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1 Control section Update history
Date Author Vers Comments
20 feb12 George Marcu 10 Prerelease version 16 mar12 19 mar12 09apr12 22iun12 27iul12 31aug12
George Marcu George Marcu George Marcu SG DA SG DA SG DA
20 25 25 26 26 26
1 Added control section 2 Migrate RomGlish closer to English 3 More clarity in text and Glossary 4 Fixed first commentaries on
a FinTP code integrity and safety b Community structure c unified referenced institutionsconcepts d updated attachments as well
5 Tables format corrections 6 Bibliography review 7 Added use cases timeline Text left in yellow means comment Text left in red means alert New chapter - FinTP Aplicability Term updates in Project approach and Next steps tables Image updates from FinTP Aplicability chapter Chapter 9 Limitation ndash term updates (table) Image update Micro-finance institutions
12oct12 JG 27 Update FinTP high-level picture Rename The community chapter to The FINkers United community
Verified and approved
Name Position title Date Version
Corina M
Distribution list
Name Position title Company Version Kosta Peric Matteo Rizzi Mariela Atanassova Judit Baracs Stephan Kraft
SWIFT 1 25
Rodica Tuchila ARB 1 2
AV MLD IBM 2
Marcelina Joavina MSFT 2
Zoli Herczeg MSFT 25
Artur Pereira Descontel
Louis Suaacuterez-Potts Karl Fogel
Independent consultants
25
Silviu Hotaran Gustav Kaeser Semper Human
2
Norbert Houmlckl Gregor Vogrin GCI Management 25
Sibos visitors via mem stick 27
Related documents and links
Related documents Document ID or link
FinTP - Vision and Scope
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2 Introduction Allevo intends to prepare and publish a freely licensable financial transactions
processing application further dubbed FinTP
The document is an introduction for further product design and implementation as well
as an initial tool for communication with different sponsors regarding this initiative
Concurrently the document provides Allevo an overall view on how to simultaneously
deploy the two tightly coupled components of the FinTP project creating an open
source application for processing financial transactions and launching a controlled
community of professionals
21 About this document
The paper contains the vision scope and limits of the Open Source Application for
The document provides high level information on the business opportunity the solution
vision and description the high level architecture the project approach what is and
isn‟t included in the scope of the project and the next steps
If there‟s need for further information please
‐ see the glossary section
‐ contact the authors who welcome questionscomments as help to improve the
clarity and consistency of the script
22 Executive summary
This section provides the abstract of the scope and motivation of the FinTP project
What Allevo undertakes
Allevo aspires towards sharing its existing assets to open a new door to a larger more
transparent and collaborative market To put it bluntly Allevo has decided to make the
strategic move of publishing into the open source space their application for
processing financial transactions
Why
The simple reason behind this initiative is achieving a larger footprint in the financial
industry In other words Allevo is ready to bet that the trust and enthusiasm of the
community members strongly influence both the sales and further developments of the
shared product
No man is an island
This exciting journey Allevo has embarked on is not doable without companions There
needs to be a cohesive community (contributing resources talents and ideas) A
moderator is also needed to guarantee that challenges are understood that actions
anticipate the desired solution and that proper decisions are taken
FinTP - Vision and Scope
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When
Allevo has already initiated the project confident to quickly find other visionaries
sharing same or better ideas on how to lay the firm foundation of a new efficient and
successful financial ecosystem
How
By both creating the open source application and simultaneously launching the related
community
What is in it for
Allevo the company will become member of a club where it can seed future
developments
The community members they will become members of a club unified by the mutual
interest of pushing the interoperability level to the more refined stage of financial
transactions processing while enjoying the benefits of a falling TCO
The Moderator this entity will consolidate its influence and prestige in the rapidly
transforming financial market
FinTP - Vision and Scope
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3 Background and Business Opportunity Payments and securities processing is the earliest form of software development in
most financial institutions The evolution in rules and regulations has very often been
built upon these developments with patchwork as result
The payments arena ie the processing of payments in itself has reached a high level
of maturity and operational software should no longer be a differentiator Payments
have become a commodity in the financial industry
Lazaro Campos in his first Sibos speech as CEO of SWIFT in the opening plenary of
Sibos 2007 in Boston has suggestively stated that SWIFT products should evolve to
the operational simplicity of a widespread fax machine
The financial ecosystem is going through major technology shifts and is at the same
time facing an increasing regulation pressure These changes represent business
opportunities for Allevo The opportunities are being driven by market forces - consumer
requirements supply and demand - not by regulators Companies and communities
start experiencing new financial instruments such as PayPal Google wallet
Facebook UK faster payments mobile payments amp commerce M-Pesa NFC etc
The existing solutions for payments processing are proprietary featuring a great
variety of licensing models amp costs implementation lead time maintenance amp support
In short not something one would expect for a commoditized process
Allevo is strongly committed to publish under free-open licensing terms its own
financial transactions processing engine - which capitalizes on a seven years practice
proven commercially available application
In our view an open source application represents in fact the acceptance of the
commoditization of the payments processing arena an opportunity to get away from
existing patchwork
60 of the financial services industry is committed to adopt open source software as
part of their infrastructures 72 having well defined open source licensing policies1
This trend is due to the actual challenges the financial industry faces
Should FinTP application be SaaS and cloud ready it will offer the customers options
to architect their business infrastructure according to their strategy
1 According to the Open Source Research (Aug 2010) authored by Accenture
FinTP - Vision and Scope
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4 Vision of the solution 41 Vision
What Allevo undertakes
This paragraph explains why and how Allevo is going to cut the branch it happily sits on
Today Allevo is milking a conveniently productive cash cow namely qPayIntegrator
an application created for processing financial transactions qPayIntegrator is a
practice proven solution certified by SWIFT on SEPA and Remittances compliance It
ensures revenues through new licenses sales and the recurring maintenance and
support services
Bitten by the flea of restless evolution Allevo aspires towards sharing its existing
assets to open a new door to a larger more transparent and collaborative market To
put it bluntly Allevo has decided to make the strategic move of publishing into the
open source space an application for processing financial transactions
Why
The simple reason behind this initiative is achieving a larger footprint in the financial
industry In other words Allevo is ready to bet that sharing its application in the open
source space the trust and enthusiasm of community members will strongly influence
both the spreading and further developments of the shared product
This initiative is a commercially disruptive transformation in the sense that the
distribution of the financial transactions processing application will be mainly the task
of the community members If the TCO will be significantly convenient and if the
solution will match the needed quality trust and safety then Allevo expects that the
market acceptance trend will be solidly sharp An open source application for
processing transactions will not only solve the specific needs of a company but will
also generate sub-communities (either regional or by industry) They will push the
interoperability of the application forward to transactions interpretation and their
operational consequences industry-wide
People will continue to generate increasing amount of data and will want to use that
data from different locations paying no attention to distances The trade and financial
community should match this new developing framework with a new financial
ldquoecosystemrdquo What today are premium applications tools or devices will commoditize
in the future to come
Todays high speed communication channels and powerful multipurpose personal
devices put pressure on companies to rethink and adapt their services Allevo strongly
believes that one of the missing pieces of this developing ecosystem is a versatile
safe free of licensing cost and widespread application for processing financial
transactions It should be capable to connect to various communication channels It
should bring together cloud based resources corporation back or front-office systems
intelligent wholesale or retail equipment transportation and many other assets this
new global ecosystem is ready to use
FinTP - Vision and Scope
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No man is an island
This exciting journey Allevo embarks on is not doable without companions
The most obvious need is that of a cohesive community with sufficient resources
talents and ideas By cohesive Allevo means that the enrolled companies and
individuals share the same set of values These are professional ethics proven
practice professionals safe amp failure-free operations While the participants speak the
same language the intent of working for efficient interoperability means eliminating
misinterpretation Thus the need to manually process transactions will be reduced and
many current ldquoexceptionsrdquo will be eliminated
Like any other form of people gathering the community needs rules governance
agora to make their voice clearly heard (requirements amp ideas) A supervisor is needed
to guarantee that the challenges are understood that the actions anticipate the desired
solution and that proper decisions are taken In this document the supervisor is called
Moderator since atop of being a moderator the supervisor should also be an
accepted and trustful negotiator perceived at the same time as a leader by all
community participants
When
Allevo is in a position of offering a reasonably strong ground for both creating this open
application and starting a community
On the latter Allevo qualifies to be one of the first members of the community given its
firm belief that the world will become a large cooperation space where ideas data and
information will be openly exchanged and knowledge openly shared - in the best
interest of the people
The deep root of the software application that Allevo brings to the community is
credited by 7 years of practice and features a number of credentials Making FinTP an
open application qualifies it to become a tool for companies with constrained budgets
Adopting FinTP will empower its customers to equally interpret both the syntax and
semantic of the exchanged financial instructions
Bottom-line Allevo has initiated the project confident to quickly find other visionaries
sharing the same daring ideas on how to lay the firm foundation of a new efficient and
successful financial ecosystem
How
Now this is the tricky part of the story The easiest part of the project is creating the
open source application The success lies in launching the community simultaneously
This means that prior to the official release the community roles should be well
defined fundamentally agreed upon by the main sponsors the Moderator should
formally engage and the initial membership should include some prestige companies
and IT vendors Thats tough but this is how it has to happen
What is in it for
Allevo the company will become member of a club where it can seed future
developments This will further lead to the enhanced visibility of Allevo team and
portfolio
The community members they will become members of a club unified by the mutual
interest of pushing the interoperability level to a more refined stage of financial
transactions processing while enjoying the benefits of a falling TCO
FinTP - Vision and Scope
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The Moderator this entity will consolidate its influence and prestige in the rapidly
transforming financial market It will be the parent of the deeper standardization of the
financial business crossing the bridge between financial messages conveying
between institutions up to the institutions interface with their customers This will lay
the ground for the financial integration to equal the industrial and trade distribution
chain footprint
Whats next for FinTP
After FinTP has successfully been adopted in the market on a reasonable scale the
future looks even brighter
Companies relying on a trustful standardized processing application will be able to free
up their minds amp budgets for what uniquely differentiates them in their customers‟
eyes quality of service relevance trade easiness agility of delivery risk containment
social responsibility or other distinctive factors
Once all this has settled in self-adaptive trade business systems will come forward to
close the loop between customers and their providers
42 FinTP Positioning
FinTP is a key business software that opens markets by aggressively addressing
customers with constrained investment budgets Allevo strongly believes that FinTP is
tightly knitted to SWIFT 2015 Strategy2
The payments arena in itself has reached a high level of maturity payments becoming
a commodity on these premises back-office software should no longer be a
differentiator
FinTP creates a widespread financial transactions processing platform a cheap
alternative (to the current proprietary payment systems) for an industry common
solution which will evolve into a new standardization layer
2 See Bibliography
FinTP - Vision and Scope
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FinTP shifts the competitive space and consequently the innovation drive (from back-
office and mostly financial institutions and large corporations) to SWIFT traditional and
new business areas (treasury and front-office of the banks large financial institutions
corporations and SMEs - including MFIs)
43 FinTP Applicability
The usage of FintP in several domains ndash banks micro-finance institutions CSMs corporations and public administration ndash is discussed The main building blocks provided by FinTP for the processing of financial transactions are shown in each case
For setting the scene consider the naiumlve drawing (see below figure) which depicts
1 the bank‟s applications - implementing the core products and services the banks provides to its customers (FX Lending Payments TF custody etc)
2 banking correspondent business and infrastructures they connect to to settle for example their payments
3 corporate customers or local financial institutions engaged in distributing their products and services
4 the individuals who benefit from the service of the bank directly or intermediated by partnering financial institutions or corporations - including retail chains connectivity channels that are either SWIFTNet or VPNs over internet or bank‟s own private network
FinTP - Vision and Scope
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Given the application scalability FinTP is fitted to deal with
1 B2B environment type FinTP performs transactions routing and processing between the before depicted institutions thus achieving cross industry interoperability Additionally FinTP helps the business customers to consolidate their financial or treasury operations similarly helps the retail chains to reconcile and settle the available stock with the registered sales
To exemplify ensuring SEPA Readiness for banking institutions and for their customers is briefly discussed
By 2014 banks in EURO zone should be ready to process instructions in ISO20022 format FinTP can be an efficient solution to achieve rapidly compliance with the EPC provisions
Are the bank‟s customers ready to send the instructions data in the right format Are you ready to accept this type of data Are you able to extend solutions to help your customers better preparing for SEPA instructions FinTP has the right building blocks for banks and corporations
2 B2C environment type FinTP goes further down to the end customers The individuals can interact directly in a branch or remotely using their computers tablets smart phones to provide them with personal financial portfolio management It enables them to operate on their bank account or to do shopping It also supports new financial instruments such as PayPal Google wallet Facebook UK faster payments mobile payments amp commerce M-Pesa NFC etc
FinTP applicability profiled on beneficiary type
FinTP - Vision and Scope
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a Banks
Regional and international banks are rethinking and often improving their business architecture because of strong penetration of traditionally non-financial business in the money supply chain
The banks have in general the following choices
i Stay the course This often means keep on muddling
ii Outsource the processing of financial transactions in its entirety or in parts
iii Lower the recurring costs dramatically and benefit from joint developments by implementing Open Source solutions for commoditized parts of the needed infrastructure
Allevo provides the building blocks for the processing of financial transactions (FinTP) for those organisations who want to go for the third strategic choice
Toolbox3 (see 51 Features for details) as illustrated in bellow figure
Business flow consolidation
External interfaces to market infrastructure(s)
Funds transfer (credit transfer direct debit debit instruments duplicate detection treasury flows)
Operational functionalities such as liquidity reporting accounting reconciliation AML transactions filtering remittances management competitive reports etc
All helping the bank to manage the operational risk
3 Toolbox means a comprehensive collection of ready to deploy operational features
FinTP - Vision and Scope
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Payment factory - as illustrated in the bellow figure - is the bank-centralized service for smaller financial institutions or corporations to provide payment and collections processing in compliance with regional or global regulation along with additional service (eg intra-day limits etc)
A similar type of architecture can be used to set-up a bank administrated Member Concentrator or a (SWIFT) Service Bureau or a Payment Service Provider
FinTP - Vision and Scope
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b Micro-finance institutions
Toolbox3 (see 51 Features)
Integration of micro-financing application with mobile payment operator(s) and banks It provides support for loan applications loan disbursement and repayments It integrates the mobile payments and the banking payments and as such provides working capital management Multi-MMTs amp multi country operations are also supported
FinTP - Vision and Scope
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c CSMs
Toolbox3 (see 51 Features)
CSMs can use FinTP (as shown in the bellow figure) to provide its customers an
effective connectivity readiness package Likewise CSMs can use FinTP to connect
themselves to other CSMs they need to
FinTP - Vision and Scope
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d Corporations
Toolbox3 (see 51 Features)
The financial or treasury department of the corporation can use FinTP (as depicted in
the figure bellow) to concentrate the processing and management of all their financial
business in one single operation window FinTP provides the building blocks for a highly
effective money supply chain between banks providers and customers Beyond that
FinTP empowers control on the working capital and financial resources
FinTP - Vision and Scope
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e Public administrations
Toolbox3 (see 51 Features)
Public debt business automation through Treasury Bonds settlement on all trade phases eg pre- sales post-
Wages and pensions payment in compliance with SEPA regulations
Structural funds financial management (in a business group managed by the State Treasury)
FinTP plays a multiple roles in the Public Administration financial business
a Bridge between the global banks secure network (SWIFTNet) and the Government
secure national network performing format conversion and business flow mapping
thus FinTP acts as a financial integrator of the different public institutions
b Interoperability gateway with the banking community and financial market
infrastructures
c Auctioning portal for the Treasury Bonds allocation and settlement for the Primary
market
d Management of the payments related to Structural Funds financed projects and to
the providers of the public institutions
e Payments (such as wages pensions state subsidies) due to individuals intermediated by banks using SWIFTRemit framework Similarly the taxes collection should be handled by the same system and framework FinTP provides means to perform the operations using either mobile devices or the internet
FinTP - Vision and Scope
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44 Key Business Objectives and Success Criteria
Today Allevo faces two major limitations in fulfilling its business objectives
1 Strong dependency on its narrow national market and thus being limited to the
known European Union and particularly Romanian practice
2 Significant allocation of the development talents to maintaining qPayIntegrator
rather than working to new business oriented products
Allevo is going to expand its business footprint and simultaneously shift its revenue
source from back-office solutions towards its customers business area (treasury front-
office) applications
To achieve this goal Allevo will focus on developing FinTP business and on gathering
a strong supporting community formed by representatives of the targeted market The
coherence of the community should be ensured by a trustful and committed
moderator
Therefore for the success of the project Allevo deems instrumental the go-to-market
process the solid take-up tempo and the quality of the community
On the FinTP side Allevo should tightly focus on
1 Understanding the community members‟ needs values and priorities in
relationship with their business competitive ecosystem
2 Improving the product management process and the technical commercial amp
distribution documentation
3 Identifying and centring the attention on strong idea generation selection and
monitoring processes
4 Elaborating the right product architecture to enable easy functional and technical
scalability maintainability diagnose native features for flexible customization
compliance to global and regional financial standards and preserving the initial
licensing structure across various customers business models
5 Strengthening project management
6 Designing coherent knowledge transfer process
7 Designing efficient customer support
As a member of this FinTP open source community Allevo will provide
1) the open source FinTP application
2) knowledge transfer (training amp consultancy) to both early adopters and to the
product development amp maintenance body (see 46 The community)
3) for a limited period of time
- support amp maintenance
- alignment to technology standards amp regulation
4) further improvements
5) contribution to relevant proofs of concept community web site conferences
articles online awareness
The power of the community will draw other vendors to partner together to ensure
market coverage each of them complementing the other through their expertise
FinTP - Vision and Scope
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FinTP distribution will be performed via the communitys portal while the initial
consultancy product installation and support services will be delivered remotely
Following the free open source software model FinTP will be available under an open
license free of charge
In designing the new products Allevo will benefit on mid and long term from the deep
insight both of FinTP internals and the structure and operation of the community
45 Market Sizing
Our evaluation of the FinTP targeted market size
- the global market size taken into account is 26100 institutions out of which
- an average FinTP engine licensing fee is euro30000 resulting in potential
maximum expenses of euro783 million
- the corresponding yearly maintenance fee is euro5400 resulting in potential
maximum expenses of euro700 million in 5 years
- the number of potential institutions adopting FinTP in the first 5 years of
availability 250 tier3 amp 2000 tier4
- consequently the savings in 5 years could reach euro675 million in license
fee and euro2025 million in maintenance fee resulting in a total of almost euro90
million
Allevo believes that (at least) during 2013 and 2014 its current income source will be
preserved while after that period the main replacement of the lost (new licensing and
recurring maintenance) fees will mainly consist of services (consulting
implementation support education) and sales of licenses for newly launched
applications
FinTP - Vision and Scope
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46 The FINkers United community
The community structure comprises three main entities (as depicted in the bellow
figure)
1 The adopters (beneficiaries) consumer companies choosing to adopt the
FinTP product in compliance with the community line of business and ethical
conduct
2 The moderator the instrumental inspirational authority expected to draw both
the development vision and the guidelines of the community
3 The contributors
a institutionalized bodies eg development and maintenance test and
validation audit legal marketing
b independent contributors eg ISVs (Allevo falling under this category)
solution providers integrators or passionate developersindividuals
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5 Solution Description amp Parameters Like qPayIntegrator FinTP offers a
standard compliant processing
engine for the financial transactions
exchanged between the back-office
or ERP applications and the financial
community (banks MFIs market
infrastructures corporations)
FinTP is able to process financial
messages in both FIN and ISO20022
formats and at the same time offers
a rich set of interfaces to different
financial applications FinTP provides
compliance with various clearing and
settlement mechanisms
Consequently FinTP ensures a high
level automation of the end-to-end
financial transactions processing
51 Features
The FinTP project has two major deliverable components
1 the FinTP application itself
2 the community built around FinTP
All subsequent chapters will refer to both of these
Component code
Component description Comments
FinTP4 FinTP is a financial transactions processing engine for 3rd or 4th tier banks microfinance corporate or SMEs treasuries available as open source application Functional characteristics
1 Operational features
o Predefined flows and message formats
Includes reconciliation of confirmations with transactions
o Single and multiple funds transfer instructions securities settlement amp reconciliation (Romanian Euroclear) messages
The supported payment instruments are credit transfer direct debit debit instruments
o MTMX coexistence Based on FinTP native internal data format (ISO20022)
o Multi-BIC multi-currency
o SEPA ready (certification) Compliancy with EPC regulations for SEPA formatting and business flows (for SCT and SDD) enables bank-to-bank and bank-to-CSM settlement
4 FinTP root is Allevo equivalent product qPayIntegrator a commercially available amp practice proven (since
2005) application qPayIntegrator provides a consistent set of functionalities and it is fully aligned to both industry regulations and technology
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Component code
Component description Comments
o TARGET 2 ready Compliance with TARGET2 settlement and operations as regulated by the ECB
o SAGSAASAE SAL interfaces
Integration with SWIFTNet to enable banking business
o Liquidity reports Real time cash reports and forecasts using several criteria (currency subsidiary profit centre)
o Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
Analysis and reports of market trends based on volumes amount BIC etc along with early alerts on behaviour changes beyond the standard deviation
o Accounting reconciliation Automatic NOSTROVOSTRO accounts reconciliation intraday liquidity reports and integrated exception management
o AML (sanctions list matching)
High and low value payments filtering uses 20+ black lists and ensures their content maintainability
o Duplicate detection Detection and investigation of possible duplicates the detection window and criteria are configurable
o Remittances processing Covers banks business and operations area as well as distribution channel
o Treasury markets Automation of treasury flows (FX and money market)
o Statements Processing of SWIFT messages related to correspondent banks accounts administration
2 Technical features
o Financial message routing and monitoring
o Multi-threading capabilities
o Persistent end-to-end transactions
During each phase of the entire processing cycle permanent copies of the transaction are kept until the final completion thus avoiding any transaction duplication or loss
o Batching unpacking
o Resilience at transaction level
o Archiving
o Tracing and logging transactions and user events
o Transient errors detection and recovery
o Real-time search and reports
o Security access and user administration
o SaaS cloud ready
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Component code
Component description Comments
FINkers United - community
Since FinTP is an application handling financial transactions the product releases and the related community should be tightly regulated and controlled As the project matures these components will be further refined The following main components of the community have been identified
‐ the moderator ‐ the product development
and maintenance body ‐ the product and
community auditor body (acting as a gatekeeper of official releases) to control and maintain the change requests integer and eliminate any malware exposures
‐ the test and validation body
‐ the legal body for defining the frame for product distribution amp licensing
‐ the marketing entity responsible for creating awareness and attracting contributors and adopters
‐ the portal used as a channel for marketing support and version control
‐ individual contributors namely ISVs solution providers developers integrators who wish to use their skills and knowledge to the benefit of the community
These tools strongly depend on the available budget and widespread
organization culture It is not mandatory for these to be open source if usage of
open source tools would mean lower quality
3) Licensing
The licensing model highly depends on the results of the open source legal and
business consultancy However we assume the following frame
‐ free of charge initial and recurring maintenance license for using FinTP
‐ FinTP does not use software components enforcing liabilities for the user
‐ consumers using FinTP source code (in part or entirely) should comply to
the licensing policy of the community
‐ the version released by the development amp maintenance body is the only
official amp to be trusted version of the community ensuring product integrity
unity and stability
4) Regulatory compliance
The regulatory compliance strongly depends on the early adaptation of new amp
changed rules via the recurring maintenance and on the quality of the audits
performed by the specific bodies of the community
Thus it is ensured that ISO20022 and FIN standards TARGET2 and TARGET2
Securities SEPA or country specific regulations (as stated respectively by
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SWIFT standards EPC specification ECB or regional Central Banks
regulations that the community chooses to comply with) stay the most
important business specific anchors of FinTP
The FinTP design also offers support for flexible definition of new compliance
sources
5) Consultancy
The needed consultancy is twofold
‐ legal to ensure that FinTP does not infringe other licensing constraints
‐ open source specific to enable the right choice of the community type and of its governing law
The main constraint relies in choosing the right advisors true experts in the
open source industry amp with appropriate ethic profile - able to deliver as
promised The consultants have to be available 800 am divide 800 pm CET and
easily reachable - geo-location is of utmost importance Selection of the
consultant will basically be done on price assuming the right mix of expertise
and availability is achieved
6) Financing
While Allevo partially undertakes the financing of FinTP development the
ancillary consultancy necessary team education or acquisition of productivity
tools are far beyond the companys 2012 budget
To overcome possible delays in the project Allevo needs to sturdily act to
identify both the most appropriate commercial offer and additional necessary
financing source(s)
FinTP community
The community related items are members moderator legal tight regulation
marketing and financing For each of these items several assumptions and the
corresponding dependencies are provided in the following paragraphs
1) Members
We assume that the communitys members span several business profiles
(such as financial services institutions corporations market infrastructures
PSPs SSBs public administrations regulatory institutions and ISVs) sharing
the mutual focus on financial operations performance and improvement
By now after some tests on market acceptance there have been identified a
few supporters comprising financial services institutions and small ISVs
To ensure the success of building the community there is need for attracting
prestige influencers (market analysts consulting companies of scale - starting
with big four key industry providers - such as SWIFT other communities - ie
professional such as banking insurers capital market associations) and a
credible pool of financial institutions and corporations
To this end Allevo unrolls its own awareness campaign through direct
meetings publications blog posts and social media public presentations and
by officially launching the initiative in a conference focused on free of charge
financial transactions processing applications
Allevo further plans to use Sibos 2012 as opportunity to organize a less
traditional communication session gathering a relevant international panel to
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debate the strong and weak aspects of this initiative amp to get the public involved
as much as possible
The goal is that by the end of 2012 some tens of different institutions are
committed to co-found the community and to actively contribute to establishing
the legal frame and to forming the required action bodies
2) Moderator
Allevo perceives the Moderator as the critical member of the community since
his prestige and influence will warrant the outcome of all performed activities
The moderator must commit on long term to develop the community and to
sponsor it with its share of trust
Allevo strongly believes that the Moderator should have a global footprint be a
reputable and trustful institution
3) Legalcopyright
The legal consultant and advisor needs to provide the coherent legal frame to
cover all community activities by roles and accountability While making it easy
for the members it should be more demanding as far as contributors are
concerned (though still encouraging ISVs to actively participate) It has to draw
very precise responsibilities for the independent and institutionalized bodies
(for instance product maintenance amp development and audit) and for the
Moderators status
The quality of this legal work fully relies on the expertise and experience of the
advisor
The law governing the community has to be in harmony with the European
(either French or Anglo-Saxon) legal system and with the open source legal
regulations largely practiced in other business regions (US and APAC)
4) Tight regulation
FinTP the product meant to gather a community which uses and supports it is
all about moving values between different entities Thats critical irrespective of
the amount because failing to perform properly opens the doors to arguments
amp loss of reputation with the related tangible costs Moreover the product has
to be beyond any doubt during its entire lifecycle free of any malefic
embedded functions meaning that contamination has to be avoided by all
means
Allevo strongly believes that this requirement can be attained only by tight
regulation of the community specific approval of the initially launched version
of FinTP and of the recurring contributions
This approach can be felt strange compared to most open source communities
and can lead to little interest from IT talents making them feel banned or
restricted It remains the Moderator‟s duty to make them feel privileged if
accepted and rewarded as such However this censorship is a price to be paid
since the community and the project are about processing transactions
initiating value transfer
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5) Marketing
The community needs to have the clear objective of spreading both
geographically and over a consistent number of industries
To achieve this goal the community should be able to actively provide open
access to relevant information (including explanations of concepts hands-on
evaluation) to non-members and to also answer their questions on FinTP and
on the community itself
The same level of information needs to be ensured for the members to whom
supplementary updates on the community events decisions available
releases patches and fixes should be made available They need to also get
focused forum discussions on specific business areas and subsequent
processes need to be distributed
These functionalities have to be hosted on the community‟s dedicated portal
This portal has to provide content dialogue space information consolidation
and broadcasting It must be a virtual showroom for FinTP It needs to host
documents and virtual meetings subscription management and product
support amp development
The community has to be able to run its own meetings enabling direct contact
between active members or their representatives
Meaningful press releases have to be regularly issued along with actively
maintaining a productive relationship with market analysts to consolidate a
clear public understanding of the community spirit and goals
6) Financing
Its all about money-money-money since at least for the first 2-3 years the
community needs to be financed
Upon reaching maturity the institutionalized bodies of the community can earn their income from collateral activities - such as organizing conferences providing education and specialized support services - either for the initial FinTP installations and customizations or for recurring services requested by the members An alternative can be trialling and certifying interested providers enabling them to perform support services for FinTP
Thus who could pump money into this project It could be one or a mix of
‐ World Bank - if governmental programs are implied and provided a proper project which convincingly demonstrates the beneficed social impact
‐ EU development funding
‐ interested wealthy members of the community
The most critical dependencies are external such as (arranged according to
their impact) availability of funds for building the community finding trustful
and skilled open source consultants (legal business community licensing)
The synthetic view of the main assumptions and dependencies is provided in
the attached file
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Maintenance amp user support 1-Jan-13 Marketing inst action
4 Activities
Initial planning amp budgeting 15-Dec-12 document
Roles allocation 15-Dec-12 document
Community inst Implementation 15-Dec-12 action
Awareness campaign 1-Jan-13 action ongoing process
Members recruiting 1-Jan-13 action ongoing process
Continued operation 1-Jan-13 action ongoing process
Service sales 1-Jan-13 action ongoing process
Future development planning 1-Jan-13 document ongoing process
5 Resource allocation
If existing institution - allocation 15-Dec-12 action
If newly formed - recruiting 15-Dec-12 action
Make FinTP available to comm 1-Jan-13 action ongoing process
Start community financing 1-Jan-13 action ongoing process
6 Financing
Initial investment 1-Jan-13 action secured by that date
First period of comm operation 31-Aug-13 action secured by that date
co
mm
un
ity
Project approach
Project approachpdf
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8 Scope This chapter deals with the phased availability of various FinTP features again considered from application and community points of view
In the first phase (due Dec 2012) the core of FinTP application is ready including the following technical features
- financial message routing between services and monitoring of exchanges
- multi-threading capabilities
- persistent end-to-end transactions
- batching de-batching
- archiving
- tracing and logging of transactions and user events
- transient errors detection and recovery
- real time search and reports
- security access and user administration
Similarly during the first phase the main community components need to be in place
- moderator
- software development and maintenance body (Allevo also available in the first and second phase of the project)
- test amp validation body
- (software) auditor
- legal
- main contributors (Allevo falls into this position)
- platform
- marketing
In the second phase (Dec2012 - Dec2013) several operational features of FinTP will be added
- predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit instruments securities settlement reconciliations
- MTMX coexistence
- multi-BIC multi-currency
- SEPA ready certification
- TARGET2 ready
- SAGSAASAE interfaces
- duplicate detection
- liquidity reports
- competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
- accounting reconciliation
- AML (sanctions list matching)
- SaaS and cloud ready
along with resilience and start of maintenance and knowledge transfer (the last two obviously continuing in the next phases)
FinTP - Vision and Scope
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The synthetic view of the project scope is provided in the following table
Crt No
Feature Activity Phase1 31Dec12
Phase2 31Dec13
Phase3 31Dec14
Phase4 31Dec15
Fin
TP
A Operational features
1
Predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit Instruments bonds (Romanian Euroclear) reconciliations
2 MTMX coexistence
3 Multi-BIC multi-currency
4 SaaS ready cloud ready
5 SEPA ready certification
6 TARGET2 ready
7 SAGSAASAE interfaces
8 Liquidity reports
9 Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
10 Accounting reconciliation
11 AML (sanctions list matching)
12 Duplicate detection
B Technical features
1 Routing financial message between services and monitoring of data flows
2 Multi-threading capabilities
3 Persistent end-to-end transactions
4 Batching de-batching
5 Resilience (at transaction level)
6 Archiving
7 Tracing and logging of transactions and user events
8 Transient errors detection and recovery
9 Real time search and reports
10 Security access and user administration
C Other activities
1 FinTP maintenance
2 Knowledge transfer
Co
mm
un
ity
Establishing the institutionscomponents
1 Mentor
2 Software Auditor amp Provider
3 Legal service
4 Members
5 Allevo initial role
6 Platform
7 Marketing
FinTP - Vision and Scope
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9 Limitations The main limitations in the economy of the project consist of phasing several FinTP
operational features for the following year (eg debit instruments liquidity reporting
AML filtering accounting reconciliation resilience SaaS ready cloud ready etc)
At the same time for features intended to front-office usage like Remit it was not yet
decided to publish them as open source product
The synthetic view of the main limitations is provided in the following table
Crt
nrItem Limitation Exclusion Comments
1
FinTP
a
Operational features Available in 2013
b
Remit Not included in
open source
package
2
Community
a
Rules Tightly controlled The statute should
ensure the right
balance between
safety and free
association of talents
Given the significant budget allocation (at least from Allevo perspective) the strong
requirement to meet the maximum ceiling will limit the FinTP product initial preparation
and maintenance expenses
Community wise the obligation of a tight regulated statute will have to ensure the right
balance between safety (mandatory in an environment dealing with financial
transactions) and a free association of talents (typical in an open source community)
In the first period after launch (at least the first two years) of the initiative the
maintenance and support activities will be provided by Allevo (as initial contributor)
A major restriction would be to meet the budgeted development and maintenance
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10 Appendix - Risks
Specific risks
1 Product
a Long delivery lead time This is a medium probability and impact risk however Allevo should make available the needed resources and motivate the entire team for the job
b Credibility loss if FinTP fails to further become certified on meaningful operations andor business tracks (ie SWIFT business certification tracks or similar) The single possible containment is lobbying if the application certification program rejects open source products Anyway the impact is very important and its materialization should be avoided
c Low quality of the allocated team and improper version management are highly unlikely to occur as long as the formal transfer of responsibility is smoothly made from Allevo to the corresponding body put in place by the community The real hidden risk is that this process could take too long and it thus has a very high impact
d Poor FinTP quality may result if the community fails to institutionalize proper quality assurance (QA) and verification amp validation (VampV) processes This is most expected not to happen but if it does the impact is at least medium The single path to overcome this risk consists in a professional approach to these items based on institutionalizing practice proven QA and VampV processes
e Allevo lack of expertise in the open source business This can be contained by carefully selecting trustful amp truly expert consultants Otherwise it means more money longer time spent on project and expenses without proper return
2 Service
a The software maintenance does not properly deliver as expected ie on-time and on-quality bug fixing regulation amp standards alignment and productivity amp technological improvement The key to contain this risk materialization is the community status having provisions to neatly provide maintenance and further development of the rules for FinTP as well as the applicable rules and fees for the ancillary services
b Low quality and safety of the service received by the members of the community To avoid the risk of performing the one-time amp recurring support services by under-prepared professionals the community has to rule the process of training and qualifying the companies willing to contribute in this area
c Not meeting the minimal SLA criteria The community should regulate and periodically revise the training curricula and to further audit both the teachers and the certified experts to ensure the service level agreements are met
d Under motivated service providing professionals - up to the level of not feeling the high impact of their activity The community status must provide guidance to the contributors on the minimal standards the professionals should meet
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e Constrained expert resource pool This risk could be overcome by the communitys policy to ensure at all time a balanced number of motivated experts to the communitys size Failing to do so may result in high negative impact of the community business and public perception
3 Community
a Emergence of a parallel competitive community If the optimal timing between publically disclosing FinTP and community take-off is not achieved then there are high chances that following a competitive initiative other entrepreneurs successfully launch their own similar or derived community This could be avoided by periodical reviews of the progress of both FinTP and community status and deciding whether the project needs to be put on hold or not
b Unfit reputation of the Moderator or main contributors If either the Moderator or the initial contributors are not beyond any dispute and are reputable institutes then there is certainly something rotten in Denmark and the project should be put on-hold
c No commitment from the Moderator‟s side Similarly if the Moderator does not commit to the project it means that Denmark has a serious problem to solve The project should relinquish until the matter is fixed
4 Legal
a Misuse of copyright and intellectual property (IP)The assigned working team could not be aware of the limitations and liabilities of using (entirely or partially) third party software this risk can be contained by delivering the right training providing proper working procedures carefully recording and documenting the use of open source code and carefully cross-scanning
b Injunctive relief and financial damages can be caused by not properly and continuously controlling the use of third party open source code resulting in copyright or IP infringement There are two containment measures which can be taken tighten the compliance check during the product lifecycle or apply the sanction policy as to set an example
c The competition starts a class action - this may result in delaying the project
5 Financing
a Lack of long term financing institutions Allevo should urge its consultant to identify and draw a reasonable list of financial options institutions
b Exceeding the budget given that this type of project has no precedent in Allevo and to avoid exposing to the dependency on engagement to financial institutions or to commitments beyond the existing budget a further carefully drawn project plan is needed along with its explicit approval from the board of the company
Market related risks
1 False expectations
a Expensive services Not everything is free aside the initial and maintenance free licensing the training the support and other professional services can amount to more than in general expected Allevo rates this risk as medium possible but with low impact as long as the law governing the community and its initial period of operation will consecrate fair market prices and competitive sources of contribution
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b Hidden costs for patches updates and upgrades While of similarly weight in terms of probability and impact this should be no real concern as long as the law governing the community clearly provides for free and accountable maintenance
2 Poor image on quality
a Too many releases making FinTP hard to manage and unsafe to operate Given proper regulation of the community and the mature root of FinTP Allevo disregards the possibility of this risk to materialize However if this were to happen this is a high impact risk and by all means should be avoided
b Backward technological (in)compatibility looks to us as a low risk in all respects and within organizations applying practice proven software engineering processes and professional - accountable team this is not likely to materialize
c Support can be perceived as the highest impact risk for FinTP This can be overcome by tight regulation of the commercial and professional conditions to deliver the service (for instance only qualified organizations should be recommended to members for supporting FinTP)
d SLA and accountability for both internally or externally performed services is closely correlated to the previous risk and the community status should provide the support for growing a community of competencies and accountable professionals around FinTP Periodical auditing (by the specialized community body) of this pool of professionals will further ensure the confidence that the skills are preserved at the required level
e Code fragmentation and forking is a high impact risk with a low probability of happening in the initial period provided the knowledge transfer is done orderly and in an institutionalized manner
3 Inherent uncertainty
a Community disputes can jeopardize its cohesion the project viability and future This is a high impact possibly high probability risk and it is the definite role of the Moderator to feel prevent and while materializing mitigate any conflicting situation
b FinTP going commercial post-launch This is a huge impact possibly high occurrence probability but manageable with the right legal instruments provisioned in the community
c Loss of alignment to industry standards and regulations This risk has medium probability and medium impact given the assumption that the community is tightly regulated and the working bodies institutionalized and gathering professionals
4 Legal
Copyright infringement given Allevo experience in the open source business this risk is highly probable and has a high impact on FinTP especially if mistakes are made in the launching phase Similarly if during the product maintenance and further development phase the community fails to institutionalize proper formal software development processes (covering all FinTP lifecycle phases) based on industry practice proven model(s) Supplementary the expert code scanning audit for compliance is the single resort to preclude external software source misuse
FinTP - Vision and Scope
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Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
5 GPL specific
a Noncompliance to the GPL license If GPL license is used the product should further distribute in compliance with this part provisions High impact and probability but manageable if proper software development processes are used and if the statute clearly defines the licensing model for FinTP
b FinTP unconformity The risk that software engineers get inspired by a chic solution which they import and emulate similarly in FinTP And this is also highly possible since les grands esprits se rencontre
6 Existing customers attitude
Anger for having paid for something which now is free The existent customers can be concerned about the future of their installed system its further development (in one word its future) and on the quality of the service (SLA including) Some recent adopters can possibly be furious for spending their money on buying licenses for a piece of software that differently packaged becomes free of charge
For the first situation the single best solution for Allevo is to ensure a smooth transition from the current status to the new solution deployed Also highly probable Allevo should provide for simultaneous (for at most one more year) maintenance of both FinTP and for qPayIntegrator
For the 2012 new qPayIntegrator adopters Allevo should transparently state the product‟s future and propose a commercially attractive migration towards FinTP when it becomes publically available (like the option for the installation migration and recurring services) The decision should clearly stay with the customer if he still buys Allevo licenses delays the implementation until FinTP is available or if he goes for a competitive solution
In other words the key to mitigate the existing customer perception is switching places and discarding if the situation proves to be uncomfortable
Bottom-line is that to avoid most of the risks the FinTP community must be a rather tightly controlled one though still opened to anyone willingly abiding to the rules
The synthetic view of the main risks their assigned probability impact and the corresponding containment approach is provided in the attached file
Risk IDRisk
CategoryRisk
Probability
(High
Medium
Low)
Severity
(High
Medium
Low)
Containment (Mitigation Action Proposed)
M1Free as in a
Free Puppy
M101
The training service amp support cost could account more than the
commercial product its replacing (application software is typically 30 of
the total cost of ownership of most projects)
Medium Low
M102 Hidden costs ie charge for patches updates and upgrades Medium Low
M2Frequent
updates
M201
Projects might be updated frequently - as often as everyday Too frequent
updates could have a negative impact on the implementation
interoperability and support
Low HighMAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M3Backwards
compatibility
M301 Less accountability Low LowMAP03 Access to prior versions of source code (additional in-house
development and support procedures might be necessary)
M4Support
related risks
M401Support could be perceived as the biggest issue with open source
software deploymentsHigh High
M402 Internal External Accountability SLAs High High
M403Code fragmentation or forking if the community fails to institutionalize
corporate like formal structureHigh High
M404Support could require greater involvement and different skills set from
operations staffMedium Medium
M5Community
immaturity Low Low
M501Could generate incompatibility of FinTP with industry standards amp
regulationsMedium Medium
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M6 Uncertainty The inherent uncertainty in every open source project
M601 Community disputes might impact project viability and future High HighMAP04 The Mentor should prevent amp mitigate any conflicts inside the
community
M602 Open source projects may not stay open in future releases High HighMAP05 The originator liabilities should be strongly enforced by the
community statute
M7 Legal risks
M701 Copyright infringement High High
M702 Can open source software deployments pass an audit
M8 GPL General Public License specific development concerns
M801Software thatrsquos derived from an existing GPL project in whole or in part
might not be released under the same licenseHigh High M08 The community should regulate the licensing model
M802
Developer contamination - developer could review an existing open source
project could see an elegant solution then implement a similar function in
closed source project
High HighMAP09 Procedurals constrains for the software developers should be
enforced
M9
Current
customers
attitude
The actual customer perception could be negative High High
M12 To prevent a negative attitude Allevo should involve the customers
in the FinTP project Allevo needs their active support for a smooth and
issues less transition
ma
rke
t re
late
d r
isk
s
co
st
rela
ted
ris
ks
MAP01 The community should regulate the applicable rules and fees for
services and maintenance
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
bu
sin
es
s a
nd
le
ga
l ri
sk
s
MAP06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S1Product
related
S101 Late delivery lead time Medium MediumMAP15 Allevo should provide proper resources (funding and human
resources)
S102 Credibility loss if fail to certify with SWIFT Medium High MAP16 Should be discussedamp agreed with SWIFT
S103 Inexperienced team or allocation below needs Low HighMAP15 Allevo should provide proper resources (funding and human
resources)
S104 Improper or non efficient version management Low High MAP16 Review the current Allevo Configuration Management System
S105Poor quality if the community fails to institutionalize proper verification and
validation practices3
M06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S106 Lack of expertise in open source projects 2 Allevo should engage thoroughly selected Open Source consultants
S2Service
related
S201
The software maintenance not properly providing for bugs fixing
regulationamp standard alignment technological improvements communities
improvement requests
High HighMAP01 The community should regulate the applicable rules and fees for
services and maintenance
S202 One-time amp recurring services might be provided by unqualified resources High HighMAP17 The community should regulate the training curricula and related
expertise certification
S203 Provided services might not meet the minimal SLA performance criteria High HighMAP17 The community should regulate the training curricula and related
expertise certification
S204 Relaxed or lack of accountability of the professionals High HighMAP18 The community should regulate the employment agreement of
the professionals
S205 Lack of qualified professionals High HighMAP19 The community should ensure a balanced number of certified
professionals with the community size
S3Community
related
S301
If after disclosing FinTP the community does not enthusiastically adopt
the solution competitors might more successfully develop a similar
strategy
Medium MediumMAP20 FinTP promotion should be convincing and realistic A well
organized marketing campaign by Allevo
S302The community mentor andor early adhering members have no
undeniable prestige or are not largely trustfulMedium Medium MAP99 Project status review Ending the project could be one option
S303 The Mentor does not strongly commit for the project Medium Medium MAP99 Project status review Ending the project could be one option
S4 Legal
S401Exposure to copyright and IP infringement due to working team unaware of
the legal consequences of using third party softwareMedium Medium
MAP21 Allevo should keep records and fully document the use of open
source code
S402Copyright or intellectual property infringement can lead to injunctive relief
and monetary damagesHigh High
MAP23 Allevo should institutionalize a tight licensing and technical
control
S403 All risks related to open source compliance High HighMAP24 Allevo should appoint as soon as possible a FinTP compliance
Officer
S5 Financial
S501 Lack of financing institutions Medium MediumMAP25 Allevo should urge consultant to provide a consistent list of
potential investors
S502 Dependency on the financing institution approval Medium Medium
S503Not thoroughly planned project overlooking one or some project cost that
need to be financedMedium Medium
Sp
ec
ific
ris
ks
tec
hn
ica
lm
ark
eti
ng
leg
al
fun
din
g
MAP26 Allevo should carefully draw a consistent and eligible project for
financing
Risks
Riskspdf
FinTP - Vision and Scope
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Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
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wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
11 Appendix - Bibliography 1 Accenture Open Source Research Geographic Findings
2 Accenture Open Source Research Industry Findings
3 Producing Open Source Software - How to Run a Successful Free Software
Project by Karl Fogel
4 Open Source Software Risks and Rewards by Gary Hein
5 A Business Case Study of Open Source Software by Carolyn A Kenwood
6 6 critical success factors for product development by Christian Wig
7 Bank 20 by Brett King
8 Managing the business risks of open innovation by Oliver Alexy and Markus
9 Product idea evaluation checklist shared by Startgass AS
10 SWIFT 2015 Strategy
11 Customers and business impact of product changes
FinTP - Vision and Scope
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Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
12 Appendix - Glossary ACH Automated Clearing House that is used to clear retail payments
between banks in a country or region
APAC Asia and Pacific
AML Anti-Money Laundering
BCampDR Business continuity amp disaster recovery
B2B Business to business
C2B Consumer to business
CET Central European Time
CMMI Capability Maturity Model Integration
CMS Configuration Management System
Coexistence The situation of multiple standards existing at the same time in the same business space Within SWIFT this refers to the coexistence between the MT and MX standards This also refers to the set of measures being taken to make the situation easier to handle by the community (publication of mapping rules translation serviceshellip)
CSM Clearing and Settlement Mechanism
CUG Closed User Group
Dictionary Part of the ISO 20022 Repository that contains all items that can be re-used during business modelling and message definition activities
EAI Enterprise Application Integration - middleware to connect applications and communication interfaces Typical EAI software includes features for mapping data between various formats enriching messages with data from other systems and orchestrating message flows
ECB European Central Bank
EMEA Europe Middle-East Africa
EPC European Payment Council
ERP Enterprise Resource Planning
EU European Union
EUCLID Connectivity to EuroClear Bank services
FIN The messaging service offered by SWIFT for the secure and reliable exchange of MT messages in store-and-forward mode By extension the syntax used to format these MTs
IP intellectual property
Interoperability Capability to easily exchange business information while using different message standards ISO 20022 promotes global use of syntax-neutral business and message components as a common denominator to achieve interoperability between standards using different syntaxes
ISO The International Organization for Standardization - an international standard-setting body composed of representatives from more than 160 national standards organizations that promulgates worldwide standards in a variety of domains aiming at facilitating cross-border exchanges of goods services and techniques
FinTP - Vision and Scope
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Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
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wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
ISO 15022 An ISO standard that describes the syntax to be used for developing securities messages used mainly to support back office related transaction flows It replaced the previous securities messaging standard ISO 7775
ISO 20022 RA Registration Authority - offers the services described in an ISO standard on behalf of and under a contractual agreement with the International Organization for Standardization
ISO 20022 Repository
Repository maintained by the ISO20022 RA which contains the financial business models message definitions and components defined in compliance with the ISO 20022 standard
ISO 20022 RMG Registration Management Group - in charge of the overall management of the ISO 20022 development and registration process in accordance with the ISO 20022 standard
ISO 20022 SEG Standards Evaluation Groups -in charge of validating candidate ISO 20022 messages within the scope of the business justification and ensuring that they address the needs of their future international community of users
ISV Independent Software Vendor
KYC Know Your Customer
MACUG Member Administered Closed User Group
Message A set of structured information exchanged between two parties involved in a financial transaction
Message component and element
A re-usable data structure used for assembling message definitions The data defined in a message component is bdquotraced‟ back to the business components and business elements In simple terms business components define the business meaning message components create data structures for messaging
MI Market Infrastructure - a system that provides services to the financial industry for trading clearing and settlement matching of financial transactions and depository functions
Middleware Software that enables data to be exchanged among different systems with standard communication components and tools for formatting mapping and processing
MT The traditional bdquotag value‟ Message Types for use on the FIN service offered by SWIFT
MX An XML message exchanged over SWIFTNet whether or not ISO 20022 compliant
OS Open source
PSP Payment service provider
QA Quality assurance
RMA Relationship Management Access
RTGS Real Time Gross Settlement System
SAA SWIFT Alliance Access
SAE SWIFT Alliance Entry
SAG SWIFT Alliance Gateway
SaaS Software as a Service
SCORE Standardized CORporate Environment
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
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Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
Semantics The study of meaning usually in language The word is often used in ordinary language to denote a problem of understanding that comes down to word selection or connotation
SEPA Single Euro Payment Area
SLA Service level agreement
SME Small and Medium-sized Business(es)
SOA Service Oriented Architecture
SSB SWIFT Service Bureau
STP Straight Through Processing
SWIFT Society for Worldwide Interbank Financial Telecommunication Visit wwwswiftcom
Syntax Physical format of a message used to identify and represent the conveyed pieces of information
T2S TARGET2 Securities - an initiative of the Eurosystem It is an IT platform that aims to make settlements across national borders simpler and more cost-efficient
TARGET2 The Eurosystem-owned European Real Time Gross Settlement (RTGS) system (Trans-European Automated Real-time Gross Settlement Express Transfer System) TARGET2 is one of the largest high-value payment systems in the world
Taxonomy The classification in a hierarchical system typically organized by super type - sub type relationships also called generalization-specialization relationships or less formally parent-child relationships
TSU Trade Service Utility
TCO Total cost of ownership
Translation rules
Set of rules to be used to map the pieces of information included in a message expressed in one syntax to the equivalent message expressed in another syntax
Remit Remittances
XML eXtensible Mark-up Language - popular syntax to encode documents (or messages) electronically on the Internet XML allows communities to define their own identifiers (or tags) and format (or data type) for each component of a message
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
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Business Information Systems (Allevo) SRL
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1 Control section Update history
Date Author Vers Comments
20 feb12 George Marcu 10 Prerelease version 16 mar12 19 mar12 09apr12 22iun12 27iul12 31aug12
George Marcu George Marcu George Marcu SG DA SG DA SG DA
20 25 25 26 26 26
1 Added control section 2 Migrate RomGlish closer to English 3 More clarity in text and Glossary 4 Fixed first commentaries on
a FinTP code integrity and safety b Community structure c unified referenced institutionsconcepts d updated attachments as well
5 Tables format corrections 6 Bibliography review 7 Added use cases timeline Text left in yellow means comment Text left in red means alert New chapter - FinTP Aplicability Term updates in Project approach and Next steps tables Image updates from FinTP Aplicability chapter Chapter 9 Limitation ndash term updates (table) Image update Micro-finance institutions
12oct12 JG 27 Update FinTP high-level picture Rename The community chapter to The FINkers United community
Verified and approved
Name Position title Date Version
Corina M
Distribution list
Name Position title Company Version Kosta Peric Matteo Rizzi Mariela Atanassova Judit Baracs Stephan Kraft
SWIFT 1 25
Rodica Tuchila ARB 1 2
AV MLD IBM 2
Marcelina Joavina MSFT 2
Zoli Herczeg MSFT 25
Artur Pereira Descontel
Louis Suaacuterez-Potts Karl Fogel
Independent consultants
25
Silviu Hotaran Gustav Kaeser Semper Human
2
Norbert Houmlckl Gregor Vogrin GCI Management 25
Sibos visitors via mem stick 27
Related documents and links
Related documents Document ID or link
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
2 Introduction Allevo intends to prepare and publish a freely licensable financial transactions
processing application further dubbed FinTP
The document is an introduction for further product design and implementation as well
as an initial tool for communication with different sponsors regarding this initiative
Concurrently the document provides Allevo an overall view on how to simultaneously
deploy the two tightly coupled components of the FinTP project creating an open
source application for processing financial transactions and launching a controlled
community of professionals
21 About this document
The paper contains the vision scope and limits of the Open Source Application for
The document provides high level information on the business opportunity the solution
vision and description the high level architecture the project approach what is and
isn‟t included in the scope of the project and the next steps
If there‟s need for further information please
‐ see the glossary section
‐ contact the authors who welcome questionscomments as help to improve the
clarity and consistency of the script
22 Executive summary
This section provides the abstract of the scope and motivation of the FinTP project
What Allevo undertakes
Allevo aspires towards sharing its existing assets to open a new door to a larger more
transparent and collaborative market To put it bluntly Allevo has decided to make the
strategic move of publishing into the open source space their application for
processing financial transactions
Why
The simple reason behind this initiative is achieving a larger footprint in the financial
