Welcome to the first annual experience Financial Services Innovator Awards. The five vendors and four financial firms spotlighted on the pages that follow have all demonstrated innovative approaches to using Microsoft technology to transform a segment of the financial industry – whether it be banking, finance or insurance. And the prime beneficiary of these transformations can be summed up with one acronym – C.E.O. No, not the chief executive, but customers, employees and operations. Because as its name suggests, a major component of financial services is service. As Microsoft's experience Financial Services theme suggests, the end goal of any process improvement is to improve the experience of both the customers and the employees who tap into financial systems for information. Tracy Issel, general manager of Microsoft’s Financial Services Group (FSG) put it this way, “Instead of people serving computers, it’s about computers serving people. It’s about how do we improve the customer experience, how do we make the job of the employee better and easier and how do we make operations run more smoothly and effortlessly so that business processes are more agile.”

These award recipients were selected by our editors based on their aggressiveness in adopting new technologies; the innovative ways in which they put technology to use; the potential for effecting long term change in their industry; and of course their impact on the Cs, the Es and the Os. Congratulations to all our winners for their foresight, their enthusiasm and their fine work.

– Renee Wijnen Caruthers Contributing Editor Windows in Financial Services

Citigroup’s BECS:
A Flexible Analytics Framework

Citigroup has been in pre-trade analytics for years. In fact, technology behind pre-trade analytics that it had developed with Delphi development tools was about 10 years old. Then over the past year, the firm decided to make a switch, moving that 10-year technology to Microsoft .NET, and building both pre-trade and post-trade analytics on .NET. The new system, called Best Execution Consulting Services, or BECS, operates as an ASP from existing server farms in the US and Europe, with new data centers under construction in Japan and Australia. It already has 100 customers.

The Web-based framework is part of its broad appeal, noted Stavros Kokkoris, vice president of CitiTech Services, because the product is not US-centric or UK-centric.

“It doesn’t depend on using any single order management system. So long as you have Web access you can use BECS and it is fully customizable,” he said.

BECS provides its service by collecting data from clients, and then clients can see their own statistics, while the aggregate data that forms the universe is available only as a summary.

“BECS generates reports that compare all client trade execution data to a universe of trade executions we have globally,” said Kokkoris. Users can also compare their trade execution against standard benchmarks, such as VWAP, HLOC T-5, or T+5.

The system is flexible, broker-neutral, and information is confidential; no one at Citigroup can see the information from individual firms, and an independent auditor certifies the secrecy of data.

The BECS architecture was designed for speed, meaning unlike competitors, BECS operates in real-time. Even a large query comes back in a second or two. The entire data layer runs on Microsoft SQL Server; CitiTech Services used mid-tier caching to speed response times. And because the entire system is Microsoft-based, users can copy and paste data from Excel and Word.

“We tried to get the look and feel of the desktop and bring it to a Web-based offering,” Kokkori said. “You can bring up a basket of stocks and perform real-time operations to get a sense of the market impact of trading that basket. Citi has had a model to do this for more than 10 years, and with BECS we rebuilt the platform from scatch.”

The client is just 200-300 kb, a tiny footprint on the desktop machine, Kokkoris said. And because it is offered over the Internet, Citi can take new customers live in less than an hour.

BMO Financial Group’s BMO Central:
Improving Employee Access to Information

At BMO Financial Group, formerly the Bank of Montreal, a new, redesigned portal has sped performance of standardized intranet tasks by 25 percent and helped employees better manage their time and serve customers.

The portal, called BMO Central, was designed by the firm’s Personal and Commercial Client Group (PCCG) which noticed that as the volume of information on its intranet grew, employees were having increased difficulty sifting through the data to find the information they needed. An internal survey confirmed that employees were having difficulty managing information, and were often turning for help to colleagues or the help desk, slowing down those around them.

The new BMO Central portal resolved the problem by pushing customized information to employees depending on their job. Branch managers, call center employees and counter staff now all have a similar, easy-to-navigate homepage, while the information they can access varies according to their role.

PCCG uses Active Directory to identify which users have which job roles. It chose SharePoint Portal Server 2003 because of its tight integration with Active directory, and for its compatibility with the .NET environment for Web services.

Ellen Liu, senior vice president, Technology and Solutions at BMO, said SharePoint Portal Server 2003’s integration with Active Directory “was a strong advantage for us because we use Active Directory for authentication as well as for identifying the individual’s job family. This lets us target content based on the employee’s role.”

