determine in the early stage.

‘Fortunately at the end, we managed to resolve those issues quickly with our onsite Temenos resource and also by utilis-ing the offsite Temenos resource in India.

‘From the product point of view, we saw a T24 module, which was historically acquired by Temenos and supposed to be fully integrated within T24. But it was not fully integrated with the rest of package and we

needed to spend an enormous effort to make it work, which was quite disappointing.’

Let’s move on

With the initial system now in place, NWB has great expectations and ambitions in Asia.

NWB believes it can capitalise on the ‘growing demand’ for wealth management services. Its target customers are ‘expected’ to invest more than HKD 1 million (US$ 129,000) and they also want to expand the current cus-tomer base to 30,000 within the next five years.

Step back a moment to the origins of NWB. According to Uehara its foundation lies in the desire for ‘Japan quality’ which will help it grow for the future.

He says NWB’s two founders; Tsutomu Nakajima (currently, executive director and CEO) and Kenichi Hasegawa (also an exec-utive director and COO) realised there were no Japanese-domiciled banks in Hong Kong with a ‘true retail business focus’.

They saw this as an opportunity because Japanese investors prefer to com-municate in their own language, according to Uehara. They also have ‘high expectations in the quality of services’.

Right now, NWB is offering deposits and FX, and also started an insurance agency business.

It also plans to acquire Type 1 (deal-ing in securities) and Type 4 (advising on securities) licences from the Securities and Futures Commission in the future, and start offering investment products such as mutual funds and bonds.

NWB has placed its faith in Temenos and Wolters Kluwer to achieve growth.

Whether it will be rewarded is something that we will all have to wait and see.

case study: nwb