industry In other words Allevo is ready to bet that the trust and enthusiasm of the
community members strongly influence both the sales and further developments of the
shared product
No man is an island
This exciting journey Allevo has embarked on is not doable without companions There
needs to be a cohesive community (contributing resources talents and ideas) A
moderator is also needed to guarantee that challenges are understood that actions
anticipate the desired solution and that proper decisions are taken
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
When
Allevo has already initiated the project confident to quickly find other visionaries
sharing same or better ideas on how to lay the firm foundation of a new efficient and
successful financial ecosystem
How
By both creating the open source application and simultaneously launching the related
community
What is in it for
Allevo the company will become member of a club where it can seed future
developments
The community members they will become members of a club unified by the mutual
interest of pushing the interoperability level to the more refined stage of financial
transactions processing while enjoying the benefits of a falling TCO
The Moderator this entity will consolidate its influence and prestige in the rapidly
transforming financial market
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
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Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
3 Background and Business Opportunity Payments and securities processing is the earliest form of software development in
most financial institutions The evolution in rules and regulations has very often been
built upon these developments with patchwork as result
The payments arena ie the processing of payments in itself has reached a high level
of maturity and operational software should no longer be a differentiator Payments
have become a commodity in the financial industry
Lazaro Campos in his first Sibos speech as CEO of SWIFT in the opening plenary of
Sibos 2007 in Boston has suggestively stated that SWIFT products should evolve to
the operational simplicity of a widespread fax machine
The financial ecosystem is going through major technology shifts and is at the same
time facing an increasing regulation pressure These changes represent business
opportunities for Allevo The opportunities are being driven by market forces - consumer
requirements supply and demand - not by regulators Companies and communities
start experiencing new financial instruments such as PayPal Google wallet
Facebook UK faster payments mobile payments amp commerce M-Pesa NFC etc
The existing solutions for payments processing are proprietary featuring a great
variety of licensing models amp costs implementation lead time maintenance amp support
In short not something one would expect for a commoditized process
Allevo is strongly committed to publish under free-open licensing terms its own
financial transactions processing engine - which capitalizes on a seven years practice
proven commercially available application
In our view an open source application represents in fact the acceptance of the
commoditization of the payments processing arena an opportunity to get away from
existing patchwork
60 of the financial services industry is committed to adopt open source software as
part of their infrastructures 72 having well defined open source licensing policies1
This trend is due to the actual challenges the financial industry faces
Should FinTP application be SaaS and cloud ready it will offer the customers options
to architect their business infrastructure according to their strategy
1 According to the Open Source Research (Aug 2010) authored by Accenture
FinTP - Vision and Scope
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Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
4 Vision of the solution 41 Vision
What Allevo undertakes
This paragraph explains why and how Allevo is going to cut the branch it happily sits on
Today Allevo is milking a conveniently productive cash cow namely qPayIntegrator
an application created for processing financial transactions qPayIntegrator is a
practice proven solution certified by SWIFT on SEPA and Remittances compliance It
ensures revenues through new licenses sales and the recurring maintenance and
support services
Bitten by the flea of restless evolution Allevo aspires towards sharing its existing
assets to open a new door to a larger more transparent and collaborative market To
put it bluntly Allevo has decided to make the strategic move of publishing into the
open source space an application for processing financial transactions
Why
The simple reason behind this initiative is achieving a larger footprint in the financial
industry In other words Allevo is ready to bet that sharing its application in the open
source space the trust and enthusiasm of community members will strongly influence
both the spreading and further developments of the shared product
This initiative is a commercially disruptive transformation in the sense that the
distribution of the financial transactions processing application will be mainly the task
of the community members If the TCO will be significantly convenient and if the
solution will match the needed quality trust and safety then Allevo expects that the
market acceptance trend will be solidly sharp An open source application for
processing transactions will not only solve the specific needs of a company but will
also generate sub-communities (either regional or by industry) They will push the
interoperability of the application forward to transactions interpretation and their
operational consequences industry-wide
People will continue to generate increasing amount of data and will want to use that
data from different locations paying no attention to distances The trade and financial
community should match this new developing framework with a new financial
ldquoecosystemrdquo What today are premium applications tools or devices will commoditize
in the future to come
Todays high speed communication channels and powerful multipurpose personal
devices put pressure on companies to rethink and adapt their services Allevo strongly
believes that one of the missing pieces of this developing ecosystem is a versatile
safe free of licensing cost and widespread application for processing financial
transactions It should be capable to connect to various communication channels It
should bring together cloud based resources corporation back or front-office systems
intelligent wholesale or retail equipment transportation and many other assets this
new global ecosystem is ready to use
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
No man is an island
This exciting journey Allevo embarks on is not doable without companions
The most obvious need is that of a cohesive community with sufficient resources
talents and ideas By cohesive Allevo means that the enrolled companies and
individuals share the same set of values These are professional ethics proven
practice professionals safe amp failure-free operations While the participants speak the
same language the intent of working for efficient interoperability means eliminating
misinterpretation Thus the need to manually process transactions will be reduced and
many current ldquoexceptionsrdquo will be eliminated
Like any other form of people gathering the community needs rules governance
agora to make their voice clearly heard (requirements amp ideas) A supervisor is needed
to guarantee that the challenges are understood that the actions anticipate the desired
solution and that proper decisions are taken In this document the supervisor is called
Moderator since atop of being a moderator the supervisor should also be an
accepted and trustful negotiator perceived at the same time as a leader by all
community participants
When
Allevo is in a position of offering a reasonably strong ground for both creating this open
application and starting a community
On the latter Allevo qualifies to be one of the first members of the community given its
firm belief that the world will become a large cooperation space where ideas data and
information will be openly exchanged and knowledge openly shared - in the best
interest of the people
The deep root of the software application that Allevo brings to the community is
credited by 7 years of practice and features a number of credentials Making FinTP an
open application qualifies it to become a tool for companies with constrained budgets
Adopting FinTP will empower its customers to equally interpret both the syntax and
semantic of the exchanged financial instructions
Bottom-line Allevo has initiated the project confident to quickly find other visionaries
sharing the same daring ideas on how to lay the firm foundation of a new efficient and
successful financial ecosystem
How
Now this is the tricky part of the story The easiest part of the project is creating the
open source application The success lies in launching the community simultaneously
This means that prior to the official release the community roles should be well
defined fundamentally agreed upon by the main sponsors the Moderator should
formally engage and the initial membership should include some prestige companies
and IT vendors Thats tough but this is how it has to happen
What is in it for
Allevo the company will become member of a club where it can seed future
developments This will further lead to the enhanced visibility of Allevo team and
portfolio
The community members they will become members of a club unified by the mutual
interest of pushing the interoperability level to a more refined stage of financial
transactions processing while enjoying the benefits of a falling TCO
FinTP - Vision and Scope
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The Moderator this entity will consolidate its influence and prestige in the rapidly
transforming financial market It will be the parent of the deeper standardization of the
financial business crossing the bridge between financial messages conveying
between institutions up to the institutions interface with their customers This will lay
the ground for the financial integration to equal the industrial and trade distribution
chain footprint
Whats next for FinTP
After FinTP has successfully been adopted in the market on a reasonable scale the
future looks even brighter
Companies relying on a trustful standardized processing application will be able to free
up their minds amp budgets for what uniquely differentiates them in their customers‟
eyes quality of service relevance trade easiness agility of delivery risk containment
social responsibility or other distinctive factors
Once all this has settled in self-adaptive trade business systems will come forward to
close the loop between customers and their providers
42 FinTP Positioning
FinTP is a key business software that opens markets by aggressively addressing
customers with constrained investment budgets Allevo strongly believes that FinTP is
tightly knitted to SWIFT 2015 Strategy2
The payments arena in itself has reached a high level of maturity payments becoming
a commodity on these premises back-office software should no longer be a
differentiator
FinTP creates a widespread financial transactions processing platform a cheap
alternative (to the current proprietary payment systems) for an industry common
solution which will evolve into a new standardization layer
2 See Bibliography
FinTP - Vision and Scope
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FinTP shifts the competitive space and consequently the innovation drive (from back-
office and mostly financial institutions and large corporations) to SWIFT traditional and
new business areas (treasury and front-office of the banks large financial institutions
corporations and SMEs - including MFIs)
43 FinTP Applicability
The usage of FintP in several domains ndash banks micro-finance institutions CSMs corporations and public administration ndash is discussed The main building blocks provided by FinTP for the processing of financial transactions are shown in each case
For setting the scene consider the naiumlve drawing (see below figure) which depicts
1 the bank‟s applications - implementing the core products and services the banks provides to its customers (FX Lending Payments TF custody etc)
2 banking correspondent business and infrastructures they connect to to settle for example their payments
3 corporate customers or local financial institutions engaged in distributing their products and services
4 the individuals who benefit from the service of the bank directly or intermediated by partnering financial institutions or corporations - including retail chains connectivity channels that are either SWIFTNet or VPNs over internet or bank‟s own private network
FinTP - Vision and Scope
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Given the application scalability FinTP is fitted to deal with
1 B2B environment type FinTP performs transactions routing and processing between the before depicted institutions thus achieving cross industry interoperability Additionally FinTP helps the business customers to consolidate their financial or treasury operations similarly helps the retail chains to reconcile and settle the available stock with the registered sales
To exemplify ensuring SEPA Readiness for banking institutions and for their customers is briefly discussed
By 2014 banks in EURO zone should be ready to process instructions in ISO20022 format FinTP can be an efficient solution to achieve rapidly compliance with the EPC provisions
Are the bank‟s customers ready to send the instructions data in the right format Are you ready to accept this type of data Are you able to extend solutions to help your customers better preparing for SEPA instructions FinTP has the right building blocks for banks and corporations
2 B2C environment type FinTP goes further down to the end customers The individuals can interact directly in a branch or remotely using their computers tablets smart phones to provide them with personal financial portfolio management It enables them to operate on their bank account or to do shopping It also supports new financial instruments such as PayPal Google wallet Facebook UK faster payments mobile payments amp commerce M-Pesa NFC etc
FinTP applicability profiled on beneficiary type
FinTP - Vision and Scope
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a Banks
Regional and international banks are rethinking and often improving their business architecture because of strong penetration of traditionally non-financial business in the money supply chain
The banks have in general the following choices
i Stay the course This often means keep on muddling
ii Outsource the processing of financial transactions in its entirety or in parts
iii Lower the recurring costs dramatically and benefit from joint developments by implementing Open Source solutions for commoditized parts of the needed infrastructure
Allevo provides the building blocks for the processing of financial transactions (FinTP) for those organisations who want to go for the third strategic choice
Toolbox3 (see 51 Features for details) as illustrated in bellow figure
Business flow consolidation
External interfaces to market infrastructure(s)
Funds transfer (credit transfer direct debit debit instruments duplicate detection treasury flows)
Operational functionalities such as liquidity reporting accounting reconciliation AML transactions filtering remittances management competitive reports etc
All helping the bank to manage the operational risk
3 Toolbox means a comprehensive collection of ready to deploy operational features
FinTP - Vision and Scope
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Payment factory - as illustrated in the bellow figure - is the bank-centralized service for smaller financial institutions or corporations to provide payment and collections processing in compliance with regional or global regulation along with additional service (eg intra-day limits etc)
A similar type of architecture can be used to set-up a bank administrated Member Concentrator or a (SWIFT) Service Bureau or a Payment Service Provider
FinTP - Vision and Scope
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b Micro-finance institutions
Toolbox3 (see 51 Features)
Integration of micro-financing application with mobile payment operator(s) and banks It provides support for loan applications loan disbursement and repayments It integrates the mobile payments and the banking payments and as such provides working capital management Multi-MMTs amp multi country operations are also supported
FinTP - Vision and Scope
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c CSMs
Toolbox3 (see 51 Features)
CSMs can use FinTP (as shown in the bellow figure) to provide its customers an
effective connectivity readiness package Likewise CSMs can use FinTP to connect
themselves to other CSMs they need to
FinTP - Vision and Scope
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d Corporations
Toolbox3 (see 51 Features)
The financial or treasury department of the corporation can use FinTP (as depicted in
the figure bellow) to concentrate the processing and management of all their financial
business in one single operation window FinTP provides the building blocks for a highly
effective money supply chain between banks providers and customers Beyond that
FinTP empowers control on the working capital and financial resources
FinTP - Vision and Scope
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e Public administrations
Toolbox3 (see 51 Features)
Public debt business automation through Treasury Bonds settlement on all trade phases eg pre- sales post-
Wages and pensions payment in compliance with SEPA regulations
Structural funds financial management (in a business group managed by the State Treasury)
FinTP plays a multiple roles in the Public Administration financial business
a Bridge between the global banks secure network (SWIFTNet) and the Government
secure national network performing format conversion and business flow mapping
thus FinTP acts as a financial integrator of the different public institutions
b Interoperability gateway with the banking community and financial market
infrastructures
c Auctioning portal for the Treasury Bonds allocation and settlement for the Primary
market
d Management of the payments related to Structural Funds financed projects and to
the providers of the public institutions
e Payments (such as wages pensions state subsidies) due to individuals intermediated by banks using SWIFTRemit framework Similarly the taxes collection should be handled by the same system and framework FinTP provides means to perform the operations using either mobile devices or the internet
FinTP - Vision and Scope
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44 Key Business Objectives and Success Criteria
Today Allevo faces two major limitations in fulfilling its business objectives
1 Strong dependency on its narrow national market and thus being limited to the
known European Union and particularly Romanian practice
2 Significant allocation of the development talents to maintaining qPayIntegrator
rather than working to new business oriented products
Allevo is going to expand its business footprint and simultaneously shift its revenue
source from back-office solutions towards its customers business area (treasury front-
office) applications
To achieve this goal Allevo will focus on developing FinTP business and on gathering
a strong supporting community formed by representatives of the targeted market The
coherence of the community should be ensured by a trustful and committed
moderator
Therefore for the success of the project Allevo deems instrumental the go-to-market
process the solid take-up tempo and the quality of the community
On the FinTP side Allevo should tightly focus on
1 Understanding the community members‟ needs values and priorities in
relationship with their business competitive ecosystem
2 Improving the product management process and the technical commercial amp
distribution documentation
3 Identifying and centring the attention on strong idea generation selection and
monitoring processes
4 Elaborating the right product architecture to enable easy functional and technical
scalability maintainability diagnose native features for flexible customization
compliance to global and regional financial standards and preserving the initial
licensing structure across various customers business models
5 Strengthening project management
6 Designing coherent knowledge transfer process
7 Designing efficient customer support
As a member of this FinTP open source community Allevo will provide
1) the open source FinTP application
2) knowledge transfer (training amp consultancy) to both early adopters and to the
product development amp maintenance body (see 46 The community)
3) for a limited period of time
- support amp maintenance
- alignment to technology standards amp regulation
4) further improvements
5) contribution to relevant proofs of concept community web site conferences
articles online awareness
The power of the community will draw other vendors to partner together to ensure
market coverage each of them complementing the other through their expertise
FinTP - Vision and Scope
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FinTP distribution will be performed via the communitys portal while the initial
consultancy product installation and support services will be delivered remotely
Following the free open source software model FinTP will be available under an open
license free of charge
In designing the new products Allevo will benefit on mid and long term from the deep
insight both of FinTP internals and the structure and operation of the community
45 Market Sizing
Our evaluation of the FinTP targeted market size
- the global market size taken into account is 26100 institutions out of which
- an average FinTP engine licensing fee is euro30000 resulting in potential
maximum expenses of euro783 million
- the corresponding yearly maintenance fee is euro5400 resulting in potential
maximum expenses of euro700 million in 5 years
- the number of potential institutions adopting FinTP in the first 5 years of
availability 250 tier3 amp 2000 tier4
- consequently the savings in 5 years could reach euro675 million in license
fee and euro2025 million in maintenance fee resulting in a total of almost euro90
million
Allevo believes that (at least) during 2013 and 2014 its current income source will be
preserved while after that period the main replacement of the lost (new licensing and
recurring maintenance) fees will mainly consist of services (consulting
implementation support education) and sales of licenses for newly launched
applications
FinTP - Vision and Scope
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46 The FINkers United community
The community structure comprises three main entities (as depicted in the bellow
figure)
1 The adopters (beneficiaries) consumer companies choosing to adopt the
FinTP product in compliance with the community line of business and ethical
conduct
2 The moderator the instrumental inspirational authority expected to draw both
the development vision and the guidelines of the community
3 The contributors
a institutionalized bodies eg development and maintenance test and
validation audit legal marketing
b independent contributors eg ISVs (Allevo falling under this category)
solution providers integrators or passionate developersindividuals
FinTP - Vision and Scope
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5 Solution Description amp Parameters Like qPayIntegrator FinTP offers a
standard compliant processing
engine for the financial transactions
exchanged between the back-office
or ERP applications and the financial
community (banks MFIs market
infrastructures corporations)
FinTP is able to process financial
messages in both FIN and ISO20022
formats and at the same time offers
a rich set of interfaces to different
financial applications FinTP provides
compliance with various clearing and
settlement mechanisms
Consequently FinTP ensures a high
level automation of the end-to-end
financial transactions processing
51 Features
The FinTP project has two major deliverable components
1 the FinTP application itself
2 the community built around FinTP
All subsequent chapters will refer to both of these
Component code
Component description Comments
FinTP4 FinTP is a financial transactions processing engine for 3rd or 4th tier banks microfinance corporate or SMEs treasuries available as open source application Functional characteristics
1 Operational features
o Predefined flows and message formats
Includes reconciliation of confirmations with transactions
o Single and multiple funds transfer instructions securities settlement amp reconciliation (Romanian Euroclear) messages
The supported payment instruments are credit transfer direct debit debit instruments
o MTMX coexistence Based on FinTP native internal data format (ISO20022)
o Multi-BIC multi-currency
o SEPA ready (certification) Compliancy with EPC regulations for SEPA formatting and business flows (for SCT and SDD) enables bank-to-bank and bank-to-CSM settlement
4 FinTP root is Allevo equivalent product qPayIntegrator a commercially available amp practice proven (since
2005) application qPayIntegrator provides a consistent set of functionalities and it is fully aligned to both industry regulations and technology
FinTP - Vision and Scope
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Component code
Component description Comments
o TARGET 2 ready Compliance with TARGET2 settlement and operations as regulated by the ECB
o SAGSAASAE SAL interfaces
Integration with SWIFTNet to enable banking business
o Liquidity reports Real time cash reports and forecasts using several criteria (currency subsidiary profit centre)
o Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
Analysis and reports of market trends based on volumes amount BIC etc along with early alerts on behaviour changes beyond the standard deviation
o Accounting reconciliation Automatic NOSTROVOSTRO accounts reconciliation intraday liquidity reports and integrated exception management
o AML (sanctions list matching)
High and low value payments filtering uses 20+ black lists and ensures their content maintainability
o Duplicate detection Detection and investigation of possible duplicates the detection window and criteria are configurable
o Remittances processing Covers banks business and operations area as well as distribution channel
o Treasury markets Automation of treasury flows (FX and money market)
o Statements Processing of SWIFT messages related to correspondent banks accounts administration
2 Technical features
o Financial message routing and monitoring
o Multi-threading capabilities
o Persistent end-to-end transactions
During each phase of the entire processing cycle permanent copies of the transaction are kept until the final completion thus avoiding any transaction duplication or loss
o Batching unpacking
o Resilience at transaction level
o Archiving
o Tracing and logging transactions and user events
o Transient errors detection and recovery
o Real-time search and reports
o Security access and user administration
o SaaS cloud ready
FinTP - Vision and Scope
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Component code
Component description Comments
FINkers United - community
Since FinTP is an application handling financial transactions the product releases and the related community should be tightly regulated and controlled As the project matures these components will be further refined The following main components of the community have been identified
‐ the moderator ‐ the product development
and maintenance body ‐ the product and
community auditor body (acting as a gatekeeper of official releases) to control and maintain the change requests integer and eliminate any malware exposures
‐ the test and validation body
‐ the legal body for defining the frame for product distribution amp licensing
‐ the marketing entity responsible for creating awareness and attracting contributors and adopters
‐ the portal used as a channel for marketing support and version control
‐ individual contributors namely ISVs solution providers developers integrators who wish to use their skills and knowledge to the benefit of the community
These tools strongly depend on the available budget and widespread
organization culture It is not mandatory for these to be open source if usage of
open source tools would mean lower quality
3) Licensing
The licensing model highly depends on the results of the open source legal and
business consultancy However we assume the following frame
‐ free of charge initial and recurring maintenance license for using FinTP
‐ FinTP does not use software components enforcing liabilities for the user
‐ consumers using FinTP source code (in part or entirely) should comply to
the licensing policy of the community
‐ the version released by the development amp maintenance body is the only
official amp to be trusted version of the community ensuring product integrity
unity and stability
4) Regulatory compliance
The regulatory compliance strongly depends on the early adaptation of new amp
changed rules via the recurring maintenance and on the quality of the audits
performed by the specific bodies of the community
Thus it is ensured that ISO20022 and FIN standards TARGET2 and TARGET2
Securities SEPA or country specific regulations (as stated respectively by
FinTP - Vision and Scope
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SWIFT standards EPC specification ECB or regional Central Banks
regulations that the community chooses to comply with) stay the most
important business specific anchors of FinTP
The FinTP design also offers support for flexible definition of new compliance
sources
5) Consultancy
The needed consultancy is twofold
‐ legal to ensure that FinTP does not infringe other licensing constraints
‐ open source specific to enable the right choice of the community type and of its governing law
The main constraint relies in choosing the right advisors true experts in the
open source industry amp with appropriate ethic profile - able to deliver as
promised The consultants have to be available 800 am divide 800 pm CET and
easily reachable - geo-location is of utmost importance Selection of the
consultant will basically be done on price assuming the right mix of expertise
and availability is achieved
6) Financing
While Allevo partially undertakes the financing of FinTP development the
ancillary consultancy necessary team education or acquisition of productivity
tools are far beyond the companys 2012 budget
To overcome possible delays in the project Allevo needs to sturdily act to
identify both the most appropriate commercial offer and additional necessary
financing source(s)
FinTP community
The community related items are members moderator legal tight regulation
marketing and financing For each of these items several assumptions and the
corresponding dependencies are provided in the following paragraphs
1) Members
We assume that the communitys members span several business profiles
(such as financial services institutions corporations market infrastructures
PSPs SSBs public administrations regulatory institutions and ISVs) sharing
the mutual focus on financial operations performance and improvement
By now after some tests on market acceptance there have been identified a
few supporters comprising financial services institutions and small ISVs
To ensure the success of building the community there is need for attracting
prestige influencers (market analysts consulting companies of scale - starting
with big four key industry providers - such as SWIFT other communities - ie
professional such as banking insurers capital market associations) and a
credible pool of financial institutions and corporations
To this end Allevo unrolls its own awareness campaign through direct
meetings publications blog posts and social media public presentations and
by officially launching the initiative in a conference focused on free of charge
financial transactions processing applications
Allevo further plans to use Sibos 2012 as opportunity to organize a less
traditional communication session gathering a relevant international panel to
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debate the strong and weak aspects of this initiative amp to get the public involved
as much as possible
The goal is that by the end of 2012 some tens of different institutions are
committed to co-found the community and to actively contribute to establishing
the legal frame and to forming the required action bodies
2) Moderator
Allevo perceives the Moderator as the critical member of the community since
his prestige and influence will warrant the outcome of all performed activities
The moderator must commit on long term to develop the community and to
sponsor it with its share of trust
Allevo strongly believes that the Moderator should have a global footprint be a
reputable and trustful institution
3) Legalcopyright
The legal consultant and advisor needs to provide the coherent legal frame to
cover all community activities by roles and accountability While making it easy
for the members it should be more demanding as far as contributors are
concerned (though still encouraging ISVs to actively participate) It has to draw
very precise responsibilities for the independent and institutionalized bodies
(for instance product maintenance amp development and audit) and for the
Moderators status
The quality of this legal work fully relies on the expertise and experience of the
advisor
The law governing the community has to be in harmony with the European
(either French or Anglo-Saxon) legal system and with the open source legal
regulations largely practiced in other business regions (US and APAC)
4) Tight regulation
FinTP the product meant to gather a community which uses and supports it is
all about moving values between different entities Thats critical irrespective of
the amount because failing to perform properly opens the doors to arguments
amp loss of reputation with the related tangible costs Moreover the product has
to be beyond any doubt during its entire lifecycle free of any malefic
embedded functions meaning that contamination has to be avoided by all
means
Allevo strongly believes that this requirement can be attained only by tight
regulation of the community specific approval of the initially launched version
of FinTP and of the recurring contributions
This approach can be felt strange compared to most open source communities
and can lead to little interest from IT talents making them feel banned or
restricted It remains the Moderator‟s duty to make them feel privileged if
accepted and rewarded as such However this censorship is a price to be paid
since the community and the project are about processing transactions
initiating value transfer
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5) Marketing
The community needs to have the clear objective of spreading both
geographically and over a consistent number of industries
To achieve this goal the community should be able to actively provide open
access to relevant information (including explanations of concepts hands-on
evaluation) to non-members and to also answer their questions on FinTP and
on the community itself
The same level of information needs to be ensured for the members to whom
supplementary updates on the community events decisions available
releases patches and fixes should be made available They need to also get
focused forum discussions on specific business areas and subsequent
processes need to be distributed
These functionalities have to be hosted on the community‟s dedicated portal
This portal has to provide content dialogue space information consolidation
and broadcasting It must be a virtual showroom for FinTP It needs to host
documents and virtual meetings subscription management and product
support amp development
The community has to be able to run its own meetings enabling direct contact
between active members or their representatives
Meaningful press releases have to be regularly issued along with actively
maintaining a productive relationship with market analysts to consolidate a
clear public understanding of the community spirit and goals
6) Financing
Its all about money-money-money since at least for the first 2-3 years the
community needs to be financed
Upon reaching maturity the institutionalized bodies of the community can earn their income from collateral activities - such as organizing conferences providing education and specialized support services - either for the initial FinTP installations and customizations or for recurring services requested by the members An alternative can be trialling and certifying interested providers enabling them to perform support services for FinTP
Thus who could pump money into this project It could be one or a mix of
‐ World Bank - if governmental programs are implied and provided a proper project which convincingly demonstrates the beneficed social impact
‐ EU development funding
‐ interested wealthy members of the community
The most critical dependencies are external such as (arranged according to
their impact) availability of funds for building the community finding trustful
and skilled open source consultants (legal business community licensing)
The synthetic view of the main assumptions and dependencies is provided in
the attached file
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Maintenance amp user support 1-Jan-13 Marketing inst action
4 Activities
Initial planning amp budgeting 15-Dec-12 document
Roles allocation 15-Dec-12 document
Community inst Implementation 15-Dec-12 action
Awareness campaign 1-Jan-13 action ongoing process
Members recruiting 1-Jan-13 action ongoing process
Continued operation 1-Jan-13 action ongoing process
Service sales 1-Jan-13 action ongoing process
Future development planning 1-Jan-13 document ongoing process
5 Resource allocation
If existing institution - allocation 15-Dec-12 action
If newly formed - recruiting 15-Dec-12 action
Make FinTP available to comm 1-Jan-13 action ongoing process
Start community financing 1-Jan-13 action ongoing process
6 Financing
Initial investment 1-Jan-13 action secured by that date
First period of comm operation 31-Aug-13 action secured by that date
co
mm
un
ity
Project approach
Project approachpdf
FinTP - Vision and Scope
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Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
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8 Scope This chapter deals with the phased availability of various FinTP features again considered from application and community points of view
In the first phase (due Dec 2012) the core of FinTP application is ready including the following technical features
- financial message routing between services and monitoring of exchanges
- multi-threading capabilities
- persistent end-to-end transactions
- batching de-batching
- archiving
- tracing and logging of transactions and user events
- transient errors detection and recovery
- real time search and reports
- security access and user administration
Similarly during the first phase the main community components need to be in place
- moderator
- software development and maintenance body (Allevo also available in the first and second phase of the project)
- test amp validation body
- (software) auditor
- legal
- main contributors (Allevo falls into this position)
- platform
- marketing
In the second phase (Dec2012 - Dec2013) several operational features of FinTP will be added
- predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit instruments securities settlement reconciliations
- MTMX coexistence
- multi-BIC multi-currency
- SEPA ready certification
- TARGET2 ready
- SAGSAASAE interfaces
- duplicate detection
- liquidity reports
- competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
- accounting reconciliation
- AML (sanctions list matching)
- SaaS and cloud ready
along with resilience and start of maintenance and knowledge transfer (the last two obviously continuing in the next phases)
FinTP - Vision and Scope
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Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
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The synthetic view of the project scope is provided in the following table
Crt No
Feature Activity Phase1 31Dec12
Phase2 31Dec13
Phase3 31Dec14
Phase4 31Dec15
Fin
TP
A Operational features
1
Predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit Instruments bonds (Romanian Euroclear) reconciliations
2 MTMX coexistence
3 Multi-BIC multi-currency
4 SaaS ready cloud ready
5 SEPA ready certification
6 TARGET2 ready
7 SAGSAASAE interfaces
8 Liquidity reports
9 Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
10 Accounting reconciliation
11 AML (sanctions list matching)
12 Duplicate detection
B Technical features
1 Routing financial message between services and monitoring of data flows
2 Multi-threading capabilities
3 Persistent end-to-end transactions
4 Batching de-batching
5 Resilience (at transaction level)
6 Archiving
7 Tracing and logging of transactions and user events
8 Transient errors detection and recovery
9 Real time search and reports
10 Security access and user administration
C Other activities
1 FinTP maintenance
2 Knowledge transfer
Co
mm
un
ity
Establishing the institutionscomponents
1 Mentor
2 Software Auditor amp Provider
3 Legal service
4 Members
5 Allevo initial role
6 Platform
7 Marketing
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
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9 Limitations The main limitations in the economy of the project consist of phasing several FinTP
operational features for the following year (eg debit instruments liquidity reporting
AML filtering accounting reconciliation resilience SaaS ready cloud ready etc)
At the same time for features intended to front-office usage like Remit it was not yet
decided to publish them as open source product
The synthetic view of the main limitations is provided in the following table
Crt
nrItem Limitation Exclusion Comments
1
FinTP
a
Operational features Available in 2013
b
Remit Not included in
open source
package
2
Community
a
Rules Tightly controlled The statute should
ensure the right
balance between
safety and free
association of talents
Given the significant budget allocation (at least from Allevo perspective) the strong
requirement to meet the maximum ceiling will limit the FinTP product initial preparation
and maintenance expenses
Community wise the obligation of a tight regulated statute will have to ensure the right
balance between safety (mandatory in an environment dealing with financial
transactions) and a free association of talents (typical in an open source community)
In the first period after launch (at least the first two years) of the initiative the
maintenance and support activities will be provided by Allevo (as initial contributor)
A major restriction would be to meet the budgeted development and maintenance
FinTP - Vision and Scope
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10 Appendix - Risks
Specific risks
1 Product
a Long delivery lead time This is a medium probability and impact risk however Allevo should make available the needed resources and motivate the entire team for the job
b Credibility loss if FinTP fails to further become certified on meaningful operations andor business tracks (ie SWIFT business certification tracks or similar) The single possible containment is lobbying if the application certification program rejects open source products Anyway the impact is very important and its materialization should be avoided
c Low quality of the allocated team and improper version management are highly unlikely to occur as long as the formal transfer of responsibility is smoothly made from Allevo to the corresponding body put in place by the community The real hidden risk is that this process could take too long and it thus has a very high impact
d Poor FinTP quality may result if the community fails to institutionalize proper quality assurance (QA) and verification amp validation (VampV) processes This is most expected not to happen but if it does the impact is at least medium The single path to overcome this risk consists in a professional approach to these items based on institutionalizing practice proven QA and VampV processes
e Allevo lack of expertise in the open source business This can be contained by carefully selecting trustful amp truly expert consultants Otherwise it means more money longer time spent on project and expenses without proper return
2 Service
a The software maintenance does not properly deliver as expected ie on-time and on-quality bug fixing regulation amp standards alignment and productivity amp technological improvement The key to contain this risk materialization is the community status having provisions to neatly provide maintenance and further development of the rules for FinTP as well as the applicable rules and fees for the ancillary services
b Low quality and safety of the service received by the members of the community To avoid the risk of performing the one-time amp recurring support services by under-prepared professionals the community has to rule the process of training and qualifying the companies willing to contribute in this area
c Not meeting the minimal SLA criteria The community should regulate and periodically revise the training curricula and to further audit both the teachers and the certified experts to ensure the service level agreements are met
d Under motivated service providing professionals - up to the level of not feeling the high impact of their activity The community status must provide guidance to the contributors on the minimal standards the professionals should meet
FinTP - Vision and Scope
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e Constrained expert resource pool This risk could be overcome by the communitys policy to ensure at all time a balanced number of motivated experts to the communitys size Failing to do so may result in high negative impact of the community business and public perception
3 Community
a Emergence of a parallel competitive community If the optimal timing between publically disclosing FinTP and community take-off is not achieved then there are high chances that following a competitive initiative other entrepreneurs successfully launch their own similar or derived community This could be avoided by periodical reviews of the progress of both FinTP and community status and deciding whether the project needs to be put on hold or not
b Unfit reputation of the Moderator or main contributors If either the Moderator or the initial contributors are not beyond any dispute and are reputable institutes then there is certainly something rotten in Denmark and the project should be put on-hold
c No commitment from the Moderator‟s side Similarly if the Moderator does not commit to the project it means that Denmark has a serious problem to solve The project should relinquish until the matter is fixed
4 Legal
a Misuse of copyright and intellectual property (IP)The assigned working team could not be aware of the limitations and liabilities of using (entirely or partially) third party software this risk can be contained by delivering the right training providing proper working procedures carefully recording and documenting the use of open source code and carefully cross-scanning
b Injunctive relief and financial damages can be caused by not properly and continuously controlling the use of third party open source code resulting in copyright or IP infringement There are two containment measures which can be taken tighten the compliance check during the product lifecycle or apply the sanction policy as to set an example
c The competition starts a class action - this may result in delaying the project
5 Financing
a Lack of long term financing institutions Allevo should urge its consultant to identify and draw a reasonable list of financial options institutions
b Exceeding the budget given that this type of project has no precedent in Allevo and to avoid exposing to the dependency on engagement to financial institutions or to commitments beyond the existing budget a further carefully drawn project plan is needed along with its explicit approval from the board of the company
Market related risks
1 False expectations
a Expensive services Not everything is free aside the initial and maintenance free licensing the training the support and other professional services can amount to more than in general expected Allevo rates this risk as medium possible but with low impact as long as the law governing the community and its initial period of operation will consecrate fair market prices and competitive sources of contribution
FinTP - Vision and Scope
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b Hidden costs for patches updates and upgrades While of similarly weight in terms of probability and impact this should be no real concern as long as the law governing the community clearly provides for free and accountable maintenance
2 Poor image on quality
a Too many releases making FinTP hard to manage and unsafe to operate Given proper regulation of the community and the mature root of FinTP Allevo disregards the possibility of this risk to materialize However if this were to happen this is a high impact risk and by all means should be avoided
b Backward technological (in)compatibility looks to us as a low risk in all respects and within organizations applying practice proven software engineering processes and professional - accountable team this is not likely to materialize
c Support can be perceived as the highest impact risk for FinTP This can be overcome by tight regulation of the commercial and professional conditions to deliver the service (for instance only qualified organizations should be recommended to members for supporting FinTP)
d SLA and accountability for both internally or externally performed services is closely correlated to the previous risk and the community status should provide the support for growing a community of competencies and accountable professionals around FinTP Periodical auditing (by the specialized community body) of this pool of professionals will further ensure the confidence that the skills are preserved at the required level
e Code fragmentation and forking is a high impact risk with a low probability of happening in the initial period provided the knowledge transfer is done orderly and in an institutionalized manner
3 Inherent uncertainty
a Community disputes can jeopardize its cohesion the project viability and future This is a high impact possibly high probability risk and it is the definite role of the Moderator to feel prevent and while materializing mitigate any conflicting situation
b FinTP going commercial post-launch This is a huge impact possibly high occurrence probability but manageable with the right legal instruments provisioned in the community
c Loss of alignment to industry standards and regulations This risk has medium probability and medium impact given the assumption that the community is tightly regulated and the working bodies institutionalized and gathering professionals
4 Legal
Copyright infringement given Allevo experience in the open source business this risk is highly probable and has a high impact on FinTP especially if mistakes are made in the launching phase Similarly if during the product maintenance and further development phase the community fails to institutionalize proper formal software development processes (covering all FinTP lifecycle phases) based on industry practice proven model(s) Supplementary the expert code scanning audit for compliance is the single resort to preclude external software source misuse
FinTP - Vision and Scope
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5 GPL specific
a Noncompliance to the GPL license If GPL license is used the product should further distribute in compliance with this part provisions High impact and probability but manageable if proper software development processes are used and if the statute clearly defines the licensing model for FinTP
b FinTP unconformity The risk that software engineers get inspired by a chic solution which they import and emulate similarly in FinTP And this is also highly possible since les grands esprits se rencontre
6 Existing customers attitude
Anger for having paid for something which now is free The existent customers can be concerned about the future of their installed system its further development (in one word its future) and on the quality of the service (SLA including) Some recent adopters can possibly be furious for spending their money on buying licenses for a piece of software that differently packaged becomes free of charge
For the first situation the single best solution for Allevo is to ensure a smooth transition from the current status to the new solution deployed Also highly probable Allevo should provide for simultaneous (for at most one more year) maintenance of both FinTP and for qPayIntegrator
For the 2012 new qPayIntegrator adopters Allevo should transparently state the product‟s future and propose a commercially attractive migration towards FinTP when it becomes publically available (like the option for the installation migration and recurring services) The decision should clearly stay with the customer if he still buys Allevo licenses delays the implementation until FinTP is available or if he goes for a competitive solution
In other words the key to mitigate the existing customer perception is switching places and discarding if the situation proves to be uncomfortable
Bottom-line is that to avoid most of the risks the FinTP community must be a rather tightly controlled one though still opened to anyone willingly abiding to the rules
The synthetic view of the main risks their assigned probability impact and the corresponding containment approach is provided in the attached file
Risk IDRisk
CategoryRisk
Probability
(High
Medium
Low)
Severity
(High
Medium
Low)
Containment (Mitigation Action Proposed)
M1Free as in a
Free Puppy
M101
The training service amp support cost could account more than the
commercial product its replacing (application software is typically 30 of
the total cost of ownership of most projects)
Medium Low
M102 Hidden costs ie charge for patches updates and upgrades Medium Low
M2Frequent
updates
M201
Projects might be updated frequently - as often as everyday Too frequent
updates could have a negative impact on the implementation
interoperability and support
Low HighMAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M3Backwards
compatibility
M301 Less accountability Low LowMAP03 Access to prior versions of source code (additional in-house
development and support procedures might be necessary)
M4Support
related risks
M401Support could be perceived as the biggest issue with open source
software deploymentsHigh High
M402 Internal External Accountability SLAs High High
M403Code fragmentation or forking if the community fails to institutionalize
corporate like formal structureHigh High
M404Support could require greater involvement and different skills set from
operations staffMedium Medium
M5Community
immaturity Low Low
M501Could generate incompatibility of FinTP with industry standards amp
regulationsMedium Medium
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M6 Uncertainty The inherent uncertainty in every open source project
M601 Community disputes might impact project viability and future High HighMAP04 The Mentor should prevent amp mitigate any conflicts inside the
community
M602 Open source projects may not stay open in future releases High HighMAP05 The originator liabilities should be strongly enforced by the
community statute
M7 Legal risks
M701 Copyright infringement High High
M702 Can open source software deployments pass an audit
M8 GPL General Public License specific development concerns
M801Software thatrsquos derived from an existing GPL project in whole or in part
might not be released under the same licenseHigh High M08 The community should regulate the licensing model
M802
Developer contamination - developer could review an existing open source
project could see an elegant solution then implement a similar function in
closed source project
High HighMAP09 Procedurals constrains for the software developers should be
enforced
M9
Current
customers
attitude
The actual customer perception could be negative High High
M12 To prevent a negative attitude Allevo should involve the customers
in the FinTP project Allevo needs their active support for a smooth and
issues less transition
ma
rke
t re
late
d r
isk
s
co
st
rela
ted
ris
ks
MAP01 The community should regulate the applicable rules and fees for
services and maintenance
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
bu
sin
es
s a
nd
le
ga
l ri
sk
s
MAP06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S1Product
related
S101 Late delivery lead time Medium MediumMAP15 Allevo should provide proper resources (funding and human
resources)
S102 Credibility loss if fail to certify with SWIFT Medium High MAP16 Should be discussedamp agreed with SWIFT
S103 Inexperienced team or allocation below needs Low HighMAP15 Allevo should provide proper resources (funding and human
resources)
S104 Improper or non efficient version management Low High MAP16 Review the current Allevo Configuration Management System
S105Poor quality if the community fails to institutionalize proper verification and
validation practices3
M06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S106 Lack of expertise in open source projects 2 Allevo should engage thoroughly selected Open Source consultants
S2Service
related
S201
The software maintenance not properly providing for bugs fixing
regulationamp standard alignment technological improvements communities
improvement requests
High HighMAP01 The community should regulate the applicable rules and fees for
services and maintenance
S202 One-time amp recurring services might be provided by unqualified resources High HighMAP17 The community should regulate the training curricula and related
expertise certification
S203 Provided services might not meet the minimal SLA performance criteria High HighMAP17 The community should regulate the training curricula and related
expertise certification
S204 Relaxed or lack of accountability of the professionals High HighMAP18 The community should regulate the employment agreement of
the professionals
S205 Lack of qualified professionals High HighMAP19 The community should ensure a balanced number of certified
professionals with the community size
S3Community
related
S301
If after disclosing FinTP the community does not enthusiastically adopt
the solution competitors might more successfully develop a similar
strategy
Medium MediumMAP20 FinTP promotion should be convincing and realistic A well
organized marketing campaign by Allevo
S302The community mentor andor early adhering members have no
undeniable prestige or are not largely trustfulMedium Medium MAP99 Project status review Ending the project could be one option
S303 The Mentor does not strongly commit for the project Medium Medium MAP99 Project status review Ending the project could be one option
S4 Legal
S401Exposure to copyright and IP infringement due to working team unaware of
the legal consequences of using third party softwareMedium Medium
MAP21 Allevo should keep records and fully document the use of open
source code
S402Copyright or intellectual property infringement can lead to injunctive relief
and monetary damagesHigh High
MAP23 Allevo should institutionalize a tight licensing and technical
control
S403 All risks related to open source compliance High HighMAP24 Allevo should appoint as soon as possible a FinTP compliance
Officer
S5 Financial
S501 Lack of financing institutions Medium MediumMAP25 Allevo should urge consultant to provide a consistent list of
potential investors
S502 Dependency on the financing institution approval Medium Medium
S503Not thoroughly planned project overlooking one or some project cost that
need to be financedMedium Medium
Sp
ec
ific
ris
ks
tec
hn
ica
lm
ark
eti
ng
leg
al
fun
din
g
MAP26 Allevo should carefully draw a consistent and eligible project for
financing
Risks
Riskspdf
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 40 of 43 Allevo Confidential
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Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
11 Appendix - Bibliography 1 Accenture Open Source Research Geographic Findings
2 Accenture Open Source Research Industry Findings
3 Producing Open Source Software - How to Run a Successful Free Software
Project by Karl Fogel
4 Open Source Software Risks and Rewards by Gary Hein
5 A Business Case Study of Open Source Software by Carolyn A Kenwood
6 6 critical success factors for product development by Christian Wig
7 Bank 20 by Brett King
8 Managing the business risks of open innovation by Oliver Alexy and Markus
9 Product idea evaluation checklist shared by Startgass AS
10 SWIFT 2015 Strategy
11 Customers and business impact of product changes
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
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Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
12 Appendix - Glossary ACH Automated Clearing House that is used to clear retail payments
between banks in a country or region
APAC Asia and Pacific
AML Anti-Money Laundering
BCampDR Business continuity amp disaster recovery
B2B Business to business
C2B Consumer to business
CET Central European Time
CMMI Capability Maturity Model Integration
CMS Configuration Management System
Coexistence The situation of multiple standards existing at the same time in the same business space Within SWIFT this refers to the coexistence between the MT and MX standards This also refers to the set of measures being taken to make the situation easier to handle by the community (publication of mapping rules translation serviceshellip)
CSM Clearing and Settlement Mechanism
CUG Closed User Group
Dictionary Part of the ISO 20022 Repository that contains all items that can be re-used during business modelling and message definition activities
EAI Enterprise Application Integration - middleware to connect applications and communication interfaces Typical EAI software includes features for mapping data between various formats enriching messages with data from other systems and orchestrating message flows
ECB European Central Bank
EMEA Europe Middle-East Africa
EPC European Payment Council
ERP Enterprise Resource Planning
EU European Union
EUCLID Connectivity to EuroClear Bank services
FIN The messaging service offered by SWIFT for the secure and reliable exchange of MT messages in store-and-forward mode By extension the syntax used to format these MTs
IP intellectual property
Interoperability Capability to easily exchange business information while using different message standards ISO 20022 promotes global use of syntax-neutral business and message components as a common denominator to achieve interoperability between standards using different syntaxes
ISO The International Organization for Standardization - an international standard-setting body composed of representatives from more than 160 national standards organizations that promulgates worldwide standards in a variety of domains aiming at facilitating cross-border exchanges of goods services and techniques
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ISO 15022 An ISO standard that describes the syntax to be used for developing securities messages used mainly to support back office related transaction flows It replaced the previous securities messaging standard ISO 7775
ISO 20022 RA Registration Authority - offers the services described in an ISO standard on behalf of and under a contractual agreement with the International Organization for Standardization
ISO 20022 Repository
Repository maintained by the ISO20022 RA which contains the financial business models message definitions and components defined in compliance with the ISO 20022 standard
ISO 20022 RMG Registration Management Group - in charge of the overall management of the ISO 20022 development and registration process in accordance with the ISO 20022 standard
ISO 20022 SEG Standards Evaluation Groups -in charge of validating candidate ISO 20022 messages within the scope of the business justification and ensuring that they address the needs of their future international community of users
ISV Independent Software Vendor
KYC Know Your Customer
MACUG Member Administered Closed User Group
Message A set of structured information exchanged between two parties involved in a financial transaction
Message component and element
A re-usable data structure used for assembling message definitions The data defined in a message component is bdquotraced‟ back to the business components and business elements In simple terms business components define the business meaning message components create data structures for messaging
MI Market Infrastructure - a system that provides services to the financial industry for trading clearing and settlement matching of financial transactions and depository functions
Middleware Software that enables data to be exchanged among different systems with standard communication components and tools for formatting mapping and processing
MT The traditional bdquotag value‟ Message Types for use on the FIN service offered by SWIFT
MX An XML message exchanged over SWIFTNet whether or not ISO 20022 compliant
OS Open source
PSP Payment service provider
QA Quality assurance
RMA Relationship Management Access
RTGS Real Time Gross Settlement System
SAA SWIFT Alliance Access
SAE SWIFT Alliance Entry
SAG SWIFT Alliance Gateway
SaaS Software as a Service
SCORE Standardized CORporate Environment
FinTP - Vision and Scope
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Semantics The study of meaning usually in language The word is often used in ordinary language to denote a problem of understanding that comes down to word selection or connotation
SEPA Single Euro Payment Area
SLA Service level agreement
SME Small and Medium-sized Business(es)
SOA Service Oriented Architecture
SSB SWIFT Service Bureau
STP Straight Through Processing
SWIFT Society for Worldwide Interbank Financial Telecommunication Visit wwwswiftcom
Syntax Physical format of a message used to identify and represent the conveyed pieces of information
T2S TARGET2 Securities - an initiative of the Eurosystem It is an IT platform that aims to make settlements across national borders simpler and more cost-efficient
TARGET2 The Eurosystem-owned European Real Time Gross Settlement (RTGS) system (Trans-European Automated Real-time Gross Settlement Express Transfer System) TARGET2 is one of the largest high-value payment systems in the world
Taxonomy The classification in a hierarchical system typically organized by super type - sub type relationships also called generalization-specialization relationships or less formally parent-child relationships
TSU Trade Service Utility
TCO Total cost of ownership
Translation rules
Set of rules to be used to map the pieces of information included in a message expressed in one syntax to the equivalent message expressed in another syntax
Remit Remittances
XML eXtensible Mark-up Language - popular syntax to encode documents (or messages) electronically on the Internet XML allows communities to define their own identifiers (or tags) and format (or data type) for each component of a message
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Bureaus etc) ISV regulatory institutionsMarketing plan feasibility campaign efficiency and costs
2 MentorPreferable SWIFT
Also eligible SunGard IBM affiliation to other OS communitySWIFT decision
3 Legalcopyright Expert legal consultant and RO apprentice Cost and time shift dependent
4 Tight regulation Clear membership admission amp software contribution criteria The quality of the consultant advice
5 Marketing Actively recruiting community members Marketing plan feasibility campaign efficiency amp customer skepticism
a community portala provide content amp debate space information consolidation amp dissemination virtual
showroom subscription management support
a business analysis solution availability and maintenance by one of the
members or employed company
b press releases amp
announcementsb PR and AR b communicators availability and costs
c events c periodical conferences user focused meetings c cost dependent
6 Financing World Bank EU amp private funds Lobby amp funds availability
Item
FinTP
FinTP community
FinTP - Vision and Scope
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1 Control section Update history
Date Author Vers Comments
20 feb12 George Marcu 10 Prerelease version 16 mar12 19 mar12 09apr12 22iun12 27iul12 31aug12
George Marcu George Marcu George Marcu SG DA SG DA SG DA
20 25 25 26 26 26
1 Added control section 2 Migrate RomGlish closer to English 3 More clarity in text and Glossary 4 Fixed first commentaries on
a FinTP code integrity and safety b Community structure c unified referenced institutionsconcepts d updated attachments as well
5 Tables format corrections 6 Bibliography review 7 Added use cases timeline Text left in yellow means comment Text left in red means alert New chapter - FinTP Aplicability Term updates in Project approach and Next steps tables Image updates from FinTP Aplicability chapter Chapter 9 Limitation ndash term updates (table) Image update Micro-finance institutions
12oct12 JG 27 Update FinTP high-level picture Rename The community chapter to The FINkers United community
Verified and approved
Name Position title Date Version
Corina M
Distribution list
Name Position title Company Version Kosta Peric Matteo Rizzi Mariela Atanassova Judit Baracs Stephan Kraft
SWIFT 1 25
Rodica Tuchila ARB 1 2
AV MLD IBM 2
Marcelina Joavina MSFT 2
Zoli Herczeg MSFT 25
Artur Pereira Descontel
Louis Suaacuterez-Potts Karl Fogel
Independent consultants
25
Silviu Hotaran Gustav Kaeser Semper Human
2
Norbert Houmlckl Gregor Vogrin GCI Management 25
Sibos visitors via mem stick 27
Related documents and links
Related documents Document ID or link
FinTP - Vision and Scope
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2 Introduction Allevo intends to prepare and publish a freely licensable financial transactions
processing application further dubbed FinTP
The document is an introduction for further product design and implementation as well
as an initial tool for communication with different sponsors regarding this initiative
Concurrently the document provides Allevo an overall view on how to simultaneously
deploy the two tightly coupled components of the FinTP project creating an open
source application for processing financial transactions and launching a controlled
community of professionals
21 About this document
The paper contains the vision scope and limits of the Open Source Application for
The document provides high level information on the business opportunity the solution
vision and description the high level architecture the project approach what is and
isn‟t included in the scope of the project and the next steps
If there‟s need for further information please
‐ see the glossary section
‐ contact the authors who welcome questionscomments as help to improve the
clarity and consistency of the script
22 Executive summary
This section provides the abstract of the scope and motivation of the FinTP project
What Allevo undertakes
Allevo aspires towards sharing its existing assets to open a new door to a larger more
transparent and collaborative market To put it bluntly Allevo has decided to make the
strategic move of publishing into the open source space their application for
processing financial transactions
Why
The simple reason behind this initiative is achieving a larger footprint in the financial
industry In other words Allevo is ready to bet that the trust and enthusiasm of the
community members strongly influence both the sales and further developments of the
shared product
No man is an island
This exciting journey Allevo has embarked on is not doable without companions There
needs to be a cohesive community (contributing resources talents and ideas) A
moderator is also needed to guarantee that challenges are understood that actions
anticipate the desired solution and that proper decisions are taken
FinTP - Vision and Scope
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When
Allevo has already initiated the project confident to quickly find other visionaries
sharing same or better ideas on how to lay the firm foundation of a new efficient and
successful financial ecosystem
How
By both creating the open source application and simultaneously launching the related
community
What is in it for
Allevo the company will become member of a club where it can seed future
developments
The community members they will become members of a club unified by the mutual
interest of pushing the interoperability level to the more refined stage of financial
transactions processing while enjoying the benefits of a falling TCO
The Moderator this entity will consolidate its influence and prestige in the rapidly
transforming financial market
FinTP - Vision and Scope
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3 Background and Business Opportunity Payments and securities processing is the earliest form of software development in
most financial institutions The evolution in rules and regulations has very often been
built upon these developments with patchwork as result
The payments arena ie the processing of payments in itself has reached a high level
of maturity and operational software should no longer be a differentiator Payments
have become a commodity in the financial industry
Lazaro Campos in his first Sibos speech as CEO of SWIFT in the opening plenary of
Sibos 2007 in Boston has suggestively stated that SWIFT products should evolve to