Twelve months after project authorization the portal was deployed to 4,500 PCCG employees, primarily in the Direct and Business Banking Divisions, and four months later it was expanded to the remaining 12,000 PCCG employees, primarily in the Retail Banking Division.

Today, a financial services manager for example, receives service requests from the Siebel customer relation management system, while a branch manager might receive status updates on new marketing programs from a different database.

“What they were able to accomplish was transforming the customer experience by changing how the employee was able to do work,” said Microsoft’s Tracy Issel.

Indeed, a follow-up survey of employees after the portal was implemented yielded vastly different responses than the one prior to the start of the project. Ninety-five percent of the respondents reported no problems transitioning from the previous portal to BMO Central, 97 percent found it easy to navigate in the new portal, and 96 percent found it easier to locate information. An overwhelming majority – 94 percent – indicated they would save time using BMO Central.

Fidelity Investments’ Streetscape for Windows:
Richer Browser Services for Brokers

At Fidelity Investments, a re-architected tool for independent broker dealers, introduced early this year, has helped brokers more easily manage customer accounts while gaining real-time access to Fidelity financial products.

Fidelity’s Streetscape, which was originally Java-based, had been created to help brokers and other investment advisers provide more customized service to clients while driving business to Fidelity. The product worked well, but had a complex, rich-client application, was difficult to support, and brokers often needed technical assistance with new releases. It also didn’t tightly integrate with Microsoft Windows-based operating systems that most brokers used in their offices.

“We really wanted to offer a more premium product than our browser-based service,” says Al Tedesco, vice president of software development at Fidelity Investments.

A team from Fidelity began designing a framework for a new version of Streetscape called Streetscape for Windows. The new Streetscape for Windows would have to give brokers more control over their customer information, better access to real-time financial information, and the ability to conduct customer transactions easily. The team also wanted to replace the old method of sending out updates via software CDs with something less problematic. Several other features were needed, including new menu and navigation controls and the ability to get real-time quotes about equity holdings in a customer’s portfolio.

Streetscape for Windows was developed using Microsoft Web Services Enhancements (WSE) for Microsoft .NET. Because WSE is platform-independent, Fidelity easily linked Streetscape to back-end functions such as logon information, account positions, account information, and more, all of which reside on UNIX-based servers.

.NET offered several advantages, according to Ian Langley, architect for Fidelity. “Because .NET is a Microsoft technology, we had very tight integration with Windows XP and it was very easy to integrate into the desktop. With Java, doing that is next to impossible.”

As far as upgrades go, originally, developers thought that they would make upgrading an automated, background process. In the end, they chose to give users three options when an upgrade is available: run the update for Streetscape immediately; download the update but delay implementing it until later; or continue running the current version.

According to Tedesco, the pattern used to make Streetscape for Windows is being adapted to projects in other areas of the firm, including an investment-adviser workstation that can be used to model various investment scenarios for brokerage clients and a workstation for Fidelity's wealth-management consultants.

Allstate Insurance Co.’s Customer Care Center:
Expanded Functionality Without Reinventing the Wheel

It took Allstate just two months to add functionality to its Allstate.com Customer Care Center that would allow customers to access life and annuity insurance policies online.

That’s because rather than build the new functionality from scratch, Allstate was able to build a link allowing customers to use functionality that already existed on its portal for financial representatives, called accessallstate.com. By using Web Services Enhancements version 2.0 for Microsoft .NET, customers were able to access the functionality of the accessallstate.com financial representatives’ portal while remaining within a familiar Customer Care Center interface.

“The accessallstate.com portal provided the features that Allstate.com Customer Care Center wanted, but it wasn't consumer-oriented,” explains Kevin Rice, enterprise architect, Allstate Financial. “Meanwhile, we had a look and feel for our policyholders within the Customer Care Center that has been very successful.”

Before the project was undertaken, customers could access their vehicle and property insurance policies through the Customer Care Center, but they could not access life and annuity policies that they had purchased through their Allstate agent. To integrate the functionality of its accessallstate.com portal with the user interface of its Allstate.com Customer Care Center, the company needed to sign in customers to two distinct systems with only one user name and password. Allstate would have to secure any connection between the two Web applications so that they could exchange information while providing a high level of data privacy.

Web Services Enhancements (WSE) version 2.0 for Microsoft .NET was used to securely and seamlessly pass customer data and logon information between the two applications. A perceptive user might notice that the address in the Web browser has changed, but that would be the only clue to the switch. In total, the project was done in half the expected time, and at half the projected cost.