the operational simplicity of a widespread fax machine
The financial ecosystem is going through major technology shifts and is at the same
time facing an increasing regulation pressure These changes represent business
opportunities for Allevo The opportunities are being driven by market forces - consumer
requirements supply and demand - not by regulators Companies and communities
start experiencing new financial instruments such as PayPal Google wallet
Facebook UK faster payments mobile payments amp commerce M-Pesa NFC etc
The existing solutions for payments processing are proprietary featuring a great
variety of licensing models amp costs implementation lead time maintenance amp support
In short not something one would expect for a commoditized process
Allevo is strongly committed to publish under free-open licensing terms its own
financial transactions processing engine - which capitalizes on a seven years practice
proven commercially available application
In our view an open source application represents in fact the acceptance of the
commoditization of the payments processing arena an opportunity to get away from
existing patchwork
60 of the financial services industry is committed to adopt open source software as
part of their infrastructures 72 having well defined open source licensing policies1
This trend is due to the actual challenges the financial industry faces
Should FinTP application be SaaS and cloud ready it will offer the customers options
to architect their business infrastructure according to their strategy
1 According to the Open Source Research (Aug 2010) authored by Accenture
FinTP - Vision and Scope
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4 Vision of the solution 41 Vision
What Allevo undertakes
This paragraph explains why and how Allevo is going to cut the branch it happily sits on
Today Allevo is milking a conveniently productive cash cow namely qPayIntegrator
an application created for processing financial transactions qPayIntegrator is a
practice proven solution certified by SWIFT on SEPA and Remittances compliance It
ensures revenues through new licenses sales and the recurring maintenance and
support services
Bitten by the flea of restless evolution Allevo aspires towards sharing its existing
assets to open a new door to a larger more transparent and collaborative market To
put it bluntly Allevo has decided to make the strategic move of publishing into the
open source space an application for processing financial transactions
Why
The simple reason behind this initiative is achieving a larger footprint in the financial
industry In other words Allevo is ready to bet that sharing its application in the open
source space the trust and enthusiasm of community members will strongly influence
both the spreading and further developments of the shared product
This initiative is a commercially disruptive transformation in the sense that the
distribution of the financial transactions processing application will be mainly the task
of the community members If the TCO will be significantly convenient and if the
solution will match the needed quality trust and safety then Allevo expects that the
market acceptance trend will be solidly sharp An open source application for
processing transactions will not only solve the specific needs of a company but will
also generate sub-communities (either regional or by industry) They will push the
interoperability of the application forward to transactions interpretation and their
operational consequences industry-wide
People will continue to generate increasing amount of data and will want to use that
data from different locations paying no attention to distances The trade and financial
community should match this new developing framework with a new financial
ldquoecosystemrdquo What today are premium applications tools or devices will commoditize
in the future to come
Todays high speed communication channels and powerful multipurpose personal
devices put pressure on companies to rethink and adapt their services Allevo strongly
believes that one of the missing pieces of this developing ecosystem is a versatile
safe free of licensing cost and widespread application for processing financial
transactions It should be capable to connect to various communication channels It
should bring together cloud based resources corporation back or front-office systems
intelligent wholesale or retail equipment transportation and many other assets this
new global ecosystem is ready to use
FinTP - Vision and Scope
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No man is an island
This exciting journey Allevo embarks on is not doable without companions
The most obvious need is that of a cohesive community with sufficient resources
talents and ideas By cohesive Allevo means that the enrolled companies and
individuals share the same set of values These are professional ethics proven
practice professionals safe amp failure-free operations While the participants speak the
same language the intent of working for efficient interoperability means eliminating
misinterpretation Thus the need to manually process transactions will be reduced and
many current ldquoexceptionsrdquo will be eliminated
Like any other form of people gathering the community needs rules governance
agora to make their voice clearly heard (requirements amp ideas) A supervisor is needed
to guarantee that the challenges are understood that the actions anticipate the desired
solution and that proper decisions are taken In this document the supervisor is called
Moderator since atop of being a moderator the supervisor should also be an
accepted and trustful negotiator perceived at the same time as a leader by all
community participants
When
Allevo is in a position of offering a reasonably strong ground for both creating this open
application and starting a community
On the latter Allevo qualifies to be one of the first members of the community given its
firm belief that the world will become a large cooperation space where ideas data and
information will be openly exchanged and knowledge openly shared - in the best
interest of the people
The deep root of the software application that Allevo brings to the community is
credited by 7 years of practice and features a number of credentials Making FinTP an
open application qualifies it to become a tool for companies with constrained budgets
Adopting FinTP will empower its customers to equally interpret both the syntax and
semantic of the exchanged financial instructions
Bottom-line Allevo has initiated the project confident to quickly find other visionaries
sharing the same daring ideas on how to lay the firm foundation of a new efficient and
successful financial ecosystem
How
Now this is the tricky part of the story The easiest part of the project is creating the
open source application The success lies in launching the community simultaneously
This means that prior to the official release the community roles should be well
defined fundamentally agreed upon by the main sponsors the Moderator should
formally engage and the initial membership should include some prestige companies
and IT vendors Thats tough but this is how it has to happen
What is in it for
Allevo the company will become member of a club where it can seed future
developments This will further lead to the enhanced visibility of Allevo team and
portfolio
The community members they will become members of a club unified by the mutual
interest of pushing the interoperability level to a more refined stage of financial
transactions processing while enjoying the benefits of a falling TCO
FinTP - Vision and Scope
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The Moderator this entity will consolidate its influence and prestige in the rapidly
transforming financial market It will be the parent of the deeper standardization of the
financial business crossing the bridge between financial messages conveying
between institutions up to the institutions interface with their customers This will lay
the ground for the financial integration to equal the industrial and trade distribution
chain footprint
Whats next for FinTP
After FinTP has successfully been adopted in the market on a reasonable scale the
future looks even brighter
Companies relying on a trustful standardized processing application will be able to free
up their minds amp budgets for what uniquely differentiates them in their customers‟
eyes quality of service relevance trade easiness agility of delivery risk containment
social responsibility or other distinctive factors
Once all this has settled in self-adaptive trade business systems will come forward to
close the loop between customers and their providers
42 FinTP Positioning
FinTP is a key business software that opens markets by aggressively addressing
customers with constrained investment budgets Allevo strongly believes that FinTP is
tightly knitted to SWIFT 2015 Strategy2
The payments arena in itself has reached a high level of maturity payments becoming
a commodity on these premises back-office software should no longer be a
differentiator
FinTP creates a widespread financial transactions processing platform a cheap
alternative (to the current proprietary payment systems) for an industry common
solution which will evolve into a new standardization layer
2 See Bibliography
FinTP - Vision and Scope
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FinTP shifts the competitive space and consequently the innovation drive (from back-
office and mostly financial institutions and large corporations) to SWIFT traditional and
new business areas (treasury and front-office of the banks large financial institutions
corporations and SMEs - including MFIs)
43 FinTP Applicability
The usage of FintP in several domains ndash banks micro-finance institutions CSMs corporations and public administration ndash is discussed The main building blocks provided by FinTP for the processing of financial transactions are shown in each case
For setting the scene consider the naiumlve drawing (see below figure) which depicts
1 the bank‟s applications - implementing the core products and services the banks provides to its customers (FX Lending Payments TF custody etc)
2 banking correspondent business and infrastructures they connect to to settle for example their payments
3 corporate customers or local financial institutions engaged in distributing their products and services
4 the individuals who benefit from the service of the bank directly or intermediated by partnering financial institutions or corporations - including retail chains connectivity channels that are either SWIFTNet or VPNs over internet or bank‟s own private network
FinTP - Vision and Scope
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Given the application scalability FinTP is fitted to deal with
1 B2B environment type FinTP performs transactions routing and processing between the before depicted institutions thus achieving cross industry interoperability Additionally FinTP helps the business customers to consolidate their financial or treasury operations similarly helps the retail chains to reconcile and settle the available stock with the registered sales
To exemplify ensuring SEPA Readiness for banking institutions and for their customers is briefly discussed
By 2014 banks in EURO zone should be ready to process instructions in ISO20022 format FinTP can be an efficient solution to achieve rapidly compliance with the EPC provisions
Are the bank‟s customers ready to send the instructions data in the right format Are you ready to accept this type of data Are you able to extend solutions to help your customers better preparing for SEPA instructions FinTP has the right building blocks for banks and corporations
2 B2C environment type FinTP goes further down to the end customers The individuals can interact directly in a branch or remotely using their computers tablets smart phones to provide them with personal financial portfolio management It enables them to operate on their bank account or to do shopping It also supports new financial instruments such as PayPal Google wallet Facebook UK faster payments mobile payments amp commerce M-Pesa NFC etc
FinTP applicability profiled on beneficiary type
FinTP - Vision and Scope
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a Banks
Regional and international banks are rethinking and often improving their business architecture because of strong penetration of traditionally non-financial business in the money supply chain
The banks have in general the following choices
i Stay the course This often means keep on muddling
ii Outsource the processing of financial transactions in its entirety or in parts
iii Lower the recurring costs dramatically and benefit from joint developments by implementing Open Source solutions for commoditized parts of the needed infrastructure
Allevo provides the building blocks for the processing of financial transactions (FinTP) for those organisations who want to go for the third strategic choice
Toolbox3 (see 51 Features for details) as illustrated in bellow figure
Business flow consolidation
External interfaces to market infrastructure(s)
Funds transfer (credit transfer direct debit debit instruments duplicate detection treasury flows)
Operational functionalities such as liquidity reporting accounting reconciliation AML transactions filtering remittances management competitive reports etc
All helping the bank to manage the operational risk
3 Toolbox means a comprehensive collection of ready to deploy operational features
FinTP - Vision and Scope
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Payment factory - as illustrated in the bellow figure - is the bank-centralized service for smaller financial institutions or corporations to provide payment and collections processing in compliance with regional or global regulation along with additional service (eg intra-day limits etc)
A similar type of architecture can be used to set-up a bank administrated Member Concentrator or a (SWIFT) Service Bureau or a Payment Service Provider
FinTP - Vision and Scope
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b Micro-finance institutions
Toolbox3 (see 51 Features)
Integration of micro-financing application with mobile payment operator(s) and banks It provides support for loan applications loan disbursement and repayments It integrates the mobile payments and the banking payments and as such provides working capital management Multi-MMTs amp multi country operations are also supported
FinTP - Vision and Scope
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c CSMs
Toolbox3 (see 51 Features)
CSMs can use FinTP (as shown in the bellow figure) to provide its customers an
effective connectivity readiness package Likewise CSMs can use FinTP to connect
themselves to other CSMs they need to
FinTP - Vision and Scope
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d Corporations
Toolbox3 (see 51 Features)
The financial or treasury department of the corporation can use FinTP (as depicted in
the figure bellow) to concentrate the processing and management of all their financial
business in one single operation window FinTP provides the building blocks for a highly
effective money supply chain between banks providers and customers Beyond that
FinTP empowers control on the working capital and financial resources
FinTP - Vision and Scope
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e Public administrations
Toolbox3 (see 51 Features)
Public debt business automation through Treasury Bonds settlement on all trade phases eg pre- sales post-
Wages and pensions payment in compliance with SEPA regulations
Structural funds financial management (in a business group managed by the State Treasury)
FinTP plays a multiple roles in the Public Administration financial business
a Bridge between the global banks secure network (SWIFTNet) and the Government
secure national network performing format conversion and business flow mapping
thus FinTP acts as a financial integrator of the different public institutions
b Interoperability gateway with the banking community and financial market
infrastructures
c Auctioning portal for the Treasury Bonds allocation and settlement for the Primary
market
d Management of the payments related to Structural Funds financed projects and to
the providers of the public institutions
e Payments (such as wages pensions state subsidies) due to individuals intermediated by banks using SWIFTRemit framework Similarly the taxes collection should be handled by the same system and framework FinTP provides means to perform the operations using either mobile devices or the internet
FinTP - Vision and Scope
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44 Key Business Objectives and Success Criteria
Today Allevo faces two major limitations in fulfilling its business objectives
1 Strong dependency on its narrow national market and thus being limited to the
known European Union and particularly Romanian practice
2 Significant allocation of the development talents to maintaining qPayIntegrator
rather than working to new business oriented products
Allevo is going to expand its business footprint and simultaneously shift its revenue
source from back-office solutions towards its customers business area (treasury front-
office) applications
To achieve this goal Allevo will focus on developing FinTP business and on gathering
a strong supporting community formed by representatives of the targeted market The
coherence of the community should be ensured by a trustful and committed
moderator
Therefore for the success of the project Allevo deems instrumental the go-to-market
process the solid take-up tempo and the quality of the community
On the FinTP side Allevo should tightly focus on
1 Understanding the community members‟ needs values and priorities in
relationship with their business competitive ecosystem
2 Improving the product management process and the technical commercial amp
distribution documentation
3 Identifying and centring the attention on strong idea generation selection and
monitoring processes
4 Elaborating the right product architecture to enable easy functional and technical
scalability maintainability diagnose native features for flexible customization
compliance to global and regional financial standards and preserving the initial
licensing structure across various customers business models
5 Strengthening project management
6 Designing coherent knowledge transfer process
7 Designing efficient customer support
As a member of this FinTP open source community Allevo will provide
1) the open source FinTP application
2) knowledge transfer (training amp consultancy) to both early adopters and to the
product development amp maintenance body (see 46 The community)
3) for a limited period of time
- support amp maintenance
- alignment to technology standards amp regulation
4) further improvements
5) contribution to relevant proofs of concept community web site conferences
articles online awareness
The power of the community will draw other vendors to partner together to ensure
market coverage each of them complementing the other through their expertise
FinTP - Vision and Scope
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FinTP distribution will be performed via the communitys portal while the initial
consultancy product installation and support services will be delivered remotely
Following the free open source software model FinTP will be available under an open
license free of charge
In designing the new products Allevo will benefit on mid and long term from the deep
insight both of FinTP internals and the structure and operation of the community
45 Market Sizing
Our evaluation of the FinTP targeted market size
- the global market size taken into account is 26100 institutions out of which
- an average FinTP engine licensing fee is euro30000 resulting in potential
maximum expenses of euro783 million
- the corresponding yearly maintenance fee is euro5400 resulting in potential
maximum expenses of euro700 million in 5 years
- the number of potential institutions adopting FinTP in the first 5 years of
availability 250 tier3 amp 2000 tier4
- consequently the savings in 5 years could reach euro675 million in license
fee and euro2025 million in maintenance fee resulting in a total of almost euro90
million
Allevo believes that (at least) during 2013 and 2014 its current income source will be
preserved while after that period the main replacement of the lost (new licensing and
recurring maintenance) fees will mainly consist of services (consulting
implementation support education) and sales of licenses for newly launched
applications
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46 The FINkers United community
The community structure comprises three main entities (as depicted in the bellow
figure)
1 The adopters (beneficiaries) consumer companies choosing to adopt the
FinTP product in compliance with the community line of business and ethical
conduct
2 The moderator the instrumental inspirational authority expected to draw both
the development vision and the guidelines of the community
3 The contributors
a institutionalized bodies eg development and maintenance test and
validation audit legal marketing
b independent contributors eg ISVs (Allevo falling under this category)
solution providers integrators or passionate developersindividuals
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5 Solution Description amp Parameters Like qPayIntegrator FinTP offers a
standard compliant processing
engine for the financial transactions
exchanged between the back-office
or ERP applications and the financial
community (banks MFIs market
infrastructures corporations)
FinTP is able to process financial
messages in both FIN and ISO20022
formats and at the same time offers
a rich set of interfaces to different
financial applications FinTP provides
compliance with various clearing and
settlement mechanisms
Consequently FinTP ensures a high
level automation of the end-to-end
financial transactions processing
51 Features
The FinTP project has two major deliverable components
1 the FinTP application itself
2 the community built around FinTP
All subsequent chapters will refer to both of these
Component code
Component description Comments
FinTP4 FinTP is a financial transactions processing engine for 3rd or 4th tier banks microfinance corporate or SMEs treasuries available as open source application Functional characteristics
1 Operational features
o Predefined flows and message formats
Includes reconciliation of confirmations with transactions
o Single and multiple funds transfer instructions securities settlement amp reconciliation (Romanian Euroclear) messages
The supported payment instruments are credit transfer direct debit debit instruments
o MTMX coexistence Based on FinTP native internal data format (ISO20022)
o Multi-BIC multi-currency
o SEPA ready (certification) Compliancy with EPC regulations for SEPA formatting and business flows (for SCT and SDD) enables bank-to-bank and bank-to-CSM settlement
4 FinTP root is Allevo equivalent product qPayIntegrator a commercially available amp practice proven (since
2005) application qPayIntegrator provides a consistent set of functionalities and it is fully aligned to both industry regulations and technology
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Component code
Component description Comments
o TARGET 2 ready Compliance with TARGET2 settlement and operations as regulated by the ECB
o SAGSAASAE SAL interfaces
Integration with SWIFTNet to enable banking business
o Liquidity reports Real time cash reports and forecasts using several criteria (currency subsidiary profit centre)
o Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
Analysis and reports of market trends based on volumes amount BIC etc along with early alerts on behaviour changes beyond the standard deviation
o Accounting reconciliation Automatic NOSTROVOSTRO accounts reconciliation intraday liquidity reports and integrated exception management
o AML (sanctions list matching)
High and low value payments filtering uses 20+ black lists and ensures their content maintainability
o Duplicate detection Detection and investigation of possible duplicates the detection window and criteria are configurable
o Remittances processing Covers banks business and operations area as well as distribution channel
o Treasury markets Automation of treasury flows (FX and money market)
o Statements Processing of SWIFT messages related to correspondent banks accounts administration
2 Technical features
o Financial message routing and monitoring
o Multi-threading capabilities
o Persistent end-to-end transactions
During each phase of the entire processing cycle permanent copies of the transaction are kept until the final completion thus avoiding any transaction duplication or loss
o Batching unpacking
o Resilience at transaction level
o Archiving
o Tracing and logging transactions and user events
o Transient errors detection and recovery
o Real-time search and reports
o Security access and user administration
o SaaS cloud ready
FinTP - Vision and Scope
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Component code
Component description Comments
FINkers United - community
Since FinTP is an application handling financial transactions the product releases and the related community should be tightly regulated and controlled As the project matures these components will be further refined The following main components of the community have been identified
‐ the moderator ‐ the product development
and maintenance body ‐ the product and
community auditor body (acting as a gatekeeper of official releases) to control and maintain the change requests integer and eliminate any malware exposures
‐ the test and validation body
‐ the legal body for defining the frame for product distribution amp licensing
‐ the marketing entity responsible for creating awareness and attracting contributors and adopters
‐ the portal used as a channel for marketing support and version control
‐ individual contributors namely ISVs solution providers developers integrators who wish to use their skills and knowledge to the benefit of the community
These tools strongly depend on the available budget and widespread
organization culture It is not mandatory for these to be open source if usage of
open source tools would mean lower quality
3) Licensing
The licensing model highly depends on the results of the open source legal and
business consultancy However we assume the following frame
‐ free of charge initial and recurring maintenance license for using FinTP
‐ FinTP does not use software components enforcing liabilities for the user
‐ consumers using FinTP source code (in part or entirely) should comply to
the licensing policy of the community
‐ the version released by the development amp maintenance body is the only
official amp to be trusted version of the community ensuring product integrity
unity and stability
4) Regulatory compliance
The regulatory compliance strongly depends on the early adaptation of new amp
changed rules via the recurring maintenance and on the quality of the audits
performed by the specific bodies of the community
Thus it is ensured that ISO20022 and FIN standards TARGET2 and TARGET2
Securities SEPA or country specific regulations (as stated respectively by
FinTP - Vision and Scope
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SWIFT standards EPC specification ECB or regional Central Banks
regulations that the community chooses to comply with) stay the most
important business specific anchors of FinTP
The FinTP design also offers support for flexible definition of new compliance
sources
5) Consultancy
The needed consultancy is twofold
‐ legal to ensure that FinTP does not infringe other licensing constraints
‐ open source specific to enable the right choice of the community type and of its governing law
The main constraint relies in choosing the right advisors true experts in the
open source industry amp with appropriate ethic profile - able to deliver as
promised The consultants have to be available 800 am divide 800 pm CET and
easily reachable - geo-location is of utmost importance Selection of the
consultant will basically be done on price assuming the right mix of expertise
and availability is achieved
6) Financing
While Allevo partially undertakes the financing of FinTP development the
ancillary consultancy necessary team education or acquisition of productivity
tools are far beyond the companys 2012 budget
To overcome possible delays in the project Allevo needs to sturdily act to
identify both the most appropriate commercial offer and additional necessary
financing source(s)
FinTP community
The community related items are members moderator legal tight regulation
marketing and financing For each of these items several assumptions and the
corresponding dependencies are provided in the following paragraphs
1) Members
We assume that the communitys members span several business profiles
(such as financial services institutions corporations market infrastructures
PSPs SSBs public administrations regulatory institutions and ISVs) sharing
the mutual focus on financial operations performance and improvement
By now after some tests on market acceptance there have been identified a
few supporters comprising financial services institutions and small ISVs
To ensure the success of building the community there is need for attracting
prestige influencers (market analysts consulting companies of scale - starting
with big four key industry providers - such as SWIFT other communities - ie
professional such as banking insurers capital market associations) and a
credible pool of financial institutions and corporations
To this end Allevo unrolls its own awareness campaign through direct
meetings publications blog posts and social media public presentations and
by officially launching the initiative in a conference focused on free of charge
financial transactions processing applications
Allevo further plans to use Sibos 2012 as opportunity to organize a less
traditional communication session gathering a relevant international panel to
FinTP - Vision and Scope
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debate the strong and weak aspects of this initiative amp to get the public involved
as much as possible
The goal is that by the end of 2012 some tens of different institutions are
committed to co-found the community and to actively contribute to establishing
the legal frame and to forming the required action bodies
2) Moderator
Allevo perceives the Moderator as the critical member of the community since
his prestige and influence will warrant the outcome of all performed activities
The moderator must commit on long term to develop the community and to
sponsor it with its share of trust
Allevo strongly believes that the Moderator should have a global footprint be a
reputable and trustful institution
3) Legalcopyright
The legal consultant and advisor needs to provide the coherent legal frame to
cover all community activities by roles and accountability While making it easy
for the members it should be more demanding as far as contributors are
concerned (though still encouraging ISVs to actively participate) It has to draw
very precise responsibilities for the independent and institutionalized bodies
(for instance product maintenance amp development and audit) and for the
Moderators status
The quality of this legal work fully relies on the expertise and experience of the
advisor
The law governing the community has to be in harmony with the European
(either French or Anglo-Saxon) legal system and with the open source legal
regulations largely practiced in other business regions (US and APAC)
4) Tight regulation
FinTP the product meant to gather a community which uses and supports it is
all about moving values between different entities Thats critical irrespective of
the amount because failing to perform properly opens the doors to arguments
amp loss of reputation with the related tangible costs Moreover the product has
to be beyond any doubt during its entire lifecycle free of any malefic
embedded functions meaning that contamination has to be avoided by all
means
Allevo strongly believes that this requirement can be attained only by tight
regulation of the community specific approval of the initially launched version
of FinTP and of the recurring contributions
This approach can be felt strange compared to most open source communities
and can lead to little interest from IT talents making them feel banned or
restricted It remains the Moderator‟s duty to make them feel privileged if
accepted and rewarded as such However this censorship is a price to be paid
since the community and the project are about processing transactions
initiating value transfer
FinTP - Vision and Scope
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5) Marketing
The community needs to have the clear objective of spreading both
geographically and over a consistent number of industries
To achieve this goal the community should be able to actively provide open
access to relevant information (including explanations of concepts hands-on
evaluation) to non-members and to also answer their questions on FinTP and
on the community itself
The same level of information needs to be ensured for the members to whom
supplementary updates on the community events decisions available
releases patches and fixes should be made available They need to also get
focused forum discussions on specific business areas and subsequent
processes need to be distributed
These functionalities have to be hosted on the community‟s dedicated portal
This portal has to provide content dialogue space information consolidation
and broadcasting It must be a virtual showroom for FinTP It needs to host
documents and virtual meetings subscription management and product
support amp development
The community has to be able to run its own meetings enabling direct contact
between active members or their representatives
Meaningful press releases have to be regularly issued along with actively
maintaining a productive relationship with market analysts to consolidate a
clear public understanding of the community spirit and goals
6) Financing
Its all about money-money-money since at least for the first 2-3 years the
community needs to be financed
Upon reaching maturity the institutionalized bodies of the community can earn their income from collateral activities - such as organizing conferences providing education and specialized support services - either for the initial FinTP installations and customizations or for recurring services requested by the members An alternative can be trialling and certifying interested providers enabling them to perform support services for FinTP
Thus who could pump money into this project It could be one or a mix of
‐ World Bank - if governmental programs are implied and provided a proper project which convincingly demonstrates the beneficed social impact
‐ EU development funding
‐ interested wealthy members of the community
The most critical dependencies are external such as (arranged according to
their impact) availability of funds for building the community finding trustful
and skilled open source consultants (legal business community licensing)
The synthetic view of the main assumptions and dependencies is provided in
the attached file
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Maintenance amp user support 1-Jan-13 Marketing inst action
4 Activities
Initial planning amp budgeting 15-Dec-12 document
Roles allocation 15-Dec-12 document
Community inst Implementation 15-Dec-12 action
Awareness campaign 1-Jan-13 action ongoing process
Members recruiting 1-Jan-13 action ongoing process
Continued operation 1-Jan-13 action ongoing process
Service sales 1-Jan-13 action ongoing process
Future development planning 1-Jan-13 document ongoing process
5 Resource allocation
If existing institution - allocation 15-Dec-12 action
If newly formed - recruiting 15-Dec-12 action
Make FinTP available to comm 1-Jan-13 action ongoing process
Start community financing 1-Jan-13 action ongoing process
6 Financing
Initial investment 1-Jan-13 action secured by that date
First period of comm operation 31-Aug-13 action secured by that date
co
mm
un
ity
Project approach
Project approachpdf
FinTP - Vision and Scope
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8 Scope This chapter deals with the phased availability of various FinTP features again considered from application and community points of view
In the first phase (due Dec 2012) the core of FinTP application is ready including the following technical features
- financial message routing between services and monitoring of exchanges
- multi-threading capabilities
- persistent end-to-end transactions
- batching de-batching
- archiving
- tracing and logging of transactions and user events
- transient errors detection and recovery
- real time search and reports
- security access and user administration
Similarly during the first phase the main community components need to be in place
- moderator
- software development and maintenance body (Allevo also available in the first and second phase of the project)
- test amp validation body
- (software) auditor
- legal
- main contributors (Allevo falls into this position)
- platform
- marketing
In the second phase (Dec2012 - Dec2013) several operational features of FinTP will be added
- predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit instruments securities settlement reconciliations
- MTMX coexistence
- multi-BIC multi-currency
- SEPA ready certification
- TARGET2 ready
- SAGSAASAE interfaces
- duplicate detection
- liquidity reports
- competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
- accounting reconciliation
- AML (sanctions list matching)
- SaaS and cloud ready
along with resilience and start of maintenance and knowledge transfer (the last two obviously continuing in the next phases)
FinTP - Vision and Scope
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The synthetic view of the project scope is provided in the following table
Crt No
Feature Activity Phase1 31Dec12
Phase2 31Dec13
Phase3 31Dec14
Phase4 31Dec15
Fin
TP
A Operational features
1
Predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit Instruments bonds (Romanian Euroclear) reconciliations
2 MTMX coexistence
3 Multi-BIC multi-currency
4 SaaS ready cloud ready
5 SEPA ready certification
6 TARGET2 ready
7 SAGSAASAE interfaces
8 Liquidity reports
9 Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
10 Accounting reconciliation
11 AML (sanctions list matching)
12 Duplicate detection
B Technical features
1 Routing financial message between services and monitoring of data flows
2 Multi-threading capabilities
3 Persistent end-to-end transactions
4 Batching de-batching
5 Resilience (at transaction level)
6 Archiving
7 Tracing and logging of transactions and user events
8 Transient errors detection and recovery
9 Real time search and reports
10 Security access and user administration
C Other activities
1 FinTP maintenance
2 Knowledge transfer
Co
mm
un
ity
Establishing the institutionscomponents
1 Mentor
2 Software Auditor amp Provider
3 Legal service
4 Members
5 Allevo initial role
6 Platform
7 Marketing
FinTP - Vision and Scope
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9 Limitations The main limitations in the economy of the project consist of phasing several FinTP
operational features for the following year (eg debit instruments liquidity reporting
AML filtering accounting reconciliation resilience SaaS ready cloud ready etc)
At the same time for features intended to front-office usage like Remit it was not yet
decided to publish them as open source product
The synthetic view of the main limitations is provided in the following table
Crt
nrItem Limitation Exclusion Comments
1
FinTP
a
Operational features Available in 2013
b
Remit Not included in
open source
package
2
Community
a
Rules Tightly controlled The statute should
ensure the right
balance between
safety and free
association of talents
Given the significant budget allocation (at least from Allevo perspective) the strong
requirement to meet the maximum ceiling will limit the FinTP product initial preparation
and maintenance expenses
Community wise the obligation of a tight regulated statute will have to ensure the right
balance between safety (mandatory in an environment dealing with financial
transactions) and a free association of talents (typical in an open source community)
In the first period after launch (at least the first two years) of the initiative the
maintenance and support activities will be provided by Allevo (as initial contributor)
A major restriction would be to meet the budgeted development and maintenance
FinTP - Vision and Scope
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10 Appendix - Risks
Specific risks
1 Product
a Long delivery lead time This is a medium probability and impact risk however Allevo should make available the needed resources and motivate the entire team for the job
b Credibility loss if FinTP fails to further become certified on meaningful operations andor business tracks (ie SWIFT business certification tracks or similar) The single possible containment is lobbying if the application certification program rejects open source products Anyway the impact is very important and its materialization should be avoided
c Low quality of the allocated team and improper version management are highly unlikely to occur as long as the formal transfer of responsibility is smoothly made from Allevo to the corresponding body put in place by the community The real hidden risk is that this process could take too long and it thus has a very high impact
d Poor FinTP quality may result if the community fails to institutionalize proper quality assurance (QA) and verification amp validation (VampV) processes This is most expected not to happen but if it does the impact is at least medium The single path to overcome this risk consists in a professional approach to these items based on institutionalizing practice proven QA and VampV processes
e Allevo lack of expertise in the open source business This can be contained by carefully selecting trustful amp truly expert consultants Otherwise it means more money longer time spent on project and expenses without proper return
2 Service
a The software maintenance does not properly deliver as expected ie on-time and on-quality bug fixing regulation amp standards alignment and productivity amp technological improvement The key to contain this risk materialization is the community status having provisions to neatly provide maintenance and further development of the rules for FinTP as well as the applicable rules and fees for the ancillary services
b Low quality and safety of the service received by the members of the community To avoid the risk of performing the one-time amp recurring support services by under-prepared professionals the community has to rule the process of training and qualifying the companies willing to contribute in this area
c Not meeting the minimal SLA criteria The community should regulate and periodically revise the training curricula and to further audit both the teachers and the certified experts to ensure the service level agreements are met
d Under motivated service providing professionals - up to the level of not feeling the high impact of their activity The community status must provide guidance to the contributors on the minimal standards the professionals should meet
FinTP - Vision and Scope
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e Constrained expert resource pool This risk could be overcome by the communitys policy to ensure at all time a balanced number of motivated experts to the communitys size Failing to do so may result in high negative impact of the community business and public perception
3 Community
a Emergence of a parallel competitive community If the optimal timing between publically disclosing FinTP and community take-off is not achieved then there are high chances that following a competitive initiative other entrepreneurs successfully launch their own similar or derived community This could be avoided by periodical reviews of the progress of both FinTP and community status and deciding whether the project needs to be put on hold or not
b Unfit reputation of the Moderator or main contributors If either the Moderator or the initial contributors are not beyond any dispute and are reputable institutes then there is certainly something rotten in Denmark and the project should be put on-hold
c No commitment from the Moderator‟s side Similarly if the Moderator does not commit to the project it means that Denmark has a serious problem to solve The project should relinquish until the matter is fixed
4 Legal
a Misuse of copyright and intellectual property (IP)The assigned working team could not be aware of the limitations and liabilities of using (entirely or partially) third party software this risk can be contained by delivering the right training providing proper working procedures carefully recording and documenting the use of open source code and carefully cross-scanning
b Injunctive relief and financial damages can be caused by not properly and continuously controlling the use of third party open source code resulting in copyright or IP infringement There are two containment measures which can be taken tighten the compliance check during the product lifecycle or apply the sanction policy as to set an example
c The competition starts a class action - this may result in delaying the project
5 Financing
a Lack of long term financing institutions Allevo should urge its consultant to identify and draw a reasonable list of financial options institutions
b Exceeding the budget given that this type of project has no precedent in Allevo and to avoid exposing to the dependency on engagement to financial institutions or to commitments beyond the existing budget a further carefully drawn project plan is needed along with its explicit approval from the board of the company
Market related risks
1 False expectations
a Expensive services Not everything is free aside the initial and maintenance free licensing the training the support and other professional services can amount to more than in general expected Allevo rates this risk as medium possible but with low impact as long as the law governing the community and its initial period of operation will consecrate fair market prices and competitive sources of contribution
FinTP - Vision and Scope
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b Hidden costs for patches updates and upgrades While of similarly weight in terms of probability and impact this should be no real concern as long as the law governing the community clearly provides for free and accountable maintenance
2 Poor image on quality
a Too many releases making FinTP hard to manage and unsafe to operate Given proper regulation of the community and the mature root of FinTP Allevo disregards the possibility of this risk to materialize However if this were to happen this is a high impact risk and by all means should be avoided
b Backward technological (in)compatibility looks to us as a low risk in all respects and within organizations applying practice proven software engineering processes and professional - accountable team this is not likely to materialize
c Support can be perceived as the highest impact risk for FinTP This can be overcome by tight regulation of the commercial and professional conditions to deliver the service (for instance only qualified organizations should be recommended to members for supporting FinTP)
d SLA and accountability for both internally or externally performed services is closely correlated to the previous risk and the community status should provide the support for growing a community of competencies and accountable professionals around FinTP Periodical auditing (by the specialized community body) of this pool of professionals will further ensure the confidence that the skills are preserved at the required level
e Code fragmentation and forking is a high impact risk with a low probability of happening in the initial period provided the knowledge transfer is done orderly and in an institutionalized manner
3 Inherent uncertainty
a Community disputes can jeopardize its cohesion the project viability and future This is a high impact possibly high probability risk and it is the definite role of the Moderator to feel prevent and while materializing mitigate any conflicting situation
b FinTP going commercial post-launch This is a huge impact possibly high occurrence probability but manageable with the right legal instruments provisioned in the community
c Loss of alignment to industry standards and regulations This risk has medium probability and medium impact given the assumption that the community is tightly regulated and the working bodies institutionalized and gathering professionals
4 Legal
Copyright infringement given Allevo experience in the open source business this risk is highly probable and has a high impact on FinTP especially if mistakes are made in the launching phase Similarly if during the product maintenance and further development phase the community fails to institutionalize proper formal software development processes (covering all FinTP lifecycle phases) based on industry practice proven model(s) Supplementary the expert code scanning audit for compliance is the single resort to preclude external software source misuse
FinTP - Vision and Scope
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5 GPL specific
a Noncompliance to the GPL license If GPL license is used the product should further distribute in compliance with this part provisions High impact and probability but manageable if proper software development processes are used and if the statute clearly defines the licensing model for FinTP
b FinTP unconformity The risk that software engineers get inspired by a chic solution which they import and emulate similarly in FinTP And this is also highly possible since les grands esprits se rencontre
6 Existing customers attitude
Anger for having paid for something which now is free The existent customers can be concerned about the future of their installed system its further development (in one word its future) and on the quality of the service (SLA including) Some recent adopters can possibly be furious for spending their money on buying licenses for a piece of software that differently packaged becomes free of charge
For the first situation the single best solution for Allevo is to ensure a smooth transition from the current status to the new solution deployed Also highly probable Allevo should provide for simultaneous (for at most one more year) maintenance of both FinTP and for qPayIntegrator
For the 2012 new qPayIntegrator adopters Allevo should transparently state the product‟s future and propose a commercially attractive migration towards FinTP when it becomes publically available (like the option for the installation migration and recurring services) The decision should clearly stay with the customer if he still buys Allevo licenses delays the implementation until FinTP is available or if he goes for a competitive solution
In other words the key to mitigate the existing customer perception is switching places and discarding if the situation proves to be uncomfortable
Bottom-line is that to avoid most of the risks the FinTP community must be a rather tightly controlled one though still opened to anyone willingly abiding to the rules
The synthetic view of the main risks their assigned probability impact and the corresponding containment approach is provided in the attached file
Risk IDRisk
CategoryRisk
Probability
(High
Medium
Low)
Severity
(High
Medium
Low)
Containment (Mitigation Action Proposed)
M1Free as in a
Free Puppy
M101
The training service amp support cost could account more than the
commercial product its replacing (application software is typically 30 of
the total cost of ownership of most projects)
Medium Low
M102 Hidden costs ie charge for patches updates and upgrades Medium Low
M2Frequent
updates
M201
Projects might be updated frequently - as often as everyday Too frequent
updates could have a negative impact on the implementation
interoperability and support
Low HighMAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M3Backwards
compatibility
M301 Less accountability Low LowMAP03 Access to prior versions of source code (additional in-house
development and support procedures might be necessary)
M4Support
related risks
M401Support could be perceived as the biggest issue with open source
software deploymentsHigh High
M402 Internal External Accountability SLAs High High
M403Code fragmentation or forking if the community fails to institutionalize
corporate like formal structureHigh High
M404Support could require greater involvement and different skills set from
operations staffMedium Medium
M5Community
immaturity Low Low
M501Could generate incompatibility of FinTP with industry standards amp
regulationsMedium Medium
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M6 Uncertainty The inherent uncertainty in every open source project
M601 Community disputes might impact project viability and future High HighMAP04 The Mentor should prevent amp mitigate any conflicts inside the
community
M602 Open source projects may not stay open in future releases High HighMAP05 The originator liabilities should be strongly enforced by the
community statute
M7 Legal risks
M701 Copyright infringement High High
M702 Can open source software deployments pass an audit
M8 GPL General Public License specific development concerns
M801Software thatrsquos derived from an existing GPL project in whole or in part
might not be released under the same licenseHigh High M08 The community should regulate the licensing model
M802
Developer contamination - developer could review an existing open source
project could see an elegant solution then implement a similar function in
closed source project
High HighMAP09 Procedurals constrains for the software developers should be
enforced
M9
Current
customers
attitude
The actual customer perception could be negative High High
M12 To prevent a negative attitude Allevo should involve the customers
in the FinTP project Allevo needs their active support for a smooth and
issues less transition
ma
rke
t re
late
d r
isk
s
co
st
rela
ted
ris
ks
MAP01 The community should regulate the applicable rules and fees for
services and maintenance
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
bu
sin
es
s a
nd
le
ga
l ri
sk
s
MAP06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S1Product
related
S101 Late delivery lead time Medium MediumMAP15 Allevo should provide proper resources (funding and human
resources)
S102 Credibility loss if fail to certify with SWIFT Medium High MAP16 Should be discussedamp agreed with SWIFT
S103 Inexperienced team or allocation below needs Low HighMAP15 Allevo should provide proper resources (funding and human
resources)
S104 Improper or non efficient version management Low High MAP16 Review the current Allevo Configuration Management System
S105Poor quality if the community fails to institutionalize proper verification and
validation practices3
M06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S106 Lack of expertise in open source projects 2 Allevo should engage thoroughly selected Open Source consultants
S2Service
related
S201
The software maintenance not properly providing for bugs fixing
regulationamp standard alignment technological improvements communities
improvement requests
High HighMAP01 The community should regulate the applicable rules and fees for
services and maintenance
S202 One-time amp recurring services might be provided by unqualified resources High HighMAP17 The community should regulate the training curricula and related
expertise certification
S203 Provided services might not meet the minimal SLA performance criteria High HighMAP17 The community should regulate the training curricula and related
expertise certification
S204 Relaxed or lack of accountability of the professionals High HighMAP18 The community should regulate the employment agreement of
the professionals
S205 Lack of qualified professionals High HighMAP19 The community should ensure a balanced number of certified
professionals with the community size
S3Community
related
S301
If after disclosing FinTP the community does not enthusiastically adopt
the solution competitors might more successfully develop a similar
strategy
Medium MediumMAP20 FinTP promotion should be convincing and realistic A well
organized marketing campaign by Allevo
S302The community mentor andor early adhering members have no
undeniable prestige or are not largely trustfulMedium Medium MAP99 Project status review Ending the project could be one option
S303 The Mentor does not strongly commit for the project Medium Medium MAP99 Project status review Ending the project could be one option
S4 Legal
S401Exposure to copyright and IP infringement due to working team unaware of
the legal consequences of using third party softwareMedium Medium
MAP21 Allevo should keep records and fully document the use of open
source code
S402Copyright or intellectual property infringement can lead to injunctive relief
and monetary damagesHigh High
MAP23 Allevo should institutionalize a tight licensing and technical
control
S403 All risks related to open source compliance High HighMAP24 Allevo should appoint as soon as possible a FinTP compliance
Officer
S5 Financial
S501 Lack of financing institutions Medium MediumMAP25 Allevo should urge consultant to provide a consistent list of
potential investors
S502 Dependency on the financing institution approval Medium Medium
S503Not thoroughly planned project overlooking one or some project cost that
need to be financedMedium Medium
Sp
ec
ific
ris
ks
tec
hn
ica
lm
ark
eti
ng
leg
al
fun
din
g
MAP26 Allevo should carefully draw a consistent and eligible project for
financing
Risks
Riskspdf
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 40 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
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wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
11 Appendix - Bibliography 1 Accenture Open Source Research Geographic Findings
2 Accenture Open Source Research Industry Findings
3 Producing Open Source Software - How to Run a Successful Free Software
Project by Karl Fogel
4 Open Source Software Risks and Rewards by Gary Hein
5 A Business Case Study of Open Source Software by Carolyn A Kenwood
6 6 critical success factors for product development by Christian Wig
7 Bank 20 by Brett King
8 Managing the business risks of open innovation by Oliver Alexy and Markus
9 Product idea evaluation checklist shared by Startgass AS
10 SWIFT 2015 Strategy
11 Customers and business impact of product changes
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
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12 Appendix - Glossary ACH Automated Clearing House that is used to clear retail payments
between banks in a country or region
APAC Asia and Pacific
AML Anti-Money Laundering
BCampDR Business continuity amp disaster recovery
B2B Business to business
C2B Consumer to business
CET Central European Time
CMMI Capability Maturity Model Integration
CMS Configuration Management System
Coexistence The situation of multiple standards existing at the same time in the same business space Within SWIFT this refers to the coexistence between the MT and MX standards This also refers to the set of measures being taken to make the situation easier to handle by the community (publication of mapping rules translation serviceshellip)
CSM Clearing and Settlement Mechanism
CUG Closed User Group
Dictionary Part of the ISO 20022 Repository that contains all items that can be re-used during business modelling and message definition activities
EAI Enterprise Application Integration - middleware to connect applications and communication interfaces Typical EAI software includes features for mapping data between various formats enriching messages with data from other systems and orchestrating message flows
ECB European Central Bank
EMEA Europe Middle-East Africa
EPC European Payment Council
ERP Enterprise Resource Planning
EU European Union
EUCLID Connectivity to EuroClear Bank services
FIN The messaging service offered by SWIFT for the secure and reliable exchange of MT messages in store-and-forward mode By extension the syntax used to format these MTs
IP intellectual property
Interoperability Capability to easily exchange business information while using different message standards ISO 20022 promotes global use of syntax-neutral business and message components as a common denominator to achieve interoperability between standards using different syntaxes
ISO The International Organization for Standardization - an international standard-setting body composed of representatives from more than 160 national standards organizations that promulgates worldwide standards in a variety of domains aiming at facilitating cross-border exchanges of goods services and techniques
FinTP - Vision and Scope
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ISO 15022 An ISO standard that describes the syntax to be used for developing securities messages used mainly to support back office related transaction flows It replaced the previous securities messaging standard ISO 7775
ISO 20022 RA Registration Authority - offers the services described in an ISO standard on behalf of and under a contractual agreement with the International Organization for Standardization
ISO 20022 Repository
Repository maintained by the ISO20022 RA which contains the financial business models message definitions and components defined in compliance with the ISO 20022 standard
ISO 20022 RMG Registration Management Group - in charge of the overall management of the ISO 20022 development and registration process in accordance with the ISO 20022 standard
ISO 20022 SEG Standards Evaluation Groups -in charge of validating candidate ISO 20022 messages within the scope of the business justification and ensuring that they address the needs of their future international community of users
ISV Independent Software Vendor
KYC Know Your Customer
MACUG Member Administered Closed User Group
Message A set of structured information exchanged between two parties involved in a financial transaction
Message component and element
A re-usable data structure used for assembling message definitions The data defined in a message component is bdquotraced‟ back to the business components and business elements In simple terms business components define the business meaning message components create data structures for messaging
MI Market Infrastructure - a system that provides services to the financial industry for trading clearing and settlement matching of financial transactions and depository functions
Middleware Software that enables data to be exchanged among different systems with standard communication components and tools for formatting mapping and processing
MT The traditional bdquotag value‟ Message Types for use on the FIN service offered by SWIFT
MX An XML message exchanged over SWIFTNet whether or not ISO 20022 compliant
OS Open source
PSP Payment service provider
QA Quality assurance
RMA Relationship Management Access
RTGS Real Time Gross Settlement System
SAA SWIFT Alliance Access
SAE SWIFT Alliance Entry
SAG SWIFT Alliance Gateway
SaaS Software as a Service
SCORE Standardized CORporate Environment
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Semantics The study of meaning usually in language The word is often used in ordinary language to denote a problem of understanding that comes down to word selection or connotation
SEPA Single Euro Payment Area
SLA Service level agreement
SME Small and Medium-sized Business(es)
SOA Service Oriented Architecture
SSB SWIFT Service Bureau
STP Straight Through Processing
SWIFT Society for Worldwide Interbank Financial Telecommunication Visit wwwswiftcom
Syntax Physical format of a message used to identify and represent the conveyed pieces of information
T2S TARGET2 Securities - an initiative of the Eurosystem It is an IT platform that aims to make settlements across national borders simpler and more cost-efficient
TARGET2 The Eurosystem-owned European Real Time Gross Settlement (RTGS) system (Trans-European Automated Real-time Gross Settlement Express Transfer System) TARGET2 is one of the largest high-value payment systems in the world
Taxonomy The classification in a hierarchical system typically organized by super type - sub type relationships also called generalization-specialization relationships or less formally parent-child relationships
TSU Trade Service Utility
TCO Total cost of ownership
Translation rules
Set of rules to be used to map the pieces of information included in a message expressed in one syntax to the equivalent message expressed in another syntax
Remit Remittances
XML eXtensible Mark-up Language - popular syntax to encode documents (or messages) electronically on the Internet XML allows communities to define their own identifiers (or tags) and format (or data type) for each component of a message
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
The document provides high level information on the business opportunity the solution
vision and description the high level architecture the project approach what is and
isn‟t included in the scope of the project and the next steps
If there‟s need for further information please
‐ see the glossary section
‐ contact the authors who welcome questionscomments as help to improve the
clarity and consistency of the script
22 Executive summary
This section provides the abstract of the scope and motivation of the FinTP project
What Allevo undertakes
Allevo aspires towards sharing its existing assets to open a new door to a larger more
transparent and collaborative market To put it bluntly Allevo has decided to make the
strategic move of publishing into the open source space their application for
processing financial transactions
Why
The simple reason behind this initiative is achieving a larger footprint in the financial
industry In other words Allevo is ready to bet that the trust and enthusiasm of the
community members strongly influence both the sales and further developments of the
shared product
No man is an island
This exciting journey Allevo has embarked on is not doable without companions There
needs to be a cohesive community (contributing resources talents and ideas) A
moderator is also needed to guarantee that challenges are understood that actions
anticipate the desired solution and that proper decisions are taken
FinTP - Vision and Scope
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When
Allevo has already initiated the project confident to quickly find other visionaries
sharing same or better ideas on how to lay the firm foundation of a new efficient and
successful financial ecosystem
How
By both creating the open source application and simultaneously launching the related
community
What is in it for
Allevo the company will become member of a club where it can seed future
developments
The community members they will become members of a club unified by the mutual
interest of pushing the interoperability level to the more refined stage of financial
transactions processing while enjoying the benefits of a falling TCO
The Moderator this entity will consolidate its influence and prestige in the rapidly
transforming financial market
FinTP - Vision and Scope
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3 Background and Business Opportunity Payments and securities processing is the earliest form of software development in
most financial institutions The evolution in rules and regulations has very often been
built upon these developments with patchwork as result
The payments arena ie the processing of payments in itself has reached a high level
of maturity and operational software should no longer be a differentiator Payments
have become a commodity in the financial industry
Lazaro Campos in his first Sibos speech as CEO of SWIFT in the opening plenary of
Sibos 2007 in Boston has suggestively stated that SWIFT products should evolve to
the operational simplicity of a widespread fax machine
The financial ecosystem is going through major technology shifts and is at the same
time facing an increasing regulation pressure These changes represent business
opportunities for Allevo The opportunities are being driven by market forces - consumer
requirements supply and demand - not by regulators Companies and communities
start experiencing new financial instruments such as PayPal Google wallet
Facebook UK faster payments mobile payments amp commerce M-Pesa NFC etc
The existing solutions for payments processing are proprietary featuring a great
variety of licensing models amp costs implementation lead time maintenance amp support
In short not something one would expect for a commoditized process
Allevo is strongly committed to publish under free-open licensing terms its own
financial transactions processing engine - which capitalizes on a seven years practice
proven commercially available application
In our view an open source application represents in fact the acceptance of the
commoditization of the payments processing arena an opportunity to get away from
existing patchwork
60 of the financial services industry is committed to adopt open source software as
part of their infrastructures 72 having well defined open source licensing policies1
This trend is due to the actual challenges the financial industry faces
Should FinTP application be SaaS and cloud ready it will offer the customers options
to architect their business infrastructure according to their strategy
1 According to the Open Source Research (Aug 2010) authored by Accenture
FinTP - Vision and Scope
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4 Vision of the solution 41 Vision
What Allevo undertakes
This paragraph explains why and how Allevo is going to cut the branch it happily sits on
Today Allevo is milking a conveniently productive cash cow namely qPayIntegrator
an application created for processing financial transactions qPayIntegrator is a
practice proven solution certified by SWIFT on SEPA and Remittances compliance It
ensures revenues through new licenses sales and the recurring maintenance and
support services
Bitten by the flea of restless evolution Allevo aspires towards sharing its existing
assets to open a new door to a larger more transparent and collaborative market To
put it bluntly Allevo has decided to make the strategic move of publishing into the
open source space an application for processing financial transactions
Why
The simple reason behind this initiative is achieving a larger footprint in the financial
industry In other words Allevo is ready to bet that sharing its application in the open
source space the trust and enthusiasm of community members will strongly influence
both the spreading and further developments of the shared product
This initiative is a commercially disruptive transformation in the sense that the
distribution of the financial transactions processing application will be mainly the task
of the community members If the TCO will be significantly convenient and if the
solution will match the needed quality trust and safety then Allevo expects that the
market acceptance trend will be solidly sharp An open source application for
processing transactions will not only solve the specific needs of a company but will
also generate sub-communities (either regional or by industry) They will push the
interoperability of the application forward to transactions interpretation and their
operational consequences industry-wide
People will continue to generate increasing amount of data and will want to use that
data from different locations paying no attention to distances The trade and financial
community should match this new developing framework with a new financial
ldquoecosystemrdquo What today are premium applications tools or devices will commoditize
in the future to come
Todays high speed communication channels and powerful multipurpose personal
devices put pressure on companies to rethink and adapt their services Allevo strongly
believes that one of the missing pieces of this developing ecosystem is a versatile
safe free of licensing cost and widespread application for processing financial
transactions It should be capable to connect to various communication channels It
should bring together cloud based resources corporation back or front-office systems
intelligent wholesale or retail equipment transportation and many other assets this
new global ecosystem is ready to use
FinTP - Vision and Scope
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No man is an island
This exciting journey Allevo embarks on is not doable without companions
The most obvious need is that of a cohesive community with sufficient resources
talents and ideas By cohesive Allevo means that the enrolled companies and
individuals share the same set of values These are professional ethics proven
practice professionals safe amp failure-free operations While the participants speak the
same language the intent of working for efficient interoperability means eliminating
misinterpretation Thus the need to manually process transactions will be reduced and
many current ldquoexceptionsrdquo will be eliminated
Like any other form of people gathering the community needs rules governance
agora to make their voice clearly heard (requirements amp ideas) A supervisor is needed
to guarantee that the challenges are understood that the actions anticipate the desired
solution and that proper decisions are taken In this document the supervisor is called
Moderator since atop of being a moderator the supervisor should also be an
accepted and trustful negotiator perceived at the same time as a leader by all
community participants
When
Allevo is in a position of offering a reasonably strong ground for both creating this open
application and starting a community
On the latter Allevo qualifies to be one of the first members of the community given its
firm belief that the world will become a large cooperation space where ideas data and
information will be openly exchanged and knowledge openly shared - in the best
interest of the people
The deep root of the software application that Allevo brings to the community is
credited by 7 years of practice and features a number of credentials Making FinTP an
open application qualifies it to become a tool for companies with constrained budgets
Adopting FinTP will empower its customers to equally interpret both the syntax and
semantic of the exchanged financial instructions
Bottom-line Allevo has initiated the project confident to quickly find other visionaries
sharing the same daring ideas on how to lay the firm foundation of a new efficient and
successful financial ecosystem
How
Now this is the tricky part of the story The easiest part of the project is creating the
open source application The success lies in launching the community simultaneously
This means that prior to the official release the community roles should be well
defined fundamentally agreed upon by the main sponsors the Moderator should
formally engage and the initial membership should include some prestige companies
and IT vendors Thats tough but this is how it has to happen
What is in it for
Allevo the company will become member of a club where it can seed future
developments This will further lead to the enhanced visibility of Allevo team and
portfolio
The community members they will become members of a club unified by the mutual
interest of pushing the interoperability level to a more refined stage of financial
transactions processing while enjoying the benefits of a falling TCO
FinTP - Vision and Scope
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The Moderator this entity will consolidate its influence and prestige in the rapidly
transforming financial market It will be the parent of the deeper standardization of the
financial business crossing the bridge between financial messages conveying
between institutions up to the institutions interface with their customers This will lay
the ground for the financial integration to equal the industrial and trade distribution
chain footprint
Whats next for FinTP
After FinTP has successfully been adopted in the market on a reasonable scale the
future looks even brighter
Companies relying on a trustful standardized processing application will be able to free
up their minds amp budgets for what uniquely differentiates them in their customers‟
eyes quality of service relevance trade easiness agility of delivery risk containment
social responsibility or other distinctive factors
Once all this has settled in self-adaptive trade business systems will come forward to
close the loop between customers and their providers
42 FinTP Positioning
FinTP is a key business software that opens markets by aggressively addressing
customers with constrained investment budgets Allevo strongly believes that FinTP is
tightly knitted to SWIFT 2015 Strategy2
The payments arena in itself has reached a high level of maturity payments becoming
a commodity on these premises back-office software should no longer be a
differentiator
FinTP creates a widespread financial transactions processing platform a cheap
alternative (to the current proprietary payment systems) for an industry common
solution which will evolve into a new standardization layer
2 See Bibliography
FinTP - Vision and Scope
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FinTP shifts the competitive space and consequently the innovation drive (from back-
office and mostly financial institutions and large corporations) to SWIFT traditional and
new business areas (treasury and front-office of the banks large financial institutions
corporations and SMEs - including MFIs)
43 FinTP Applicability
The usage of FintP in several domains ndash banks micro-finance institutions CSMs corporations and public administration ndash is discussed The main building blocks provided by FinTP for the processing of financial transactions are shown in each case
For setting the scene consider the naiumlve drawing (see below figure) which depicts
1 the bank‟s applications - implementing the core products and services the banks provides to its customers (FX Lending Payments TF custody etc)
2 banking correspondent business and infrastructures they connect to to settle for example their payments
3 corporate customers or local financial institutions engaged in distributing their products and services
4 the individuals who benefit from the service of the bank directly or intermediated by partnering financial institutions or corporations - including retail chains connectivity channels that are either SWIFTNet or VPNs over internet or bank‟s own private network
FinTP - Vision and Scope
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Given the application scalability FinTP is fitted to deal with
1 B2B environment type FinTP performs transactions routing and processing between the before depicted institutions thus achieving cross industry interoperability Additionally FinTP helps the business customers to consolidate their financial or treasury operations similarly helps the retail chains to reconcile and settle the available stock with the registered sales
To exemplify ensuring SEPA Readiness for banking institutions and for their customers is briefly discussed
By 2014 banks in EURO zone should be ready to process instructions in ISO20022 format FinTP can be an efficient solution to achieve rapidly compliance with the EPC provisions
Are the bank‟s customers ready to send the instructions data in the right format Are you ready to accept this type of data Are you able to extend solutions to help your customers better preparing for SEPA instructions FinTP has the right building blocks for banks and corporations
2 B2C environment type FinTP goes further down to the end customers The individuals can interact directly in a branch or remotely using their computers tablets smart phones to provide them with personal financial portfolio management It enables them to operate on their bank account or to do shopping It also supports new financial instruments such as PayPal Google wallet Facebook UK faster payments mobile payments amp commerce M-Pesa NFC etc
FinTP applicability profiled on beneficiary type
FinTP - Vision and Scope
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a Banks
Regional and international banks are rethinking and often improving their business architecture because of strong penetration of traditionally non-financial business in the money supply chain
The banks have in general the following choices
i Stay the course This often means keep on muddling
ii Outsource the processing of financial transactions in its entirety or in parts
iii Lower the recurring costs dramatically and benefit from joint developments by implementing Open Source solutions for commoditized parts of the needed infrastructure
Allevo provides the building blocks for the processing of financial transactions (FinTP) for those organisations who want to go for the third strategic choice
Toolbox3 (see 51 Features for details) as illustrated in bellow figure
Business flow consolidation
External interfaces to market infrastructure(s)
Funds transfer (credit transfer direct debit debit instruments duplicate detection treasury flows)
Operational functionalities such as liquidity reporting accounting reconciliation AML transactions filtering remittances management competitive reports etc
All helping the bank to manage the operational risk
3 Toolbox means a comprehensive collection of ready to deploy operational features
FinTP - Vision and Scope
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Payment factory - as illustrated in the bellow figure - is the bank-centralized service for smaller financial institutions or corporations to provide payment and collections processing in compliance with regional or global regulation along with additional service (eg intra-day limits etc)
A similar type of architecture can be used to set-up a bank administrated Member Concentrator or a (SWIFT) Service Bureau or a Payment Service Provider
FinTP - Vision and Scope
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b Micro-finance institutions
Toolbox3 (see 51 Features)
Integration of micro-financing application with mobile payment operator(s) and banks It provides support for loan applications loan disbursement and repayments It integrates the mobile payments and the banking payments and as such provides working capital management Multi-MMTs amp multi country operations are also supported
FinTP - Vision and Scope
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c CSMs
Toolbox3 (see 51 Features)
CSMs can use FinTP (as shown in the bellow figure) to provide its customers an
effective connectivity readiness package Likewise CSMs can use FinTP to connect
themselves to other CSMs they need to
FinTP - Vision and Scope
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d Corporations
Toolbox3 (see 51 Features)
The financial or treasury department of the corporation can use FinTP (as depicted in
the figure bellow) to concentrate the processing and management of all their financial
business in one single operation window FinTP provides the building blocks for a highly
effective money supply chain between banks providers and customers Beyond that
FinTP empowers control on the working capital and financial resources
FinTP - Vision and Scope
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e Public administrations
Toolbox3 (see 51 Features)
Public debt business automation through Treasury Bonds settlement on all trade phases eg pre- sales post-
Wages and pensions payment in compliance with SEPA regulations
Structural funds financial management (in a business group managed by the State Treasury)
FinTP plays a multiple roles in the Public Administration financial business
a Bridge between the global banks secure network (SWIFTNet) and the Government
secure national network performing format conversion and business flow mapping
thus FinTP acts as a financial integrator of the different public institutions
b Interoperability gateway with the banking community and financial market
infrastructures
c Auctioning portal for the Treasury Bonds allocation and settlement for the Primary
market
d Management of the payments related to Structural Funds financed projects and to
the providers of the public institutions
e Payments (such as wages pensions state subsidies) due to individuals intermediated by banks using SWIFTRemit framework Similarly the taxes collection should be handled by the same system and framework FinTP provides means to perform the operations using either mobile devices or the internet
FinTP - Vision and Scope
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44 Key Business Objectives and Success Criteria
Today Allevo faces two major limitations in fulfilling its business objectives
1 Strong dependency on its narrow national market and thus being limited to the
known European Union and particularly Romanian practice
2 Significant allocation of the development talents to maintaining qPayIntegrator
rather than working to new business oriented products
Allevo is going to expand its business footprint and simultaneously shift its revenue
source from back-office solutions towards its customers business area (treasury front-
office) applications
To achieve this goal Allevo will focus on developing FinTP business and on gathering
a strong supporting community formed by representatives of the targeted market The
coherence of the community should be ensured by a trustful and committed
moderator
Therefore for the success of the project Allevo deems instrumental the go-to-market
process the solid take-up tempo and the quality of the community
On the FinTP side Allevo should tightly focus on
1 Understanding the community members‟ needs values and priorities in
relationship with their business competitive ecosystem
2 Improving the product management process and the technical commercial amp
distribution documentation
3 Identifying and centring the attention on strong idea generation selection and
monitoring processes
4 Elaborating the right product architecture to enable easy functional and technical
scalability maintainability diagnose native features for flexible customization
compliance to global and regional financial standards and preserving the initial
licensing structure across various customers business models
5 Strengthening project management
6 Designing coherent knowledge transfer process
7 Designing efficient customer support
As a member of this FinTP open source community Allevo will provide
1) the open source FinTP application
2) knowledge transfer (training amp consultancy) to both early adopters and to the
product development amp maintenance body (see 46 The community)
3) for a limited period of time
- support amp maintenance
- alignment to technology standards amp regulation
4) further improvements
5) contribution to relevant proofs of concept community web site conferences
articles online awareness
The power of the community will draw other vendors to partner together to ensure
market coverage each of them complementing the other through their expertise
FinTP - Vision and Scope
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FinTP distribution will be performed via the communitys portal while the initial
consultancy product installation and support services will be delivered remotely
Following the free open source software model FinTP will be available under an open
license free of charge
In designing the new products Allevo will benefit on mid and long term from the deep
insight both of FinTP internals and the structure and operation of the community
45 Market Sizing
Our evaluation of the FinTP targeted market size
- the global market size taken into account is 26100 institutions out of which
- an average FinTP engine licensing fee is euro30000 resulting in potential
maximum expenses of euro783 million
- the corresponding yearly maintenance fee is euro5400 resulting in potential
maximum expenses of euro700 million in 5 years
- the number of potential institutions adopting FinTP in the first 5 years of
availability 250 tier3 amp 2000 tier4
- consequently the savings in 5 years could reach euro675 million in license
fee and euro2025 million in maintenance fee resulting in a total of almost euro90
million
Allevo believes that (at least) during 2013 and 2014 its current income source will be
preserved while after that period the main replacement of the lost (new licensing and
recurring maintenance) fees will mainly consist of services (consulting
implementation support education) and sales of licenses for newly launched
applications
FinTP - Vision and Scope
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46 The FINkers United community
The community structure comprises three main entities (as depicted in the bellow
figure)
1 The adopters (beneficiaries) consumer companies choosing to adopt the
FinTP product in compliance with the community line of business and ethical
conduct
2 The moderator the instrumental inspirational authority expected to draw both
the development vision and the guidelines of the community
3 The contributors
a institutionalized bodies eg development and maintenance test and
validation audit legal marketing
b independent contributors eg ISVs (Allevo falling under this category)
solution providers integrators or passionate developersindividuals
FinTP - Vision and Scope
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5 Solution Description amp Parameters Like qPayIntegrator FinTP offers a
standard compliant processing
engine for the financial transactions
exchanged between the back-office
or ERP applications and the financial
community (banks MFIs market
infrastructures corporations)
FinTP is able to process financial
messages in both FIN and ISO20022
formats and at the same time offers
a rich set of interfaces to different
financial applications FinTP provides
compliance with various clearing and
settlement mechanisms
Consequently FinTP ensures a high
level automation of the end-to-end
financial transactions processing
51 Features
The FinTP project has two major deliverable components
1 the FinTP application itself
2 the community built around FinTP
All subsequent chapters will refer to both of these
Component code
Component description Comments
FinTP4 FinTP is a financial transactions processing engine for 3rd or 4th tier banks microfinance corporate or SMEs treasuries available as open source application Functional characteristics
1 Operational features
o Predefined flows and message formats
Includes reconciliation of confirmations with transactions
o Single and multiple funds transfer instructions securities settlement amp reconciliation (Romanian Euroclear) messages
The supported payment instruments are credit transfer direct debit debit instruments
o MTMX coexistence Based on FinTP native internal data format (ISO20022)
o Multi-BIC multi-currency
o SEPA ready (certification) Compliancy with EPC regulations for SEPA formatting and business flows (for SCT and SDD) enables bank-to-bank and bank-to-CSM settlement
4 FinTP root is Allevo equivalent product qPayIntegrator a commercially available amp practice proven (since
2005) application qPayIntegrator provides a consistent set of functionalities and it is fully aligned to both industry regulations and technology
FinTP - Vision and Scope
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Component code
Component description Comments
o TARGET 2 ready Compliance with TARGET2 settlement and operations as regulated by the ECB
o SAGSAASAE SAL interfaces
Integration with SWIFTNet to enable banking business
o Liquidity reports Real time cash reports and forecasts using several criteria (currency subsidiary profit centre)
o Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
Analysis and reports of market trends based on volumes amount BIC etc along with early alerts on behaviour changes beyond the standard deviation
o Accounting reconciliation Automatic NOSTROVOSTRO accounts reconciliation intraday liquidity reports and integrated exception management
o AML (sanctions list matching)
High and low value payments filtering uses 20+ black lists and ensures their content maintainability
o Duplicate detection Detection and investigation of possible duplicates the detection window and criteria are configurable
o Remittances processing Covers banks business and operations area as well as distribution channel
o Treasury markets Automation of treasury flows (FX and money market)
o Statements Processing of SWIFT messages related to correspondent banks accounts administration
2 Technical features
o Financial message routing and monitoring
o Multi-threading capabilities
o Persistent end-to-end transactions
During each phase of the entire processing cycle permanent copies of the transaction are kept until the final completion thus avoiding any transaction duplication or loss
o Batching unpacking
o Resilience at transaction level
o Archiving
o Tracing and logging transactions and user events
o Transient errors detection and recovery
o Real-time search and reports
o Security access and user administration
o SaaS cloud ready
FinTP - Vision and Scope
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Component code
Component description Comments
FINkers United - community
Since FinTP is an application handling financial transactions the product releases and the related community should be tightly regulated and controlled As the project matures these components will be further refined The following main components of the community have been identified
‐ the moderator ‐ the product development
and maintenance body ‐ the product and
community auditor body (acting as a gatekeeper of official releases) to control and maintain the change requests integer and eliminate any malware exposures
‐ the test and validation body
‐ the legal body for defining the frame for product distribution amp licensing
‐ the marketing entity responsible for creating awareness and attracting contributors and adopters
‐ the portal used as a channel for marketing support and version control
‐ individual contributors namely ISVs solution providers developers integrators who wish to use their skills and knowledge to the benefit of the community
These tools strongly depend on the available budget and widespread
organization culture It is not mandatory for these to be open source if usage of
open source tools would mean lower quality
3) Licensing
The licensing model highly depends on the results of the open source legal and
business consultancy However we assume the following frame
‐ free of charge initial and recurring maintenance license for using FinTP
‐ FinTP does not use software components enforcing liabilities for the user
‐ consumers using FinTP source code (in part or entirely) should comply to
the licensing policy of the community
‐ the version released by the development amp maintenance body is the only
official amp to be trusted version of the community ensuring product integrity
unity and stability
4) Regulatory compliance
The regulatory compliance strongly depends on the early adaptation of new amp
changed rules via the recurring maintenance and on the quality of the audits
performed by the specific bodies of the community
Thus it is ensured that ISO20022 and FIN standards TARGET2 and TARGET2
Securities SEPA or country specific regulations (as stated respectively by
FinTP - Vision and Scope
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SWIFT standards EPC specification ECB or regional Central Banks
regulations that the community chooses to comply with) stay the most
important business specific anchors of FinTP
The FinTP design also offers support for flexible definition of new compliance
sources
5) Consultancy
The needed consultancy is twofold
‐ legal to ensure that FinTP does not infringe other licensing constraints
‐ open source specific to enable the right choice of the community type and of its governing law
The main constraint relies in choosing the right advisors true experts in the
open source industry amp with appropriate ethic profile - able to deliver as
promised The consultants have to be available 800 am divide 800 pm CET and
easily reachable - geo-location is of utmost importance Selection of the
consultant will basically be done on price assuming the right mix of expertise
and availability is achieved
6) Financing
While Allevo partially undertakes the financing of FinTP development the
ancillary consultancy necessary team education or acquisition of productivity
tools are far beyond the companys 2012 budget
To overcome possible delays in the project Allevo needs to sturdily act to
identify both the most appropriate commercial offer and additional necessary
financing source(s)
FinTP community
The community related items are members moderator legal tight regulation
marketing and financing For each of these items several assumptions and the
corresponding dependencies are provided in the following paragraphs
1) Members
We assume that the communitys members span several business profiles
(such as financial services institutions corporations market infrastructures
PSPs SSBs public administrations regulatory institutions and ISVs) sharing
the mutual focus on financial operations performance and improvement
By now after some tests on market acceptance there have been identified a
few supporters comprising financial services institutions and small ISVs
To ensure the success of building the community there is need for attracting
prestige influencers (market analysts consulting companies of scale - starting
with big four key industry providers - such as SWIFT other communities - ie
professional such as banking insurers capital market associations) and a
credible pool of financial institutions and corporations
To this end Allevo unrolls its own awareness campaign through direct
meetings publications blog posts and social media public presentations and
by officially launching the initiative in a conference focused on free of charge
financial transactions processing applications
Allevo further plans to use Sibos 2012 as opportunity to organize a less
traditional communication session gathering a relevant international panel to
FinTP - Vision and Scope
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debate the strong and weak aspects of this initiative amp to get the public involved
as much as possible
The goal is that by the end of 2012 some tens of different institutions are
committed to co-found the community and to actively contribute to establishing
the legal frame and to forming the required action bodies
2) Moderator
Allevo perceives the Moderator as the critical member of the community since
his prestige and influence will warrant the outcome of all performed activities
The moderator must commit on long term to develop the community and to
sponsor it with its share of trust
Allevo strongly believes that the Moderator should have a global footprint be a
reputable and trustful institution
3) Legalcopyright
The legal consultant and advisor needs to provide the coherent legal frame to
cover all community activities by roles and accountability While making it easy
for the members it should be more demanding as far as contributors are
concerned (though still encouraging ISVs to actively participate) It has to draw
very precise responsibilities for the independent and institutionalized bodies
(for instance product maintenance amp development and audit) and for the
Moderators status
The quality of this legal work fully relies on the expertise and experience of the
advisor
The law governing the community has to be in harmony with the European
(either French or Anglo-Saxon) legal system and with the open source legal
regulations largely practiced in other business regions (US and APAC)
4) Tight regulation
FinTP the product meant to gather a community which uses and supports it is
all about moving values between different entities Thats critical irrespective of
the amount because failing to perform properly opens the doors to arguments
amp loss of reputation with the related tangible costs Moreover the product has
to be beyond any doubt during its entire lifecycle free of any malefic
embedded functions meaning that contamination has to be avoided by all
means
Allevo strongly believes that this requirement can be attained only by tight
regulation of the community specific approval of the initially launched version
of FinTP and of the recurring contributions
This approach can be felt strange compared to most open source communities
and can lead to little interest from IT talents making them feel banned or
restricted It remains the Moderator‟s duty to make them feel privileged if
accepted and rewarded as such However this censorship is a price to be paid
since the community and the project are about processing transactions
initiating value transfer
FinTP - Vision and Scope
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5) Marketing
The community needs to have the clear objective of spreading both
geographically and over a consistent number of industries
To achieve this goal the community should be able to actively provide open
access to relevant information (including explanations of concepts hands-on
evaluation) to non-members and to also answer their questions on FinTP and
on the community itself
The same level of information needs to be ensured for the members to whom
supplementary updates on the community events decisions available
releases patches and fixes should be made available They need to also get
focused forum discussions on specific business areas and subsequent
processes need to be distributed
These functionalities have to be hosted on the community‟s dedicated portal
This portal has to provide content dialogue space information consolidation
and broadcasting It must be a virtual showroom for FinTP It needs to host
documents and virtual meetings subscription management and product
support amp development
The community has to be able to run its own meetings enabling direct contact
between active members or their representatives
Meaningful press releases have to be regularly issued along with actively
maintaining a productive relationship with market analysts to consolidate a
clear public understanding of the community spirit and goals
6) Financing
Its all about money-money-money since at least for the first 2-3 years the
community needs to be financed
Upon reaching maturity the institutionalized bodies of the community can earn their income from collateral activities - such as organizing conferences providing education and specialized support services - either for the initial FinTP installations and customizations or for recurring services requested by the members An alternative can be trialling and certifying interested providers enabling them to perform support services for FinTP
Thus who could pump money into this project It could be one or a mix of
‐ World Bank - if governmental programs are implied and provided a proper project which convincingly demonstrates the beneficed social impact
‐ EU development funding
‐ interested wealthy members of the community
The most critical dependencies are external such as (arranged according to
their impact) availability of funds for building the community finding trustful
and skilled open source consultants (legal business community licensing)
The synthetic view of the main assumptions and dependencies is provided in
the attached file
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Maintenance amp user support 1-Jan-13 Marketing inst action
4 Activities
Initial planning amp budgeting 15-Dec-12 document
Roles allocation 15-Dec-12 document
Community inst Implementation 15-Dec-12 action
Awareness campaign 1-Jan-13 action ongoing process
Members recruiting 1-Jan-13 action ongoing process
Continued operation 1-Jan-13 action ongoing process
Service sales 1-Jan-13 action ongoing process
Future development planning 1-Jan-13 document ongoing process
5 Resource allocation
If existing institution - allocation 15-Dec-12 action
If newly formed - recruiting 15-Dec-12 action
Make FinTP available to comm 1-Jan-13 action ongoing process
Start community financing 1-Jan-13 action ongoing process
6 Financing
Initial investment 1-Jan-13 action secured by that date
First period of comm operation 31-Aug-13 action secured by that date
co
mm
un
ity
Project approach
Project approachpdf
FinTP - Vision and Scope
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8 Scope This chapter deals with the phased availability of various FinTP features again considered from application and community points of view
In the first phase (due Dec 2012) the core of FinTP application is ready including the following technical features
- financial message routing between services and monitoring of exchanges
- multi-threading capabilities
- persistent end-to-end transactions
- batching de-batching
- archiving
- tracing and logging of transactions and user events
- transient errors detection and recovery
- real time search and reports
- security access and user administration
Similarly during the first phase the main community components need to be in place
- moderator
- software development and maintenance body (Allevo also available in the first and second phase of the project)
- test amp validation body
- (software) auditor
- legal
- main contributors (Allevo falls into this position)
- platform
- marketing
In the second phase (Dec2012 - Dec2013) several operational features of FinTP will be added
- predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit instruments securities settlement reconciliations
- MTMX coexistence
- multi-BIC multi-currency
- SEPA ready certification
- TARGET2 ready
- SAGSAASAE interfaces
- duplicate detection
- liquidity reports
- competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
- accounting reconciliation
- AML (sanctions list matching)
- SaaS and cloud ready
along with resilience and start of maintenance and knowledge transfer (the last two obviously continuing in the next phases)
FinTP - Vision and Scope
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The synthetic view of the project scope is provided in the following table
Crt No
Feature Activity Phase1 31Dec12
Phase2 31Dec13
Phase3 31Dec14
Phase4 31Dec15
Fin
TP
A Operational features
1
Predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit Instruments bonds (Romanian Euroclear) reconciliations
2 MTMX coexistence
3 Multi-BIC multi-currency
4 SaaS ready cloud ready
5 SEPA ready certification
6 TARGET2 ready
7 SAGSAASAE interfaces
8 Liquidity reports
9 Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
10 Accounting reconciliation
11 AML (sanctions list matching)
12 Duplicate detection
B Technical features
1 Routing financial message between services and monitoring of data flows
2 Multi-threading capabilities
3 Persistent end-to-end transactions
4 Batching de-batching
5 Resilience (at transaction level)
6 Archiving
7 Tracing and logging of transactions and user events
8 Transient errors detection and recovery
9 Real time search and reports
10 Security access and user administration
C Other activities
1 FinTP maintenance
2 Knowledge transfer
Co
mm
un
ity
Establishing the institutionscomponents
1 Mentor
2 Software Auditor amp Provider
3 Legal service
4 Members
5 Allevo initial role
6 Platform
7 Marketing
FinTP - Vision and Scope
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9 Limitations The main limitations in the economy of the project consist of phasing several FinTP
operational features for the following year (eg debit instruments liquidity reporting
AML filtering accounting reconciliation resilience SaaS ready cloud ready etc)
At the same time for features intended to front-office usage like Remit it was not yet
decided to publish them as open source product
The synthetic view of the main limitations is provided in the following table
Crt
nrItem Limitation Exclusion Comments
1
FinTP
a
Operational features Available in 2013
b
Remit Not included in
open source
package
2
Community
a
Rules Tightly controlled The statute should
ensure the right
balance between
safety and free
association of talents
Given the significant budget allocation (at least from Allevo perspective) the strong
requirement to meet the maximum ceiling will limit the FinTP product initial preparation
and maintenance expenses
Community wise the obligation of a tight regulated statute will have to ensure the right
balance between safety (mandatory in an environment dealing with financial
transactions) and a free association of talents (typical in an open source community)
In the first period after launch (at least the first two years) of the initiative the
maintenance and support activities will be provided by Allevo (as initial contributor)
A major restriction would be to meet the budgeted development and maintenance
FinTP - Vision and Scope
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10 Appendix - Risks
Specific risks
1 Product
a Long delivery lead time This is a medium probability and impact risk however Allevo should make available the needed resources and motivate the entire team for the job
b Credibility loss if FinTP fails to further become certified on meaningful operations andor business tracks (ie SWIFT business certification tracks or similar) The single possible containment is lobbying if the application certification program rejects open source products Anyway the impact is very important and its materialization should be avoided
c Low quality of the allocated team and improper version management are highly unlikely to occur as long as the formal transfer of responsibility is smoothly made from Allevo to the corresponding body put in place by the community The real hidden risk is that this process could take too long and it thus has a very high impact
d Poor FinTP quality may result if the community fails to institutionalize proper quality assurance (QA) and verification amp validation (VampV) processes This is most expected not to happen but if it does the impact is at least medium The single path to overcome this risk consists in a professional approach to these items based on institutionalizing practice proven QA and VampV processes
e Allevo lack of expertise in the open source business This can be contained by carefully selecting trustful amp truly expert consultants Otherwise it means more money longer time spent on project and expenses without proper return
2 Service
a The software maintenance does not properly deliver as expected ie on-time and on-quality bug fixing regulation amp standards alignment and productivity amp technological improvement The key to contain this risk materialization is the community status having provisions to neatly provide maintenance and further development of the rules for FinTP as well as the applicable rules and fees for the ancillary services
b Low quality and safety of the service received by the members of the community To avoid the risk of performing the one-time amp recurring support services by under-prepared professionals the community has to rule the process of training and qualifying the companies willing to contribute in this area
c Not meeting the minimal SLA criteria The community should regulate and periodically revise the training curricula and to further audit both the teachers and the certified experts to ensure the service level agreements are met
d Under motivated service providing professionals - up to the level of not feeling the high impact of their activity The community status must provide guidance to the contributors on the minimal standards the professionals should meet
FinTP - Vision and Scope
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e Constrained expert resource pool This risk could be overcome by the communitys policy to ensure at all time a balanced number of motivated experts to the communitys size Failing to do so may result in high negative impact of the community business and public perception
3 Community
a Emergence of a parallel competitive community If the optimal timing between publically disclosing FinTP and community take-off is not achieved then there are high chances that following a competitive initiative other entrepreneurs successfully launch their own similar or derived community This could be avoided by periodical reviews of the progress of both FinTP and community status and deciding whether the project needs to be put on hold or not
b Unfit reputation of the Moderator or main contributors If either the Moderator or the initial contributors are not beyond any dispute and are reputable institutes then there is certainly something rotten in Denmark and the project should be put on-hold
c No commitment from the Moderator‟s side Similarly if the Moderator does not commit to the project it means that Denmark has a serious problem to solve The project should relinquish until the matter is fixed
4 Legal
a Misuse of copyright and intellectual property (IP)The assigned working team could not be aware of the limitations and liabilities of using (entirely or partially) third party software this risk can be contained by delivering the right training providing proper working procedures carefully recording and documenting the use of open source code and carefully cross-scanning
b Injunctive relief and financial damages can be caused by not properly and continuously controlling the use of third party open source code resulting in copyright or IP infringement There are two containment measures which can be taken tighten the compliance check during the product lifecycle or apply the sanction policy as to set an example
c The competition starts a class action - this may result in delaying the project
5 Financing
a Lack of long term financing institutions Allevo should urge its consultant to identify and draw a reasonable list of financial options institutions
b Exceeding the budget given that this type of project has no precedent in Allevo and to avoid exposing to the dependency on engagement to financial institutions or to commitments beyond the existing budget a further carefully drawn project plan is needed along with its explicit approval from the board of the company
Market related risks
1 False expectations
a Expensive services Not everything is free aside the initial and maintenance free licensing the training the support and other professional services can amount to more than in general expected Allevo rates this risk as medium possible but with low impact as long as the law governing the community and its initial period of operation will consecrate fair market prices and competitive sources of contribution
FinTP - Vision and Scope
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b Hidden costs for patches updates and upgrades While of similarly weight in terms of probability and impact this should be no real concern as long as the law governing the community clearly provides for free and accountable maintenance
2 Poor image on quality
a Too many releases making FinTP hard to manage and unsafe to operate Given proper regulation of the community and the mature root of FinTP Allevo disregards the possibility of this risk to materialize However if this were to happen this is a high impact risk and by all means should be avoided
b Backward technological (in)compatibility looks to us as a low risk in all respects and within organizations applying practice proven software engineering processes and professional - accountable team this is not likely to materialize
c Support can be perceived as the highest impact risk for FinTP This can be overcome by tight regulation of the commercial and professional conditions to deliver the service (for instance only qualified organizations should be recommended to members for supporting FinTP)
d SLA and accountability for both internally or externally performed services is closely correlated to the previous risk and the community status should provide the support for growing a community of competencies and accountable professionals around FinTP Periodical auditing (by the specialized community body) of this pool of professionals will further ensure the confidence that the skills are preserved at the required level
e Code fragmentation and forking is a high impact risk with a low probability of happening in the initial period provided the knowledge transfer is done orderly and in an institutionalized manner
3 Inherent uncertainty
a Community disputes can jeopardize its cohesion the project viability and future This is a high impact possibly high probability risk and it is the definite role of the Moderator to feel prevent and while materializing mitigate any conflicting situation
b FinTP going commercial post-launch This is a huge impact possibly high occurrence probability but manageable with the right legal instruments provisioned in the community
c Loss of alignment to industry standards and regulations This risk has medium probability and medium impact given the assumption that the community is tightly regulated and the working bodies institutionalized and gathering professionals
4 Legal
Copyright infringement given Allevo experience in the open source business this risk is highly probable and has a high impact on FinTP especially if mistakes are made in the launching phase Similarly if during the product maintenance and further development phase the community fails to institutionalize proper formal software development processes (covering all FinTP lifecycle phases) based on industry practice proven model(s) Supplementary the expert code scanning audit for compliance is the single resort to preclude external software source misuse
FinTP - Vision and Scope
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5 GPL specific
a Noncompliance to the GPL license If GPL license is used the product should further distribute in compliance with this part provisions High impact and probability but manageable if proper software development processes are used and if the statute clearly defines the licensing model for FinTP
b FinTP unconformity The risk that software engineers get inspired by a chic solution which they import and emulate similarly in FinTP And this is also highly possible since les grands esprits se rencontre
6 Existing customers attitude
Anger for having paid for something which now is free The existent customers can be concerned about the future of their installed system its further development (in one word its future) and on the quality of the service (SLA including) Some recent adopters can possibly be furious for spending their money on buying licenses for a piece of software that differently packaged becomes free of charge
For the first situation the single best solution for Allevo is to ensure a smooth transition from the current status to the new solution deployed Also highly probable Allevo should provide for simultaneous (for at most one more year) maintenance of both FinTP and for qPayIntegrator
For the 2012 new qPayIntegrator adopters Allevo should transparently state the product‟s future and propose a commercially attractive migration towards FinTP when it becomes publically available (like the option for the installation migration and recurring services) The decision should clearly stay with the customer if he still buys Allevo licenses delays the implementation until FinTP is available or if he goes for a competitive solution
In other words the key to mitigate the existing customer perception is switching places and discarding if the situation proves to be uncomfortable
Bottom-line is that to avoid most of the risks the FinTP community must be a rather tightly controlled one though still opened to anyone willingly abiding to the rules
The synthetic view of the main risks their assigned probability impact and the corresponding containment approach is provided in the attached file
Risk IDRisk
CategoryRisk
Probability
(High
Medium
Low)
Severity
(High
Medium
Low)
Containment (Mitigation Action Proposed)
M1Free as in a
Free Puppy
M101
The training service amp support cost could account more than the
commercial product its replacing (application software is typically 30 of
the total cost of ownership of most projects)
Medium Low
M102 Hidden costs ie charge for patches updates and upgrades Medium Low
M2Frequent
updates
M201
Projects might be updated frequently - as often as everyday Too frequent
updates could have a negative impact on the implementation
interoperability and support
Low HighMAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M3Backwards
compatibility
M301 Less accountability Low LowMAP03 Access to prior versions of source code (additional in-house
development and support procedures might be necessary)
M4Support
related risks
M401Support could be perceived as the biggest issue with open source
software deploymentsHigh High
M402 Internal External Accountability SLAs High High
M403Code fragmentation or forking if the community fails to institutionalize
corporate like formal structureHigh High
M404Support could require greater involvement and different skills set from
operations staffMedium Medium
M5Community
immaturity Low Low
M501Could generate incompatibility of FinTP with industry standards amp
regulationsMedium Medium
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M6 Uncertainty The inherent uncertainty in every open source project
M601 Community disputes might impact project viability and future High HighMAP04 The Mentor should prevent amp mitigate any conflicts inside the
community
M602 Open source projects may not stay open in future releases High HighMAP05 The originator liabilities should be strongly enforced by the
community statute
M7 Legal risks
M701 Copyright infringement High High
M702 Can open source software deployments pass an audit
M8 GPL General Public License specific development concerns
M801Software thatrsquos derived from an existing GPL project in whole or in part
might not be released under the same licenseHigh High M08 The community should regulate the licensing model
M802
Developer contamination - developer could review an existing open source
project could see an elegant solution then implement a similar function in
closed source project
High HighMAP09 Procedurals constrains for the software developers should be
enforced
M9
Current
customers
attitude
The actual customer perception could be negative High High
M12 To prevent a negative attitude Allevo should involve the customers
in the FinTP project Allevo needs their active support for a smooth and
issues less transition
ma
rke
t re
late
d r
isk
s
co
st
rela
ted
ris
ks
MAP01 The community should regulate the applicable rules and fees for
services and maintenance
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
bu
sin
es
s a
nd
le
ga
l ri
sk
s
MAP06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S1Product
related
S101 Late delivery lead time Medium MediumMAP15 Allevo should provide proper resources (funding and human
resources)
S102 Credibility loss if fail to certify with SWIFT Medium High MAP16 Should be discussedamp agreed with SWIFT
S103 Inexperienced team or allocation below needs Low HighMAP15 Allevo should provide proper resources (funding and human
resources)
S104 Improper or non efficient version management Low High MAP16 Review the current Allevo Configuration Management System
S105Poor quality if the community fails to institutionalize proper verification and
validation practices3
M06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S106 Lack of expertise in open source projects 2 Allevo should engage thoroughly selected Open Source consultants
S2Service
related
S201
The software maintenance not properly providing for bugs fixing
regulationamp standard alignment technological improvements communities
improvement requests
High HighMAP01 The community should regulate the applicable rules and fees for
services and maintenance
S202 One-time amp recurring services might be provided by unqualified resources High HighMAP17 The community should regulate the training curricula and related
expertise certification
S203 Provided services might not meet the minimal SLA performance criteria High HighMAP17 The community should regulate the training curricula and related
expertise certification
S204 Relaxed or lack of accountability of the professionals High HighMAP18 The community should regulate the employment agreement of
the professionals
S205 Lack of qualified professionals High HighMAP19 The community should ensure a balanced number of certified
professionals with the community size
S3Community
related
S301
If after disclosing FinTP the community does not enthusiastically adopt
the solution competitors might more successfully develop a similar
strategy
Medium MediumMAP20 FinTP promotion should be convincing and realistic A well
organized marketing campaign by Allevo
S302The community mentor andor early adhering members have no
undeniable prestige or are not largely trustfulMedium Medium MAP99 Project status review Ending the project could be one option
S303 The Mentor does not strongly commit for the project Medium Medium MAP99 Project status review Ending the project could be one option
S4 Legal
S401Exposure to copyright and IP infringement due to working team unaware of
the legal consequences of using third party softwareMedium Medium
MAP21 Allevo should keep records and fully document the use of open
source code
S402Copyright or intellectual property infringement can lead to injunctive relief
and monetary damagesHigh High
MAP23 Allevo should institutionalize a tight licensing and technical
control
S403 All risks related to open source compliance High HighMAP24 Allevo should appoint as soon as possible a FinTP compliance
Officer
S5 Financial
S501 Lack of financing institutions Medium MediumMAP25 Allevo should urge consultant to provide a consistent list of
potential investors
S502 Dependency on the financing institution approval Medium Medium
S503Not thoroughly planned project overlooking one or some project cost that
need to be financedMedium Medium
Sp
ec
ific
ris
ks
tec
hn
ica
lm
ark
eti
ng
leg
al
fun
din
g
MAP26 Allevo should carefully draw a consistent and eligible project for
financing
Risks
Riskspdf
FinTP - Vision and Scope
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11 Appendix - Bibliography 1 Accenture Open Source Research Geographic Findings
2 Accenture Open Source Research Industry Findings
3 Producing Open Source Software - How to Run a Successful Free Software
Project by Karl Fogel
4 Open Source Software Risks and Rewards by Gary Hein
5 A Business Case Study of Open Source Software by Carolyn A Kenwood
6 6 critical success factors for product development by Christian Wig
7 Bank 20 by Brett King
8 Managing the business risks of open innovation by Oliver Alexy and Markus
9 Product idea evaluation checklist shared by Startgass AS
10 SWIFT 2015 Strategy
11 Customers and business impact of product changes
FinTP - Vision and Scope
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12 Appendix - Glossary ACH Automated Clearing House that is used to clear retail payments
between banks in a country or region
APAC Asia and Pacific
AML Anti-Money Laundering
BCampDR Business continuity amp disaster recovery
B2B Business to business
C2B Consumer to business
CET Central European Time
CMMI Capability Maturity Model Integration
CMS Configuration Management System
Coexistence The situation of multiple standards existing at the same time in the same business space Within SWIFT this refers to the coexistence between the MT and MX standards This also refers to the set of measures being taken to make the situation easier to handle by the community (publication of mapping rules translation serviceshellip)
CSM Clearing and Settlement Mechanism
CUG Closed User Group
Dictionary Part of the ISO 20022 Repository that contains all items that can be re-used during business modelling and message definition activities
EAI Enterprise Application Integration - middleware to connect applications and communication interfaces Typical EAI software includes features for mapping data between various formats enriching messages with data from other systems and orchestrating message flows
ECB European Central Bank
EMEA Europe Middle-East Africa
EPC European Payment Council
ERP Enterprise Resource Planning
EU European Union
EUCLID Connectivity to EuroClear Bank services
FIN The messaging service offered by SWIFT for the secure and reliable exchange of MT messages in store-and-forward mode By extension the syntax used to format these MTs
IP intellectual property
Interoperability Capability to easily exchange business information while using different message standards ISO 20022 promotes global use of syntax-neutral business and message components as a common denominator to achieve interoperability between standards using different syntaxes
ISO The International Organization for Standardization - an international standard-setting body composed of representatives from more than 160 national standards organizations that promulgates worldwide standards in a variety of domains aiming at facilitating cross-border exchanges of goods services and techniques
FinTP - Vision and Scope
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Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
ISO 15022 An ISO standard that describes the syntax to be used for developing securities messages used mainly to support back office related transaction flows It replaced the previous securities messaging standard ISO 7775
ISO 20022 RA Registration Authority - offers the services described in an ISO standard on behalf of and under a contractual agreement with the International Organization for Standardization
ISO 20022 Repository
Repository maintained by the ISO20022 RA which contains the financial business models message definitions and components defined in compliance with the ISO 20022 standard
ISO 20022 RMG Registration Management Group - in charge of the overall management of the ISO 20022 development and registration process in accordance with the ISO 20022 standard
ISO 20022 SEG Standards Evaluation Groups -in charge of validating candidate ISO 20022 messages within the scope of the business justification and ensuring that they address the needs of their future international community of users
ISV Independent Software Vendor
KYC Know Your Customer
MACUG Member Administered Closed User Group
Message A set of structured information exchanged between two parties involved in a financial transaction
Message component and element
A re-usable data structure used for assembling message definitions The data defined in a message component is bdquotraced‟ back to the business components and business elements In simple terms business components define the business meaning message components create data structures for messaging
MI Market Infrastructure - a system that provides services to the financial industry for trading clearing and settlement matching of financial transactions and depository functions
Middleware Software that enables data to be exchanged among different systems with standard communication components and tools for formatting mapping and processing
MT The traditional bdquotag value‟ Message Types for use on the FIN service offered by SWIFT
MX An XML message exchanged over SWIFTNet whether or not ISO 20022 compliant
OS Open source
PSP Payment service provider
QA Quality assurance
RMA Relationship Management Access
RTGS Real Time Gross Settlement System
SAA SWIFT Alliance Access
SAE SWIFT Alliance Entry
SAG SWIFT Alliance Gateway
SaaS Software as a Service
SCORE Standardized CORporate Environment
FinTP - Vision and Scope
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Semantics The study of meaning usually in language The word is often used in ordinary language to denote a problem of understanding that comes down to word selection or connotation
SEPA Single Euro Payment Area
SLA Service level agreement
SME Small and Medium-sized Business(es)
SOA Service Oriented Architecture
SSB SWIFT Service Bureau
STP Straight Through Processing
SWIFT Society for Worldwide Interbank Financial Telecommunication Visit wwwswiftcom
Syntax Physical format of a message used to identify and represent the conveyed pieces of information
T2S TARGET2 Securities - an initiative of the Eurosystem It is an IT platform that aims to make settlements across national borders simpler and more cost-efficient
TARGET2 The Eurosystem-owned European Real Time Gross Settlement (RTGS) system (Trans-European Automated Real-time Gross Settlement Express Transfer System) TARGET2 is one of the largest high-value payment systems in the world
Taxonomy The classification in a hierarchical system typically organized by super type - sub type relationships also called generalization-specialization relationships or less formally parent-child relationships
TSU Trade Service Utility
TCO Total cost of ownership
Translation rules
Set of rules to be used to map the pieces of information included in a message expressed in one syntax to the equivalent message expressed in another syntax
Remit Remittances
XML eXtensible Mark-up Language - popular syntax to encode documents (or messages) electronically on the Internet XML allows communities to define their own identifiers (or tags) and format (or data type) for each component of a message
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Bureaus etc) ISV regulatory institutionsMarketing plan feasibility campaign efficiency and costs
2 MentorPreferable SWIFT
Also eligible SunGard IBM affiliation to other OS communitySWIFT decision
3 Legalcopyright Expert legal consultant and RO apprentice Cost and time shift dependent
4 Tight regulation Clear membership admission amp software contribution criteria The quality of the consultant advice
5 Marketing Actively recruiting community members Marketing plan feasibility campaign efficiency amp customer skepticism
a community portala provide content amp debate space information consolidation amp dissemination virtual
showroom subscription management support
a business analysis solution availability and maintenance by one of the
members or employed company
b press releases amp
announcementsb PR and AR b communicators availability and costs
c events c periodical conferences user focused meetings c cost dependent
6 Financing World Bank EU amp private funds Lobby amp funds availability
Item
FinTP
FinTP community
FinTP - Vision and Scope
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When
Allevo has already initiated the project confident to quickly find other visionaries
sharing same or better ideas on how to lay the firm foundation of a new efficient and
successful financial ecosystem
How
By both creating the open source application and simultaneously launching the related
community
What is in it for
Allevo the company will become member of a club where it can seed future
developments
The community members they will become members of a club unified by the mutual
interest of pushing the interoperability level to the more refined stage of financial
transactions processing while enjoying the benefits of a falling TCO
The Moderator this entity will consolidate its influence and prestige in the rapidly
transforming financial market
FinTP - Vision and Scope
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3 Background and Business Opportunity Payments and securities processing is the earliest form of software development in
most financial institutions The evolution in rules and regulations has very often been
built upon these developments with patchwork as result
The payments arena ie the processing of payments in itself has reached a high level
of maturity and operational software should no longer be a differentiator Payments
have become a commodity in the financial industry
Lazaro Campos in his first Sibos speech as CEO of SWIFT in the opening plenary of
Sibos 2007 in Boston has suggestively stated that SWIFT products should evolve to
the operational simplicity of a widespread fax machine
The financial ecosystem is going through major technology shifts and is at the same
time facing an increasing regulation pressure These changes represent business
opportunities for Allevo The opportunities are being driven by market forces - consumer
requirements supply and demand - not by regulators Companies and communities
start experiencing new financial instruments such as PayPal Google wallet
Facebook UK faster payments mobile payments amp commerce M-Pesa NFC etc
The existing solutions for payments processing are proprietary featuring a great
variety of licensing models amp costs implementation lead time maintenance amp support
In short not something one would expect for a commoditized process
Allevo is strongly committed to publish under free-open licensing terms its own
financial transactions processing engine - which capitalizes on a seven years practice
proven commercially available application
In our view an open source application represents in fact the acceptance of the
commoditization of the payments processing arena an opportunity to get away from
existing patchwork
60 of the financial services industry is committed to adopt open source software as
part of their infrastructures 72 having well defined open source licensing policies1
This trend is due to the actual challenges the financial industry faces
Should FinTP application be SaaS and cloud ready it will offer the customers options
to architect their business infrastructure according to their strategy
1 According to the Open Source Research (Aug 2010) authored by Accenture
FinTP - Vision and Scope
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4 Vision of the solution 41 Vision
What Allevo undertakes
This paragraph explains why and how Allevo is going to cut the branch it happily sits on
Today Allevo is milking a conveniently productive cash cow namely qPayIntegrator
an application created for processing financial transactions qPayIntegrator is a
practice proven solution certified by SWIFT on SEPA and Remittances compliance It
ensures revenues through new licenses sales and the recurring maintenance and
support services
Bitten by the flea of restless evolution Allevo aspires towards sharing its existing
assets to open a new door to a larger more transparent and collaborative market To
put it bluntly Allevo has decided to make the strategic move of publishing into the
open source space an application for processing financial transactions
Why
The simple reason behind this initiative is achieving a larger footprint in the financial
industry In other words Allevo is ready to bet that sharing its application in the open
source space the trust and enthusiasm of community members will strongly influence
both the spreading and further developments of the shared product
This initiative is a commercially disruptive transformation in the sense that the
distribution of the financial transactions processing application will be mainly the task
of the community members If the TCO will be significantly convenient and if the
solution will match the needed quality trust and safety then Allevo expects that the
market acceptance trend will be solidly sharp An open source application for
processing transactions will not only solve the specific needs of a company but will
also generate sub-communities (either regional or by industry) They will push the
interoperability of the application forward to transactions interpretation and their
operational consequences industry-wide
People will continue to generate increasing amount of data and will want to use that
data from different locations paying no attention to distances The trade and financial
community should match this new developing framework with a new financial
ldquoecosystemrdquo What today are premium applications tools or devices will commoditize
in the future to come
Todays high speed communication channels and powerful multipurpose personal
devices put pressure on companies to rethink and adapt their services Allevo strongly
believes that one of the missing pieces of this developing ecosystem is a versatile
safe free of licensing cost and widespread application for processing financial
transactions It should be capable to connect to various communication channels It
should bring together cloud based resources corporation back or front-office systems
intelligent wholesale or retail equipment transportation and many other assets this
new global ecosystem is ready to use
FinTP - Vision and Scope
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No man is an island
This exciting journey Allevo embarks on is not doable without companions
The most obvious need is that of a cohesive community with sufficient resources
talents and ideas By cohesive Allevo means that the enrolled companies and
individuals share the same set of values These are professional ethics proven
practice professionals safe amp failure-free operations While the participants speak the
same language the intent of working for efficient interoperability means eliminating
misinterpretation Thus the need to manually process transactions will be reduced and
many current ldquoexceptionsrdquo will be eliminated
Like any other form of people gathering the community needs rules governance
agora to make their voice clearly heard (requirements amp ideas) A supervisor is needed
to guarantee that the challenges are understood that the actions anticipate the desired
solution and that proper decisions are taken In this document the supervisor is called
Moderator since atop of being a moderator the supervisor should also be an
accepted and trustful negotiator perceived at the same time as a leader by all
community participants
When
Allevo is in a position of offering a reasonably strong ground for both creating this open
application and starting a community
On the latter Allevo qualifies to be one of the first members of the community given its
firm belief that the world will become a large cooperation space where ideas data and
information will be openly exchanged and knowledge openly shared - in the best
interest of the people
The deep root of the software application that Allevo brings to the community is
credited by 7 years of practice and features a number of credentials Making FinTP an
open application qualifies it to become a tool for companies with constrained budgets
Adopting FinTP will empower its customers to equally interpret both the syntax and
semantic of the exchanged financial instructions
Bottom-line Allevo has initiated the project confident to quickly find other visionaries
sharing the same daring ideas on how to lay the firm foundation of a new efficient and
successful financial ecosystem
How
Now this is the tricky part of the story The easiest part of the project is creating the
open source application The success lies in launching the community simultaneously
This means that prior to the official release the community roles should be well
defined fundamentally agreed upon by the main sponsors the Moderator should
formally engage and the initial membership should include some prestige companies
and IT vendors Thats tough but this is how it has to happen
What is in it for
Allevo the company will become member of a club where it can seed future
developments This will further lead to the enhanced visibility of Allevo team and
portfolio
The community members they will become members of a club unified by the mutual
interest of pushing the interoperability level to a more refined stage of financial
transactions processing while enjoying the benefits of a falling TCO
FinTP - Vision and Scope
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The Moderator this entity will consolidate its influence and prestige in the rapidly
transforming financial market It will be the parent of the deeper standardization of the
financial business crossing the bridge between financial messages conveying
between institutions up to the institutions interface with their customers This will lay
the ground for the financial integration to equal the industrial and trade distribution
chain footprint
Whats next for FinTP
After FinTP has successfully been adopted in the market on a reasonable scale the
future looks even brighter
Companies relying on a trustful standardized processing application will be able to free
up their minds amp budgets for what uniquely differentiates them in their customers‟
eyes quality of service relevance trade easiness agility of delivery risk containment
social responsibility or other distinctive factors
Once all this has settled in self-adaptive trade business systems will come forward to
close the loop between customers and their providers
42 FinTP Positioning
FinTP is a key business software that opens markets by aggressively addressing
customers with constrained investment budgets Allevo strongly believes that FinTP is
tightly knitted to SWIFT 2015 Strategy2
The payments arena in itself has reached a high level of maturity payments becoming
a commodity on these premises back-office software should no longer be a
differentiator
FinTP creates a widespread financial transactions processing platform a cheap
alternative (to the current proprietary payment systems) for an industry common
solution which will evolve into a new standardization layer
2 See Bibliography
FinTP - Vision and Scope
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FinTP shifts the competitive space and consequently the innovation drive (from back-
office and mostly financial institutions and large corporations) to SWIFT traditional and
new business areas (treasury and front-office of the banks large financial institutions
corporations and SMEs - including MFIs)
43 FinTP Applicability
The usage of FintP in several domains ndash banks micro-finance institutions CSMs corporations and public administration ndash is discussed The main building blocks provided by FinTP for the processing of financial transactions are shown in each case
For setting the scene consider the naiumlve drawing (see below figure) which depicts
1 the bank‟s applications - implementing the core products and services the banks provides to its customers (FX Lending Payments TF custody etc)
2 banking correspondent business and infrastructures they connect to to settle for example their payments
3 corporate customers or local financial institutions engaged in distributing their products and services
4 the individuals who benefit from the service of the bank directly or intermediated by partnering financial institutions or corporations - including retail chains connectivity channels that are either SWIFTNet or VPNs over internet or bank‟s own private network
FinTP - Vision and Scope
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Given the application scalability FinTP is fitted to deal with
1 B2B environment type FinTP performs transactions routing and processing between the before depicted institutions thus achieving cross industry interoperability Additionally FinTP helps the business customers to consolidate their financial or treasury operations similarly helps the retail chains to reconcile and settle the available stock with the registered sales
To exemplify ensuring SEPA Readiness for banking institutions and for their customers is briefly discussed
By 2014 banks in EURO zone should be ready to process instructions in ISO20022 format FinTP can be an efficient solution to achieve rapidly compliance with the EPC provisions
Are the bank‟s customers ready to send the instructions data in the right format Are you ready to accept this type of data Are you able to extend solutions to help your customers better preparing for SEPA instructions FinTP has the right building blocks for banks and corporations
2 B2C environment type FinTP goes further down to the end customers The individuals can interact directly in a branch or remotely using their computers tablets smart phones to provide them with personal financial portfolio management It enables them to operate on their bank account or to do shopping It also supports new financial instruments such as PayPal Google wallet Facebook UK faster payments mobile payments amp commerce M-Pesa NFC etc