The project also represented one of the company's first steps toward a service-oriented architecture. Already, Web services designed for the portal integration have been added to the Allstate Enterprise Reference Architecture, a code framework that internal developers can use to jump-start projects. Allstate expects the components to contribute to shorter development cycles with future projects, and open up opportunities to take on new projects that previously might have been considered too costly. Developers at Allstate also are taking advantage of the security Web service hosted by Allstate Financial Technology to provide security for their own applications.

Winning the Race in Hardware Innovation: Intel

Intel continues its sprint in a race to increase processing power. In April, it released its first dual-core processor, what it considers a first step in the transition to multi-core computing. In June it announced that with the introduction of the Intel Celeron D processor 351, it now has 64-bit memory addressability throughout its entire desktop and server processor lines.

For the financial industry, the power of 64-bit and multi-core processing has clear potential.

“Why I love financial services is it’s all about speed,” said Eric Doyle, global industry manager for financial services at Intel.

Indeed, as far back as the late 90s, Intel was working with vendors such as RiskMetrics and Algometrics on applying 64-bit computing to risk management applications. “We started looking at the performance gains,” Doyle said. “Risk management is generally done end-of-day but we started realizing there will be a day when we’ll be able to do that in real time.”

Today, Doyle sees 64-bit and dual-core processing as having particular potential for market data and analytics, in addition to risk management.

“When you have to keep going from disk to memory, it slows the execution of that application. The huge memory footprint in 64-bit will naturally run that application faster,” Doyle said.

Meanwhile, dual-core computing helps speed multi-threaded applications, Doyle noted. Threaded applications, which allow for the processing of repetitive tasks, should run much faster when there are more processors to execute the repetitive tasks concurrently.

Intel has worked closely with Microsoft to make sure that not only the Windows operating system works well in an Intel 64-bit or dual-core environment, but that SQL server and other desktop applications work well in the environment as well. “One of the things that differentiates Intel is our ability to bring along the ecosystem. We’re much more than a processor,” said Doyle.

Meanwhile, the next version of Itanium, due out next spring, will allow 1.5 to 2 times the performance of the existing version while using less power.

Taking Top Honors for Enterprise-Level Innovation: SAP

Though Microsoft and SAP have a fifteen-year history of working together, the partnership made a splash this spring with the announcement of Mendocino, their first joint product. Mendocino, which sits on top of MySAP ERP as well as on Microsoft Office, will eliminate redundancies between the two flagship products.

In general, users of Mendocino will find simple drop down menus in their commonly used Office applications, that will allow them to tap into information or processes managed by SAP that might have normally been less accessible from the desktop. Writing a vacation request into an Outlook calendar, for example, might automatically trigger a workflow through SAP to an approving manager.

“Previously, people had to learn a whole new tool set for SAP,” said Microsoft’s Issel. “This is at the heart of an institution’s ability to bring data integration up to a new scale. It’s about what are customer’s long-term desires to use tools. Financial services is a space where this partnership has a lot of value to bring.”

The initial version of the product, to be launched to a group of 40 to 50 preview customers in the last quarter of this year and set to be made generally available in the first quarter of 2006, will focus on horizontal applications, specifically, time management, vacation requests, and subscription to internal reports. There are approximately 3,000 predefined reports in the SAP business warehouse to which users can subscribe. A second version of the product, expected to follow shortly on the heels of the first version, will offer customers more flexibility in terms of customizing reports and setting the parameters in which to receive them, said Kevin Fleiss, SAP’s vice president of product marketing for emerging solutions.

It’s this type of functionality that will be particularly valuable to financial firms, Fleiss noted. For example, as Excel is ubiquitous throughout the financial industry, the Mendocino integration would make it easier to put enterprise data into a front-end application like Excel.

“Employees subscribing to reports delivered to the desktop in Excel or HTML would be able to drill down to get the necessary details in SAP,” he said.

A Most Innovative Approach to Compliance: NetEconomy

NetEconomy’s ERASE Financial Crime Suite is designed to help banks, insurance and securities firms detect and manage fraud. Its flexible architecture allows it to be used in a variety of environments – indeed ING, which recently purchased the product for installation in three large domestic retail banks in the Netherlands, was able to expand the product to offices of varying sizes in nine different countries.