FinTP applicability profiled on beneficiary type
FinTP - Vision and Scope
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a Banks
Regional and international banks are rethinking and often improving their business architecture because of strong penetration of traditionally non-financial business in the money supply chain
The banks have in general the following choices
i Stay the course This often means keep on muddling
ii Outsource the processing of financial transactions in its entirety or in parts
iii Lower the recurring costs dramatically and benefit from joint developments by implementing Open Source solutions for commoditized parts of the needed infrastructure
Allevo provides the building blocks for the processing of financial transactions (FinTP) for those organisations who want to go for the third strategic choice
Toolbox3 (see 51 Features for details) as illustrated in bellow figure
Business flow consolidation
External interfaces to market infrastructure(s)
Funds transfer (credit transfer direct debit debit instruments duplicate detection treasury flows)
Operational functionalities such as liquidity reporting accounting reconciliation AML transactions filtering remittances management competitive reports etc
All helping the bank to manage the operational risk
3 Toolbox means a comprehensive collection of ready to deploy operational features
FinTP - Vision and Scope
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Payment factory - as illustrated in the bellow figure - is the bank-centralized service for smaller financial institutions or corporations to provide payment and collections processing in compliance with regional or global regulation along with additional service (eg intra-day limits etc)
A similar type of architecture can be used to set-up a bank administrated Member Concentrator or a (SWIFT) Service Bureau or a Payment Service Provider
FinTP - Vision and Scope
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b Micro-finance institutions
Toolbox3 (see 51 Features)
Integration of micro-financing application with mobile payment operator(s) and banks It provides support for loan applications loan disbursement and repayments It integrates the mobile payments and the banking payments and as such provides working capital management Multi-MMTs amp multi country operations are also supported
FinTP - Vision and Scope
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c CSMs
Toolbox3 (see 51 Features)
CSMs can use FinTP (as shown in the bellow figure) to provide its customers an
effective connectivity readiness package Likewise CSMs can use FinTP to connect
themselves to other CSMs they need to
FinTP - Vision and Scope
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d Corporations
Toolbox3 (see 51 Features)
The financial or treasury department of the corporation can use FinTP (as depicted in
the figure bellow) to concentrate the processing and management of all their financial
business in one single operation window FinTP provides the building blocks for a highly
effective money supply chain between banks providers and customers Beyond that
FinTP empowers control on the working capital and financial resources
FinTP - Vision and Scope
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e Public administrations
Toolbox3 (see 51 Features)
Public debt business automation through Treasury Bonds settlement on all trade phases eg pre- sales post-
Wages and pensions payment in compliance with SEPA regulations
Structural funds financial management (in a business group managed by the State Treasury)
FinTP plays a multiple roles in the Public Administration financial business
a Bridge between the global banks secure network (SWIFTNet) and the Government
secure national network performing format conversion and business flow mapping
thus FinTP acts as a financial integrator of the different public institutions
b Interoperability gateway with the banking community and financial market
infrastructures
c Auctioning portal for the Treasury Bonds allocation and settlement for the Primary
market
d Management of the payments related to Structural Funds financed projects and to
the providers of the public institutions
e Payments (such as wages pensions state subsidies) due to individuals intermediated by banks using SWIFTRemit framework Similarly the taxes collection should be handled by the same system and framework FinTP provides means to perform the operations using either mobile devices or the internet
FinTP - Vision and Scope
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44 Key Business Objectives and Success Criteria
Today Allevo faces two major limitations in fulfilling its business objectives
1 Strong dependency on its narrow national market and thus being limited to the
known European Union and particularly Romanian practice
2 Significant allocation of the development talents to maintaining qPayIntegrator
rather than working to new business oriented products
Allevo is going to expand its business footprint and simultaneously shift its revenue
source from back-office solutions towards its customers business area (treasury front-
office) applications
To achieve this goal Allevo will focus on developing FinTP business and on gathering
a strong supporting community formed by representatives of the targeted market The
coherence of the community should be ensured by a trustful and committed
moderator
Therefore for the success of the project Allevo deems instrumental the go-to-market
process the solid take-up tempo and the quality of the community
On the FinTP side Allevo should tightly focus on
1 Understanding the community members‟ needs values and priorities in
relationship with their business competitive ecosystem
2 Improving the product management process and the technical commercial amp
distribution documentation
3 Identifying and centring the attention on strong idea generation selection and
monitoring processes
4 Elaborating the right product architecture to enable easy functional and technical
scalability maintainability diagnose native features for flexible customization
compliance to global and regional financial standards and preserving the initial
licensing structure across various customers business models
5 Strengthening project management
6 Designing coherent knowledge transfer process
7 Designing efficient customer support
As a member of this FinTP open source community Allevo will provide
1) the open source FinTP application
2) knowledge transfer (training amp consultancy) to both early adopters and to the
product development amp maintenance body (see 46 The community)
3) for a limited period of time
- support amp maintenance
- alignment to technology standards amp regulation
4) further improvements
5) contribution to relevant proofs of concept community web site conferences
articles online awareness
The power of the community will draw other vendors to partner together to ensure
market coverage each of them complementing the other through their expertise
FinTP - Vision and Scope
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FinTP distribution will be performed via the communitys portal while the initial
consultancy product installation and support services will be delivered remotely
Following the free open source software model FinTP will be available under an open
license free of charge
In designing the new products Allevo will benefit on mid and long term from the deep
insight both of FinTP internals and the structure and operation of the community
45 Market Sizing
Our evaluation of the FinTP targeted market size
- the global market size taken into account is 26100 institutions out of which
- an average FinTP engine licensing fee is euro30000 resulting in potential
maximum expenses of euro783 million
- the corresponding yearly maintenance fee is euro5400 resulting in potential
maximum expenses of euro700 million in 5 years
- the number of potential institutions adopting FinTP in the first 5 years of
availability 250 tier3 amp 2000 tier4
- consequently the savings in 5 years could reach euro675 million in license
fee and euro2025 million in maintenance fee resulting in a total of almost euro90
million
Allevo believes that (at least) during 2013 and 2014 its current income source will be
preserved while after that period the main replacement of the lost (new licensing and
recurring maintenance) fees will mainly consist of services (consulting
implementation support education) and sales of licenses for newly launched
applications
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46 The FINkers United community
The community structure comprises three main entities (as depicted in the bellow
figure)
1 The adopters (beneficiaries) consumer companies choosing to adopt the
FinTP product in compliance with the community line of business and ethical
conduct
2 The moderator the instrumental inspirational authority expected to draw both
the development vision and the guidelines of the community
3 The contributors
a institutionalized bodies eg development and maintenance test and
validation audit legal marketing
b independent contributors eg ISVs (Allevo falling under this category)
solution providers integrators or passionate developersindividuals
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5 Solution Description amp Parameters Like qPayIntegrator FinTP offers a
standard compliant processing
engine for the financial transactions
exchanged between the back-office
or ERP applications and the financial
community (banks MFIs market
infrastructures corporations)
FinTP is able to process financial
messages in both FIN and ISO20022
formats and at the same time offers
a rich set of interfaces to different
financial applications FinTP provides
compliance with various clearing and
settlement mechanisms
Consequently FinTP ensures a high
level automation of the end-to-end
financial transactions processing
51 Features
The FinTP project has two major deliverable components
1 the FinTP application itself
2 the community built around FinTP
All subsequent chapters will refer to both of these
Component code
Component description Comments
FinTP4 FinTP is a financial transactions processing engine for 3rd or 4th tier banks microfinance corporate or SMEs treasuries available as open source application Functional characteristics
1 Operational features
o Predefined flows and message formats
Includes reconciliation of confirmations with transactions
o Single and multiple funds transfer instructions securities settlement amp reconciliation (Romanian Euroclear) messages
The supported payment instruments are credit transfer direct debit debit instruments
o MTMX coexistence Based on FinTP native internal data format (ISO20022)
o Multi-BIC multi-currency
o SEPA ready (certification) Compliancy with EPC regulations for SEPA formatting and business flows (for SCT and SDD) enables bank-to-bank and bank-to-CSM settlement
4 FinTP root is Allevo equivalent product qPayIntegrator a commercially available amp practice proven (since
2005) application qPayIntegrator provides a consistent set of functionalities and it is fully aligned to both industry regulations and technology
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Component code
Component description Comments
o TARGET 2 ready Compliance with TARGET2 settlement and operations as regulated by the ECB
o SAGSAASAE SAL interfaces
Integration with SWIFTNet to enable banking business
o Liquidity reports Real time cash reports and forecasts using several criteria (currency subsidiary profit centre)
o Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
Analysis and reports of market trends based on volumes amount BIC etc along with early alerts on behaviour changes beyond the standard deviation
o Accounting reconciliation Automatic NOSTROVOSTRO accounts reconciliation intraday liquidity reports and integrated exception management
o AML (sanctions list matching)
High and low value payments filtering uses 20+ black lists and ensures their content maintainability
o Duplicate detection Detection and investigation of possible duplicates the detection window and criteria are configurable
o Remittances processing Covers banks business and operations area as well as distribution channel
o Treasury markets Automation of treasury flows (FX and money market)
o Statements Processing of SWIFT messages related to correspondent banks accounts administration
2 Technical features
o Financial message routing and monitoring
o Multi-threading capabilities
o Persistent end-to-end transactions
During each phase of the entire processing cycle permanent copies of the transaction are kept until the final completion thus avoiding any transaction duplication or loss
o Batching unpacking
o Resilience at transaction level
o Archiving
o Tracing and logging transactions and user events
o Transient errors detection and recovery
o Real-time search and reports
o Security access and user administration
o SaaS cloud ready
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Component code
Component description Comments
FINkers United - community
Since FinTP is an application handling financial transactions the product releases and the related community should be tightly regulated and controlled As the project matures these components will be further refined The following main components of the community have been identified
‐ the moderator ‐ the product development
and maintenance body ‐ the product and
community auditor body (acting as a gatekeeper of official releases) to control and maintain the change requests integer and eliminate any malware exposures
‐ the test and validation body
‐ the legal body for defining the frame for product distribution amp licensing
‐ the marketing entity responsible for creating awareness and attracting contributors and adopters
‐ the portal used as a channel for marketing support and version control
‐ individual contributors namely ISVs solution providers developers integrators who wish to use their skills and knowledge to the benefit of the community
These tools strongly depend on the available budget and widespread
organization culture It is not mandatory for these to be open source if usage of
open source tools would mean lower quality
3) Licensing
The licensing model highly depends on the results of the open source legal and
business consultancy However we assume the following frame
‐ free of charge initial and recurring maintenance license for using FinTP
‐ FinTP does not use software components enforcing liabilities for the user
‐ consumers using FinTP source code (in part or entirely) should comply to
the licensing policy of the community
‐ the version released by the development amp maintenance body is the only
official amp to be trusted version of the community ensuring product integrity
unity and stability
4) Regulatory compliance
The regulatory compliance strongly depends on the early adaptation of new amp
changed rules via the recurring maintenance and on the quality of the audits
performed by the specific bodies of the community
Thus it is ensured that ISO20022 and FIN standards TARGET2 and TARGET2
Securities SEPA or country specific regulations (as stated respectively by
FinTP - Vision and Scope
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SWIFT standards EPC specification ECB or regional Central Banks
regulations that the community chooses to comply with) stay the most
important business specific anchors of FinTP
The FinTP design also offers support for flexible definition of new compliance
sources
5) Consultancy
The needed consultancy is twofold
‐ legal to ensure that FinTP does not infringe other licensing constraints
‐ open source specific to enable the right choice of the community type and of its governing law
The main constraint relies in choosing the right advisors true experts in the
open source industry amp with appropriate ethic profile - able to deliver as
promised The consultants have to be available 800 am divide 800 pm CET and
easily reachable - geo-location is of utmost importance Selection of the
consultant will basically be done on price assuming the right mix of expertise
and availability is achieved
6) Financing
While Allevo partially undertakes the financing of FinTP development the
ancillary consultancy necessary team education or acquisition of productivity
tools are far beyond the companys 2012 budget
To overcome possible delays in the project Allevo needs to sturdily act to
identify both the most appropriate commercial offer and additional necessary
financing source(s)
FinTP community
The community related items are members moderator legal tight regulation
marketing and financing For each of these items several assumptions and the
corresponding dependencies are provided in the following paragraphs
1) Members
We assume that the communitys members span several business profiles
(such as financial services institutions corporations market infrastructures
PSPs SSBs public administrations regulatory institutions and ISVs) sharing
the mutual focus on financial operations performance and improvement
By now after some tests on market acceptance there have been identified a
few supporters comprising financial services institutions and small ISVs
To ensure the success of building the community there is need for attracting
prestige influencers (market analysts consulting companies of scale - starting
with big four key industry providers - such as SWIFT other communities - ie
professional such as banking insurers capital market associations) and a
credible pool of financial institutions and corporations
To this end Allevo unrolls its own awareness campaign through direct
meetings publications blog posts and social media public presentations and
by officially launching the initiative in a conference focused on free of charge
financial transactions processing applications
Allevo further plans to use Sibos 2012 as opportunity to organize a less
traditional communication session gathering a relevant international panel to
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debate the strong and weak aspects of this initiative amp to get the public involved
as much as possible
The goal is that by the end of 2012 some tens of different institutions are
committed to co-found the community and to actively contribute to establishing
the legal frame and to forming the required action bodies
2) Moderator
Allevo perceives the Moderator as the critical member of the community since
his prestige and influence will warrant the outcome of all performed activities
The moderator must commit on long term to develop the community and to
sponsor it with its share of trust
Allevo strongly believes that the Moderator should have a global footprint be a
reputable and trustful institution
3) Legalcopyright
The legal consultant and advisor needs to provide the coherent legal frame to
cover all community activities by roles and accountability While making it easy
for the members it should be more demanding as far as contributors are
concerned (though still encouraging ISVs to actively participate) It has to draw
very precise responsibilities for the independent and institutionalized bodies
(for instance product maintenance amp development and audit) and for the
Moderators status
The quality of this legal work fully relies on the expertise and experience of the
advisor
The law governing the community has to be in harmony with the European
(either French or Anglo-Saxon) legal system and with the open source legal
regulations largely practiced in other business regions (US and APAC)
4) Tight regulation
FinTP the product meant to gather a community which uses and supports it is
all about moving values between different entities Thats critical irrespective of
the amount because failing to perform properly opens the doors to arguments
amp loss of reputation with the related tangible costs Moreover the product has
to be beyond any doubt during its entire lifecycle free of any malefic
embedded functions meaning that contamination has to be avoided by all
means
Allevo strongly believes that this requirement can be attained only by tight
regulation of the community specific approval of the initially launched version
of FinTP and of the recurring contributions
This approach can be felt strange compared to most open source communities
and can lead to little interest from IT talents making them feel banned or
restricted It remains the Moderator‟s duty to make them feel privileged if
accepted and rewarded as such However this censorship is a price to be paid
since the community and the project are about processing transactions
initiating value transfer
FinTP - Vision and Scope
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5) Marketing
The community needs to have the clear objective of spreading both
geographically and over a consistent number of industries
To achieve this goal the community should be able to actively provide open
access to relevant information (including explanations of concepts hands-on
evaluation) to non-members and to also answer their questions on FinTP and
on the community itself
The same level of information needs to be ensured for the members to whom
supplementary updates on the community events decisions available
releases patches and fixes should be made available They need to also get
focused forum discussions on specific business areas and subsequent
processes need to be distributed
These functionalities have to be hosted on the community‟s dedicated portal
This portal has to provide content dialogue space information consolidation
and broadcasting It must be a virtual showroom for FinTP It needs to host
documents and virtual meetings subscription management and product
support amp development
The community has to be able to run its own meetings enabling direct contact
between active members or their representatives
Meaningful press releases have to be regularly issued along with actively
maintaining a productive relationship with market analysts to consolidate a
clear public understanding of the community spirit and goals
6) Financing
Its all about money-money-money since at least for the first 2-3 years the
community needs to be financed
Upon reaching maturity the institutionalized bodies of the community can earn their income from collateral activities - such as organizing conferences providing education and specialized support services - either for the initial FinTP installations and customizations or for recurring services requested by the members An alternative can be trialling and certifying interested providers enabling them to perform support services for FinTP
Thus who could pump money into this project It could be one or a mix of
‐ World Bank - if governmental programs are implied and provided a proper project which convincingly demonstrates the beneficed social impact
‐ EU development funding
‐ interested wealthy members of the community
The most critical dependencies are external such as (arranged according to
their impact) availability of funds for building the community finding trustful
and skilled open source consultants (legal business community licensing)
The synthetic view of the main assumptions and dependencies is provided in
the attached file
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Maintenance amp user support 1-Jan-13 Marketing inst action
4 Activities
Initial planning amp budgeting 15-Dec-12 document
Roles allocation 15-Dec-12 document
Community inst Implementation 15-Dec-12 action
Awareness campaign 1-Jan-13 action ongoing process
Members recruiting 1-Jan-13 action ongoing process
Continued operation 1-Jan-13 action ongoing process
Service sales 1-Jan-13 action ongoing process
Future development planning 1-Jan-13 document ongoing process
5 Resource allocation
If existing institution - allocation 15-Dec-12 action
If newly formed - recruiting 15-Dec-12 action
Make FinTP available to comm 1-Jan-13 action ongoing process
Start community financing 1-Jan-13 action ongoing process
6 Financing
Initial investment 1-Jan-13 action secured by that date
First period of comm operation 31-Aug-13 action secured by that date
co
mm
un
ity
Project approach
Project approachpdf
FinTP - Vision and Scope
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8 Scope This chapter deals with the phased availability of various FinTP features again considered from application and community points of view
In the first phase (due Dec 2012) the core of FinTP application is ready including the following technical features
- financial message routing between services and monitoring of exchanges
- multi-threading capabilities
- persistent end-to-end transactions
- batching de-batching
- archiving
- tracing and logging of transactions and user events
- transient errors detection and recovery
- real time search and reports
- security access and user administration
Similarly during the first phase the main community components need to be in place
- moderator
- software development and maintenance body (Allevo also available in the first and second phase of the project)
- test amp validation body
- (software) auditor
- legal
- main contributors (Allevo falls into this position)
- platform
- marketing
In the second phase (Dec2012 - Dec2013) several operational features of FinTP will be added
- predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit instruments securities settlement reconciliations
- MTMX coexistence
- multi-BIC multi-currency
- SEPA ready certification
- TARGET2 ready
- SAGSAASAE interfaces
- duplicate detection
- liquidity reports
- competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
- accounting reconciliation
- AML (sanctions list matching)
- SaaS and cloud ready
along with resilience and start of maintenance and knowledge transfer (the last two obviously continuing in the next phases)
FinTP - Vision and Scope
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The synthetic view of the project scope is provided in the following table
Crt No
Feature Activity Phase1 31Dec12
Phase2 31Dec13
Phase3 31Dec14
Phase4 31Dec15
Fin
TP
A Operational features
1
Predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit Instruments bonds (Romanian Euroclear) reconciliations
2 MTMX coexistence
3 Multi-BIC multi-currency
4 SaaS ready cloud ready
5 SEPA ready certification
6 TARGET2 ready
7 SAGSAASAE interfaces
8 Liquidity reports
9 Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
10 Accounting reconciliation
11 AML (sanctions list matching)
12 Duplicate detection
B Technical features
1 Routing financial message between services and monitoring of data flows
2 Multi-threading capabilities
3 Persistent end-to-end transactions
4 Batching de-batching
5 Resilience (at transaction level)
6 Archiving
7 Tracing and logging of transactions and user events
8 Transient errors detection and recovery
9 Real time search and reports
10 Security access and user administration
C Other activities
1 FinTP maintenance
2 Knowledge transfer
Co
mm
un
ity
Establishing the institutionscomponents
1 Mentor
2 Software Auditor amp Provider
3 Legal service
4 Members
5 Allevo initial role
6 Platform
7 Marketing
FinTP - Vision and Scope
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9 Limitations The main limitations in the economy of the project consist of phasing several FinTP
operational features for the following year (eg debit instruments liquidity reporting
AML filtering accounting reconciliation resilience SaaS ready cloud ready etc)
At the same time for features intended to front-office usage like Remit it was not yet
decided to publish them as open source product
The synthetic view of the main limitations is provided in the following table
Crt
nrItem Limitation Exclusion Comments
1
FinTP
a
Operational features Available in 2013
b
Remit Not included in
open source
package
2
Community
a
Rules Tightly controlled The statute should
ensure the right
balance between
safety and free
association of talents
Given the significant budget allocation (at least from Allevo perspective) the strong
requirement to meet the maximum ceiling will limit the FinTP product initial preparation
and maintenance expenses
Community wise the obligation of a tight regulated statute will have to ensure the right
balance between safety (mandatory in an environment dealing with financial
transactions) and a free association of talents (typical in an open source community)
In the first period after launch (at least the first two years) of the initiative the
maintenance and support activities will be provided by Allevo (as initial contributor)
A major restriction would be to meet the budgeted development and maintenance
FinTP - Vision and Scope
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10 Appendix - Risks
Specific risks
1 Product
a Long delivery lead time This is a medium probability and impact risk however Allevo should make available the needed resources and motivate the entire team for the job
b Credibility loss if FinTP fails to further become certified on meaningful operations andor business tracks (ie SWIFT business certification tracks or similar) The single possible containment is lobbying if the application certification program rejects open source products Anyway the impact is very important and its materialization should be avoided
c Low quality of the allocated team and improper version management are highly unlikely to occur as long as the formal transfer of responsibility is smoothly made from Allevo to the corresponding body put in place by the community The real hidden risk is that this process could take too long and it thus has a very high impact
d Poor FinTP quality may result if the community fails to institutionalize proper quality assurance (QA) and verification amp validation (VampV) processes This is most expected not to happen but if it does the impact is at least medium The single path to overcome this risk consists in a professional approach to these items based on institutionalizing practice proven QA and VampV processes
e Allevo lack of expertise in the open source business This can be contained by carefully selecting trustful amp truly expert consultants Otherwise it means more money longer time spent on project and expenses without proper return
2 Service
a The software maintenance does not properly deliver as expected ie on-time and on-quality bug fixing regulation amp standards alignment and productivity amp technological improvement The key to contain this risk materialization is the community status having provisions to neatly provide maintenance and further development of the rules for FinTP as well as the applicable rules and fees for the ancillary services
b Low quality and safety of the service received by the members of the community To avoid the risk of performing the one-time amp recurring support services by under-prepared professionals the community has to rule the process of training and qualifying the companies willing to contribute in this area
c Not meeting the minimal SLA criteria The community should regulate and periodically revise the training curricula and to further audit both the teachers and the certified experts to ensure the service level agreements are met
d Under motivated service providing professionals - up to the level of not feeling the high impact of their activity The community status must provide guidance to the contributors on the minimal standards the professionals should meet
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e Constrained expert resource pool This risk could be overcome by the communitys policy to ensure at all time a balanced number of motivated experts to the communitys size Failing to do so may result in high negative impact of the community business and public perception
3 Community
a Emergence of a parallel competitive community If the optimal timing between publically disclosing FinTP and community take-off is not achieved then there are high chances that following a competitive initiative other entrepreneurs successfully launch their own similar or derived community This could be avoided by periodical reviews of the progress of both FinTP and community status and deciding whether the project needs to be put on hold or not
b Unfit reputation of the Moderator or main contributors If either the Moderator or the initial contributors are not beyond any dispute and are reputable institutes then there is certainly something rotten in Denmark and the project should be put on-hold
c No commitment from the Moderator‟s side Similarly if the Moderator does not commit to the project it means that Denmark has a serious problem to solve The project should relinquish until the matter is fixed
4 Legal
a Misuse of copyright and intellectual property (IP)The assigned working team could not be aware of the limitations and liabilities of using (entirely or partially) third party software this risk can be contained by delivering the right training providing proper working procedures carefully recording and documenting the use of open source code and carefully cross-scanning
b Injunctive relief and financial damages can be caused by not properly and continuously controlling the use of third party open source code resulting in copyright or IP infringement There are two containment measures which can be taken tighten the compliance check during the product lifecycle or apply the sanction policy as to set an example
c The competition starts a class action - this may result in delaying the project
5 Financing
a Lack of long term financing institutions Allevo should urge its consultant to identify and draw a reasonable list of financial options institutions
b Exceeding the budget given that this type of project has no precedent in Allevo and to avoid exposing to the dependency on engagement to financial institutions or to commitments beyond the existing budget a further carefully drawn project plan is needed along with its explicit approval from the board of the company
Market related risks
1 False expectations
a Expensive services Not everything is free aside the initial and maintenance free licensing the training the support and other professional services can amount to more than in general expected Allevo rates this risk as medium possible but with low impact as long as the law governing the community and its initial period of operation will consecrate fair market prices and competitive sources of contribution
FinTP - Vision and Scope
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b Hidden costs for patches updates and upgrades While of similarly weight in terms of probability and impact this should be no real concern as long as the law governing the community clearly provides for free and accountable maintenance
2 Poor image on quality
a Too many releases making FinTP hard to manage and unsafe to operate Given proper regulation of the community and the mature root of FinTP Allevo disregards the possibility of this risk to materialize However if this were to happen this is a high impact risk and by all means should be avoided
b Backward technological (in)compatibility looks to us as a low risk in all respects and within organizations applying practice proven software engineering processes and professional - accountable team this is not likely to materialize
c Support can be perceived as the highest impact risk for FinTP This can be overcome by tight regulation of the commercial and professional conditions to deliver the service (for instance only qualified organizations should be recommended to members for supporting FinTP)
d SLA and accountability for both internally or externally performed services is closely correlated to the previous risk and the community status should provide the support for growing a community of competencies and accountable professionals around FinTP Periodical auditing (by the specialized community body) of this pool of professionals will further ensure the confidence that the skills are preserved at the required level
e Code fragmentation and forking is a high impact risk with a low probability of happening in the initial period provided the knowledge transfer is done orderly and in an institutionalized manner
3 Inherent uncertainty
a Community disputes can jeopardize its cohesion the project viability and future This is a high impact possibly high probability risk and it is the definite role of the Moderator to feel prevent and while materializing mitigate any conflicting situation
b FinTP going commercial post-launch This is a huge impact possibly high occurrence probability but manageable with the right legal instruments provisioned in the community
c Loss of alignment to industry standards and regulations This risk has medium probability and medium impact given the assumption that the community is tightly regulated and the working bodies institutionalized and gathering professionals
4 Legal
Copyright infringement given Allevo experience in the open source business this risk is highly probable and has a high impact on FinTP especially if mistakes are made in the launching phase Similarly if during the product maintenance and further development phase the community fails to institutionalize proper formal software development processes (covering all FinTP lifecycle phases) based on industry practice proven model(s) Supplementary the expert code scanning audit for compliance is the single resort to preclude external software source misuse
FinTP - Vision and Scope
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5 GPL specific
a Noncompliance to the GPL license If GPL license is used the product should further distribute in compliance with this part provisions High impact and probability but manageable if proper software development processes are used and if the statute clearly defines the licensing model for FinTP
b FinTP unconformity The risk that software engineers get inspired by a chic solution which they import and emulate similarly in FinTP And this is also highly possible since les grands esprits se rencontre
6 Existing customers attitude
Anger for having paid for something which now is free The existent customers can be concerned about the future of their installed system its further development (in one word its future) and on the quality of the service (SLA including) Some recent adopters can possibly be furious for spending their money on buying licenses for a piece of software that differently packaged becomes free of charge
For the first situation the single best solution for Allevo is to ensure a smooth transition from the current status to the new solution deployed Also highly probable Allevo should provide for simultaneous (for at most one more year) maintenance of both FinTP and for qPayIntegrator
For the 2012 new qPayIntegrator adopters Allevo should transparently state the product‟s future and propose a commercially attractive migration towards FinTP when it becomes publically available (like the option for the installation migration and recurring services) The decision should clearly stay with the customer if he still buys Allevo licenses delays the implementation until FinTP is available or if he goes for a competitive solution
In other words the key to mitigate the existing customer perception is switching places and discarding if the situation proves to be uncomfortable
Bottom-line is that to avoid most of the risks the FinTP community must be a rather tightly controlled one though still opened to anyone willingly abiding to the rules
The synthetic view of the main risks their assigned probability impact and the corresponding containment approach is provided in the attached file
Risk IDRisk
CategoryRisk
Probability
(High
Medium
Low)
Severity
(High
Medium
Low)
Containment (Mitigation Action Proposed)
M1Free as in a
Free Puppy
M101
The training service amp support cost could account more than the
commercial product its replacing (application software is typically 30 of
the total cost of ownership of most projects)
Medium Low
M102 Hidden costs ie charge for patches updates and upgrades Medium Low
M2Frequent
updates
M201
Projects might be updated frequently - as often as everyday Too frequent
updates could have a negative impact on the implementation
interoperability and support
Low HighMAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M3Backwards
compatibility
M301 Less accountability Low LowMAP03 Access to prior versions of source code (additional in-house
development and support procedures might be necessary)
M4Support
related risks
M401Support could be perceived as the biggest issue with open source
software deploymentsHigh High
M402 Internal External Accountability SLAs High High
M403Code fragmentation or forking if the community fails to institutionalize
corporate like formal structureHigh High
M404Support could require greater involvement and different skills set from
operations staffMedium Medium
M5Community
immaturity Low Low
M501Could generate incompatibility of FinTP with industry standards amp
regulationsMedium Medium
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M6 Uncertainty The inherent uncertainty in every open source project
M601 Community disputes might impact project viability and future High HighMAP04 The Mentor should prevent amp mitigate any conflicts inside the
community
M602 Open source projects may not stay open in future releases High HighMAP05 The originator liabilities should be strongly enforced by the
community statute
M7 Legal risks
M701 Copyright infringement High High
M702 Can open source software deployments pass an audit
M8 GPL General Public License specific development concerns
M801Software thatrsquos derived from an existing GPL project in whole or in part
might not be released under the same licenseHigh High M08 The community should regulate the licensing model
M802
Developer contamination - developer could review an existing open source
project could see an elegant solution then implement a similar function in
closed source project
High HighMAP09 Procedurals constrains for the software developers should be
enforced
M9
Current
customers
attitude
The actual customer perception could be negative High High
M12 To prevent a negative attitude Allevo should involve the customers
in the FinTP project Allevo needs their active support for a smooth and
issues less transition
ma
rke
t re
late
d r
isk
s
co
st
rela
ted
ris
ks
MAP01 The community should regulate the applicable rules and fees for
services and maintenance
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
bu
sin
es
s a
nd
le
ga
l ri
sk
s
MAP06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S1Product
related
S101 Late delivery lead time Medium MediumMAP15 Allevo should provide proper resources (funding and human
resources)
S102 Credibility loss if fail to certify with SWIFT Medium High MAP16 Should be discussedamp agreed with SWIFT
S103 Inexperienced team or allocation below needs Low HighMAP15 Allevo should provide proper resources (funding and human
resources)
S104 Improper or non efficient version management Low High MAP16 Review the current Allevo Configuration Management System
S105Poor quality if the community fails to institutionalize proper verification and
validation practices3
M06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S106 Lack of expertise in open source projects 2 Allevo should engage thoroughly selected Open Source consultants
S2Service
related
S201
The software maintenance not properly providing for bugs fixing
regulationamp standard alignment technological improvements communities
improvement requests
High HighMAP01 The community should regulate the applicable rules and fees for
services and maintenance
S202 One-time amp recurring services might be provided by unqualified resources High HighMAP17 The community should regulate the training curricula and related
expertise certification
S203 Provided services might not meet the minimal SLA performance criteria High HighMAP17 The community should regulate the training curricula and related
expertise certification
S204 Relaxed or lack of accountability of the professionals High HighMAP18 The community should regulate the employment agreement of
the professionals
S205 Lack of qualified professionals High HighMAP19 The community should ensure a balanced number of certified
professionals with the community size
S3Community
related
S301
If after disclosing FinTP the community does not enthusiastically adopt
the solution competitors might more successfully develop a similar
strategy
Medium MediumMAP20 FinTP promotion should be convincing and realistic A well
organized marketing campaign by Allevo
S302The community mentor andor early adhering members have no
undeniable prestige or are not largely trustfulMedium Medium MAP99 Project status review Ending the project could be one option
S303 The Mentor does not strongly commit for the project Medium Medium MAP99 Project status review Ending the project could be one option
S4 Legal
S401Exposure to copyright and IP infringement due to working team unaware of
the legal consequences of using third party softwareMedium Medium
MAP21 Allevo should keep records and fully document the use of open
source code
S402Copyright or intellectual property infringement can lead to injunctive relief
and monetary damagesHigh High
MAP23 Allevo should institutionalize a tight licensing and technical
control
S403 All risks related to open source compliance High HighMAP24 Allevo should appoint as soon as possible a FinTP compliance
Officer
S5 Financial
S501 Lack of financing institutions Medium MediumMAP25 Allevo should urge consultant to provide a consistent list of
potential investors
S502 Dependency on the financing institution approval Medium Medium
S503Not thoroughly planned project overlooking one or some project cost that
need to be financedMedium Medium
Sp
ec
ific
ris
ks
tec
hn
ica
lm
ark
eti
ng
leg
al
fun
din
g
MAP26 Allevo should carefully draw a consistent and eligible project for
financing
Risks
Riskspdf
FinTP - Vision and Scope
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wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
11 Appendix - Bibliography 1 Accenture Open Source Research Geographic Findings
2 Accenture Open Source Research Industry Findings
3 Producing Open Source Software - How to Run a Successful Free Software
Project by Karl Fogel
4 Open Source Software Risks and Rewards by Gary Hein
5 A Business Case Study of Open Source Software by Carolyn A Kenwood
6 6 critical success factors for product development by Christian Wig
7 Bank 20 by Brett King
8 Managing the business risks of open innovation by Oliver Alexy and Markus
9 Product idea evaluation checklist shared by Startgass AS
10 SWIFT 2015 Strategy
11 Customers and business impact of product changes
FinTP - Vision and Scope
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12 Appendix - Glossary ACH Automated Clearing House that is used to clear retail payments
between banks in a country or region
APAC Asia and Pacific
AML Anti-Money Laundering
BCampDR Business continuity amp disaster recovery
B2B Business to business
C2B Consumer to business
CET Central European Time
CMMI Capability Maturity Model Integration
CMS Configuration Management System
Coexistence The situation of multiple standards existing at the same time in the same business space Within SWIFT this refers to the coexistence between the MT and MX standards This also refers to the set of measures being taken to make the situation easier to handle by the community (publication of mapping rules translation serviceshellip)
CSM Clearing and Settlement Mechanism
CUG Closed User Group
Dictionary Part of the ISO 20022 Repository that contains all items that can be re-used during business modelling and message definition activities
EAI Enterprise Application Integration - middleware to connect applications and communication interfaces Typical EAI software includes features for mapping data between various formats enriching messages with data from other systems and orchestrating message flows
ECB European Central Bank
EMEA Europe Middle-East Africa
EPC European Payment Council
ERP Enterprise Resource Planning
EU European Union
EUCLID Connectivity to EuroClear Bank services
FIN The messaging service offered by SWIFT for the secure and reliable exchange of MT messages in store-and-forward mode By extension the syntax used to format these MTs
IP intellectual property
Interoperability Capability to easily exchange business information while using different message standards ISO 20022 promotes global use of syntax-neutral business and message components as a common denominator to achieve interoperability between standards using different syntaxes
ISO The International Organization for Standardization - an international standard-setting body composed of representatives from more than 160 national standards organizations that promulgates worldwide standards in a variety of domains aiming at facilitating cross-border exchanges of goods services and techniques
FinTP - Vision and Scope
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ISO 15022 An ISO standard that describes the syntax to be used for developing securities messages used mainly to support back office related transaction flows It replaced the previous securities messaging standard ISO 7775
ISO 20022 RA Registration Authority - offers the services described in an ISO standard on behalf of and under a contractual agreement with the International Organization for Standardization
ISO 20022 Repository
Repository maintained by the ISO20022 RA which contains the financial business models message definitions and components defined in compliance with the ISO 20022 standard
ISO 20022 RMG Registration Management Group - in charge of the overall management of the ISO 20022 development and registration process in accordance with the ISO 20022 standard
ISO 20022 SEG Standards Evaluation Groups -in charge of validating candidate ISO 20022 messages within the scope of the business justification and ensuring that they address the needs of their future international community of users
ISV Independent Software Vendor
KYC Know Your Customer
MACUG Member Administered Closed User Group
Message A set of structured information exchanged between two parties involved in a financial transaction
Message component and element
A re-usable data structure used for assembling message definitions The data defined in a message component is bdquotraced‟ back to the business components and business elements In simple terms business components define the business meaning message components create data structures for messaging
MI Market Infrastructure - a system that provides services to the financial industry for trading clearing and settlement matching of financial transactions and depository functions
Middleware Software that enables data to be exchanged among different systems with standard communication components and tools for formatting mapping and processing
MT The traditional bdquotag value‟ Message Types for use on the FIN service offered by SWIFT
MX An XML message exchanged over SWIFTNet whether or not ISO 20022 compliant
OS Open source
PSP Payment service provider
QA Quality assurance
RMA Relationship Management Access
RTGS Real Time Gross Settlement System
SAA SWIFT Alliance Access
SAE SWIFT Alliance Entry
SAG SWIFT Alliance Gateway
SaaS Software as a Service
SCORE Standardized CORporate Environment
FinTP - Vision and Scope
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Semantics The study of meaning usually in language The word is often used in ordinary language to denote a problem of understanding that comes down to word selection or connotation
SEPA Single Euro Payment Area
SLA Service level agreement
SME Small and Medium-sized Business(es)
SOA Service Oriented Architecture
SSB SWIFT Service Bureau
STP Straight Through Processing
SWIFT Society for Worldwide Interbank Financial Telecommunication Visit wwwswiftcom
Syntax Physical format of a message used to identify and represent the conveyed pieces of information
T2S TARGET2 Securities - an initiative of the Eurosystem It is an IT platform that aims to make settlements across national borders simpler and more cost-efficient
TARGET2 The Eurosystem-owned European Real Time Gross Settlement (RTGS) system (Trans-European Automated Real-time Gross Settlement Express Transfer System) TARGET2 is one of the largest high-value payment systems in the world
Taxonomy The classification in a hierarchical system typically organized by super type - sub type relationships also called generalization-specialization relationships or less formally parent-child relationships
TSU Trade Service Utility
TCO Total cost of ownership
Translation rules
Set of rules to be used to map the pieces of information included in a message expressed in one syntax to the equivalent message expressed in another syntax
Remit Remittances
XML eXtensible Mark-up Language - popular syntax to encode documents (or messages) electronically on the Internet XML allows communities to define their own identifiers (or tags) and format (or data type) for each component of a message
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Bureaus etc) ISV regulatory institutionsMarketing plan feasibility campaign efficiency and costs
2 MentorPreferable SWIFT
Also eligible SunGard IBM affiliation to other OS communitySWIFT decision
3 Legalcopyright Expert legal consultant and RO apprentice Cost and time shift dependent
4 Tight regulation Clear membership admission amp software contribution criteria The quality of the consultant advice
5 Marketing Actively recruiting community members Marketing plan feasibility campaign efficiency amp customer skepticism
a community portala provide content amp debate space information consolidation amp dissemination virtual
showroom subscription management support
a business analysis solution availability and maintenance by one of the
members or employed company
b press releases amp
announcementsb PR and AR b communicators availability and costs
c events c periodical conferences user focused meetings c cost dependent
6 Financing World Bank EU amp private funds Lobby amp funds availability
Item
FinTP
FinTP community
FinTP - Vision and Scope
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3 Background and Business Opportunity Payments and securities processing is the earliest form of software development in
most financial institutions The evolution in rules and regulations has very often been
built upon these developments with patchwork as result
The payments arena ie the processing of payments in itself has reached a high level
of maturity and operational software should no longer be a differentiator Payments
have become a commodity in the financial industry
Lazaro Campos in his first Sibos speech as CEO of SWIFT in the opening plenary of
Sibos 2007 in Boston has suggestively stated that SWIFT products should evolve to
the operational simplicity of a widespread fax machine
The financial ecosystem is going through major technology shifts and is at the same
time facing an increasing regulation pressure These changes represent business
opportunities for Allevo The opportunities are being driven by market forces - consumer
requirements supply and demand - not by regulators Companies and communities
start experiencing new financial instruments such as PayPal Google wallet
Facebook UK faster payments mobile payments amp commerce M-Pesa NFC etc
The existing solutions for payments processing are proprietary featuring a great
variety of licensing models amp costs implementation lead time maintenance amp support
In short not something one would expect for a commoditized process
Allevo is strongly committed to publish under free-open licensing terms its own
financial transactions processing engine - which capitalizes on a seven years practice
proven commercially available application
In our view an open source application represents in fact the acceptance of the
commoditization of the payments processing arena an opportunity to get away from
existing patchwork
60 of the financial services industry is committed to adopt open source software as
part of their infrastructures 72 having well defined open source licensing policies1
This trend is due to the actual challenges the financial industry faces
Should FinTP application be SaaS and cloud ready it will offer the customers options
to architect their business infrastructure according to their strategy
1 According to the Open Source Research (Aug 2010) authored by Accenture
FinTP - Vision and Scope
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4 Vision of the solution 41 Vision
What Allevo undertakes
This paragraph explains why and how Allevo is going to cut the branch it happily sits on
Today Allevo is milking a conveniently productive cash cow namely qPayIntegrator
an application created for processing financial transactions qPayIntegrator is a
practice proven solution certified by SWIFT on SEPA and Remittances compliance It
ensures revenues through new licenses sales and the recurring maintenance and
support services
Bitten by the flea of restless evolution Allevo aspires towards sharing its existing
assets to open a new door to a larger more transparent and collaborative market To
put it bluntly Allevo has decided to make the strategic move of publishing into the
open source space an application for processing financial transactions
Why
The simple reason behind this initiative is achieving a larger footprint in the financial
industry In other words Allevo is ready to bet that sharing its application in the open
source space the trust and enthusiasm of community members will strongly influence
both the spreading and further developments of the shared product
This initiative is a commercially disruptive transformation in the sense that the
distribution of the financial transactions processing application will be mainly the task
of the community members If the TCO will be significantly convenient and if the
solution will match the needed quality trust and safety then Allevo expects that the
market acceptance trend will be solidly sharp An open source application for
processing transactions will not only solve the specific needs of a company but will
also generate sub-communities (either regional or by industry) They will push the
interoperability of the application forward to transactions interpretation and their
operational consequences industry-wide
People will continue to generate increasing amount of data and will want to use that
data from different locations paying no attention to distances The trade and financial
community should match this new developing framework with a new financial
ldquoecosystemrdquo What today are premium applications tools or devices will commoditize
in the future to come
Todays high speed communication channels and powerful multipurpose personal
devices put pressure on companies to rethink and adapt their services Allevo strongly
believes that one of the missing pieces of this developing ecosystem is a versatile
safe free of licensing cost and widespread application for processing financial
transactions It should be capable to connect to various communication channels It
should bring together cloud based resources corporation back or front-office systems
intelligent wholesale or retail equipment transportation and many other assets this
new global ecosystem is ready to use
FinTP - Vision and Scope
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No man is an island
This exciting journey Allevo embarks on is not doable without companions
The most obvious need is that of a cohesive community with sufficient resources
talents and ideas By cohesive Allevo means that the enrolled companies and
individuals share the same set of values These are professional ethics proven
practice professionals safe amp failure-free operations While the participants speak the
same language the intent of working for efficient interoperability means eliminating
misinterpretation Thus the need to manually process transactions will be reduced and
many current ldquoexceptionsrdquo will be eliminated
Like any other form of people gathering the community needs rules governance
agora to make their voice clearly heard (requirements amp ideas) A supervisor is needed
to guarantee that the challenges are understood that the actions anticipate the desired
solution and that proper decisions are taken In this document the supervisor is called
Moderator since atop of being a moderator the supervisor should also be an
accepted and trustful negotiator perceived at the same time as a leader by all
community participants
When
Allevo is in a position of offering a reasonably strong ground for both creating this open
application and starting a community
On the latter Allevo qualifies to be one of the first members of the community given its
firm belief that the world will become a large cooperation space where ideas data and
information will be openly exchanged and knowledge openly shared - in the best
interest of the people
The deep root of the software application that Allevo brings to the community is
credited by 7 years of practice and features a number of credentials Making FinTP an
open application qualifies it to become a tool for companies with constrained budgets
Adopting FinTP will empower its customers to equally interpret both the syntax and
semantic of the exchanged financial instructions
Bottom-line Allevo has initiated the project confident to quickly find other visionaries
sharing the same daring ideas on how to lay the firm foundation of a new efficient and
successful financial ecosystem
How
Now this is the tricky part of the story The easiest part of the project is creating the
open source application The success lies in launching the community simultaneously
This means that prior to the official release the community roles should be well
defined fundamentally agreed upon by the main sponsors the Moderator should
formally engage and the initial membership should include some prestige companies
and IT vendors Thats tough but this is how it has to happen
What is in it for
Allevo the company will become member of a club where it can seed future
developments This will further lead to the enhanced visibility of Allevo team and
portfolio
The community members they will become members of a club unified by the mutual
interest of pushing the interoperability level to a more refined stage of financial
transactions processing while enjoying the benefits of a falling TCO
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
The Moderator this entity will consolidate its influence and prestige in the rapidly
transforming financial market It will be the parent of the deeper standardization of the
financial business crossing the bridge between financial messages conveying
between institutions up to the institutions interface with their customers This will lay
the ground for the financial integration to equal the industrial and trade distribution
chain footprint
Whats next for FinTP
After FinTP has successfully been adopted in the market on a reasonable scale the
future looks even brighter
Companies relying on a trustful standardized processing application will be able to free
up their minds amp budgets for what uniquely differentiates them in their customers‟
eyes quality of service relevance trade easiness agility of delivery risk containment
social responsibility or other distinctive factors
Once all this has settled in self-adaptive trade business systems will come forward to
close the loop between customers and their providers
42 FinTP Positioning
FinTP is a key business software that opens markets by aggressively addressing
customers with constrained investment budgets Allevo strongly believes that FinTP is
tightly knitted to SWIFT 2015 Strategy2
The payments arena in itself has reached a high level of maturity payments becoming
a commodity on these premises back-office software should no longer be a
differentiator
FinTP creates a widespread financial transactions processing platform a cheap
alternative (to the current proprietary payment systems) for an industry common
solution which will evolve into a new standardization layer
2 See Bibliography
FinTP - Vision and Scope
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FinTP shifts the competitive space and consequently the innovation drive (from back-
office and mostly financial institutions and large corporations) to SWIFT traditional and
new business areas (treasury and front-office of the banks large financial institutions
corporations and SMEs - including MFIs)
43 FinTP Applicability
The usage of FintP in several domains ndash banks micro-finance institutions CSMs corporations and public administration ndash is discussed The main building blocks provided by FinTP for the processing of financial transactions are shown in each case
For setting the scene consider the naiumlve drawing (see below figure) which depicts
1 the bank‟s applications - implementing the core products and services the banks provides to its customers (FX Lending Payments TF custody etc)
2 banking correspondent business and infrastructures they connect to to settle for example their payments
3 corporate customers or local financial institutions engaged in distributing their products and services
4 the individuals who benefit from the service of the bank directly or intermediated by partnering financial institutions or corporations - including retail chains connectivity channels that are either SWIFTNet or VPNs over internet or bank‟s own private network
FinTP - Vision and Scope
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Given the application scalability FinTP is fitted to deal with
1 B2B environment type FinTP performs transactions routing and processing between the before depicted institutions thus achieving cross industry interoperability Additionally FinTP helps the business customers to consolidate their financial or treasury operations similarly helps the retail chains to reconcile and settle the available stock with the registered sales
To exemplify ensuring SEPA Readiness for banking institutions and for their customers is briefly discussed
By 2014 banks in EURO zone should be ready to process instructions in ISO20022 format FinTP can be an efficient solution to achieve rapidly compliance with the EPC provisions
Are the bank‟s customers ready to send the instructions data in the right format Are you ready to accept this type of data Are you able to extend solutions to help your customers better preparing for SEPA instructions FinTP has the right building blocks for banks and corporations
2 B2C environment type FinTP goes further down to the end customers The individuals can interact directly in a branch or remotely using their computers tablets smart phones to provide them with personal financial portfolio management It enables them to operate on their bank account or to do shopping It also supports new financial instruments such as PayPal Google wallet Facebook UK faster payments mobile payments amp commerce M-Pesa NFC etc
FinTP applicability profiled on beneficiary type
FinTP - Vision and Scope
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a Banks
Regional and international banks are rethinking and often improving their business architecture because of strong penetration of traditionally non-financial business in the money supply chain
The banks have in general the following choices
i Stay the course This often means keep on muddling
ii Outsource the processing of financial transactions in its entirety or in parts
iii Lower the recurring costs dramatically and benefit from joint developments by implementing Open Source solutions for commoditized parts of the needed infrastructure
Allevo provides the building blocks for the processing of financial transactions (FinTP) for those organisations who want to go for the third strategic choice
Toolbox3 (see 51 Features for details) as illustrated in bellow figure
Business flow consolidation
External interfaces to market infrastructure(s)
Funds transfer (credit transfer direct debit debit instruments duplicate detection treasury flows)
Operational functionalities such as liquidity reporting accounting reconciliation AML transactions filtering remittances management competitive reports etc
All helping the bank to manage the operational risk
3 Toolbox means a comprehensive collection of ready to deploy operational features
FinTP - Vision and Scope
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Payment factory - as illustrated in the bellow figure - is the bank-centralized service for smaller financial institutions or corporations to provide payment and collections processing in compliance with regional or global regulation along with additional service (eg intra-day limits etc)
A similar type of architecture can be used to set-up a bank administrated Member Concentrator or a (SWIFT) Service Bureau or a Payment Service Provider
FinTP - Vision and Scope
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b Micro-finance institutions
Toolbox3 (see 51 Features)
Integration of micro-financing application with mobile payment operator(s) and banks It provides support for loan applications loan disbursement and repayments It integrates the mobile payments and the banking payments and as such provides working capital management Multi-MMTs amp multi country operations are also supported
FinTP - Vision and Scope
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c CSMs
Toolbox3 (see 51 Features)
CSMs can use FinTP (as shown in the bellow figure) to provide its customers an
effective connectivity readiness package Likewise CSMs can use FinTP to connect
themselves to other CSMs they need to
FinTP - Vision and Scope
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d Corporations
Toolbox3 (see 51 Features)
The financial or treasury department of the corporation can use FinTP (as depicted in
the figure bellow) to concentrate the processing and management of all their financial
business in one single operation window FinTP provides the building blocks for a highly
effective money supply chain between banks providers and customers Beyond that
FinTP empowers control on the working capital and financial resources
FinTP - Vision and Scope
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e Public administrations
Toolbox3 (see 51 Features)
Public debt business automation through Treasury Bonds settlement on all trade phases eg pre- sales post-
Wages and pensions payment in compliance with SEPA regulations
Structural funds financial management (in a business group managed by the State Treasury)
FinTP plays a multiple roles in the Public Administration financial business
a Bridge between the global banks secure network (SWIFTNet) and the Government
secure national network performing format conversion and business flow mapping
thus FinTP acts as a financial integrator of the different public institutions
b Interoperability gateway with the banking community and financial market
infrastructures
c Auctioning portal for the Treasury Bonds allocation and settlement for the Primary
market
d Management of the payments related to Structural Funds financed projects and to
the providers of the public institutions
e Payments (such as wages pensions state subsidies) due to individuals intermediated by banks using SWIFTRemit framework Similarly the taxes collection should be handled by the same system and framework FinTP provides means to perform the operations using either mobile devices or the internet
FinTP - Vision and Scope
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44 Key Business Objectives and Success Criteria
Today Allevo faces two major limitations in fulfilling its business objectives
1 Strong dependency on its narrow national market and thus being limited to the
known European Union and particularly Romanian practice
2 Significant allocation of the development talents to maintaining qPayIntegrator
rather than working to new business oriented products
Allevo is going to expand its business footprint and simultaneously shift its revenue
source from back-office solutions towards its customers business area (treasury front-
office) applications
To achieve this goal Allevo will focus on developing FinTP business and on gathering
a strong supporting community formed by representatives of the targeted market The
coherence of the community should be ensured by a trustful and committed
moderator
Therefore for the success of the project Allevo deems instrumental the go-to-market
process the solid take-up tempo and the quality of the community
On the FinTP side Allevo should tightly focus on
1 Understanding the community members‟ needs values and priorities in
relationship with their business competitive ecosystem
2 Improving the product management process and the technical commercial amp
distribution documentation
3 Identifying and centring the attention on strong idea generation selection and
monitoring processes
4 Elaborating the right product architecture to enable easy functional and technical
scalability maintainability diagnose native features for flexible customization
compliance to global and regional financial standards and preserving the initial
licensing structure across various customers business models
5 Strengthening project management
6 Designing coherent knowledge transfer process
7 Designing efficient customer support
As a member of this FinTP open source community Allevo will provide
1) the open source FinTP application
2) knowledge transfer (training amp consultancy) to both early adopters and to the
product development amp maintenance body (see 46 The community)
3) for a limited period of time
- support amp maintenance
- alignment to technology standards amp regulation
4) further improvements
5) contribution to relevant proofs of concept community web site conferences
articles online awareness
The power of the community will draw other vendors to partner together to ensure
market coverage each of them complementing the other through their expertise
FinTP - Vision and Scope
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FinTP distribution will be performed via the communitys portal while the initial
consultancy product installation and support services will be delivered remotely
Following the free open source software model FinTP will be available under an open
license free of charge
In designing the new products Allevo will benefit on mid and long term from the deep
insight both of FinTP internals and the structure and operation of the community
45 Market Sizing
Our evaluation of the FinTP targeted market size
- the global market size taken into account is 26100 institutions out of which
- an average FinTP engine licensing fee is euro30000 resulting in potential
maximum expenses of euro783 million
- the corresponding yearly maintenance fee is euro5400 resulting in potential
maximum expenses of euro700 million in 5 years
- the number of potential institutions adopting FinTP in the first 5 years of
availability 250 tier3 amp 2000 tier4
- consequently the savings in 5 years could reach euro675 million in license
fee and euro2025 million in maintenance fee resulting in a total of almost euro90
million
Allevo believes that (at least) during 2013 and 2014 its current income source will be
preserved while after that period the main replacement of the lost (new licensing and
recurring maintenance) fees will mainly consist of services (consulting
implementation support education) and sales of licenses for newly launched
applications
FinTP - Vision and Scope
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46 The FINkers United community
The community structure comprises three main entities (as depicted in the bellow
figure)
1 The adopters (beneficiaries) consumer companies choosing to adopt the
FinTP product in compliance with the community line of business and ethical
conduct
2 The moderator the instrumental inspirational authority expected to draw both
the development vision and the guidelines of the community
3 The contributors
a institutionalized bodies eg development and maintenance test and
validation audit legal marketing
b independent contributors eg ISVs (Allevo falling under this category)
solution providers integrators or passionate developersindividuals
FinTP - Vision and Scope
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5 Solution Description amp Parameters Like qPayIntegrator FinTP offers a
standard compliant processing
engine for the financial transactions
exchanged between the back-office
or ERP applications and the financial
community (banks MFIs market
infrastructures corporations)
FinTP is able to process financial
messages in both FIN and ISO20022
formats and at the same time offers
a rich set of interfaces to different
financial applications FinTP provides
compliance with various clearing and
settlement mechanisms
Consequently FinTP ensures a high
level automation of the end-to-end
financial transactions processing
51 Features
The FinTP project has two major deliverable components
1 the FinTP application itself
2 the community built around FinTP
All subsequent chapters will refer to both of these
Component code
Component description Comments
FinTP4 FinTP is a financial transactions processing engine for 3rd or 4th tier banks microfinance corporate or SMEs treasuries available as open source application Functional characteristics
1 Operational features
o Predefined flows and message formats
Includes reconciliation of confirmations with transactions
o Single and multiple funds transfer instructions securities settlement amp reconciliation (Romanian Euroclear) messages
The supported payment instruments are credit transfer direct debit debit instruments
o MTMX coexistence Based on FinTP native internal data format (ISO20022)
o Multi-BIC multi-currency
o SEPA ready (certification) Compliancy with EPC regulations for SEPA formatting and business flows (for SCT and SDD) enables bank-to-bank and bank-to-CSM settlement
4 FinTP root is Allevo equivalent product qPayIntegrator a commercially available amp practice proven (since
2005) application qPayIntegrator provides a consistent set of functionalities and it is fully aligned to both industry regulations and technology
FinTP - Vision and Scope
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Component code
Component description Comments
o TARGET 2 ready Compliance with TARGET2 settlement and operations as regulated by the ECB
o SAGSAASAE SAL interfaces
Integration with SWIFTNet to enable banking business
o Liquidity reports Real time cash reports and forecasts using several criteria (currency subsidiary profit centre)
o Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
Analysis and reports of market trends based on volumes amount BIC etc along with early alerts on behaviour changes beyond the standard deviation
o Accounting reconciliation Automatic NOSTROVOSTRO accounts reconciliation intraday liquidity reports and integrated exception management
o AML (sanctions list matching)
High and low value payments filtering uses 20+ black lists and ensures their content maintainability
o Duplicate detection Detection and investigation of possible duplicates the detection window and criteria are configurable
o Remittances processing Covers banks business and operations area as well as distribution channel
o Treasury markets Automation of treasury flows (FX and money market)
o Statements Processing of SWIFT messages related to correspondent banks accounts administration
2 Technical features
o Financial message routing and monitoring
o Multi-threading capabilities
o Persistent end-to-end transactions
During each phase of the entire processing cycle permanent copies of the transaction are kept until the final completion thus avoiding any transaction duplication or loss
o Batching unpacking
o Resilience at transaction level
o Archiving
o Tracing and logging transactions and user events
o Transient errors detection and recovery
o Real-time search and reports
o Security access and user administration
o SaaS cloud ready
FinTP - Vision and Scope
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Component code
Component description Comments
FINkers United - community
Since FinTP is an application handling financial transactions the product releases and the related community should be tightly regulated and controlled As the project matures these components will be further refined The following main components of the community have been identified
‐ the moderator ‐ the product development
and maintenance body ‐ the product and
community auditor body (acting as a gatekeeper of official releases) to control and maintain the change requests integer and eliminate any malware exposures
‐ the test and validation body
‐ the legal body for defining the frame for product distribution amp licensing
‐ the marketing entity responsible for creating awareness and attracting contributors and adopters
‐ the portal used as a channel for marketing support and version control
‐ individual contributors namely ISVs solution providers developers integrators who wish to use their skills and knowledge to the benefit of the community
These tools strongly depend on the available budget and widespread
organization culture It is not mandatory for these to be open source if usage of
open source tools would mean lower quality
3) Licensing
The licensing model highly depends on the results of the open source legal and
business consultancy However we assume the following frame
‐ free of charge initial and recurring maintenance license for using FinTP
‐ FinTP does not use software components enforcing liabilities for the user
‐ consumers using FinTP source code (in part or entirely) should comply to
the licensing policy of the community
‐ the version released by the development amp maintenance body is the only
official amp to be trusted version of the community ensuring product integrity
unity and stability
4) Regulatory compliance
The regulatory compliance strongly depends on the early adaptation of new amp
changed rules via the recurring maintenance and on the quality of the audits
performed by the specific bodies of the community
Thus it is ensured that ISO20022 and FIN standards TARGET2 and TARGET2
Securities SEPA or country specific regulations (as stated respectively by
FinTP - Vision and Scope
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SWIFT standards EPC specification ECB or regional Central Banks
regulations that the community chooses to comply with) stay the most
important business specific anchors of FinTP
The FinTP design also offers support for flexible definition of new compliance
sources
5) Consultancy
The needed consultancy is twofold
‐ legal to ensure that FinTP does not infringe other licensing constraints
‐ open source specific to enable the right choice of the community type and of its governing law
The main constraint relies in choosing the right advisors true experts in the
open source industry amp with appropriate ethic profile - able to deliver as
promised The consultants have to be available 800 am divide 800 pm CET and
easily reachable - geo-location is of utmost importance Selection of the
consultant will basically be done on price assuming the right mix of expertise
and availability is achieved
6) Financing
While Allevo partially undertakes the financing of FinTP development the
ancillary consultancy necessary team education or acquisition of productivity
tools are far beyond the companys 2012 budget
To overcome possible delays in the project Allevo needs to sturdily act to
identify both the most appropriate commercial offer and additional necessary
financing source(s)
FinTP community
The community related items are members moderator legal tight regulation
marketing and financing For each of these items several assumptions and the
corresponding dependencies are provided in the following paragraphs
1) Members
We assume that the communitys members span several business profiles
(such as financial services institutions corporations market infrastructures
PSPs SSBs public administrations regulatory institutions and ISVs) sharing
the mutual focus on financial operations performance and improvement
By now after some tests on market acceptance there have been identified a
few supporters comprising financial services institutions and small ISVs
To ensure the success of building the community there is need for attracting
prestige influencers (market analysts consulting companies of scale - starting
with big four key industry providers - such as SWIFT other communities - ie
professional such as banking insurers capital market associations) and a
credible pool of financial institutions and corporations
To this end Allevo unrolls its own awareness campaign through direct
meetings publications blog posts and social media public presentations and
by officially launching the initiative in a conference focused on free of charge
financial transactions processing applications
Allevo further plans to use Sibos 2012 as opportunity to organize a less
traditional communication session gathering a relevant international panel to
FinTP - Vision and Scope
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debate the strong and weak aspects of this initiative amp to get the public involved
as much as possible
The goal is that by the end of 2012 some tens of different institutions are
committed to co-found the community and to actively contribute to establishing
the legal frame and to forming the required action bodies
2) Moderator
Allevo perceives the Moderator as the critical member of the community since
his prestige and influence will warrant the outcome of all performed activities
The moderator must commit on long term to develop the community and to
sponsor it with its share of trust
Allevo strongly believes that the Moderator should have a global footprint be a
reputable and trustful institution
3) Legalcopyright
The legal consultant and advisor needs to provide the coherent legal frame to
cover all community activities by roles and accountability While making it easy
for the members it should be more demanding as far as contributors are
concerned (though still encouraging ISVs to actively participate) It has to draw
very precise responsibilities for the independent and institutionalized bodies
(for instance product maintenance amp development and audit) and for the
Moderators status
The quality of this legal work fully relies on the expertise and experience of the
advisor
The law governing the community has to be in harmony with the European
(either French or Anglo-Saxon) legal system and with the open source legal
regulations largely practiced in other business regions (US and APAC)
4) Tight regulation
FinTP the product meant to gather a community which uses and supports it is
all about moving values between different entities Thats critical irrespective of
the amount because failing to perform properly opens the doors to arguments
amp loss of reputation with the related tangible costs Moreover the product has
to be beyond any doubt during its entire lifecycle free of any malefic
embedded functions meaning that contamination has to be avoided by all
means
Allevo strongly believes that this requirement can be attained only by tight
regulation of the community specific approval of the initially launched version
of FinTP and of the recurring contributions
This approach can be felt strange compared to most open source communities
and can lead to little interest from IT talents making them feel banned or
restricted It remains the Moderator‟s duty to make them feel privileged if
accepted and rewarded as such However this censorship is a price to be paid
since the community and the project are about processing transactions
initiating value transfer
FinTP - Vision and Scope
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5) Marketing
The community needs to have the clear objective of spreading both
geographically and over a consistent number of industries
To achieve this goal the community should be able to actively provide open
access to relevant information (including explanations of concepts hands-on
evaluation) to non-members and to also answer their questions on FinTP and
on the community itself
The same level of information needs to be ensured for the members to whom
supplementary updates on the community events decisions available
releases patches and fixes should be made available They need to also get
focused forum discussions on specific business areas and subsequent
processes need to be distributed
These functionalities have to be hosted on the community‟s dedicated portal
This portal has to provide content dialogue space information consolidation
and broadcasting It must be a virtual showroom for FinTP It needs to host
documents and virtual meetings subscription management and product
support amp development
The community has to be able to run its own meetings enabling direct contact
between active members or their representatives
Meaningful press releases have to be regularly issued along with actively
maintaining a productive relationship with market analysts to consolidate a
clear public understanding of the community spirit and goals
6) Financing
Its all about money-money-money since at least for the first 2-3 years the
community needs to be financed
Upon reaching maturity the institutionalized bodies of the community can earn their income from collateral activities - such as organizing conferences providing education and specialized support services - either for the initial FinTP installations and customizations or for recurring services requested by the members An alternative can be trialling and certifying interested providers enabling them to perform support services for FinTP
Thus who could pump money into this project It could be one or a mix of
‐ World Bank - if governmental programs are implied and provided a proper project which convincingly demonstrates the beneficed social impact
‐ EU development funding
‐ interested wealthy members of the community
The most critical dependencies are external such as (arranged according to
their impact) availability of funds for building the community finding trustful
and skilled open source consultants (legal business community licensing)
The synthetic view of the main assumptions and dependencies is provided in
the attached file
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Maintenance amp user support 1-Jan-13 Marketing inst action
4 Activities
Initial planning amp budgeting 15-Dec-12 document
Roles allocation 15-Dec-12 document
Community inst Implementation 15-Dec-12 action
Awareness campaign 1-Jan-13 action ongoing process
Members recruiting 1-Jan-13 action ongoing process
Continued operation 1-Jan-13 action ongoing process
Service sales 1-Jan-13 action ongoing process
Future development planning 1-Jan-13 document ongoing process
5 Resource allocation
If existing institution - allocation 15-Dec-12 action
If newly formed - recruiting 15-Dec-12 action
Make FinTP available to comm 1-Jan-13 action ongoing process
Start community financing 1-Jan-13 action ongoing process
6 Financing
Initial investment 1-Jan-13 action secured by that date
First period of comm operation 31-Aug-13 action secured by that date
co
mm
un
ity
Project approach
Project approachpdf
FinTP - Vision and Scope
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Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
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Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
8 Scope This chapter deals with the phased availability of various FinTP features again considered from application and community points of view
In the first phase (due Dec 2012) the core of FinTP application is ready including the following technical features
- financial message routing between services and monitoring of exchanges
- multi-threading capabilities
- persistent end-to-end transactions
- batching de-batching
- archiving
- tracing and logging of transactions and user events
- transient errors detection and recovery
- real time search and reports
- security access and user administration
Similarly during the first phase the main community components need to be in place
- moderator
- software development and maintenance body (Allevo also available in the first and second phase of the project)
- test amp validation body
- (software) auditor
- legal
- main contributors (Allevo falls into this position)
- platform
- marketing
In the second phase (Dec2012 - Dec2013) several operational features of FinTP will be added
- predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit instruments securities settlement reconciliations
- MTMX coexistence
- multi-BIC multi-currency
- SEPA ready certification
- TARGET2 ready
- SAGSAASAE interfaces
- duplicate detection
- liquidity reports
- competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
- accounting reconciliation
- AML (sanctions list matching)
- SaaS and cloud ready
along with resilience and start of maintenance and knowledge transfer (the last two obviously continuing in the next phases)
FinTP - Vision and Scope
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Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
The synthetic view of the project scope is provided in the following table
Crt No
Feature Activity Phase1 31Dec12
Phase2 31Dec13
Phase3 31Dec14
Phase4 31Dec15
Fin
TP
A Operational features
1
Predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit Instruments bonds (Romanian Euroclear) reconciliations
2 MTMX coexistence
3 Multi-BIC multi-currency
4 SaaS ready cloud ready
5 SEPA ready certification
6 TARGET2 ready
7 SAGSAASAE interfaces
8 Liquidity reports
9 Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
10 Accounting reconciliation
11 AML (sanctions list matching)
12 Duplicate detection
B Technical features
1 Routing financial message between services and monitoring of data flows
2 Multi-threading capabilities
3 Persistent end-to-end transactions
4 Batching de-batching
5 Resilience (at transaction level)
6 Archiving
7 Tracing and logging of transactions and user events
8 Transient errors detection and recovery
9 Real time search and reports
10 Security access and user administration
C Other activities
1 FinTP maintenance
2 Knowledge transfer
Co
mm
un
ity
Establishing the institutionscomponents
1 Mentor
2 Software Auditor amp Provider
3 Legal service
4 Members
5 Allevo initial role
6 Platform
7 Marketing
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
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Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
9 Limitations The main limitations in the economy of the project consist of phasing several FinTP
operational features for the following year (eg debit instruments liquidity reporting
AML filtering accounting reconciliation resilience SaaS ready cloud ready etc)
At the same time for features intended to front-office usage like Remit it was not yet
decided to publish them as open source product
The synthetic view of the main limitations is provided in the following table
Crt
nrItem Limitation Exclusion Comments
1
FinTP
a
Operational features Available in 2013
b
Remit Not included in
open source
package
2
Community
a
Rules Tightly controlled The statute should
ensure the right
balance between
safety and free
association of talents
Given the significant budget allocation (at least from Allevo perspective) the strong
requirement to meet the maximum ceiling will limit the FinTP product initial preparation
and maintenance expenses
Community wise the obligation of a tight regulated statute will have to ensure the right
balance between safety (mandatory in an environment dealing with financial
transactions) and a free association of talents (typical in an open source community)
In the first period after launch (at least the first two years) of the initiative the
maintenance and support activities will be provided by Allevo (as initial contributor)
A major restriction would be to meet the budgeted development and maintenance
FinTP - Vision and Scope
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10 Appendix - Risks
Specific risks
1 Product
a Long delivery lead time This is a medium probability and impact risk however Allevo should make available the needed resources and motivate the entire team for the job
b Credibility loss if FinTP fails to further become certified on meaningful operations andor business tracks (ie SWIFT business certification tracks or similar) The single possible containment is lobbying if the application certification program rejects open source products Anyway the impact is very important and its materialization should be avoided
c Low quality of the allocated team and improper version management are highly unlikely to occur as long as the formal transfer of responsibility is smoothly made from Allevo to the corresponding body put in place by the community The real hidden risk is that this process could take too long and it thus has a very high impact
d Poor FinTP quality may result if the community fails to institutionalize proper quality assurance (QA) and verification amp validation (VampV) processes This is most expected not to happen but if it does the impact is at least medium The single path to overcome this risk consists in a professional approach to these items based on institutionalizing practice proven QA and VampV processes
e Allevo lack of expertise in the open source business This can be contained by carefully selecting trustful amp truly expert consultants Otherwise it means more money longer time spent on project and expenses without proper return
2 Service
a The software maintenance does not properly deliver as expected ie on-time and on-quality bug fixing regulation amp standards alignment and productivity amp technological improvement The key to contain this risk materialization is the community status having provisions to neatly provide maintenance and further development of the rules for FinTP as well as the applicable rules and fees for the ancillary services
b Low quality and safety of the service received by the members of the community To avoid the risk of performing the one-time amp recurring support services by under-prepared professionals the community has to rule the process of training and qualifying the companies willing to contribute in this area
c Not meeting the minimal SLA criteria The community should regulate and periodically revise the training curricula and to further audit both the teachers and the certified experts to ensure the service level agreements are met
d Under motivated service providing professionals - up to the level of not feeling the high impact of their activity The community status must provide guidance to the contributors on the minimal standards the professionals should meet
FinTP - Vision and Scope
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e Constrained expert resource pool This risk could be overcome by the communitys policy to ensure at all time a balanced number of motivated experts to the communitys size Failing to do so may result in high negative impact of the community business and public perception
3 Community
a Emergence of a parallel competitive community If the optimal timing between publically disclosing FinTP and community take-off is not achieved then there are high chances that following a competitive initiative other entrepreneurs successfully launch their own similar or derived community This could be avoided by periodical reviews of the progress of both FinTP and community status and deciding whether the project needs to be put on hold or not
b Unfit reputation of the Moderator or main contributors If either the Moderator or the initial contributors are not beyond any dispute and are reputable institutes then there is certainly something rotten in Denmark and the project should be put on-hold
c No commitment from the Moderator‟s side Similarly if the Moderator does not commit to the project it means that Denmark has a serious problem to solve The project should relinquish until the matter is fixed
4 Legal
a Misuse of copyright and intellectual property (IP)The assigned working team could not be aware of the limitations and liabilities of using (entirely or partially) third party software this risk can be contained by delivering the right training providing proper working procedures carefully recording and documenting the use of open source code and carefully cross-scanning
b Injunctive relief and financial damages can be caused by not properly and continuously controlling the use of third party open source code resulting in copyright or IP infringement There are two containment measures which can be taken tighten the compliance check during the product lifecycle or apply the sanction policy as to set an example
c The competition starts a class action - this may result in delaying the project
5 Financing
a Lack of long term financing institutions Allevo should urge its consultant to identify and draw a reasonable list of financial options institutions
b Exceeding the budget given that this type of project has no precedent in Allevo and to avoid exposing to the dependency on engagement to financial institutions or to commitments beyond the existing budget a further carefully drawn project plan is needed along with its explicit approval from the board of the company
Market related risks
1 False expectations
a Expensive services Not everything is free aside the initial and maintenance free licensing the training the support and other professional services can amount to more than in general expected Allevo rates this risk as medium possible but with low impact as long as the law governing the community and its initial period of operation will consecrate fair market prices and competitive sources of contribution
FinTP - Vision and Scope
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b Hidden costs for patches updates and upgrades While of similarly weight in terms of probability and impact this should be no real concern as long as the law governing the community clearly provides for free and accountable maintenance
2 Poor image on quality
a Too many releases making FinTP hard to manage and unsafe to operate Given proper regulation of the community and the mature root of FinTP Allevo disregards the possibility of this risk to materialize However if this were to happen this is a high impact risk and by all means should be avoided
b Backward technological (in)compatibility looks to us as a low risk in all respects and within organizations applying practice proven software engineering processes and professional - accountable team this is not likely to materialize
c Support can be perceived as the highest impact risk for FinTP This can be overcome by tight regulation of the commercial and professional conditions to deliver the service (for instance only qualified organizations should be recommended to members for supporting FinTP)
d SLA and accountability for both internally or externally performed services is closely correlated to the previous risk and the community status should provide the support for growing a community of competencies and accountable professionals around FinTP Periodical auditing (by the specialized community body) of this pool of professionals will further ensure the confidence that the skills are preserved at the required level
e Code fragmentation and forking is a high impact risk with a low probability of happening in the initial period provided the knowledge transfer is done orderly and in an institutionalized manner
3 Inherent uncertainty
a Community disputes can jeopardize its cohesion the project viability and future This is a high impact possibly high probability risk and it is the definite role of the Moderator to feel prevent and while materializing mitigate any conflicting situation
b FinTP going commercial post-launch This is a huge impact possibly high occurrence probability but manageable with the right legal instruments provisioned in the community
c Loss of alignment to industry standards and regulations This risk has medium probability and medium impact given the assumption that the community is tightly regulated and the working bodies institutionalized and gathering professionals
4 Legal
Copyright infringement given Allevo experience in the open source business this risk is highly probable and has a high impact on FinTP especially if mistakes are made in the launching phase Similarly if during the product maintenance and further development phase the community fails to institutionalize proper formal software development processes (covering all FinTP lifecycle phases) based on industry practice proven model(s) Supplementary the expert code scanning audit for compliance is the single resort to preclude external software source misuse
FinTP - Vision and Scope
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5 GPL specific
a Noncompliance to the GPL license If GPL license is used the product should further distribute in compliance with this part provisions High impact and probability but manageable if proper software development processes are used and if the statute clearly defines the licensing model for FinTP
b FinTP unconformity The risk that software engineers get inspired by a chic solution which they import and emulate similarly in FinTP And this is also highly possible since les grands esprits se rencontre
6 Existing customers attitude
Anger for having paid for something which now is free The existent customers can be concerned about the future of their installed system its further development (in one word its future) and on the quality of the service (SLA including) Some recent adopters can possibly be furious for spending their money on buying licenses for a piece of software that differently packaged becomes free of charge
For the first situation the single best solution for Allevo is to ensure a smooth transition from the current status to the new solution deployed Also highly probable Allevo should provide for simultaneous (for at most one more year) maintenance of both FinTP and for qPayIntegrator
For the 2012 new qPayIntegrator adopters Allevo should transparently state the product‟s future and propose a commercially attractive migration towards FinTP when it becomes publically available (like the option for the installation migration and recurring services) The decision should clearly stay with the customer if he still buys Allevo licenses delays the implementation until FinTP is available or if he goes for a competitive solution
In other words the key to mitigate the existing customer perception is switching places and discarding if the situation proves to be uncomfortable
Bottom-line is that to avoid most of the risks the FinTP community must be a rather tightly controlled one though still opened to anyone willingly abiding to the rules
The synthetic view of the main risks their assigned probability impact and the corresponding containment approach is provided in the attached file
Risk IDRisk
CategoryRisk
Probability
(High
Medium
Low)
Severity
(High
Medium
Low)
Containment (Mitigation Action Proposed)
M1Free as in a
Free Puppy
M101
The training service amp support cost could account more than the
commercial product its replacing (application software is typically 30 of
the total cost of ownership of most projects)
Medium Low
M102 Hidden costs ie charge for patches updates and upgrades Medium Low
M2Frequent
updates
M201
Projects might be updated frequently - as often as everyday Too frequent
updates could have a negative impact on the implementation
interoperability and support
Low HighMAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M3Backwards
compatibility
M301 Less accountability Low LowMAP03 Access to prior versions of source code (additional in-house
development and support procedures might be necessary)
M4Support
related risks
M401Support could be perceived as the biggest issue with open source
software deploymentsHigh High
M402 Internal External Accountability SLAs High High
M403Code fragmentation or forking if the community fails to institutionalize
corporate like formal structureHigh High
M404Support could require greater involvement and different skills set from
operations staffMedium Medium
M5Community
immaturity Low Low
M501Could generate incompatibility of FinTP with industry standards amp
regulationsMedium Medium
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M6 Uncertainty The inherent uncertainty in every open source project
M601 Community disputes might impact project viability and future High HighMAP04 The Mentor should prevent amp mitigate any conflicts inside the
community
M602 Open source projects may not stay open in future releases High HighMAP05 The originator liabilities should be strongly enforced by the
community statute
M7 Legal risks
M701 Copyright infringement High High
M702 Can open source software deployments pass an audit
M8 GPL General Public License specific development concerns
M801Software thatrsquos derived from an existing GPL project in whole or in part
might not be released under the same licenseHigh High M08 The community should regulate the licensing model
M802
Developer contamination - developer could review an existing open source
project could see an elegant solution then implement a similar function in
closed source project
High HighMAP09 Procedurals constrains for the software developers should be
enforced
M9
Current
customers
attitude
The actual customer perception could be negative High High
M12 To prevent a negative attitude Allevo should involve the customers
in the FinTP project Allevo needs their active support for a smooth and
issues less transition
ma
rke
t re
late
d r
isk
s
co
st
rela
ted
ris
ks
MAP01 The community should regulate the applicable rules and fees for
services and maintenance
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
bu
sin
es
s a
nd
le
ga
l ri
sk
s
MAP06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S1Product
related
S101 Late delivery lead time Medium MediumMAP15 Allevo should provide proper resources (funding and human
resources)
S102 Credibility loss if fail to certify with SWIFT Medium High MAP16 Should be discussedamp agreed with SWIFT
S103 Inexperienced team or allocation below needs Low HighMAP15 Allevo should provide proper resources (funding and human
resources)
S104 Improper or non efficient version management Low High MAP16 Review the current Allevo Configuration Management System
S105Poor quality if the community fails to institutionalize proper verification and
validation practices3
M06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S106 Lack of expertise in open source projects 2 Allevo should engage thoroughly selected Open Source consultants
S2Service
related
S201
The software maintenance not properly providing for bugs fixing
regulationamp standard alignment technological improvements communities
improvement requests
High HighMAP01 The community should regulate the applicable rules and fees for
services and maintenance
S202 One-time amp recurring services might be provided by unqualified resources High HighMAP17 The community should regulate the training curricula and related
expertise certification
S203 Provided services might not meet the minimal SLA performance criteria High HighMAP17 The community should regulate the training curricula and related
expertise certification
S204 Relaxed or lack of accountability of the professionals High HighMAP18 The community should regulate the employment agreement of
the professionals
S205 Lack of qualified professionals High HighMAP19 The community should ensure a balanced number of certified
professionals with the community size
S3Community
related
S301
If after disclosing FinTP the community does not enthusiastically adopt
the solution competitors might more successfully develop a similar
strategy
Medium MediumMAP20 FinTP promotion should be convincing and realistic A well
organized marketing campaign by Allevo
S302The community mentor andor early adhering members have no
undeniable prestige or are not largely trustfulMedium Medium MAP99 Project status review Ending the project could be one option
S303 The Mentor does not strongly commit for the project Medium Medium MAP99 Project status review Ending the project could be one option
S4 Legal
S401Exposure to copyright and IP infringement due to working team unaware of
the legal consequences of using third party softwareMedium Medium
MAP21 Allevo should keep records and fully document the use of open
source code
S402Copyright or intellectual property infringement can lead to injunctive relief
and monetary damagesHigh High
MAP23 Allevo should institutionalize a tight licensing and technical
control
S403 All risks related to open source compliance High HighMAP24 Allevo should appoint as soon as possible a FinTP compliance
Officer
S5 Financial
S501 Lack of financing institutions Medium MediumMAP25 Allevo should urge consultant to provide a consistent list of
potential investors
S502 Dependency on the financing institution approval Medium Medium
S503Not thoroughly planned project overlooking one or some project cost that
need to be financedMedium Medium
Sp
ec
ific
ris
ks
tec
hn
ica
lm
ark
eti
ng
leg
al
fun
din
g
MAP26 Allevo should carefully draw a consistent and eligible project for
financing
Risks
Riskspdf
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 40 of 43 Allevo Confidential
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wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
11 Appendix - Bibliography 1 Accenture Open Source Research Geographic Findings
2 Accenture Open Source Research Industry Findings
3 Producing Open Source Software - How to Run a Successful Free Software
Project by Karl Fogel
4 Open Source Software Risks and Rewards by Gary Hein
5 A Business Case Study of Open Source Software by Carolyn A Kenwood
6 6 critical success factors for product development by Christian Wig
7 Bank 20 by Brett King
8 Managing the business risks of open innovation by Oliver Alexy and Markus
9 Product idea evaluation checklist shared by Startgass AS
10 SWIFT 2015 Strategy
11 Customers and business impact of product changes
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
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Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
12 Appendix - Glossary ACH Automated Clearing House that is used to clear retail payments
between banks in a country or region
APAC Asia and Pacific
AML Anti-Money Laundering
BCampDR Business continuity amp disaster recovery
B2B Business to business
C2B Consumer to business
CET Central European Time
CMMI Capability Maturity Model Integration
CMS Configuration Management System
Coexistence The situation of multiple standards existing at the same time in the same business space Within SWIFT this refers to the coexistence between the MT and MX standards This also refers to the set of measures being taken to make the situation easier to handle by the community (publication of mapping rules translation serviceshellip)
CSM Clearing and Settlement Mechanism
CUG Closed User Group
Dictionary Part of the ISO 20022 Repository that contains all items that can be re-used during business modelling and message definition activities
EAI Enterprise Application Integration - middleware to connect applications and communication interfaces Typical EAI software includes features for mapping data between various formats enriching messages with data from other systems and orchestrating message flows
ECB European Central Bank
EMEA Europe Middle-East Africa
EPC European Payment Council
ERP Enterprise Resource Planning
EU European Union
EUCLID Connectivity to EuroClear Bank services
FIN The messaging service offered by SWIFT for the secure and reliable exchange of MT messages in store-and-forward mode By extension the syntax used to format these MTs
IP intellectual property
Interoperability Capability to easily exchange business information while using different message standards ISO 20022 promotes global use of syntax-neutral business and message components as a common denominator to achieve interoperability between standards using different syntaxes
ISO The International Organization for Standardization - an international standard-setting body composed of representatives from more than 160 national standards organizations that promulgates worldwide standards in a variety of domains aiming at facilitating cross-border exchanges of goods services and techniques
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Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
ISO 15022 An ISO standard that describes the syntax to be used for developing securities messages used mainly to support back office related transaction flows It replaced the previous securities messaging standard ISO 7775
ISO 20022 RA Registration Authority - offers the services described in an ISO standard on behalf of and under a contractual agreement with the International Organization for Standardization
ISO 20022 Repository
Repository maintained by the ISO20022 RA which contains the financial business models message definitions and components defined in compliance with the ISO 20022 standard
ISO 20022 RMG Registration Management Group - in charge of the overall management of the ISO 20022 development and registration process in accordance with the ISO 20022 standard
ISO 20022 SEG Standards Evaluation Groups -in charge of validating candidate ISO 20022 messages within the scope of the business justification and ensuring that they address the needs of their future international community of users
ISV Independent Software Vendor
KYC Know Your Customer
MACUG Member Administered Closed User Group
Message A set of structured information exchanged between two parties involved in a financial transaction
Message component and element
A re-usable data structure used for assembling message definitions The data defined in a message component is bdquotraced‟ back to the business components and business elements In simple terms business components define the business meaning message components create data structures for messaging
MI Market Infrastructure - a system that provides services to the financial industry for trading clearing and settlement matching of financial transactions and depository functions
Middleware Software that enables data to be exchanged among different systems with standard communication components and tools for formatting mapping and processing
MT The traditional bdquotag value‟ Message Types for use on the FIN service offered by SWIFT
MX An XML message exchanged over SWIFTNet whether or not ISO 20022 compliant
OS Open source
PSP Payment service provider
QA Quality assurance
RMA Relationship Management Access
RTGS Real Time Gross Settlement System
SAA SWIFT Alliance Access
SAE SWIFT Alliance Entry
SAG SWIFT Alliance Gateway
SaaS Software as a Service
SCORE Standardized CORporate Environment
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Tel fax +40212554577 +40212554578 +40212554579
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Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
Semantics The study of meaning usually in language The word is often used in ordinary language to denote a problem of understanding that comes down to word selection or connotation
SEPA Single Euro Payment Area
SLA Service level agreement
SME Small and Medium-sized Business(es)
SOA Service Oriented Architecture
SSB SWIFT Service Bureau
STP Straight Through Processing
SWIFT Society for Worldwide Interbank Financial Telecommunication Visit wwwswiftcom
Syntax Physical format of a message used to identify and represent the conveyed pieces of information
T2S TARGET2 Securities - an initiative of the Eurosystem It is an IT platform that aims to make settlements across national borders simpler and more cost-efficient
TARGET2 The Eurosystem-owned European Real Time Gross Settlement (RTGS) system (Trans-European Automated Real-time Gross Settlement Express Transfer System) TARGET2 is one of the largest high-value payment systems in the world
Taxonomy The classification in a hierarchical system typically organized by super type - sub type relationships also called generalization-specialization relationships or less formally parent-child relationships
TSU Trade Service Utility
TCO Total cost of ownership
Translation rules
Set of rules to be used to map the pieces of information included in a message expressed in one syntax to the equivalent message expressed in another syntax
Remit Remittances
XML eXtensible Mark-up Language - popular syntax to encode documents (or messages) electronically on the Internet XML allows communities to define their own identifiers (or tags) and format (or data type) for each component of a message
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Bureaus etc) ISV regulatory institutionsMarketing plan feasibility campaign efficiency and costs
2 MentorPreferable SWIFT
Also eligible SunGard IBM affiliation to other OS communitySWIFT decision
3 Legalcopyright Expert legal consultant and RO apprentice Cost and time shift dependent
4 Tight regulation Clear membership admission amp software contribution criteria The quality of the consultant advice
5 Marketing Actively recruiting community members Marketing plan feasibility campaign efficiency amp customer skepticism
a community portala provide content amp debate space information consolidation amp dissemination virtual
showroom subscription management support
a business analysis solution availability and maintenance by one of the
members or employed company
b press releases amp
announcementsb PR and AR b communicators availability and costs
c events c periodical conferences user focused meetings c cost dependent
6 Financing World Bank EU amp private funds Lobby amp funds availability
Item
FinTP
FinTP community
FinTP - Vision and Scope
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4 Vision of the solution 41 Vision
What Allevo undertakes
This paragraph explains why and how Allevo is going to cut the branch it happily sits on
Today Allevo is milking a conveniently productive cash cow namely qPayIntegrator
an application created for processing financial transactions qPayIntegrator is a
practice proven solution certified by SWIFT on SEPA and Remittances compliance It
ensures revenues through new licenses sales and the recurring maintenance and
support services
Bitten by the flea of restless evolution Allevo aspires towards sharing its existing
assets to open a new door to a larger more transparent and collaborative market To
put it bluntly Allevo has decided to make the strategic move of publishing into the
open source space an application for processing financial transactions
Why
The simple reason behind this initiative is achieving a larger footprint in the financial
industry In other words Allevo is ready to bet that sharing its application in the open
source space the trust and enthusiasm of community members will strongly influence
both the spreading and further developments of the shared product
This initiative is a commercially disruptive transformation in the sense that the
distribution of the financial transactions processing application will be mainly the task
of the community members If the TCO will be significantly convenient and if the
solution will match the needed quality trust and safety then Allevo expects that the
market acceptance trend will be solidly sharp An open source application for
processing transactions will not only solve the specific needs of a company but will
also generate sub-communities (either regional or by industry) They will push the
interoperability of the application forward to transactions interpretation and their
operational consequences industry-wide
People will continue to generate increasing amount of data and will want to use that
data from different locations paying no attention to distances The trade and financial
community should match this new developing framework with a new financial
ldquoecosystemrdquo What today are premium applications tools or devices will commoditize
in the future to come
Todays high speed communication channels and powerful multipurpose personal
devices put pressure on companies to rethink and adapt their services Allevo strongly
believes that one of the missing pieces of this developing ecosystem is a versatile
safe free of licensing cost and widespread application for processing financial
transactions It should be capable to connect to various communication channels It
should bring together cloud based resources corporation back or front-office systems
intelligent wholesale or retail equipment transportation and many other assets this
new global ecosystem is ready to use
FinTP - Vision and Scope
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No man is an island
This exciting journey Allevo embarks on is not doable without companions
The most obvious need is that of a cohesive community with sufficient resources
talents and ideas By cohesive Allevo means that the enrolled companies and
individuals share the same set of values These are professional ethics proven
practice professionals safe amp failure-free operations While the participants speak the
same language the intent of working for efficient interoperability means eliminating
misinterpretation Thus the need to manually process transactions will be reduced and
many current ldquoexceptionsrdquo will be eliminated
Like any other form of people gathering the community needs rules governance
agora to make their voice clearly heard (requirements amp ideas) A supervisor is needed
to guarantee that the challenges are understood that the actions anticipate the desired
solution and that proper decisions are taken In this document the supervisor is called
Moderator since atop of being a moderator the supervisor should also be an
accepted and trustful negotiator perceived at the same time as a leader by all
community participants
When
Allevo is in a position of offering a reasonably strong ground for both creating this open
application and starting a community
On the latter Allevo qualifies to be one of the first members of the community given its
firm belief that the world will become a large cooperation space where ideas data and
information will be openly exchanged and knowledge openly shared - in the best
interest of the people
The deep root of the software application that Allevo brings to the community is
credited by 7 years of practice and features a number of credentials Making FinTP an
open application qualifies it to become a tool for companies with constrained budgets
Adopting FinTP will empower its customers to equally interpret both the syntax and
semantic of the exchanged financial instructions
Bottom-line Allevo has initiated the project confident to quickly find other visionaries
sharing the same daring ideas on how to lay the firm foundation of a new efficient and
successful financial ecosystem
How
Now this is the tricky part of the story The easiest part of the project is creating the
open source application The success lies in launching the community simultaneously
This means that prior to the official release the community roles should be well
defined fundamentally agreed upon by the main sponsors the Moderator should
formally engage and the initial membership should include some prestige companies
and IT vendors Thats tough but this is how it has to happen
What is in it for
Allevo the company will become member of a club where it can seed future
developments This will further lead to the enhanced visibility of Allevo team and
portfolio
The community members they will become members of a club unified by the mutual
interest of pushing the interoperability level to a more refined stage of financial
transactions processing while enjoying the benefits of a falling TCO
FinTP - Vision and Scope
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The Moderator this entity will consolidate its influence and prestige in the rapidly
transforming financial market It will be the parent of the deeper standardization of the
financial business crossing the bridge between financial messages conveying
between institutions up to the institutions interface with their customers This will lay
the ground for the financial integration to equal the industrial and trade distribution
chain footprint
Whats next for FinTP
After FinTP has successfully been adopted in the market on a reasonable scale the
future looks even brighter
Companies relying on a trustful standardized processing application will be able to free
up their minds amp budgets for what uniquely differentiates them in their customers‟
eyes quality of service relevance trade easiness agility of delivery risk containment
social responsibility or other distinctive factors
Once all this has settled in self-adaptive trade business systems will come forward to
close the loop between customers and their providers
42 FinTP Positioning
FinTP is a key business software that opens markets by aggressively addressing
customers with constrained investment budgets Allevo strongly believes that FinTP is
tightly knitted to SWIFT 2015 Strategy2
The payments arena in itself has reached a high level of maturity payments becoming
a commodity on these premises back-office software should no longer be a
differentiator
FinTP creates a widespread financial transactions processing platform a cheap
alternative (to the current proprietary payment systems) for an industry common
solution which will evolve into a new standardization layer
2 See Bibliography
FinTP - Vision and Scope
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FinTP shifts the competitive space and consequently the innovation drive (from back-
office and mostly financial institutions and large corporations) to SWIFT traditional and
new business areas (treasury and front-office of the banks large financial institutions
corporations and SMEs - including MFIs)
43 FinTP Applicability
The usage of FintP in several domains ndash banks micro-finance institutions CSMs corporations and public administration ndash is discussed The main building blocks provided by FinTP for the processing of financial transactions are shown in each case
For setting the scene consider the naiumlve drawing (see below figure) which depicts
1 the bank‟s applications - implementing the core products and services the banks provides to its customers (FX Lending Payments TF custody etc)
2 banking correspondent business and infrastructures they connect to to settle for example their payments
3 corporate customers or local financial institutions engaged in distributing their products and services
4 the individuals who benefit from the service of the bank directly or intermediated by partnering financial institutions or corporations - including retail chains connectivity channels that are either SWIFTNet or VPNs over internet or bank‟s own private network
FinTP - Vision and Scope
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Given the application scalability FinTP is fitted to deal with
1 B2B environment type FinTP performs transactions routing and processing between the before depicted institutions thus achieving cross industry interoperability Additionally FinTP helps the business customers to consolidate their financial or treasury operations similarly helps the retail chains to reconcile and settle the available stock with the registered sales
To exemplify ensuring SEPA Readiness for banking institutions and for their customers is briefly discussed
By 2014 banks in EURO zone should be ready to process instructions in ISO20022 format FinTP can be an efficient solution to achieve rapidly compliance with the EPC provisions
Are the bank‟s customers ready to send the instructions data in the right format Are you ready to accept this type of data Are you able to extend solutions to help your customers better preparing for SEPA instructions FinTP has the right building blocks for banks and corporations
2 B2C environment type FinTP goes further down to the end customers The individuals can interact directly in a branch or remotely using their computers tablets smart phones to provide them with personal financial portfolio management It enables them to operate on their bank account or to do shopping It also supports new financial instruments such as PayPal Google wallet Facebook UK faster payments mobile payments amp commerce M-Pesa NFC etc
FinTP applicability profiled on beneficiary type
FinTP - Vision and Scope
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a Banks
Regional and international banks are rethinking and often improving their business architecture because of strong penetration of traditionally non-financial business in the money supply chain
The banks have in general the following choices
i Stay the course This often means keep on muddling
ii Outsource the processing of financial transactions in its entirety or in parts
iii Lower the recurring costs dramatically and benefit from joint developments by implementing Open Source solutions for commoditized parts of the needed infrastructure
Allevo provides the building blocks for the processing of financial transactions (FinTP) for those organisations who want to go for the third strategic choice
Toolbox3 (see 51 Features for details) as illustrated in bellow figure
Business flow consolidation
External interfaces to market infrastructure(s)
Funds transfer (credit transfer direct debit debit instruments duplicate detection treasury flows)
Operational functionalities such as liquidity reporting accounting reconciliation AML transactions filtering remittances management competitive reports etc
All helping the bank to manage the operational risk
3 Toolbox means a comprehensive collection of ready to deploy operational features
FinTP - Vision and Scope
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Payment factory - as illustrated in the bellow figure - is the bank-centralized service for smaller financial institutions or corporations to provide payment and collections processing in compliance with regional or global regulation along with additional service (eg intra-day limits etc)
A similar type of architecture can be used to set-up a bank administrated Member Concentrator or a (SWIFT) Service Bureau or a Payment Service Provider
FinTP - Vision and Scope
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b Micro-finance institutions
Toolbox3 (see 51 Features)
Integration of micro-financing application with mobile payment operator(s) and banks It provides support for loan applications loan disbursement and repayments It integrates the mobile payments and the banking payments and as such provides working capital management Multi-MMTs amp multi country operations are also supported
FinTP - Vision and Scope
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c CSMs
Toolbox3 (see 51 Features)
CSMs can use FinTP (as shown in the bellow figure) to provide its customers an
effective connectivity readiness package Likewise CSMs can use FinTP to connect
themselves to other CSMs they need to
FinTP - Vision and Scope
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d Corporations
Toolbox3 (see 51 Features)
The financial or treasury department of the corporation can use FinTP (as depicted in
the figure bellow) to concentrate the processing and management of all their financial
business in one single operation window FinTP provides the building blocks for a highly
effective money supply chain between banks providers and customers Beyond that
FinTP empowers control on the working capital and financial resources
FinTP - Vision and Scope
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e Public administrations
Toolbox3 (see 51 Features)
Public debt business automation through Treasury Bonds settlement on all trade phases eg pre- sales post-
Wages and pensions payment in compliance with SEPA regulations
Structural funds financial management (in a business group managed by the State Treasury)
FinTP plays a multiple roles in the Public Administration financial business
a Bridge between the global banks secure network (SWIFTNet) and the Government
secure national network performing format conversion and business flow mapping
thus FinTP acts as a financial integrator of the different public institutions
b Interoperability gateway with the banking community and financial market
infrastructures
c Auctioning portal for the Treasury Bonds allocation and settlement for the Primary
market
d Management of the payments related to Structural Funds financed projects and to
the providers of the public institutions
e Payments (such as wages pensions state subsidies) due to individuals intermediated by banks using SWIFTRemit framework Similarly the taxes collection should be handled by the same system and framework FinTP provides means to perform the operations using either mobile devices or the internet
FinTP - Vision and Scope
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44 Key Business Objectives and Success Criteria
Today Allevo faces two major limitations in fulfilling its business objectives
1 Strong dependency on its narrow national market and thus being limited to the
known European Union and particularly Romanian practice
2 Significant allocation of the development talents to maintaining qPayIntegrator
rather than working to new business oriented products
Allevo is going to expand its business footprint and simultaneously shift its revenue
source from back-office solutions towards its customers business area (treasury front-
office) applications
To achieve this goal Allevo will focus on developing FinTP business and on gathering
a strong supporting community formed by representatives of the targeted market The
coherence of the community should be ensured by a trustful and committed
moderator
Therefore for the success of the project Allevo deems instrumental the go-to-market
process the solid take-up tempo and the quality of the community
On the FinTP side Allevo should tightly focus on
1 Understanding the community members‟ needs values and priorities in
relationship with their business competitive ecosystem
2 Improving the product management process and the technical commercial amp
distribution documentation
3 Identifying and centring the attention on strong idea generation selection and
monitoring processes
4 Elaborating the right product architecture to enable easy functional and technical
scalability maintainability diagnose native features for flexible customization
compliance to global and regional financial standards and preserving the initial
licensing structure across various customers business models
5 Strengthening project management
6 Designing coherent knowledge transfer process
7 Designing efficient customer support
As a member of this FinTP open source community Allevo will provide
1) the open source FinTP application
2) knowledge transfer (training amp consultancy) to both early adopters and to the
product development amp maintenance body (see 46 The community)
3) for a limited period of time
- support amp maintenance
- alignment to technology standards amp regulation
4) further improvements
5) contribution to relevant proofs of concept community web site conferences
articles online awareness
The power of the community will draw other vendors to partner together to ensure
market coverage each of them complementing the other through their expertise
FinTP - Vision and Scope
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FinTP distribution will be performed via the communitys portal while the initial
consultancy product installation and support services will be delivered remotely
Following the free open source software model FinTP will be available under an open
license free of charge
In designing the new products Allevo will benefit on mid and long term from the deep
insight both of FinTP internals and the structure and operation of the community
45 Market Sizing
Our evaluation of the FinTP targeted market size
- the global market size taken into account is 26100 institutions out of which
- an average FinTP engine licensing fee is euro30000 resulting in potential
maximum expenses of euro783 million
- the corresponding yearly maintenance fee is euro5400 resulting in potential
maximum expenses of euro700 million in 5 years
- the number of potential institutions adopting FinTP in the first 5 years of
availability 250 tier3 amp 2000 tier4
- consequently the savings in 5 years could reach euro675 million in license
fee and euro2025 million in maintenance fee resulting in a total of almost euro90
million
Allevo believes that (at least) during 2013 and 2014 its current income source will be
preserved while after that period the main replacement of the lost (new licensing and
recurring maintenance) fees will mainly consist of services (consulting
implementation support education) and sales of licenses for newly launched
applications
FinTP - Vision and Scope
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46 The FINkers United community
The community structure comprises three main entities (as depicted in the bellow
figure)
1 The adopters (beneficiaries) consumer companies choosing to adopt the
FinTP product in compliance with the community line of business and ethical
conduct
2 The moderator the instrumental inspirational authority expected to draw both
the development vision and the guidelines of the community
3 The contributors
a institutionalized bodies eg development and maintenance test and
validation audit legal marketing
b independent contributors eg ISVs (Allevo falling under this category)
solution providers integrators or passionate developersindividuals
FinTP - Vision and Scope
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5 Solution Description amp Parameters Like qPayIntegrator FinTP offers a
standard compliant processing
engine for the financial transactions
exchanged between the back-office
or ERP applications and the financial
community (banks MFIs market
infrastructures corporations)
FinTP is able to process financial
messages in both FIN and ISO20022
formats and at the same time offers
a rich set of interfaces to different
financial applications FinTP provides
compliance with various clearing and
settlement mechanisms
Consequently FinTP ensures a high
level automation of the end-to-end
financial transactions processing
51 Features
The FinTP project has two major deliverable components
1 the FinTP application itself
2 the community built around FinTP
All subsequent chapters will refer to both of these
Component code
Component description Comments
FinTP4 FinTP is a financial transactions processing engine for 3rd or 4th tier banks microfinance corporate or SMEs treasuries available as open source application Functional characteristics
1 Operational features
o Predefined flows and message formats
Includes reconciliation of confirmations with transactions
o Single and multiple funds transfer instructions securities settlement amp reconciliation (Romanian Euroclear) messages
The supported payment instruments are credit transfer direct debit debit instruments
o MTMX coexistence Based on FinTP native internal data format (ISO20022)
o Multi-BIC multi-currency
o SEPA ready (certification) Compliancy with EPC regulations for SEPA formatting and business flows (for SCT and SDD) enables bank-to-bank and bank-to-CSM settlement
4 FinTP root is Allevo equivalent product qPayIntegrator a commercially available amp practice proven (since
2005) application qPayIntegrator provides a consistent set of functionalities and it is fully aligned to both industry regulations and technology
FinTP - Vision and Scope
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Component code
Component description Comments
o TARGET 2 ready Compliance with TARGET2 settlement and operations as regulated by the ECB
o SAGSAASAE SAL interfaces
Integration with SWIFTNet to enable banking business
o Liquidity reports Real time cash reports and forecasts using several criteria (currency subsidiary profit centre)
o Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
Analysis and reports of market trends based on volumes amount BIC etc along with early alerts on behaviour changes beyond the standard deviation
o Accounting reconciliation Automatic NOSTROVOSTRO accounts reconciliation intraday liquidity reports and integrated exception management
o AML (sanctions list matching)
High and low value payments filtering uses 20+ black lists and ensures their content maintainability
o Duplicate detection Detection and investigation of possible duplicates the detection window and criteria are configurable
o Remittances processing Covers banks business and operations area as well as distribution channel
o Treasury markets Automation of treasury flows (FX and money market)
o Statements Processing of SWIFT messages related to correspondent banks accounts administration
2 Technical features
o Financial message routing and monitoring
o Multi-threading capabilities
o Persistent end-to-end transactions
During each phase of the entire processing cycle permanent copies of the transaction are kept until the final completion thus avoiding any transaction duplication or loss
o Batching unpacking
o Resilience at transaction level
o Archiving
o Tracing and logging transactions and user events
o Transient errors detection and recovery
o Real-time search and reports
o Security access and user administration
o SaaS cloud ready
FinTP - Vision and Scope
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Component code
Component description Comments
FINkers United - community
Since FinTP is an application handling financial transactions the product releases and the related community should be tightly regulated and controlled As the project matures these components will be further refined The following main components of the community have been identified
‐ the moderator ‐ the product development
and maintenance body ‐ the product and
community auditor body (acting as a gatekeeper of official releases) to control and maintain the change requests integer and eliminate any malware exposures
‐ the test and validation body
‐ the legal body for defining the frame for product distribution amp licensing
‐ the marketing entity responsible for creating awareness and attracting contributors and adopters
‐ the portal used as a channel for marketing support and version control
‐ individual contributors namely ISVs solution providers developers integrators who wish to use their skills and knowledge to the benefit of the community
These tools strongly depend on the available budget and widespread
organization culture It is not mandatory for these to be open source if usage of
open source tools would mean lower quality
3) Licensing
The licensing model highly depends on the results of the open source legal and
business consultancy However we assume the following frame
‐ free of charge initial and recurring maintenance license for using FinTP
‐ FinTP does not use software components enforcing liabilities for the user
‐ consumers using FinTP source code (in part or entirely) should comply to
the licensing policy of the community
‐ the version released by the development amp maintenance body is the only
official amp to be trusted version of the community ensuring product integrity
unity and stability
4) Regulatory compliance
The regulatory compliance strongly depends on the early adaptation of new amp
changed rules via the recurring maintenance and on the quality of the audits
performed by the specific bodies of the community
Thus it is ensured that ISO20022 and FIN standards TARGET2 and TARGET2
Securities SEPA or country specific regulations (as stated respectively by
FinTP - Vision and Scope
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SWIFT standards EPC specification ECB or regional Central Banks
regulations that the community chooses to comply with) stay the most
important business specific anchors of FinTP
The FinTP design also offers support for flexible definition of new compliance
sources
5) Consultancy
The needed consultancy is twofold
‐ legal to ensure that FinTP does not infringe other licensing constraints
‐ open source specific to enable the right choice of the community type and of its governing law