Rather than serve as a point solution, ERASE gives customers a complete view of the enterprise, eliminating the need for a variety of tools for different crime areas. For example, in addition to money laundering and fraud detection, ERASE can monitor and prevent abusive trading practices such as late trading, washed trading, front running and market timing, and can monitor and detect employee fraud. Its holistic approach allows clients to benefit from operational efficiency and provides increased insight into overall business risk.

“Customers are trying to figure out how to transform non-discretionary spend into something that adds value to their customer information, that financial services can use for other purposes than complying with specific regulations,” notes Microsoft’s Issel.

ERASE monitors customers, accounts and transactions and has several ways of monitoring for suspicious activity. It can do client ID matching and look for generally suspicious or out-of-the-ordinary activity; it compares clients to a peer group to see if activity is atypical in relation to others in its group; and it also screens by banking product for unusual activity for a particular product type.

“If a student starts dealing like a well-paid business man, or a garage starts sending out bills that are not normal for a garage it might be worth further investigation,” said CEO Sebastian Kuntz in explaining the peer group screening.

Workflow rules can also be implemented, such as the four-eye principal, requiring that a minimum of two people view or sign off on certain suspicious activity.

Since ERASE operates on Microsoft Windows 2000 and 2003 Servers, using SQL server as its database, customers benefit from a reduced total cost of ownership by leveraging existing Microsoft systems already deployed in-house.

Integration With an Innovative Twist: Avanade

This global technology integrator founded in April 2000, as a joint venture between Accenture and Microsoft, now has more than 3,000 employees and has served more than 1,500 customers.

At the heart of its secret recipe is a methodology called Avanade Connected Architecture, or ACA.NET, a set of common tools and services addressing the most common day-to-day requirements that clients can draw from as they build on or integrate Microsoft technologies. The idea is to help clients eliminate the work of rebuilding the basics over and over again.

“As we’ve deployed applications for clients on client engagements, we’ve developed a set of tools to which we’ve added the cumulative experience of hundreds of engagements around the world,” said George Lipsker, Avanade’s market development director for financial services in North America.

In fact, Avanade has worked with Microsoft to make the basic, commodity layer of ACA.NET available for free download, through Microsoft’s Enterprise Library. That common set includes pieces of code for managing functions such as logins, error handling or navigation features.

Meanwhile, Avanade has a separate proprietary product, also called ACA.NET, which includes tools that provide clients with an extra layer of functionality beyond the basics. One example of the tools that might be available through the proprietary ACA.NET may be batch processing tools, Lipsker said, noting that while batch processing might not always be the ideal processing method, it’s still alive and well and often the easiest method for functions for which immediate turnaround is not necessary.

Examples of vertical uses of the company’s methodology can be seen at the Chicago Federal Home Loan Bank, where Avanade rearchitected a secondary mortgage management application using ACA.NET to ease integration between the bank’s systems and make it more accessible for future links with other sytems; or at i-Deal, which was able to bring an online new debt and equity issuance platform to market in less than six months using Web services tools that gave the platform the flexibility to adapt to changes in the market.

A Fresh Start Leads to Insurance Innovation: AMS

Back in 2003, AMS Services launched AMS 360, a new agency management system based on its previous AfW system, but built from the ground up using .NET.

“Access to Web services and a service oriented architecture made it more modern as opposed to a client-server environment. It afforded better connectivity with clients and with carriers,” said Dominique Laborde, senior vice president and chief technology officer for AMS’ parent company Vertafore, Inc.

Since then, the product has been continually upgraded to take full advantage of .NET’s connectivity and its ability to facilitate the delivery of flexible workflows. The system automatically connects to and starts up Microsoft Outlook; provides hotlinks to different functions, including email, even directly from reports; and displays activities in intuitive categories along with relevant and connected information.

To give a total management picture, it ties together CRM, agency sales efforts, and agency management as well as banking, broker and vendor management.

Indeed, AMS has long worked closely to follow the ACORD standard. In fact, at the ACORD/LOMA Insurance Systems Forum in Orlando in May, AMS was recognized by ACORD for five awards for outstanding achievements in implementation of ACORD XML data standards. Currently the company is following ACORD’s effort in relation to commercial lines.

Meanwhile, AMS 360 works with another AMS Microsoft-based product, the company’s TransactNOW. A free interface tool introduced by AMS two years ago, TransactNOW has now been adopted by more than 50 carriers. The tool gives insurance agents and customer service representatives real-time access to some of the most requested transactions. For example, agents or CSRs can now submit quote requests directly from their management systems, navigate through carrier systems instantly and manage billing and claims inquiries and several other types of inquiries in real-time.