The main constraint relies in choosing the right advisors true experts in the
open source industry amp with appropriate ethic profile - able to deliver as
promised The consultants have to be available 800 am divide 800 pm CET and
easily reachable - geo-location is of utmost importance Selection of the
consultant will basically be done on price assuming the right mix of expertise
and availability is achieved
6) Financing
While Allevo partially undertakes the financing of FinTP development the
ancillary consultancy necessary team education or acquisition of productivity
tools are far beyond the companys 2012 budget
To overcome possible delays in the project Allevo needs to sturdily act to
identify both the most appropriate commercial offer and additional necessary
financing source(s)
FinTP community
The community related items are members moderator legal tight regulation
marketing and financing For each of these items several assumptions and the
corresponding dependencies are provided in the following paragraphs
1) Members
We assume that the communitys members span several business profiles
(such as financial services institutions corporations market infrastructures
PSPs SSBs public administrations regulatory institutions and ISVs) sharing
the mutual focus on financial operations performance and improvement
By now after some tests on market acceptance there have been identified a
few supporters comprising financial services institutions and small ISVs
To ensure the success of building the community there is need for attracting
prestige influencers (market analysts consulting companies of scale - starting
with big four key industry providers - such as SWIFT other communities - ie
professional such as banking insurers capital market associations) and a
credible pool of financial institutions and corporations
To this end Allevo unrolls its own awareness campaign through direct
meetings publications blog posts and social media public presentations and
by officially launching the initiative in a conference focused on free of charge
financial transactions processing applications
Allevo further plans to use Sibos 2012 as opportunity to organize a less
traditional communication session gathering a relevant international panel to
FinTP - Vision and Scope
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debate the strong and weak aspects of this initiative amp to get the public involved
as much as possible
The goal is that by the end of 2012 some tens of different institutions are
committed to co-found the community and to actively contribute to establishing
the legal frame and to forming the required action bodies
2) Moderator
Allevo perceives the Moderator as the critical member of the community since
his prestige and influence will warrant the outcome of all performed activities
The moderator must commit on long term to develop the community and to
sponsor it with its share of trust
Allevo strongly believes that the Moderator should have a global footprint be a
reputable and trustful institution
3) Legalcopyright
The legal consultant and advisor needs to provide the coherent legal frame to
cover all community activities by roles and accountability While making it easy
for the members it should be more demanding as far as contributors are
concerned (though still encouraging ISVs to actively participate) It has to draw
very precise responsibilities for the independent and institutionalized bodies
(for instance product maintenance amp development and audit) and for the
Moderators status
The quality of this legal work fully relies on the expertise and experience of the
advisor
The law governing the community has to be in harmony with the European
(either French or Anglo-Saxon) legal system and with the open source legal
regulations largely practiced in other business regions (US and APAC)
4) Tight regulation
FinTP the product meant to gather a community which uses and supports it is
all about moving values between different entities Thats critical irrespective of
the amount because failing to perform properly opens the doors to arguments
amp loss of reputation with the related tangible costs Moreover the product has
to be beyond any doubt during its entire lifecycle free of any malefic
embedded functions meaning that contamination has to be avoided by all
means
Allevo strongly believes that this requirement can be attained only by tight
regulation of the community specific approval of the initially launched version
of FinTP and of the recurring contributions
This approach can be felt strange compared to most open source communities
and can lead to little interest from IT talents making them feel banned or
restricted It remains the Moderator‟s duty to make them feel privileged if
accepted and rewarded as such However this censorship is a price to be paid
since the community and the project are about processing transactions
initiating value transfer
FinTP - Vision and Scope
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5) Marketing
The community needs to have the clear objective of spreading both
geographically and over a consistent number of industries
To achieve this goal the community should be able to actively provide open
access to relevant information (including explanations of concepts hands-on
evaluation) to non-members and to also answer their questions on FinTP and
on the community itself
The same level of information needs to be ensured for the members to whom
supplementary updates on the community events decisions available
releases patches and fixes should be made available They need to also get
focused forum discussions on specific business areas and subsequent
processes need to be distributed
These functionalities have to be hosted on the community‟s dedicated portal
This portal has to provide content dialogue space information consolidation
and broadcasting It must be a virtual showroom for FinTP It needs to host
documents and virtual meetings subscription management and product
support amp development
The community has to be able to run its own meetings enabling direct contact
between active members or their representatives
Meaningful press releases have to be regularly issued along with actively
maintaining a productive relationship with market analysts to consolidate a
clear public understanding of the community spirit and goals
6) Financing
Its all about money-money-money since at least for the first 2-3 years the
community needs to be financed
Upon reaching maturity the institutionalized bodies of the community can earn their income from collateral activities - such as organizing conferences providing education and specialized support services - either for the initial FinTP installations and customizations or for recurring services requested by the members An alternative can be trialling and certifying interested providers enabling them to perform support services for FinTP
Thus who could pump money into this project It could be one or a mix of
‐ World Bank - if governmental programs are implied and provided a proper project which convincingly demonstrates the beneficed social impact
‐ EU development funding
‐ interested wealthy members of the community
The most critical dependencies are external such as (arranged according to
their impact) availability of funds for building the community finding trustful
and skilled open source consultants (legal business community licensing)
The synthetic view of the main assumptions and dependencies is provided in
the attached file
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Maintenance amp user support 1-Jan-13 Marketing inst action
4 Activities
Initial planning amp budgeting 15-Dec-12 document
Roles allocation 15-Dec-12 document
Community inst Implementation 15-Dec-12 action
Awareness campaign 1-Jan-13 action ongoing process
Members recruiting 1-Jan-13 action ongoing process
Continued operation 1-Jan-13 action ongoing process
Service sales 1-Jan-13 action ongoing process
Future development planning 1-Jan-13 document ongoing process
5 Resource allocation
If existing institution - allocation 15-Dec-12 action
If newly formed - recruiting 15-Dec-12 action
Make FinTP available to comm 1-Jan-13 action ongoing process
Start community financing 1-Jan-13 action ongoing process
6 Financing
Initial investment 1-Jan-13 action secured by that date
First period of comm operation 31-Aug-13 action secured by that date
co
mm
un
ity
Project approach
Project approachpdf
FinTP - Vision and Scope
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8 Scope This chapter deals with the phased availability of various FinTP features again considered from application and community points of view
In the first phase (due Dec 2012) the core of FinTP application is ready including the following technical features
- financial message routing between services and monitoring of exchanges
- multi-threading capabilities
- persistent end-to-end transactions
- batching de-batching
- archiving
- tracing and logging of transactions and user events
- transient errors detection and recovery
- real time search and reports
- security access and user administration
Similarly during the first phase the main community components need to be in place
- moderator
- software development and maintenance body (Allevo also available in the first and second phase of the project)
- test amp validation body
- (software) auditor
- legal
- main contributors (Allevo falls into this position)
- platform
- marketing
In the second phase (Dec2012 - Dec2013) several operational features of FinTP will be added
- predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit instruments securities settlement reconciliations
- MTMX coexistence
- multi-BIC multi-currency
- SEPA ready certification
- TARGET2 ready
- SAGSAASAE interfaces
- duplicate detection
- liquidity reports
- competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
- accounting reconciliation
- AML (sanctions list matching)
- SaaS and cloud ready
along with resilience and start of maintenance and knowledge transfer (the last two obviously continuing in the next phases)
FinTP - Vision and Scope
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The synthetic view of the project scope is provided in the following table
Crt No
Feature Activity Phase1 31Dec12
Phase2 31Dec13
Phase3 31Dec14
Phase4 31Dec15
Fin
TP
A Operational features
1
Predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit Instruments bonds (Romanian Euroclear) reconciliations
2 MTMX coexistence
3 Multi-BIC multi-currency
4 SaaS ready cloud ready
5 SEPA ready certification
6 TARGET2 ready
7 SAGSAASAE interfaces
8 Liquidity reports
9 Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
10 Accounting reconciliation
11 AML (sanctions list matching)
12 Duplicate detection
B Technical features
1 Routing financial message between services and monitoring of data flows
2 Multi-threading capabilities
3 Persistent end-to-end transactions
4 Batching de-batching
5 Resilience (at transaction level)
6 Archiving
7 Tracing and logging of transactions and user events
8 Transient errors detection and recovery
9 Real time search and reports
10 Security access and user administration
C Other activities
1 FinTP maintenance
2 Knowledge transfer
Co
mm
un
ity
Establishing the institutionscomponents
1 Mentor
2 Software Auditor amp Provider
3 Legal service
4 Members
5 Allevo initial role
6 Platform
7 Marketing
FinTP - Vision and Scope
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9 Limitations The main limitations in the economy of the project consist of phasing several FinTP
operational features for the following year (eg debit instruments liquidity reporting
AML filtering accounting reconciliation resilience SaaS ready cloud ready etc)
At the same time for features intended to front-office usage like Remit it was not yet
decided to publish them as open source product
The synthetic view of the main limitations is provided in the following table
Crt
nrItem Limitation Exclusion Comments
1
FinTP
a
Operational features Available in 2013
b
Remit Not included in
open source
package
2
Community
a
Rules Tightly controlled The statute should
ensure the right
balance between
safety and free
association of talents
Given the significant budget allocation (at least from Allevo perspective) the strong
requirement to meet the maximum ceiling will limit the FinTP product initial preparation
and maintenance expenses
Community wise the obligation of a tight regulated statute will have to ensure the right
balance between safety (mandatory in an environment dealing with financial
transactions) and a free association of talents (typical in an open source community)
In the first period after launch (at least the first two years) of the initiative the
maintenance and support activities will be provided by Allevo (as initial contributor)
A major restriction would be to meet the budgeted development and maintenance
FinTP - Vision and Scope
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10 Appendix - Risks
Specific risks
1 Product
a Long delivery lead time This is a medium probability and impact risk however Allevo should make available the needed resources and motivate the entire team for the job
b Credibility loss if FinTP fails to further become certified on meaningful operations andor business tracks (ie SWIFT business certification tracks or similar) The single possible containment is lobbying if the application certification program rejects open source products Anyway the impact is very important and its materialization should be avoided
c Low quality of the allocated team and improper version management are highly unlikely to occur as long as the formal transfer of responsibility is smoothly made from Allevo to the corresponding body put in place by the community The real hidden risk is that this process could take too long and it thus has a very high impact
d Poor FinTP quality may result if the community fails to institutionalize proper quality assurance (QA) and verification amp validation (VampV) processes This is most expected not to happen but if it does the impact is at least medium The single path to overcome this risk consists in a professional approach to these items based on institutionalizing practice proven QA and VampV processes
e Allevo lack of expertise in the open source business This can be contained by carefully selecting trustful amp truly expert consultants Otherwise it means more money longer time spent on project and expenses without proper return
2 Service
a The software maintenance does not properly deliver as expected ie on-time and on-quality bug fixing regulation amp standards alignment and productivity amp technological improvement The key to contain this risk materialization is the community status having provisions to neatly provide maintenance and further development of the rules for FinTP as well as the applicable rules and fees for the ancillary services
b Low quality and safety of the service received by the members of the community To avoid the risk of performing the one-time amp recurring support services by under-prepared professionals the community has to rule the process of training and qualifying the companies willing to contribute in this area
c Not meeting the minimal SLA criteria The community should regulate and periodically revise the training curricula and to further audit both the teachers and the certified experts to ensure the service level agreements are met
d Under motivated service providing professionals - up to the level of not feeling the high impact of their activity The community status must provide guidance to the contributors on the minimal standards the professionals should meet
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e Constrained expert resource pool This risk could be overcome by the communitys policy to ensure at all time a balanced number of motivated experts to the communitys size Failing to do so may result in high negative impact of the community business and public perception
3 Community
a Emergence of a parallel competitive community If the optimal timing between publically disclosing FinTP and community take-off is not achieved then there are high chances that following a competitive initiative other entrepreneurs successfully launch their own similar or derived community This could be avoided by periodical reviews of the progress of both FinTP and community status and deciding whether the project needs to be put on hold or not
b Unfit reputation of the Moderator or main contributors If either the Moderator or the initial contributors are not beyond any dispute and are reputable institutes then there is certainly something rotten in Denmark and the project should be put on-hold
c No commitment from the Moderator‟s side Similarly if the Moderator does not commit to the project it means that Denmark has a serious problem to solve The project should relinquish until the matter is fixed
4 Legal
a Misuse of copyright and intellectual property (IP)The assigned working team could not be aware of the limitations and liabilities of using (entirely or partially) third party software this risk can be contained by delivering the right training providing proper working procedures carefully recording and documenting the use of open source code and carefully cross-scanning
b Injunctive relief and financial damages can be caused by not properly and continuously controlling the use of third party open source code resulting in copyright or IP infringement There are two containment measures which can be taken tighten the compliance check during the product lifecycle or apply the sanction policy as to set an example
c The competition starts a class action - this may result in delaying the project
5 Financing
a Lack of long term financing institutions Allevo should urge its consultant to identify and draw a reasonable list of financial options institutions
b Exceeding the budget given that this type of project has no precedent in Allevo and to avoid exposing to the dependency on engagement to financial institutions or to commitments beyond the existing budget a further carefully drawn project plan is needed along with its explicit approval from the board of the company
Market related risks
1 False expectations
a Expensive services Not everything is free aside the initial and maintenance free licensing the training the support and other professional services can amount to more than in general expected Allevo rates this risk as medium possible but with low impact as long as the law governing the community and its initial period of operation will consecrate fair market prices and competitive sources of contribution
FinTP - Vision and Scope
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b Hidden costs for patches updates and upgrades While of similarly weight in terms of probability and impact this should be no real concern as long as the law governing the community clearly provides for free and accountable maintenance
2 Poor image on quality
a Too many releases making FinTP hard to manage and unsafe to operate Given proper regulation of the community and the mature root of FinTP Allevo disregards the possibility of this risk to materialize However if this were to happen this is a high impact risk and by all means should be avoided
b Backward technological (in)compatibility looks to us as a low risk in all respects and within organizations applying practice proven software engineering processes and professional - accountable team this is not likely to materialize
c Support can be perceived as the highest impact risk for FinTP This can be overcome by tight regulation of the commercial and professional conditions to deliver the service (for instance only qualified organizations should be recommended to members for supporting FinTP)
d SLA and accountability for both internally or externally performed services is closely correlated to the previous risk and the community status should provide the support for growing a community of competencies and accountable professionals around FinTP Periodical auditing (by the specialized community body) of this pool of professionals will further ensure the confidence that the skills are preserved at the required level
e Code fragmentation and forking is a high impact risk with a low probability of happening in the initial period provided the knowledge transfer is done orderly and in an institutionalized manner
3 Inherent uncertainty
a Community disputes can jeopardize its cohesion the project viability and future This is a high impact possibly high probability risk and it is the definite role of the Moderator to feel prevent and while materializing mitigate any conflicting situation
b FinTP going commercial post-launch This is a huge impact possibly high occurrence probability but manageable with the right legal instruments provisioned in the community
c Loss of alignment to industry standards and regulations This risk has medium probability and medium impact given the assumption that the community is tightly regulated and the working bodies institutionalized and gathering professionals
4 Legal
Copyright infringement given Allevo experience in the open source business this risk is highly probable and has a high impact on FinTP especially if mistakes are made in the launching phase Similarly if during the product maintenance and further development phase the community fails to institutionalize proper formal software development processes (covering all FinTP lifecycle phases) based on industry practice proven model(s) Supplementary the expert code scanning audit for compliance is the single resort to preclude external software source misuse
FinTP - Vision and Scope
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5 GPL specific
a Noncompliance to the GPL license If GPL license is used the product should further distribute in compliance with this part provisions High impact and probability but manageable if proper software development processes are used and if the statute clearly defines the licensing model for FinTP
b FinTP unconformity The risk that software engineers get inspired by a chic solution which they import and emulate similarly in FinTP And this is also highly possible since les grands esprits se rencontre
6 Existing customers attitude
Anger for having paid for something which now is free The existent customers can be concerned about the future of their installed system its further development (in one word its future) and on the quality of the service (SLA including) Some recent adopters can possibly be furious for spending their money on buying licenses for a piece of software that differently packaged becomes free of charge
For the first situation the single best solution for Allevo is to ensure a smooth transition from the current status to the new solution deployed Also highly probable Allevo should provide for simultaneous (for at most one more year) maintenance of both FinTP and for qPayIntegrator
For the 2012 new qPayIntegrator adopters Allevo should transparently state the product‟s future and propose a commercially attractive migration towards FinTP when it becomes publically available (like the option for the installation migration and recurring services) The decision should clearly stay with the customer if he still buys Allevo licenses delays the implementation until FinTP is available or if he goes for a competitive solution
In other words the key to mitigate the existing customer perception is switching places and discarding if the situation proves to be uncomfortable
Bottom-line is that to avoid most of the risks the FinTP community must be a rather tightly controlled one though still opened to anyone willingly abiding to the rules
The synthetic view of the main risks their assigned probability impact and the corresponding containment approach is provided in the attached file
Risk IDRisk
CategoryRisk
Probability
(High
Medium
Low)
Severity
(High
Medium
Low)
Containment (Mitigation Action Proposed)
M1Free as in a
Free Puppy
M101
The training service amp support cost could account more than the
commercial product its replacing (application software is typically 30 of
the total cost of ownership of most projects)
Medium Low
M102 Hidden costs ie charge for patches updates and upgrades Medium Low
M2Frequent
updates
M201
Projects might be updated frequently - as often as everyday Too frequent
updates could have a negative impact on the implementation
interoperability and support
Low HighMAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M3Backwards
compatibility
M301 Less accountability Low LowMAP03 Access to prior versions of source code (additional in-house
development and support procedures might be necessary)
M4Support
related risks
M401Support could be perceived as the biggest issue with open source
software deploymentsHigh High
M402 Internal External Accountability SLAs High High
M403Code fragmentation or forking if the community fails to institutionalize
corporate like formal structureHigh High
M404Support could require greater involvement and different skills set from
operations staffMedium Medium
M5Community
immaturity Low Low
M501Could generate incompatibility of FinTP with industry standards amp
regulationsMedium Medium
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M6 Uncertainty The inherent uncertainty in every open source project
M601 Community disputes might impact project viability and future High HighMAP04 The Mentor should prevent amp mitigate any conflicts inside the
community
M602 Open source projects may not stay open in future releases High HighMAP05 The originator liabilities should be strongly enforced by the
community statute
M7 Legal risks
M701 Copyright infringement High High
M702 Can open source software deployments pass an audit
M8 GPL General Public License specific development concerns
M801Software thatrsquos derived from an existing GPL project in whole or in part
might not be released under the same licenseHigh High M08 The community should regulate the licensing model
M802
Developer contamination - developer could review an existing open source
project could see an elegant solution then implement a similar function in
closed source project
High HighMAP09 Procedurals constrains for the software developers should be
enforced
M9
Current
customers
attitude
The actual customer perception could be negative High High
M12 To prevent a negative attitude Allevo should involve the customers
in the FinTP project Allevo needs their active support for a smooth and
issues less transition
ma
rke
t re
late
d r
isk
s
co
st
rela
ted
ris
ks
MAP01 The community should regulate the applicable rules and fees for
services and maintenance
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
bu
sin
es
s a
nd
le
ga
l ri
sk
s
MAP06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S1Product
related
S101 Late delivery lead time Medium MediumMAP15 Allevo should provide proper resources (funding and human
resources)
S102 Credibility loss if fail to certify with SWIFT Medium High MAP16 Should be discussedamp agreed with SWIFT
S103 Inexperienced team or allocation below needs Low HighMAP15 Allevo should provide proper resources (funding and human
resources)
S104 Improper or non efficient version management Low High MAP16 Review the current Allevo Configuration Management System
S105Poor quality if the community fails to institutionalize proper verification and
validation practices3
M06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S106 Lack of expertise in open source projects 2 Allevo should engage thoroughly selected Open Source consultants
S2Service
related
S201
The software maintenance not properly providing for bugs fixing
regulationamp standard alignment technological improvements communities
improvement requests
High HighMAP01 The community should regulate the applicable rules and fees for
services and maintenance
S202 One-time amp recurring services might be provided by unqualified resources High HighMAP17 The community should regulate the training curricula and related
expertise certification
S203 Provided services might not meet the minimal SLA performance criteria High HighMAP17 The community should regulate the training curricula and related
expertise certification
S204 Relaxed or lack of accountability of the professionals High HighMAP18 The community should regulate the employment agreement of
the professionals
S205 Lack of qualified professionals High HighMAP19 The community should ensure a balanced number of certified
professionals with the community size
S3Community
related
S301
If after disclosing FinTP the community does not enthusiastically adopt
the solution competitors might more successfully develop a similar
strategy
Medium MediumMAP20 FinTP promotion should be convincing and realistic A well
organized marketing campaign by Allevo
S302The community mentor andor early adhering members have no
undeniable prestige or are not largely trustfulMedium Medium MAP99 Project status review Ending the project could be one option
S303 The Mentor does not strongly commit for the project Medium Medium MAP99 Project status review Ending the project could be one option
S4 Legal
S401Exposure to copyright and IP infringement due to working team unaware of
the legal consequences of using third party softwareMedium Medium
MAP21 Allevo should keep records and fully document the use of open
source code
S402Copyright or intellectual property infringement can lead to injunctive relief
and monetary damagesHigh High
MAP23 Allevo should institutionalize a tight licensing and technical
control
S403 All risks related to open source compliance High HighMAP24 Allevo should appoint as soon as possible a FinTP compliance
Officer
S5 Financial
S501 Lack of financing institutions Medium MediumMAP25 Allevo should urge consultant to provide a consistent list of
potential investors
S502 Dependency on the financing institution approval Medium Medium
S503Not thoroughly planned project overlooking one or some project cost that
need to be financedMedium Medium
Sp
ec
ific
ris
ks
tec
hn
ica
lm
ark
eti
ng
leg
al
fun
din
g
MAP26 Allevo should carefully draw a consistent and eligible project for
financing
Risks
Riskspdf
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11 Appendix - Bibliography 1 Accenture Open Source Research Geographic Findings
2 Accenture Open Source Research Industry Findings
3 Producing Open Source Software - How to Run a Successful Free Software
Project by Karl Fogel
4 Open Source Software Risks and Rewards by Gary Hein
5 A Business Case Study of Open Source Software by Carolyn A Kenwood
6 6 critical success factors for product development by Christian Wig
7 Bank 20 by Brett King
8 Managing the business risks of open innovation by Oliver Alexy and Markus
9 Product idea evaluation checklist shared by Startgass AS
10 SWIFT 2015 Strategy
11 Customers and business impact of product changes
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12 Appendix - Glossary ACH Automated Clearing House that is used to clear retail payments
between banks in a country or region
APAC Asia and Pacific
AML Anti-Money Laundering
BCampDR Business continuity amp disaster recovery
B2B Business to business
C2B Consumer to business
CET Central European Time
CMMI Capability Maturity Model Integration
CMS Configuration Management System
Coexistence The situation of multiple standards existing at the same time in the same business space Within SWIFT this refers to the coexistence between the MT and MX standards This also refers to the set of measures being taken to make the situation easier to handle by the community (publication of mapping rules translation serviceshellip)
CSM Clearing and Settlement Mechanism
CUG Closed User Group
Dictionary Part of the ISO 20022 Repository that contains all items that can be re-used during business modelling and message definition activities
EAI Enterprise Application Integration - middleware to connect applications and communication interfaces Typical EAI software includes features for mapping data between various formats enriching messages with data from other systems and orchestrating message flows
ECB European Central Bank
EMEA Europe Middle-East Africa
EPC European Payment Council
ERP Enterprise Resource Planning
EU European Union
EUCLID Connectivity to EuroClear Bank services
FIN The messaging service offered by SWIFT for the secure and reliable exchange of MT messages in store-and-forward mode By extension the syntax used to format these MTs
IP intellectual property
Interoperability Capability to easily exchange business information while using different message standards ISO 20022 promotes global use of syntax-neutral business and message components as a common denominator to achieve interoperability between standards using different syntaxes
ISO The International Organization for Standardization - an international standard-setting body composed of representatives from more than 160 national standards organizations that promulgates worldwide standards in a variety of domains aiming at facilitating cross-border exchanges of goods services and techniques
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ISO 15022 An ISO standard that describes the syntax to be used for developing securities messages used mainly to support back office related transaction flows It replaced the previous securities messaging standard ISO 7775
ISO 20022 RA Registration Authority - offers the services described in an ISO standard on behalf of and under a contractual agreement with the International Organization for Standardization
ISO 20022 Repository
Repository maintained by the ISO20022 RA which contains the financial business models message definitions and components defined in compliance with the ISO 20022 standard
ISO 20022 RMG Registration Management Group - in charge of the overall management of the ISO 20022 development and registration process in accordance with the ISO 20022 standard
ISO 20022 SEG Standards Evaluation Groups -in charge of validating candidate ISO 20022 messages within the scope of the business justification and ensuring that they address the needs of their future international community of users
ISV Independent Software Vendor
KYC Know Your Customer
MACUG Member Administered Closed User Group
Message A set of structured information exchanged between two parties involved in a financial transaction
Message component and element
A re-usable data structure used for assembling message definitions The data defined in a message component is bdquotraced‟ back to the business components and business elements In simple terms business components define the business meaning message components create data structures for messaging
MI Market Infrastructure - a system that provides services to the financial industry for trading clearing and settlement matching of financial transactions and depository functions
Middleware Software that enables data to be exchanged among different systems with standard communication components and tools for formatting mapping and processing
MT The traditional bdquotag value‟ Message Types for use on the FIN service offered by SWIFT
MX An XML message exchanged over SWIFTNet whether or not ISO 20022 compliant
OS Open source
PSP Payment service provider
QA Quality assurance
RMA Relationship Management Access
RTGS Real Time Gross Settlement System
SAA SWIFT Alliance Access
SAE SWIFT Alliance Entry
SAG SWIFT Alliance Gateway
SaaS Software as a Service
SCORE Standardized CORporate Environment
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Semantics The study of meaning usually in language The word is often used in ordinary language to denote a problem of understanding that comes down to word selection or connotation
SEPA Single Euro Payment Area
SLA Service level agreement
SME Small and Medium-sized Business(es)
SOA Service Oriented Architecture
SSB SWIFT Service Bureau
STP Straight Through Processing
SWIFT Society for Worldwide Interbank Financial Telecommunication Visit wwwswiftcom
Syntax Physical format of a message used to identify and represent the conveyed pieces of information
T2S TARGET2 Securities - an initiative of the Eurosystem It is an IT platform that aims to make settlements across national borders simpler and more cost-efficient
TARGET2 The Eurosystem-owned European Real Time Gross Settlement (RTGS) system (Trans-European Automated Real-time Gross Settlement Express Transfer System) TARGET2 is one of the largest high-value payment systems in the world
Taxonomy The classification in a hierarchical system typically organized by super type - sub type relationships also called generalization-specialization relationships or less formally parent-child relationships
TSU Trade Service Utility
TCO Total cost of ownership
Translation rules
Set of rules to be used to map the pieces of information included in a message expressed in one syntax to the equivalent message expressed in another syntax
Remit Remittances
XML eXtensible Mark-up Language - popular syntax to encode documents (or messages) electronically on the Internet XML allows communities to define their own identifiers (or tags) and format (or data type) for each component of a message
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Bureaus etc) ISV regulatory institutionsMarketing plan feasibility campaign efficiency and costs
2 MentorPreferable SWIFT
Also eligible SunGard IBM affiliation to other OS communitySWIFT decision
3 Legalcopyright Expert legal consultant and RO apprentice Cost and time shift dependent
4 Tight regulation Clear membership admission amp software contribution criteria The quality of the consultant advice
5 Marketing Actively recruiting community members Marketing plan feasibility campaign efficiency amp customer skepticism
a community portala provide content amp debate space information consolidation amp dissemination virtual
showroom subscription management support
a business analysis solution availability and maintenance by one of the
members or employed company
b press releases amp
announcementsb PR and AR b communicators availability and costs
c events c periodical conferences user focused meetings c cost dependent
6 Financing World Bank EU amp private funds Lobby amp funds availability
Item
FinTP
FinTP community
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No man is an island
This exciting journey Allevo embarks on is not doable without companions
The most obvious need is that of a cohesive community with sufficient resources
talents and ideas By cohesive Allevo means that the enrolled companies and
individuals share the same set of values These are professional ethics proven
practice professionals safe amp failure-free operations While the participants speak the
same language the intent of working for efficient interoperability means eliminating
misinterpretation Thus the need to manually process transactions will be reduced and
many current ldquoexceptionsrdquo will be eliminated
Like any other form of people gathering the community needs rules governance
agora to make their voice clearly heard (requirements amp ideas) A supervisor is needed
to guarantee that the challenges are understood that the actions anticipate the desired
solution and that proper decisions are taken In this document the supervisor is called
Moderator since atop of being a moderator the supervisor should also be an
accepted and trustful negotiator perceived at the same time as a leader by all
community participants
When
Allevo is in a position of offering a reasonably strong ground for both creating this open
application and starting a community
On the latter Allevo qualifies to be one of the first members of the community given its
firm belief that the world will become a large cooperation space where ideas data and
information will be openly exchanged and knowledge openly shared - in the best
interest of the people
The deep root of the software application that Allevo brings to the community is
credited by 7 years of practice and features a number of credentials Making FinTP an
open application qualifies it to become a tool for companies with constrained budgets
Adopting FinTP will empower its customers to equally interpret both the syntax and
semantic of the exchanged financial instructions
Bottom-line Allevo has initiated the project confident to quickly find other visionaries
sharing the same daring ideas on how to lay the firm foundation of a new efficient and
successful financial ecosystem
How
Now this is the tricky part of the story The easiest part of the project is creating the
open source application The success lies in launching the community simultaneously
This means that prior to the official release the community roles should be well
defined fundamentally agreed upon by the main sponsors the Moderator should
formally engage and the initial membership should include some prestige companies
and IT vendors Thats tough but this is how it has to happen
What is in it for
Allevo the company will become member of a club where it can seed future
developments This will further lead to the enhanced visibility of Allevo team and
portfolio
The community members they will become members of a club unified by the mutual
interest of pushing the interoperability level to a more refined stage of financial
transactions processing while enjoying the benefits of a falling TCO
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The Moderator this entity will consolidate its influence and prestige in the rapidly
transforming financial market It will be the parent of the deeper standardization of the
financial business crossing the bridge between financial messages conveying
between institutions up to the institutions interface with their customers This will lay
the ground for the financial integration to equal the industrial and trade distribution
chain footprint
Whats next for FinTP
After FinTP has successfully been adopted in the market on a reasonable scale the
future looks even brighter
Companies relying on a trustful standardized processing application will be able to free
up their minds amp budgets for what uniquely differentiates them in their customers‟
eyes quality of service relevance trade easiness agility of delivery risk containment
social responsibility or other distinctive factors
Once all this has settled in self-adaptive trade business systems will come forward to
close the loop between customers and their providers
42 FinTP Positioning
FinTP is a key business software that opens markets by aggressively addressing
customers with constrained investment budgets Allevo strongly believes that FinTP is
tightly knitted to SWIFT 2015 Strategy2
The payments arena in itself has reached a high level of maturity payments becoming
a commodity on these premises back-office software should no longer be a
differentiator
FinTP creates a widespread financial transactions processing platform a cheap
alternative (to the current proprietary payment systems) for an industry common
solution which will evolve into a new standardization layer
2 See Bibliography
FinTP - Vision and Scope
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FinTP shifts the competitive space and consequently the innovation drive (from back-
office and mostly financial institutions and large corporations) to SWIFT traditional and
new business areas (treasury and front-office of the banks large financial institutions
corporations and SMEs - including MFIs)
43 FinTP Applicability
The usage of FintP in several domains ndash banks micro-finance institutions CSMs corporations and public administration ndash is discussed The main building blocks provided by FinTP for the processing of financial transactions are shown in each case
For setting the scene consider the naiumlve drawing (see below figure) which depicts
1 the bank‟s applications - implementing the core products and services the banks provides to its customers (FX Lending Payments TF custody etc)
2 banking correspondent business and infrastructures they connect to to settle for example their payments
3 corporate customers or local financial institutions engaged in distributing their products and services
4 the individuals who benefit from the service of the bank directly or intermediated by partnering financial institutions or corporations - including retail chains connectivity channels that are either SWIFTNet or VPNs over internet or bank‟s own private network
FinTP - Vision and Scope
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Given the application scalability FinTP is fitted to deal with
1 B2B environment type FinTP performs transactions routing and processing between the before depicted institutions thus achieving cross industry interoperability Additionally FinTP helps the business customers to consolidate their financial or treasury operations similarly helps the retail chains to reconcile and settle the available stock with the registered sales
To exemplify ensuring SEPA Readiness for banking institutions and for their customers is briefly discussed
By 2014 banks in EURO zone should be ready to process instructions in ISO20022 format FinTP can be an efficient solution to achieve rapidly compliance with the EPC provisions
Are the bank‟s customers ready to send the instructions data in the right format Are you ready to accept this type of data Are you able to extend solutions to help your customers better preparing for SEPA instructions FinTP has the right building blocks for banks and corporations
2 B2C environment type FinTP goes further down to the end customers The individuals can interact directly in a branch or remotely using their computers tablets smart phones to provide them with personal financial portfolio management It enables them to operate on their bank account or to do shopping It also supports new financial instruments such as PayPal Google wallet Facebook UK faster payments mobile payments amp commerce M-Pesa NFC etc
FinTP applicability profiled on beneficiary type
FinTP - Vision and Scope
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a Banks
Regional and international banks are rethinking and often improving their business architecture because of strong penetration of traditionally non-financial business in the money supply chain
The banks have in general the following choices
i Stay the course This often means keep on muddling
ii Outsource the processing of financial transactions in its entirety or in parts
iii Lower the recurring costs dramatically and benefit from joint developments by implementing Open Source solutions for commoditized parts of the needed infrastructure
Allevo provides the building blocks for the processing of financial transactions (FinTP) for those organisations who want to go for the third strategic choice
Toolbox3 (see 51 Features for details) as illustrated in bellow figure
Business flow consolidation
External interfaces to market infrastructure(s)
Funds transfer (credit transfer direct debit debit instruments duplicate detection treasury flows)
Operational functionalities such as liquidity reporting accounting reconciliation AML transactions filtering remittances management competitive reports etc
All helping the bank to manage the operational risk
3 Toolbox means a comprehensive collection of ready to deploy operational features
FinTP - Vision and Scope
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Payment factory - as illustrated in the bellow figure - is the bank-centralized service for smaller financial institutions or corporations to provide payment and collections processing in compliance with regional or global regulation along with additional service (eg intra-day limits etc)
A similar type of architecture can be used to set-up a bank administrated Member Concentrator or a (SWIFT) Service Bureau or a Payment Service Provider
FinTP - Vision and Scope
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b Micro-finance institutions
Toolbox3 (see 51 Features)
Integration of micro-financing application with mobile payment operator(s) and banks It provides support for loan applications loan disbursement and repayments It integrates the mobile payments and the banking payments and as such provides working capital management Multi-MMTs amp multi country operations are also supported
FinTP - Vision and Scope
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c CSMs
Toolbox3 (see 51 Features)
CSMs can use FinTP (as shown in the bellow figure) to provide its customers an
effective connectivity readiness package Likewise CSMs can use FinTP to connect
themselves to other CSMs they need to
FinTP - Vision and Scope
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d Corporations
Toolbox3 (see 51 Features)
The financial or treasury department of the corporation can use FinTP (as depicted in
the figure bellow) to concentrate the processing and management of all their financial
business in one single operation window FinTP provides the building blocks for a highly
effective money supply chain between banks providers and customers Beyond that
FinTP empowers control on the working capital and financial resources
FinTP - Vision and Scope
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e Public administrations
Toolbox3 (see 51 Features)
Public debt business automation through Treasury Bonds settlement on all trade phases eg pre- sales post-
Wages and pensions payment in compliance with SEPA regulations
Structural funds financial management (in a business group managed by the State Treasury)
FinTP plays a multiple roles in the Public Administration financial business
a Bridge between the global banks secure network (SWIFTNet) and the Government
secure national network performing format conversion and business flow mapping
thus FinTP acts as a financial integrator of the different public institutions
b Interoperability gateway with the banking community and financial market
infrastructures
c Auctioning portal for the Treasury Bonds allocation and settlement for the Primary
market
d Management of the payments related to Structural Funds financed projects and to
the providers of the public institutions
e Payments (such as wages pensions state subsidies) due to individuals intermediated by banks using SWIFTRemit framework Similarly the taxes collection should be handled by the same system and framework FinTP provides means to perform the operations using either mobile devices or the internet
FinTP - Vision and Scope
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44 Key Business Objectives and Success Criteria
Today Allevo faces two major limitations in fulfilling its business objectives
1 Strong dependency on its narrow national market and thus being limited to the
known European Union and particularly Romanian practice
2 Significant allocation of the development talents to maintaining qPayIntegrator
rather than working to new business oriented products
Allevo is going to expand its business footprint and simultaneously shift its revenue
source from back-office solutions towards its customers business area (treasury front-
office) applications
To achieve this goal Allevo will focus on developing FinTP business and on gathering
a strong supporting community formed by representatives of the targeted market The
coherence of the community should be ensured by a trustful and committed
moderator
Therefore for the success of the project Allevo deems instrumental the go-to-market
process the solid take-up tempo and the quality of the community
On the FinTP side Allevo should tightly focus on
1 Understanding the community members‟ needs values and priorities in
relationship with their business competitive ecosystem
2 Improving the product management process and the technical commercial amp
distribution documentation
3 Identifying and centring the attention on strong idea generation selection and
monitoring processes
4 Elaborating the right product architecture to enable easy functional and technical
scalability maintainability diagnose native features for flexible customization
compliance to global and regional financial standards and preserving the initial
licensing structure across various customers business models
5 Strengthening project management
6 Designing coherent knowledge transfer process
7 Designing efficient customer support
As a member of this FinTP open source community Allevo will provide
1) the open source FinTP application
2) knowledge transfer (training amp consultancy) to both early adopters and to the
product development amp maintenance body (see 46 The community)
3) for a limited period of time
- support amp maintenance
- alignment to technology standards amp regulation
4) further improvements
5) contribution to relevant proofs of concept community web site conferences
articles online awareness
The power of the community will draw other vendors to partner together to ensure
market coverage each of them complementing the other through their expertise
FinTP - Vision and Scope
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FinTP distribution will be performed via the communitys portal while the initial
consultancy product installation and support services will be delivered remotely
Following the free open source software model FinTP will be available under an open
license free of charge
In designing the new products Allevo will benefit on mid and long term from the deep
insight both of FinTP internals and the structure and operation of the community
45 Market Sizing
Our evaluation of the FinTP targeted market size
- the global market size taken into account is 26100 institutions out of which
- an average FinTP engine licensing fee is euro30000 resulting in potential
maximum expenses of euro783 million
- the corresponding yearly maintenance fee is euro5400 resulting in potential
maximum expenses of euro700 million in 5 years
- the number of potential institutions adopting FinTP in the first 5 years of
availability 250 tier3 amp 2000 tier4
- consequently the savings in 5 years could reach euro675 million in license
fee and euro2025 million in maintenance fee resulting in a total of almost euro90
million
Allevo believes that (at least) during 2013 and 2014 its current income source will be
preserved while after that period the main replacement of the lost (new licensing and
recurring maintenance) fees will mainly consist of services (consulting
implementation support education) and sales of licenses for newly launched
applications
FinTP - Vision and Scope
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46 The FINkers United community
The community structure comprises three main entities (as depicted in the bellow
figure)
1 The adopters (beneficiaries) consumer companies choosing to adopt the
FinTP product in compliance with the community line of business and ethical
conduct
2 The moderator the instrumental inspirational authority expected to draw both
the development vision and the guidelines of the community
3 The contributors
a institutionalized bodies eg development and maintenance test and
validation audit legal marketing
b independent contributors eg ISVs (Allevo falling under this category)
solution providers integrators or passionate developersindividuals
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5 Solution Description amp Parameters Like qPayIntegrator FinTP offers a
standard compliant processing
engine for the financial transactions
exchanged between the back-office
or ERP applications and the financial
community (banks MFIs market
infrastructures corporations)
FinTP is able to process financial
messages in both FIN and ISO20022
formats and at the same time offers
a rich set of interfaces to different
financial applications FinTP provides
compliance with various clearing and
settlement mechanisms
Consequently FinTP ensures a high
level automation of the end-to-end
financial transactions processing
51 Features
The FinTP project has two major deliverable components
1 the FinTP application itself
2 the community built around FinTP
All subsequent chapters will refer to both of these
Component code
Component description Comments
FinTP4 FinTP is a financial transactions processing engine for 3rd or 4th tier banks microfinance corporate or SMEs treasuries available as open source application Functional characteristics
1 Operational features
o Predefined flows and message formats
Includes reconciliation of confirmations with transactions
o Single and multiple funds transfer instructions securities settlement amp reconciliation (Romanian Euroclear) messages
The supported payment instruments are credit transfer direct debit debit instruments
o MTMX coexistence Based on FinTP native internal data format (ISO20022)
o Multi-BIC multi-currency
o SEPA ready (certification) Compliancy with EPC regulations for SEPA formatting and business flows (for SCT and SDD) enables bank-to-bank and bank-to-CSM settlement
4 FinTP root is Allevo equivalent product qPayIntegrator a commercially available amp practice proven (since
2005) application qPayIntegrator provides a consistent set of functionalities and it is fully aligned to both industry regulations and technology
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Component code
Component description Comments
o TARGET 2 ready Compliance with TARGET2 settlement and operations as regulated by the ECB
o SAGSAASAE SAL interfaces
Integration with SWIFTNet to enable banking business
o Liquidity reports Real time cash reports and forecasts using several criteria (currency subsidiary profit centre)
o Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
Analysis and reports of market trends based on volumes amount BIC etc along with early alerts on behaviour changes beyond the standard deviation
o Accounting reconciliation Automatic NOSTROVOSTRO accounts reconciliation intraday liquidity reports and integrated exception management
o AML (sanctions list matching)
High and low value payments filtering uses 20+ black lists and ensures their content maintainability
o Duplicate detection Detection and investigation of possible duplicates the detection window and criteria are configurable
o Remittances processing Covers banks business and operations area as well as distribution channel
o Treasury markets Automation of treasury flows (FX and money market)
o Statements Processing of SWIFT messages related to correspondent banks accounts administration
2 Technical features
o Financial message routing and monitoring
o Multi-threading capabilities
o Persistent end-to-end transactions
During each phase of the entire processing cycle permanent copies of the transaction are kept until the final completion thus avoiding any transaction duplication or loss
o Batching unpacking
o Resilience at transaction level
o Archiving
o Tracing and logging transactions and user events
o Transient errors detection and recovery
o Real-time search and reports
o Security access and user administration
o SaaS cloud ready
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Component code
Component description Comments
FINkers United - community
Since FinTP is an application handling financial transactions the product releases and the related community should be tightly regulated and controlled As the project matures these components will be further refined The following main components of the community have been identified
‐ the moderator ‐ the product development
and maintenance body ‐ the product and
community auditor body (acting as a gatekeeper of official releases) to control and maintain the change requests integer and eliminate any malware exposures
‐ the test and validation body
‐ the legal body for defining the frame for product distribution amp licensing
‐ the marketing entity responsible for creating awareness and attracting contributors and adopters
‐ the portal used as a channel for marketing support and version control
‐ individual contributors namely ISVs solution providers developers integrators who wish to use their skills and knowledge to the benefit of the community
These tools strongly depend on the available budget and widespread
organization culture It is not mandatory for these to be open source if usage of
open source tools would mean lower quality
3) Licensing
The licensing model highly depends on the results of the open source legal and
business consultancy However we assume the following frame
‐ free of charge initial and recurring maintenance license for using FinTP
‐ FinTP does not use software components enforcing liabilities for the user
‐ consumers using FinTP source code (in part or entirely) should comply to
the licensing policy of the community
‐ the version released by the development amp maintenance body is the only
official amp to be trusted version of the community ensuring product integrity
unity and stability
4) Regulatory compliance
The regulatory compliance strongly depends on the early adaptation of new amp
changed rules via the recurring maintenance and on the quality of the audits
performed by the specific bodies of the community
Thus it is ensured that ISO20022 and FIN standards TARGET2 and TARGET2
Securities SEPA or country specific regulations (as stated respectively by
FinTP - Vision and Scope
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SWIFT standards EPC specification ECB or regional Central Banks
regulations that the community chooses to comply with) stay the most
important business specific anchors of FinTP
The FinTP design also offers support for flexible definition of new compliance
sources
5) Consultancy
The needed consultancy is twofold
‐ legal to ensure that FinTP does not infringe other licensing constraints
‐ open source specific to enable the right choice of the community type and of its governing law
The main constraint relies in choosing the right advisors true experts in the
open source industry amp with appropriate ethic profile - able to deliver as
promised The consultants have to be available 800 am divide 800 pm CET and
easily reachable - geo-location is of utmost importance Selection of the
consultant will basically be done on price assuming the right mix of expertise
and availability is achieved
6) Financing
While Allevo partially undertakes the financing of FinTP development the
ancillary consultancy necessary team education or acquisition of productivity
tools are far beyond the companys 2012 budget
To overcome possible delays in the project Allevo needs to sturdily act to
identify both the most appropriate commercial offer and additional necessary
financing source(s)
FinTP community
The community related items are members moderator legal tight regulation
marketing and financing For each of these items several assumptions and the
corresponding dependencies are provided in the following paragraphs
1) Members
We assume that the communitys members span several business profiles
(such as financial services institutions corporations market infrastructures
PSPs SSBs public administrations regulatory institutions and ISVs) sharing
the mutual focus on financial operations performance and improvement
By now after some tests on market acceptance there have been identified a
few supporters comprising financial services institutions and small ISVs
To ensure the success of building the community there is need for attracting
prestige influencers (market analysts consulting companies of scale - starting
with big four key industry providers - such as SWIFT other communities - ie
professional such as banking insurers capital market associations) and a
credible pool of financial institutions and corporations
To this end Allevo unrolls its own awareness campaign through direct
meetings publications blog posts and social media public presentations and
by officially launching the initiative in a conference focused on free of charge
financial transactions processing applications
Allevo further plans to use Sibos 2012 as opportunity to organize a less
traditional communication session gathering a relevant international panel to
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debate the strong and weak aspects of this initiative amp to get the public involved
as much as possible
The goal is that by the end of 2012 some tens of different institutions are
committed to co-found the community and to actively contribute to establishing
the legal frame and to forming the required action bodies
2) Moderator
Allevo perceives the Moderator as the critical member of the community since
his prestige and influence will warrant the outcome of all performed activities
The moderator must commit on long term to develop the community and to
sponsor it with its share of trust
Allevo strongly believes that the Moderator should have a global footprint be a
reputable and trustful institution
3) Legalcopyright
The legal consultant and advisor needs to provide the coherent legal frame to
cover all community activities by roles and accountability While making it easy
for the members it should be more demanding as far as contributors are
concerned (though still encouraging ISVs to actively participate) It has to draw
very precise responsibilities for the independent and institutionalized bodies
(for instance product maintenance amp development and audit) and for the
Moderators status
The quality of this legal work fully relies on the expertise and experience of the
advisor
The law governing the community has to be in harmony with the European
(either French or Anglo-Saxon) legal system and with the open source legal
regulations largely practiced in other business regions (US and APAC)
4) Tight regulation
FinTP the product meant to gather a community which uses and supports it is
all about moving values between different entities Thats critical irrespective of
the amount because failing to perform properly opens the doors to arguments
amp loss of reputation with the related tangible costs Moreover the product has
to be beyond any doubt during its entire lifecycle free of any malefic
embedded functions meaning that contamination has to be avoided by all
means
Allevo strongly believes that this requirement can be attained only by tight
regulation of the community specific approval of the initially launched version
of FinTP and of the recurring contributions
This approach can be felt strange compared to most open source communities
and can lead to little interest from IT talents making them feel banned or
restricted It remains the Moderator‟s duty to make them feel privileged if
accepted and rewarded as such However this censorship is a price to be paid
since the community and the project are about processing transactions
initiating value transfer
FinTP - Vision and Scope
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5) Marketing
The community needs to have the clear objective of spreading both
geographically and over a consistent number of industries
To achieve this goal the community should be able to actively provide open
access to relevant information (including explanations of concepts hands-on
evaluation) to non-members and to also answer their questions on FinTP and
on the community itself
The same level of information needs to be ensured for the members to whom
supplementary updates on the community events decisions available
releases patches and fixes should be made available They need to also get
focused forum discussions on specific business areas and subsequent
processes need to be distributed
These functionalities have to be hosted on the community‟s dedicated portal
This portal has to provide content dialogue space information consolidation
and broadcasting It must be a virtual showroom for FinTP It needs to host
documents and virtual meetings subscription management and product
support amp development
The community has to be able to run its own meetings enabling direct contact
between active members or their representatives
Meaningful press releases have to be regularly issued along with actively
maintaining a productive relationship with market analysts to consolidate a
clear public understanding of the community spirit and goals
6) Financing
Its all about money-money-money since at least for the first 2-3 years the
community needs to be financed
Upon reaching maturity the institutionalized bodies of the community can earn their income from collateral activities - such as organizing conferences providing education and specialized support services - either for the initial FinTP installations and customizations or for recurring services requested by the members An alternative can be trialling and certifying interested providers enabling them to perform support services for FinTP
Thus who could pump money into this project It could be one or a mix of
‐ World Bank - if governmental programs are implied and provided a proper project which convincingly demonstrates the beneficed social impact
‐ EU development funding
‐ interested wealthy members of the community
The most critical dependencies are external such as (arranged according to
their impact) availability of funds for building the community finding trustful
and skilled open source consultants (legal business community licensing)
The synthetic view of the main assumptions and dependencies is provided in
the attached file
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Maintenance amp user support 1-Jan-13 Marketing inst action
4 Activities
Initial planning amp budgeting 15-Dec-12 document
Roles allocation 15-Dec-12 document
Community inst Implementation 15-Dec-12 action
Awareness campaign 1-Jan-13 action ongoing process
Members recruiting 1-Jan-13 action ongoing process
Continued operation 1-Jan-13 action ongoing process
Service sales 1-Jan-13 action ongoing process
Future development planning 1-Jan-13 document ongoing process
5 Resource allocation
If existing institution - allocation 15-Dec-12 action
If newly formed - recruiting 15-Dec-12 action
Make FinTP available to comm 1-Jan-13 action ongoing process
Start community financing 1-Jan-13 action ongoing process
6 Financing
Initial investment 1-Jan-13 action secured by that date
First period of comm operation 31-Aug-13 action secured by that date
co
mm
un
ity
Project approach
Project approachpdf
FinTP - Vision and Scope
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8 Scope This chapter deals with the phased availability of various FinTP features again considered from application and community points of view
In the first phase (due Dec 2012) the core of FinTP application is ready including the following technical features
- financial message routing between services and monitoring of exchanges
- multi-threading capabilities
- persistent end-to-end transactions
- batching de-batching
- archiving
- tracing and logging of transactions and user events
- transient errors detection and recovery
- real time search and reports
- security access and user administration
Similarly during the first phase the main community components need to be in place
- moderator
- software development and maintenance body (Allevo also available in the first and second phase of the project)
- test amp validation body
- (software) auditor
- legal
- main contributors (Allevo falls into this position)
- platform
- marketing
In the second phase (Dec2012 - Dec2013) several operational features of FinTP will be added
- predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit instruments securities settlement reconciliations
- MTMX coexistence
- multi-BIC multi-currency
- SEPA ready certification
- TARGET2 ready
- SAGSAASAE interfaces
- duplicate detection
- liquidity reports
- competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
- accounting reconciliation
- AML (sanctions list matching)
- SaaS and cloud ready
along with resilience and start of maintenance and knowledge transfer (the last two obviously continuing in the next phases)
FinTP - Vision and Scope
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The synthetic view of the project scope is provided in the following table
Crt No
Feature Activity Phase1 31Dec12
Phase2 31Dec13
Phase3 31Dec14
Phase4 31Dec15
Fin
TP
A Operational features
1
Predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit Instruments bonds (Romanian Euroclear) reconciliations
2 MTMX coexistence
3 Multi-BIC multi-currency
4 SaaS ready cloud ready
5 SEPA ready certification
6 TARGET2 ready
7 SAGSAASAE interfaces
8 Liquidity reports
9 Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
10 Accounting reconciliation
11 AML (sanctions list matching)
12 Duplicate detection
B Technical features
1 Routing financial message between services and monitoring of data flows
2 Multi-threading capabilities
3 Persistent end-to-end transactions
4 Batching de-batching
5 Resilience (at transaction level)
6 Archiving
7 Tracing and logging of transactions and user events
8 Transient errors detection and recovery
9 Real time search and reports
10 Security access and user administration
C Other activities
1 FinTP maintenance
2 Knowledge transfer
Co
mm
un
ity
Establishing the institutionscomponents
1 Mentor
2 Software Auditor amp Provider
3 Legal service
4 Members
5 Allevo initial role
6 Platform
7 Marketing
FinTP - Vision and Scope
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9 Limitations The main limitations in the economy of the project consist of phasing several FinTP
operational features for the following year (eg debit instruments liquidity reporting
AML filtering accounting reconciliation resilience SaaS ready cloud ready etc)
At the same time for features intended to front-office usage like Remit it was not yet
decided to publish them as open source product
The synthetic view of the main limitations is provided in the following table
Crt
nrItem Limitation Exclusion Comments
1
FinTP
a
Operational features Available in 2013
b
Remit Not included in
open source
package
2
Community
a
Rules Tightly controlled The statute should
ensure the right
balance between
safety and free
association of talents
Given the significant budget allocation (at least from Allevo perspective) the strong
requirement to meet the maximum ceiling will limit the FinTP product initial preparation
and maintenance expenses
Community wise the obligation of a tight regulated statute will have to ensure the right
balance between safety (mandatory in an environment dealing with financial
transactions) and a free association of talents (typical in an open source community)
In the first period after launch (at least the first two years) of the initiative the
maintenance and support activities will be provided by Allevo (as initial contributor)
A major restriction would be to meet the budgeted development and maintenance
FinTP - Vision and Scope
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10 Appendix - Risks
Specific risks
1 Product
a Long delivery lead time This is a medium probability and impact risk however Allevo should make available the needed resources and motivate the entire team for the job
b Credibility loss if FinTP fails to further become certified on meaningful operations andor business tracks (ie SWIFT business certification tracks or similar) The single possible containment is lobbying if the application certification program rejects open source products Anyway the impact is very important and its materialization should be avoided
c Low quality of the allocated team and improper version management are highly unlikely to occur as long as the formal transfer of responsibility is smoothly made from Allevo to the corresponding body put in place by the community The real hidden risk is that this process could take too long and it thus has a very high impact
d Poor FinTP quality may result if the community fails to institutionalize proper quality assurance (QA) and verification amp validation (VampV) processes This is most expected not to happen but if it does the impact is at least medium The single path to overcome this risk consists in a professional approach to these items based on institutionalizing practice proven QA and VampV processes
e Allevo lack of expertise in the open source business This can be contained by carefully selecting trustful amp truly expert consultants Otherwise it means more money longer time spent on project and expenses without proper return
2 Service
a The software maintenance does not properly deliver as expected ie on-time and on-quality bug fixing regulation amp standards alignment and productivity amp technological improvement The key to contain this risk materialization is the community status having provisions to neatly provide maintenance and further development of the rules for FinTP as well as the applicable rules and fees for the ancillary services
b Low quality and safety of the service received by the members of the community To avoid the risk of performing the one-time amp recurring support services by under-prepared professionals the community has to rule the process of training and qualifying the companies willing to contribute in this area
c Not meeting the minimal SLA criteria The community should regulate and periodically revise the training curricula and to further audit both the teachers and the certified experts to ensure the service level agreements are met
d Under motivated service providing professionals - up to the level of not feeling the high impact of their activity The community status must provide guidance to the contributors on the minimal standards the professionals should meet
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e Constrained expert resource pool This risk could be overcome by the communitys policy to ensure at all time a balanced number of motivated experts to the communitys size Failing to do so may result in high negative impact of the community business and public perception
3 Community
a Emergence of a parallel competitive community If the optimal timing between publically disclosing FinTP and community take-off is not achieved then there are high chances that following a competitive initiative other entrepreneurs successfully launch their own similar or derived community This could be avoided by periodical reviews of the progress of both FinTP and community status and deciding whether the project needs to be put on hold or not
b Unfit reputation of the Moderator or main contributors If either the Moderator or the initial contributors are not beyond any dispute and are reputable institutes then there is certainly something rotten in Denmark and the project should be put on-hold
c No commitment from the Moderator‟s side Similarly if the Moderator does not commit to the project it means that Denmark has a serious problem to solve The project should relinquish until the matter is fixed
4 Legal
a Misuse of copyright and intellectual property (IP)The assigned working team could not be aware of the limitations and liabilities of using (entirely or partially) third party software this risk can be contained by delivering the right training providing proper working procedures carefully recording and documenting the use of open source code and carefully cross-scanning
b Injunctive relief and financial damages can be caused by not properly and continuously controlling the use of third party open source code resulting in copyright or IP infringement There are two containment measures which can be taken tighten the compliance check during the product lifecycle or apply the sanction policy as to set an example
c The competition starts a class action - this may result in delaying the project
5 Financing
a Lack of long term financing institutions Allevo should urge its consultant to identify and draw a reasonable list of financial options institutions
b Exceeding the budget given that this type of project has no precedent in Allevo and to avoid exposing to the dependency on engagement to financial institutions or to commitments beyond the existing budget a further carefully drawn project plan is needed along with its explicit approval from the board of the company
Market related risks
1 False expectations
a Expensive services Not everything is free aside the initial and maintenance free licensing the training the support and other professional services can amount to more than in general expected Allevo rates this risk as medium possible but with low impact as long as the law governing the community and its initial period of operation will consecrate fair market prices and competitive sources of contribution
FinTP - Vision and Scope
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b Hidden costs for patches updates and upgrades While of similarly weight in terms of probability and impact this should be no real concern as long as the law governing the community clearly provides for free and accountable maintenance
2 Poor image on quality
a Too many releases making FinTP hard to manage and unsafe to operate Given proper regulation of the community and the mature root of FinTP Allevo disregards the possibility of this risk to materialize However if this were to happen this is a high impact risk and by all means should be avoided
b Backward technological (in)compatibility looks to us as a low risk in all respects and within organizations applying practice proven software engineering processes and professional - accountable team this is not likely to materialize
c Support can be perceived as the highest impact risk for FinTP This can be overcome by tight regulation of the commercial and professional conditions to deliver the service (for instance only qualified organizations should be recommended to members for supporting FinTP)
d SLA and accountability for both internally or externally performed services is closely correlated to the previous risk and the community status should provide the support for growing a community of competencies and accountable professionals around FinTP Periodical auditing (by the specialized community body) of this pool of professionals will further ensure the confidence that the skills are preserved at the required level
e Code fragmentation and forking is a high impact risk with a low probability of happening in the initial period provided the knowledge transfer is done orderly and in an institutionalized manner
3 Inherent uncertainty
a Community disputes can jeopardize its cohesion the project viability and future This is a high impact possibly high probability risk and it is the definite role of the Moderator to feel prevent and while materializing mitigate any conflicting situation
b FinTP going commercial post-launch This is a huge impact possibly high occurrence probability but manageable with the right legal instruments provisioned in the community
c Loss of alignment to industry standards and regulations This risk has medium probability and medium impact given the assumption that the community is tightly regulated and the working bodies institutionalized and gathering professionals
4 Legal
Copyright infringement given Allevo experience in the open source business this risk is highly probable and has a high impact on FinTP especially if mistakes are made in the launching phase Similarly if during the product maintenance and further development phase the community fails to institutionalize proper formal software development processes (covering all FinTP lifecycle phases) based on industry practice proven model(s) Supplementary the expert code scanning audit for compliance is the single resort to preclude external software source misuse
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5 GPL specific
a Noncompliance to the GPL license If GPL license is used the product should further distribute in compliance with this part provisions High impact and probability but manageable if proper software development processes are used and if the statute clearly defines the licensing model for FinTP
b FinTP unconformity The risk that software engineers get inspired by a chic solution which they import and emulate similarly in FinTP And this is also highly possible since les grands esprits se rencontre
6 Existing customers attitude
Anger for having paid for something which now is free The existent customers can be concerned about the future of their installed system its further development (in one word its future) and on the quality of the service (SLA including) Some recent adopters can possibly be furious for spending their money on buying licenses for a piece of software that differently packaged becomes free of charge
For the first situation the single best solution for Allevo is to ensure a smooth transition from the current status to the new solution deployed Also highly probable Allevo should provide for simultaneous (for at most one more year) maintenance of both FinTP and for qPayIntegrator
For the 2012 new qPayIntegrator adopters Allevo should transparently state the product‟s future and propose a commercially attractive migration towards FinTP when it becomes publically available (like the option for the installation migration and recurring services) The decision should clearly stay with the customer if he still buys Allevo licenses delays the implementation until FinTP is available or if he goes for a competitive solution
In other words the key to mitigate the existing customer perception is switching places and discarding if the situation proves to be uncomfortable
Bottom-line is that to avoid most of the risks the FinTP community must be a rather tightly controlled one though still opened to anyone willingly abiding to the rules
The synthetic view of the main risks their assigned probability impact and the corresponding containment approach is provided in the attached file
Risk IDRisk
CategoryRisk
Probability
(High
Medium
Low)
Severity
(High
Medium
Low)
Containment (Mitigation Action Proposed)
M1Free as in a
Free Puppy
M101
The training service amp support cost could account more than the
commercial product its replacing (application software is typically 30 of
the total cost of ownership of most projects)
Medium Low
M102 Hidden costs ie charge for patches updates and upgrades Medium Low
M2Frequent
updates
M201
Projects might be updated frequently - as often as everyday Too frequent
updates could have a negative impact on the implementation
interoperability and support
Low HighMAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M3Backwards
compatibility
M301 Less accountability Low LowMAP03 Access to prior versions of source code (additional in-house
development and support procedures might be necessary)
M4Support
related risks
M401Support could be perceived as the biggest issue with open source
software deploymentsHigh High
M402 Internal External Accountability SLAs High High
M403Code fragmentation or forking if the community fails to institutionalize
corporate like formal structureHigh High
M404Support could require greater involvement and different skills set from
operations staffMedium Medium
M5Community
immaturity Low Low
M501Could generate incompatibility of FinTP with industry standards amp
regulationsMedium Medium
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M6 Uncertainty The inherent uncertainty in every open source project
M601 Community disputes might impact project viability and future High HighMAP04 The Mentor should prevent amp mitigate any conflicts inside the
community
M602 Open source projects may not stay open in future releases High HighMAP05 The originator liabilities should be strongly enforced by the
community statute
M7 Legal risks
M701 Copyright infringement High High
M702 Can open source software deployments pass an audit
M8 GPL General Public License specific development concerns
M801Software thatrsquos derived from an existing GPL project in whole or in part
might not be released under the same licenseHigh High M08 The community should regulate the licensing model
M802
Developer contamination - developer could review an existing open source
project could see an elegant solution then implement a similar function in
closed source project
High HighMAP09 Procedurals constrains for the software developers should be
enforced
M9
Current
customers
attitude
The actual customer perception could be negative High High
M12 To prevent a negative attitude Allevo should involve the customers
in the FinTP project Allevo needs their active support for a smooth and
issues less transition
ma
rke
t re
late
d r
isk
s
co
st
rela
ted
ris
ks
MAP01 The community should regulate the applicable rules and fees for
services and maintenance
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
bu
sin
es
s a
nd
le
ga
l ri
sk
s
MAP06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S1Product
related
S101 Late delivery lead time Medium MediumMAP15 Allevo should provide proper resources (funding and human
resources)
S102 Credibility loss if fail to certify with SWIFT Medium High MAP16 Should be discussedamp agreed with SWIFT
S103 Inexperienced team or allocation below needs Low HighMAP15 Allevo should provide proper resources (funding and human
resources)
S104 Improper or non efficient version management Low High MAP16 Review the current Allevo Configuration Management System
S105Poor quality if the community fails to institutionalize proper verification and
validation practices3
M06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S106 Lack of expertise in open source projects 2 Allevo should engage thoroughly selected Open Source consultants
S2Service
related
S201
The software maintenance not properly providing for bugs fixing
regulationamp standard alignment technological improvements communities
improvement requests
High HighMAP01 The community should regulate the applicable rules and fees for
services and maintenance
S202 One-time amp recurring services might be provided by unqualified resources High HighMAP17 The community should regulate the training curricula and related
expertise certification
S203 Provided services might not meet the minimal SLA performance criteria High HighMAP17 The community should regulate the training curricula and related
expertise certification
S204 Relaxed or lack of accountability of the professionals High HighMAP18 The community should regulate the employment agreement of
the professionals
S205 Lack of qualified professionals High HighMAP19 The community should ensure a balanced number of certified
professionals with the community size
S3Community
related
S301
If after disclosing FinTP the community does not enthusiastically adopt
the solution competitors might more successfully develop a similar
strategy
Medium MediumMAP20 FinTP promotion should be convincing and realistic A well
organized marketing campaign by Allevo
S302The community mentor andor early adhering members have no
undeniable prestige or are not largely trustfulMedium Medium MAP99 Project status review Ending the project could be one option
S303 The Mentor does not strongly commit for the project Medium Medium MAP99 Project status review Ending the project could be one option
S4 Legal
S401Exposure to copyright and IP infringement due to working team unaware of
the legal consequences of using third party softwareMedium Medium
MAP21 Allevo should keep records and fully document the use of open
source code
S402Copyright or intellectual property infringement can lead to injunctive relief
and monetary damagesHigh High
MAP23 Allevo should institutionalize a tight licensing and technical
control
S403 All risks related to open source compliance High HighMAP24 Allevo should appoint as soon as possible a FinTP compliance
Officer
S5 Financial
S501 Lack of financing institutions Medium MediumMAP25 Allevo should urge consultant to provide a consistent list of
potential investors
S502 Dependency on the financing institution approval Medium Medium
S503Not thoroughly planned project overlooking one or some project cost that
need to be financedMedium Medium
Sp
ec
ific
ris
ks
tec
hn
ica
lm
ark
eti
ng
leg
al
fun
din
g
MAP26 Allevo should carefully draw a consistent and eligible project for
financing
Risks
Riskspdf
FinTP - Vision and Scope
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11 Appendix - Bibliography 1 Accenture Open Source Research Geographic Findings
2 Accenture Open Source Research Industry Findings
3 Producing Open Source Software - How to Run a Successful Free Software
Project by Karl Fogel
4 Open Source Software Risks and Rewards by Gary Hein
5 A Business Case Study of Open Source Software by Carolyn A Kenwood
6 6 critical success factors for product development by Christian Wig
7 Bank 20 by Brett King
8 Managing the business risks of open innovation by Oliver Alexy and Markus
9 Product idea evaluation checklist shared by Startgass AS
10 SWIFT 2015 Strategy
11 Customers and business impact of product changes
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12 Appendix - Glossary ACH Automated Clearing House that is used to clear retail payments
between banks in a country or region
APAC Asia and Pacific
AML Anti-Money Laundering
BCampDR Business continuity amp disaster recovery
B2B Business to business
C2B Consumer to business
CET Central European Time
CMMI Capability Maturity Model Integration
CMS Configuration Management System
Coexistence The situation of multiple standards existing at the same time in the same business space Within SWIFT this refers to the coexistence between the MT and MX standards This also refers to the set of measures being taken to make the situation easier to handle by the community (publication of mapping rules translation serviceshellip)
CSM Clearing and Settlement Mechanism
CUG Closed User Group
Dictionary Part of the ISO 20022 Repository that contains all items that can be re-used during business modelling and message definition activities
EAI Enterprise Application Integration - middleware to connect applications and communication interfaces Typical EAI software includes features for mapping data between various formats enriching messages with data from other systems and orchestrating message flows
ECB European Central Bank
EMEA Europe Middle-East Africa
EPC European Payment Council
ERP Enterprise Resource Planning
EU European Union
EUCLID Connectivity to EuroClear Bank services
FIN The messaging service offered by SWIFT for the secure and reliable exchange of MT messages in store-and-forward mode By extension the syntax used to format these MTs
IP intellectual property
Interoperability Capability to easily exchange business information while using different message standards ISO 20022 promotes global use of syntax-neutral business and message components as a common denominator to achieve interoperability between standards using different syntaxes
ISO The International Organization for Standardization - an international standard-setting body composed of representatives from more than 160 national standards organizations that promulgates worldwide standards in a variety of domains aiming at facilitating cross-border exchanges of goods services and techniques
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ISO 15022 An ISO standard that describes the syntax to be used for developing securities messages used mainly to support back office related transaction flows It replaced the previous securities messaging standard ISO 7775
ISO 20022 RA Registration Authority - offers the services described in an ISO standard on behalf of and under a contractual agreement with the International Organization for Standardization
ISO 20022 Repository
Repository maintained by the ISO20022 RA which contains the financial business models message definitions and components defined in compliance with the ISO 20022 standard
ISO 20022 RMG Registration Management Group - in charge of the overall management of the ISO 20022 development and registration process in accordance with the ISO 20022 standard
ISO 20022 SEG Standards Evaluation Groups -in charge of validating candidate ISO 20022 messages within the scope of the business justification and ensuring that they address the needs of their future international community of users
ISV Independent Software Vendor
KYC Know Your Customer
MACUG Member Administered Closed User Group
Message A set of structured information exchanged between two parties involved in a financial transaction
Message component and element
A re-usable data structure used for assembling message definitions The data defined in a message component is bdquotraced‟ back to the business components and business elements In simple terms business components define the business meaning message components create data structures for messaging
MI Market Infrastructure - a system that provides services to the financial industry for trading clearing and settlement matching of financial transactions and depository functions
Middleware Software that enables data to be exchanged among different systems with standard communication components and tools for formatting mapping and processing
MT The traditional bdquotag value‟ Message Types for use on the FIN service offered by SWIFT
MX An XML message exchanged over SWIFTNet whether or not ISO 20022 compliant
OS Open source
PSP Payment service provider
QA Quality assurance
RMA Relationship Management Access
RTGS Real Time Gross Settlement System
SAA SWIFT Alliance Access
SAE SWIFT Alliance Entry
SAG SWIFT Alliance Gateway
SaaS Software as a Service
SCORE Standardized CORporate Environment
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Semantics The study of meaning usually in language The word is often used in ordinary language to denote a problem of understanding that comes down to word selection or connotation
SEPA Single Euro Payment Area
SLA Service level agreement
SME Small and Medium-sized Business(es)
SOA Service Oriented Architecture
SSB SWIFT Service Bureau
STP Straight Through Processing
SWIFT Society for Worldwide Interbank Financial Telecommunication Visit wwwswiftcom
Syntax Physical format of a message used to identify and represent the conveyed pieces of information
T2S TARGET2 Securities - an initiative of the Eurosystem It is an IT platform that aims to make settlements across national borders simpler and more cost-efficient
TARGET2 The Eurosystem-owned European Real Time Gross Settlement (RTGS) system (Trans-European Automated Real-time Gross Settlement Express Transfer System) TARGET2 is one of the largest high-value payment systems in the world
Taxonomy The classification in a hierarchical system typically organized by super type - sub type relationships also called generalization-specialization relationships or less formally parent-child relationships
TSU Trade Service Utility
TCO Total cost of ownership
Translation rules
Set of rules to be used to map the pieces of information included in a message expressed in one syntax to the equivalent message expressed in another syntax
Remit Remittances
XML eXtensible Mark-up Language - popular syntax to encode documents (or messages) electronically on the Internet XML allows communities to define their own identifiers (or tags) and format (or data type) for each component of a message
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Bureaus etc) ISV regulatory institutionsMarketing plan feasibility campaign efficiency and costs
2 MentorPreferable SWIFT
Also eligible SunGard IBM affiliation to other OS communitySWIFT decision
3 Legalcopyright Expert legal consultant and RO apprentice Cost and time shift dependent
4 Tight regulation Clear membership admission amp software contribution criteria The quality of the consultant advice
5 Marketing Actively recruiting community members Marketing plan feasibility campaign efficiency amp customer skepticism
a community portala provide content amp debate space information consolidation amp dissemination virtual
showroom subscription management support
a business analysis solution availability and maintenance by one of the
members or employed company
b press releases amp
announcementsb PR and AR b communicators availability and costs
c events c periodical conferences user focused meetings c cost dependent
6 Financing World Bank EU amp private funds Lobby amp funds availability
Item
FinTP
FinTP community
FinTP - Vision and Scope
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The Moderator this entity will consolidate its influence and prestige in the rapidly
transforming financial market It will be the parent of the deeper standardization of the
financial business crossing the bridge between financial messages conveying
between institutions up to the institutions interface with their customers This will lay
the ground for the financial integration to equal the industrial and trade distribution
chain footprint
Whats next for FinTP
After FinTP has successfully been adopted in the market on a reasonable scale the
future looks even brighter
Companies relying on a trustful standardized processing application will be able to free
up their minds amp budgets for what uniquely differentiates them in their customers‟
eyes quality of service relevance trade easiness agility of delivery risk containment
social responsibility or other distinctive factors
Once all this has settled in self-adaptive trade business systems will come forward to
close the loop between customers and their providers
42 FinTP Positioning
FinTP is a key business software that opens markets by aggressively addressing
customers with constrained investment budgets Allevo strongly believes that FinTP is
tightly knitted to SWIFT 2015 Strategy2
The payments arena in itself has reached a high level of maturity payments becoming
a commodity on these premises back-office software should no longer be a
differentiator
FinTP creates a widespread financial transactions processing platform a cheap
alternative (to the current proprietary payment systems) for an industry common
solution which will evolve into a new standardization layer
2 See Bibliography
FinTP - Vision and Scope
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FinTP shifts the competitive space and consequently the innovation drive (from back-
office and mostly financial institutions and large corporations) to SWIFT traditional and
new business areas (treasury and front-office of the banks large financial institutions
corporations and SMEs - including MFIs)
43 FinTP Applicability
The usage of FintP in several domains ndash banks micro-finance institutions CSMs corporations and public administration ndash is discussed The main building blocks provided by FinTP for the processing of financial transactions are shown in each case
For setting the scene consider the naiumlve drawing (see below figure) which depicts
1 the bank‟s applications - implementing the core products and services the banks provides to its customers (FX Lending Payments TF custody etc)
2 banking correspondent business and infrastructures they connect to to settle for example their payments
3 corporate customers or local financial institutions engaged in distributing their products and services
4 the individuals who benefit from the service of the bank directly or intermediated by partnering financial institutions or corporations - including retail chains connectivity channels that are either SWIFTNet or VPNs over internet or bank‟s own private network
FinTP - Vision and Scope
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Given the application scalability FinTP is fitted to deal with
1 B2B environment type FinTP performs transactions routing and processing between the before depicted institutions thus achieving cross industry interoperability Additionally FinTP helps the business customers to consolidate their financial or treasury operations similarly helps the retail chains to reconcile and settle the available stock with the registered sales
To exemplify ensuring SEPA Readiness for banking institutions and for their customers is briefly discussed
By 2014 banks in EURO zone should be ready to process instructions in ISO20022 format FinTP can be an efficient solution to achieve rapidly compliance with the EPC provisions
Are the bank‟s customers ready to send the instructions data in the right format Are you ready to accept this type of data Are you able to extend solutions to help your customers better preparing for SEPA instructions FinTP has the right building blocks for banks and corporations
2 B2C environment type FinTP goes further down to the end customers The individuals can interact directly in a branch or remotely using their computers tablets smart phones to provide them with personal financial portfolio management It enables them to operate on their bank account or to do shopping It also supports new financial instruments such as PayPal Google wallet Facebook UK faster payments mobile payments amp commerce M-Pesa NFC etc
FinTP applicability profiled on beneficiary type
FinTP - Vision and Scope
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a Banks
Regional and international banks are rethinking and often improving their business architecture because of strong penetration of traditionally non-financial business in the money supply chain
The banks have in general the following choices
i Stay the course This often means keep on muddling
ii Outsource the processing of financial transactions in its entirety or in parts
iii Lower the recurring costs dramatically and benefit from joint developments by implementing Open Source solutions for commoditized parts of the needed infrastructure
Allevo provides the building blocks for the processing of financial transactions (FinTP) for those organisations who want to go for the third strategic choice
Toolbox3 (see 51 Features for details) as illustrated in bellow figure
Business flow consolidation
External interfaces to market infrastructure(s)
Funds transfer (credit transfer direct debit debit instruments duplicate detection treasury flows)
Operational functionalities such as liquidity reporting accounting reconciliation AML transactions filtering remittances management competitive reports etc
All helping the bank to manage the operational risk
3 Toolbox means a comprehensive collection of ready to deploy operational features
FinTP - Vision and Scope
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Payment factory - as illustrated in the bellow figure - is the bank-centralized service for smaller financial institutions or corporations to provide payment and collections processing in compliance with regional or global regulation along with additional service (eg intra-day limits etc)
A similar type of architecture can be used to set-up a bank administrated Member Concentrator or a (SWIFT) Service Bureau or a Payment Service Provider
FinTP - Vision and Scope
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b Micro-finance institutions
Toolbox3 (see 51 Features)
Integration of micro-financing application with mobile payment operator(s) and banks It provides support for loan applications loan disbursement and repayments It integrates the mobile payments and the banking payments and as such provides working capital management Multi-MMTs amp multi country operations are also supported
FinTP - Vision and Scope
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Business Information Systems (Allevo) SRL
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c CSMs
Toolbox3 (see 51 Features)
CSMs can use FinTP (as shown in the bellow figure) to provide its customers an
effective connectivity readiness package Likewise CSMs can use FinTP to connect
themselves to other CSMs they need to
FinTP - Vision and Scope
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d Corporations
Toolbox3 (see 51 Features)
The financial or treasury department of the corporation can use FinTP (as depicted in
the figure bellow) to concentrate the processing and management of all their financial
business in one single operation window FinTP provides the building blocks for a highly
effective money supply chain between banks providers and customers Beyond that
FinTP empowers control on the working capital and financial resources
FinTP - Vision and Scope
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e Public administrations
Toolbox3 (see 51 Features)
Public debt business automation through Treasury Bonds settlement on all trade phases eg pre- sales post-
Wages and pensions payment in compliance with SEPA regulations
Structural funds financial management (in a business group managed by the State Treasury)
FinTP plays a multiple roles in the Public Administration financial business
a Bridge between the global banks secure network (SWIFTNet) and the Government
secure national network performing format conversion and business flow mapping
thus FinTP acts as a financial integrator of the different public institutions
b Interoperability gateway with the banking community and financial market
infrastructures
c Auctioning portal for the Treasury Bonds allocation and settlement for the Primary
market
d Management of the payments related to Structural Funds financed projects and to
the providers of the public institutions
e Payments (such as wages pensions state subsidies) due to individuals intermediated by banks using SWIFTRemit framework Similarly the taxes collection should be handled by the same system and framework FinTP provides means to perform the operations using either mobile devices or the internet
FinTP - Vision and Scope
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44 Key Business Objectives and Success Criteria
Today Allevo faces two major limitations in fulfilling its business objectives
1 Strong dependency on its narrow national market and thus being limited to the
known European Union and particularly Romanian practice
2 Significant allocation of the development talents to maintaining qPayIntegrator
rather than working to new business oriented products
Allevo is going to expand its business footprint and simultaneously shift its revenue
source from back-office solutions towards its customers business area (treasury front-
office) applications
To achieve this goal Allevo will focus on developing FinTP business and on gathering
a strong supporting community formed by representatives of the targeted market The
coherence of the community should be ensured by a trustful and committed
moderator
Therefore for the success of the project Allevo deems instrumental the go-to-market
process the solid take-up tempo and the quality of the community
On the FinTP side Allevo should tightly focus on
1 Understanding the community members‟ needs values and priorities in
relationship with their business competitive ecosystem
2 Improving the product management process and the technical commercial amp
distribution documentation
3 Identifying and centring the attention on strong idea generation selection and
monitoring processes
4 Elaborating the right product architecture to enable easy functional and technical
scalability maintainability diagnose native features for flexible customization
compliance to global and regional financial standards and preserving the initial
licensing structure across various customers business models
5 Strengthening project management
6 Designing coherent knowledge transfer process
7 Designing efficient customer support
As a member of this FinTP open source community Allevo will provide
1) the open source FinTP application
2) knowledge transfer (training amp consultancy) to both early adopters and to the
product development amp maintenance body (see 46 The community)
3) for a limited period of time
- support amp maintenance
- alignment to technology standards amp regulation
4) further improvements
5) contribution to relevant proofs of concept community web site conferences
articles online awareness
The power of the community will draw other vendors to partner together to ensure
market coverage each of them complementing the other through their expertise
FinTP - Vision and Scope
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FinTP distribution will be performed via the communitys portal while the initial
consultancy product installation and support services will be delivered remotely
Following the free open source software model FinTP will be available under an open
license free of charge
In designing the new products Allevo will benefit on mid and long term from the deep
insight both of FinTP internals and the structure and operation of the community
45 Market Sizing
Our evaluation of the FinTP targeted market size
- the global market size taken into account is 26100 institutions out of which
- an average FinTP engine licensing fee is euro30000 resulting in potential
maximum expenses of euro783 million
- the corresponding yearly maintenance fee is euro5400 resulting in potential
maximum expenses of euro700 million in 5 years
- the number of potential institutions adopting FinTP in the first 5 years of
availability 250 tier3 amp 2000 tier4
- consequently the savings in 5 years could reach euro675 million in license
fee and euro2025 million in maintenance fee resulting in a total of almost euro90
million
Allevo believes that (at least) during 2013 and 2014 its current income source will be
preserved while after that period the main replacement of the lost (new licensing and
recurring maintenance) fees will mainly consist of services (consulting
implementation support education) and sales of licenses for newly launched
applications
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46 The FINkers United community
The community structure comprises three main entities (as depicted in the bellow
figure)
1 The adopters (beneficiaries) consumer companies choosing to adopt the
FinTP product in compliance with the community line of business and ethical
conduct
2 The moderator the instrumental inspirational authority expected to draw both
the development vision and the guidelines of the community
3 The contributors
a institutionalized bodies eg development and maintenance test and
validation audit legal marketing
b independent contributors eg ISVs (Allevo falling under this category)
solution providers integrators or passionate developersindividuals
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5 Solution Description amp Parameters Like qPayIntegrator FinTP offers a
standard compliant processing
engine for the financial transactions
exchanged between the back-office
or ERP applications and the financial
community (banks MFIs market
infrastructures corporations)
FinTP is able to process financial
messages in both FIN and ISO20022
formats and at the same time offers
a rich set of interfaces to different
financial applications FinTP provides
compliance with various clearing and
settlement mechanisms
Consequently FinTP ensures a high
level automation of the end-to-end
financial transactions processing
51 Features
The FinTP project has two major deliverable components
1 the FinTP application itself
2 the community built around FinTP
All subsequent chapters will refer to both of these
Component code
Component description Comments
FinTP4 FinTP is a financial transactions processing engine for 3rd or 4th tier banks microfinance corporate or SMEs treasuries available as open source application Functional characteristics
1 Operational features
o Predefined flows and message formats
Includes reconciliation of confirmations with transactions
o Single and multiple funds transfer instructions securities settlement amp reconciliation (Romanian Euroclear) messages
The supported payment instruments are credit transfer direct debit debit instruments
o MTMX coexistence Based on FinTP native internal data format (ISO20022)
o Multi-BIC multi-currency
o SEPA ready (certification) Compliancy with EPC regulations for SEPA formatting and business flows (for SCT and SDD) enables bank-to-bank and bank-to-CSM settlement
4 FinTP root is Allevo equivalent product qPayIntegrator a commercially available amp practice proven (since
2005) application qPayIntegrator provides a consistent set of functionalities and it is fully aligned to both industry regulations and technology
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Component code
Component description Comments
o TARGET 2 ready Compliance with TARGET2 settlement and operations as regulated by the ECB
o SAGSAASAE SAL interfaces
Integration with SWIFTNet to enable banking business
o Liquidity reports Real time cash reports and forecasts using several criteria (currency subsidiary profit centre)
o Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
Analysis and reports of market trends based on volumes amount BIC etc along with early alerts on behaviour changes beyond the standard deviation
o Accounting reconciliation Automatic NOSTROVOSTRO accounts reconciliation intraday liquidity reports and integrated exception management
o AML (sanctions list matching)
High and low value payments filtering uses 20+ black lists and ensures their content maintainability
o Duplicate detection Detection and investigation of possible duplicates the detection window and criteria are configurable
o Remittances processing Covers banks business and operations area as well as distribution channel
o Treasury markets Automation of treasury flows (FX and money market)
o Statements Processing of SWIFT messages related to correspondent banks accounts administration
2 Technical features
o Financial message routing and monitoring
o Multi-threading capabilities
o Persistent end-to-end transactions
During each phase of the entire processing cycle permanent copies of the transaction are kept until the final completion thus avoiding any transaction duplication or loss
o Batching unpacking
o Resilience at transaction level
o Archiving
o Tracing and logging transactions and user events
o Transient errors detection and recovery
o Real-time search and reports
o Security access and user administration
o SaaS cloud ready
FinTP - Vision and Scope
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Component code
Component description Comments
FINkers United - community
Since FinTP is an application handling financial transactions the product releases and the related community should be tightly regulated and controlled As the project matures these components will be further refined The following main components of the community have been identified
‐ the moderator ‐ the product development
and maintenance body ‐ the product and
community auditor body (acting as a gatekeeper of official releases) to control and maintain the change requests integer and eliminate any malware exposures
‐ the test and validation body
‐ the legal body for defining the frame for product distribution amp licensing
‐ the marketing entity responsible for creating awareness and attracting contributors and adopters
‐ the portal used as a channel for marketing support and version control
‐ individual contributors namely ISVs solution providers developers integrators who wish to use their skills and knowledge to the benefit of the community
These tools strongly depend on the available budget and widespread
organization culture It is not mandatory for these to be open source if usage of
open source tools would mean lower quality
3) Licensing
The licensing model highly depends on the results of the open source legal and
business consultancy However we assume the following frame
‐ free of charge initial and recurring maintenance license for using FinTP
‐ FinTP does not use software components enforcing liabilities for the user
‐ consumers using FinTP source code (in part or entirely) should comply to
the licensing policy of the community
‐ the version released by the development amp maintenance body is the only
official amp to be trusted version of the community ensuring product integrity
unity and stability
4) Regulatory compliance
The regulatory compliance strongly depends on the early adaptation of new amp
changed rules via the recurring maintenance and on the quality of the audits
performed by the specific bodies of the community
Thus it is ensured that ISO20022 and FIN standards TARGET2 and TARGET2
Securities SEPA or country specific regulations (as stated respectively by
FinTP - Vision and Scope
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SWIFT standards EPC specification ECB or regional Central Banks
regulations that the community chooses to comply with) stay the most
important business specific anchors of FinTP
The FinTP design also offers support for flexible definition of new compliance
sources
5) Consultancy
The needed consultancy is twofold
‐ legal to ensure that FinTP does not infringe other licensing constraints
‐ open source specific to enable the right choice of the community type and of its governing law
The main constraint relies in choosing the right advisors true experts in the
open source industry amp with appropriate ethic profile - able to deliver as
promised The consultants have to be available 800 am divide 800 pm CET and
easily reachable - geo-location is of utmost importance Selection of the
consultant will basically be done on price assuming the right mix of expertise
and availability is achieved
6) Financing
While Allevo partially undertakes the financing of FinTP development the
ancillary consultancy necessary team education or acquisition of productivity
tools are far beyond the companys 2012 budget
To overcome possible delays in the project Allevo needs to sturdily act to
identify both the most appropriate commercial offer and additional necessary
financing source(s)
FinTP community
The community related items are members moderator legal tight regulation
marketing and financing For each of these items several assumptions and the
corresponding dependencies are provided in the following paragraphs
1) Members
We assume that the communitys members span several business profiles
(such as financial services institutions corporations market infrastructures
PSPs SSBs public administrations regulatory institutions and ISVs) sharing
the mutual focus on financial operations performance and improvement
By now after some tests on market acceptance there have been identified a
few supporters comprising financial services institutions and small ISVs
To ensure the success of building the community there is need for attracting
prestige influencers (market analysts consulting companies of scale - starting
with big four key industry providers - such as SWIFT other communities - ie
professional such as banking insurers capital market associations) and a
credible pool of financial institutions and corporations
To this end Allevo unrolls its own awareness campaign through direct
meetings publications blog posts and social media public presentations and
by officially launching the initiative in a conference focused on free of charge
financial transactions processing applications
Allevo further plans to use Sibos 2012 as opportunity to organize a less
traditional communication session gathering a relevant international panel to
FinTP - Vision and Scope
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debate the strong and weak aspects of this initiative amp to get the public involved
as much as possible
The goal is that by the end of 2012 some tens of different institutions are
committed to co-found the community and to actively contribute to establishing
the legal frame and to forming the required action bodies
2) Moderator
Allevo perceives the Moderator as the critical member of the community since
his prestige and influence will warrant the outcome of all performed activities
The moderator must commit on long term to develop the community and to
sponsor it with its share of trust
Allevo strongly believes that the Moderator should have a global footprint be a
reputable and trustful institution
3) Legalcopyright
The legal consultant and advisor needs to provide the coherent legal frame to
cover all community activities by roles and accountability While making it easy
for the members it should be more demanding as far as contributors are
concerned (though still encouraging ISVs to actively participate) It has to draw
very precise responsibilities for the independent and institutionalized bodies
(for instance product maintenance amp development and audit) and for the
Moderators status
The quality of this legal work fully relies on the expertise and experience of the
advisor
The law governing the community has to be in harmony with the European
(either French or Anglo-Saxon) legal system and with the open source legal
regulations largely practiced in other business regions (US and APAC)
4) Tight regulation
FinTP the product meant to gather a community which uses and supports it is
all about moving values between different entities Thats critical irrespective of
the amount because failing to perform properly opens the doors to arguments
amp loss of reputation with the related tangible costs Moreover the product has
to be beyond any doubt during its entire lifecycle free of any malefic
embedded functions meaning that contamination has to be avoided by all
means
Allevo strongly believes that this requirement can be attained only by tight
regulation of the community specific approval of the initially launched version
of FinTP and of the recurring contributions
This approach can be felt strange compared to most open source communities
and can lead to little interest from IT talents making them feel banned or
restricted It remains the Moderator‟s duty to make them feel privileged if
accepted and rewarded as such However this censorship is a price to be paid
since the community and the project are about processing transactions
initiating value transfer
FinTP - Vision and Scope
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5) Marketing
The community needs to have the clear objective of spreading both
geographically and over a consistent number of industries
To achieve this goal the community should be able to actively provide open
access to relevant information (including explanations of concepts hands-on
evaluation) to non-members and to also answer their questions on FinTP and
on the community itself
The same level of information needs to be ensured for the members to whom
supplementary updates on the community events decisions available
releases patches and fixes should be made available They need to also get
focused forum discussions on specific business areas and subsequent
processes need to be distributed
These functionalities have to be hosted on the community‟s dedicated portal
This portal has to provide content dialogue space information consolidation
and broadcasting It must be a virtual showroom for FinTP It needs to host
documents and virtual meetings subscription management and product
support amp development
The community has to be able to run its own meetings enabling direct contact
between active members or their representatives
Meaningful press releases have to be regularly issued along with actively
maintaining a productive relationship with market analysts to consolidate a
clear public understanding of the community spirit and goals
6) Financing
Its all about money-money-money since at least for the first 2-3 years the
community needs to be financed
Upon reaching maturity the institutionalized bodies of the community can earn their income from collateral activities - such as organizing conferences providing education and specialized support services - either for the initial FinTP installations and customizations or for recurring services requested by the members An alternative can be trialling and certifying interested providers enabling them to perform support services for FinTP
Thus who could pump money into this project It could be one or a mix of
‐ World Bank - if governmental programs are implied and provided a proper project which convincingly demonstrates the beneficed social impact
‐ EU development funding
‐ interested wealthy members of the community
The most critical dependencies are external such as (arranged according to
their impact) availability of funds for building the community finding trustful
and skilled open source consultants (legal business community licensing)
The synthetic view of the main assumptions and dependencies is provided in
the attached file
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Maintenance amp user support 1-Jan-13 Marketing inst action
4 Activities
Initial planning amp budgeting 15-Dec-12 document
Roles allocation 15-Dec-12 document
Community inst Implementation 15-Dec-12 action
Awareness campaign 1-Jan-13 action ongoing process
Members recruiting 1-Jan-13 action ongoing process
Continued operation 1-Jan-13 action ongoing process
Service sales 1-Jan-13 action ongoing process
Future development planning 1-Jan-13 document ongoing process
5 Resource allocation
If existing institution - allocation 15-Dec-12 action
If newly formed - recruiting 15-Dec-12 action
Make FinTP available to comm 1-Jan-13 action ongoing process
Start community financing 1-Jan-13 action ongoing process
6 Financing
Initial investment 1-Jan-13 action secured by that date
First period of comm operation 31-Aug-13 action secured by that date
co
mm
un
ity
Project approach
Project approachpdf
FinTP - Vision and Scope
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8 Scope This chapter deals with the phased availability of various FinTP features again considered from application and community points of view
In the first phase (due Dec 2012) the core of FinTP application is ready including the following technical features
- financial message routing between services and monitoring of exchanges
- multi-threading capabilities
- persistent end-to-end transactions
- batching de-batching
- archiving
- tracing and logging of transactions and user events
- transient errors detection and recovery
- real time search and reports
- security access and user administration
Similarly during the first phase the main community components need to be in place
- moderator
- software development and maintenance body (Allevo also available in the first and second phase of the project)
- test amp validation body
- (software) auditor
- legal
- main contributors (Allevo falls into this position)
- platform
- marketing
In the second phase (Dec2012 - Dec2013) several operational features of FinTP will be added
- predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit instruments securities settlement reconciliations
- MTMX coexistence
- multi-BIC multi-currency
- SEPA ready certification
- TARGET2 ready
- SAGSAASAE interfaces
- duplicate detection
- liquidity reports
- competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
- accounting reconciliation
- AML (sanctions list matching)
- SaaS and cloud ready
along with resilience and start of maintenance and knowledge transfer (the last two obviously continuing in the next phases)
FinTP - Vision and Scope
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The synthetic view of the project scope is provided in the following table
Crt No
Feature Activity Phase1 31Dec12
Phase2 31Dec13
Phase3 31Dec14
Phase4 31Dec15
Fin
TP
A Operational features
1
Predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit Instruments bonds (Romanian Euroclear) reconciliations
2 MTMX coexistence
3 Multi-BIC multi-currency
4 SaaS ready cloud ready
5 SEPA ready certification
6 TARGET2 ready
7 SAGSAASAE interfaces
8 Liquidity reports
9 Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
10 Accounting reconciliation
11 AML (sanctions list matching)
12 Duplicate detection
B Technical features
1 Routing financial message between services and monitoring of data flows
2 Multi-threading capabilities
3 Persistent end-to-end transactions
4 Batching de-batching
5 Resilience (at transaction level)
6 Archiving
7 Tracing and logging of transactions and user events
8 Transient errors detection and recovery
9 Real time search and reports
10 Security access and user administration
C Other activities
1 FinTP maintenance
2 Knowledge transfer
Co
mm
un
ity
Establishing the institutionscomponents
1 Mentor
2 Software Auditor amp Provider
3 Legal service
4 Members
5 Allevo initial role
6 Platform
7 Marketing
FinTP - Vision and Scope
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9 Limitations The main limitations in the economy of the project consist of phasing several FinTP
operational features for the following year (eg debit instruments liquidity reporting
AML filtering accounting reconciliation resilience SaaS ready cloud ready etc)
At the same time for features intended to front-office usage like Remit it was not yet
decided to publish them as open source product
The synthetic view of the main limitations is provided in the following table
Crt
nrItem Limitation Exclusion Comments
1
FinTP
a
Operational features Available in 2013
b
Remit Not included in
open source
package
2
Community
a
Rules Tightly controlled The statute should
ensure the right
balance between
safety and free
association of talents
Given the significant budget allocation (at least from Allevo perspective) the strong
requirement to meet the maximum ceiling will limit the FinTP product initial preparation
and maintenance expenses
Community wise the obligation of a tight regulated statute will have to ensure the right
balance between safety (mandatory in an environment dealing with financial
transactions) and a free association of talents (typical in an open source community)
In the first period after launch (at least the first two years) of the initiative the
maintenance and support activities will be provided by Allevo (as initial contributor)
A major restriction would be to meet the budgeted development and maintenance
FinTP - Vision and Scope
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10 Appendix - Risks
Specific risks
1 Product
a Long delivery lead time This is a medium probability and impact risk however Allevo should make available the needed resources and motivate the entire team for the job
b Credibility loss if FinTP fails to further become certified on meaningful operations andor business tracks (ie SWIFT business certification tracks or similar) The single possible containment is lobbying if the application certification program rejects open source products Anyway the impact is very important and its materialization should be avoided
c Low quality of the allocated team and improper version management are highly unlikely to occur as long as the formal transfer of responsibility is smoothly made from Allevo to the corresponding body put in place by the community The real hidden risk is that this process could take too long and it thus has a very high impact
d Poor FinTP quality may result if the community fails to institutionalize proper quality assurance (QA) and verification amp validation (VampV) processes This is most expected not to happen but if it does the impact is at least medium The single path to overcome this risk consists in a professional approach to these items based on institutionalizing practice proven QA and VampV processes
e Allevo lack of expertise in the open source business This can be contained by carefully selecting trustful amp truly expert consultants Otherwise it means more money longer time spent on project and expenses without proper return
2 Service
a The software maintenance does not properly deliver as expected ie on-time and on-quality bug fixing regulation amp standards alignment and productivity amp technological improvement The key to contain this risk materialization is the community status having provisions to neatly provide maintenance and further development of the rules for FinTP as well as the applicable rules and fees for the ancillary services
b Low quality and safety of the service received by the members of the community To avoid the risk of performing the one-time amp recurring support services by under-prepared professionals the community has to rule the process of training and qualifying the companies willing to contribute in this area
c Not meeting the minimal SLA criteria The community should regulate and periodically revise the training curricula and to further audit both the teachers and the certified experts to ensure the service level agreements are met
d Under motivated service providing professionals - up to the level of not feeling the high impact of their activity The community status must provide guidance to the contributors on the minimal standards the professionals should meet
FinTP - Vision and Scope
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e Constrained expert resource pool This risk could be overcome by the communitys policy to ensure at all time a balanced number of motivated experts to the communitys size Failing to do so may result in high negative impact of the community business and public perception
3 Community
a Emergence of a parallel competitive community If the optimal timing between publically disclosing FinTP and community take-off is not achieved then there are high chances that following a competitive initiative other entrepreneurs successfully launch their own similar or derived community This could be avoided by periodical reviews of the progress of both FinTP and community status and deciding whether the project needs to be put on hold or not
b Unfit reputation of the Moderator or main contributors If either the Moderator or the initial contributors are not beyond any dispute and are reputable institutes then there is certainly something rotten in Denmark and the project should be put on-hold
c No commitment from the Moderator‟s side Similarly if the Moderator does not commit to the project it means that Denmark has a serious problem to solve The project should relinquish until the matter is fixed
4 Legal
a Misuse of copyright and intellectual property (IP)The assigned working team could not be aware of the limitations and liabilities of using (entirely or partially) third party software this risk can be contained by delivering the right training providing proper working procedures carefully recording and documenting the use of open source code and carefully cross-scanning
b Injunctive relief and financial damages can be caused by not properly and continuously controlling the use of third party open source code resulting in copyright or IP infringement There are two containment measures which can be taken tighten the compliance check during the product lifecycle or apply the sanction policy as to set an example
c The competition starts a class action - this may result in delaying the project
5 Financing
a Lack of long term financing institutions Allevo should urge its consultant to identify and draw a reasonable list of financial options institutions
b Exceeding the budget given that this type of project has no precedent in Allevo and to avoid exposing to the dependency on engagement to financial institutions or to commitments beyond the existing budget a further carefully drawn project plan is needed along with its explicit approval from the board of the company
Market related risks
1 False expectations
a Expensive services Not everything is free aside the initial and maintenance free licensing the training the support and other professional services can amount to more than in general expected Allevo rates this risk as medium possible but with low impact as long as the law governing the community and its initial period of operation will consecrate fair market prices and competitive sources of contribution
FinTP - Vision and Scope
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b Hidden costs for patches updates and upgrades While of similarly weight in terms of probability and impact this should be no real concern as long as the law governing the community clearly provides for free and accountable maintenance
2 Poor image on quality
a Too many releases making FinTP hard to manage and unsafe to operate Given proper regulation of the community and the mature root of FinTP Allevo disregards the possibility of this risk to materialize However if this were to happen this is a high impact risk and by all means should be avoided
b Backward technological (in)compatibility looks to us as a low risk in all respects and within organizations applying practice proven software engineering processes and professional - accountable team this is not likely to materialize
c Support can be perceived as the highest impact risk for FinTP This can be overcome by tight regulation of the commercial and professional conditions to deliver the service (for instance only qualified organizations should be recommended to members for supporting FinTP)
d SLA and accountability for both internally or externally performed services is closely correlated to the previous risk and the community status should provide the support for growing a community of competencies and accountable professionals around FinTP Periodical auditing (by the specialized community body) of this pool of professionals will further ensure the confidence that the skills are preserved at the required level
e Code fragmentation and forking is a high impact risk with a low probability of happening in the initial period provided the knowledge transfer is done orderly and in an institutionalized manner
3 Inherent uncertainty
a Community disputes can jeopardize its cohesion the project viability and future This is a high impact possibly high probability risk and it is the definite role of the Moderator to feel prevent and while materializing mitigate any conflicting situation
b FinTP going commercial post-launch This is a huge impact possibly high occurrence probability but manageable with the right legal instruments provisioned in the community
c Loss of alignment to industry standards and regulations This risk has medium probability and medium impact given the assumption that the community is tightly regulated and the working bodies institutionalized and gathering professionals
4 Legal
Copyright infringement given Allevo experience in the open source business this risk is highly probable and has a high impact on FinTP especially if mistakes are made in the launching phase Similarly if during the product maintenance and further development phase the community fails to institutionalize proper formal software development processes (covering all FinTP lifecycle phases) based on industry practice proven model(s) Supplementary the expert code scanning audit for compliance is the single resort to preclude external software source misuse
FinTP - Vision and Scope
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5 GPL specific
a Noncompliance to the GPL license If GPL license is used the product should further distribute in compliance with this part provisions High impact and probability but manageable if proper software development processes are used and if the statute clearly defines the licensing model for FinTP
b FinTP unconformity The risk that software engineers get inspired by a chic solution which they import and emulate similarly in FinTP And this is also highly possible since les grands esprits se rencontre
6 Existing customers attitude
Anger for having paid for something which now is free The existent customers can be concerned about the future of their installed system its further development (in one word its future) and on the quality of the service (SLA including) Some recent adopters can possibly be furious for spending their money on buying licenses for a piece of software that differently packaged becomes free of charge
For the first situation the single best solution for Allevo is to ensure a smooth transition from the current status to the new solution deployed Also highly probable Allevo should provide for simultaneous (for at most one more year) maintenance of both FinTP and for qPayIntegrator
For the 2012 new qPayIntegrator adopters Allevo should transparently state the product‟s future and propose a commercially attractive migration towards FinTP when it becomes publically available (like the option for the installation migration and recurring services) The decision should clearly stay with the customer if he still buys Allevo licenses delays the implementation until FinTP is available or if he goes for a competitive solution
In other words the key to mitigate the existing customer perception is switching places and discarding if the situation proves to be uncomfortable
Bottom-line is that to avoid most of the risks the FinTP community must be a rather tightly controlled one though still opened to anyone willingly abiding to the rules
The synthetic view of the main risks their assigned probability impact and the corresponding containment approach is provided in the attached file
Risk IDRisk
CategoryRisk
Probability
(High
Medium
Low)
Severity
(High
Medium
Low)
Containment (Mitigation Action Proposed)
M1Free as in a
Free Puppy
M101
The training service amp support cost could account more than the
commercial product its replacing (application software is typically 30 of
the total cost of ownership of most projects)
Medium Low
M102 Hidden costs ie charge for patches updates and upgrades Medium Low
M2Frequent
updates
M201
Projects might be updated frequently - as often as everyday Too frequent
updates could have a negative impact on the implementation
interoperability and support
Low HighMAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M3Backwards
compatibility
M301 Less accountability Low LowMAP03 Access to prior versions of source code (additional in-house
development and support procedures might be necessary)
M4Support
related risks
M401Support could be perceived as the biggest issue with open source
software deploymentsHigh High
M402 Internal External Accountability SLAs High High
M403Code fragmentation or forking if the community fails to institutionalize
corporate like formal structureHigh High
M404Support could require greater involvement and different skills set from
operations staffMedium Medium
M5Community
immaturity Low Low
M501Could generate incompatibility of FinTP with industry standards amp
regulationsMedium Medium
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M6 Uncertainty The inherent uncertainty in every open source project
M601 Community disputes might impact project viability and future High HighMAP04 The Mentor should prevent amp mitigate any conflicts inside the
community
M602 Open source projects may not stay open in future releases High HighMAP05 The originator liabilities should be strongly enforced by the
community statute
M7 Legal risks
M701 Copyright infringement High High
M702 Can open source software deployments pass an audit
M8 GPL General Public License specific development concerns
M801Software thatrsquos derived from an existing GPL project in whole or in part
might not be released under the same licenseHigh High M08 The community should regulate the licensing model
M802
Developer contamination - developer could review an existing open source
project could see an elegant solution then implement a similar function in
closed source project
High HighMAP09 Procedurals constrains for the software developers should be
enforced
M9
Current
customers
attitude
The actual customer perception could be negative High High
M12 To prevent a negative attitude Allevo should involve the customers
in the FinTP project Allevo needs their active support for a smooth and
issues less transition
ma
rke
t re
late
d r
isk
s
co
st
rela
ted
ris
ks
MAP01 The community should regulate the applicable rules and fees for
services and maintenance
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
bu
sin
es
s a
nd
le
ga
l ri
sk
s
MAP06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S1Product
related
S101 Late delivery lead time Medium MediumMAP15 Allevo should provide proper resources (funding and human
resources)
S102 Credibility loss if fail to certify with SWIFT Medium High MAP16 Should be discussedamp agreed with SWIFT
S103 Inexperienced team or allocation below needs Low HighMAP15 Allevo should provide proper resources (funding and human
resources)
S104 Improper or non efficient version management Low High MAP16 Review the current Allevo Configuration Management System
S105Poor quality if the community fails to institutionalize proper verification and
validation practices3
M06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S106 Lack of expertise in open source projects 2 Allevo should engage thoroughly selected Open Source consultants
S2Service
related
S201
The software maintenance not properly providing for bugs fixing
regulationamp standard alignment technological improvements communities
improvement requests
High HighMAP01 The community should regulate the applicable rules and fees for
services and maintenance
S202 One-time amp recurring services might be provided by unqualified resources High HighMAP17 The community should regulate the training curricula and related
expertise certification
S203 Provided services might not meet the minimal SLA performance criteria High HighMAP17 The community should regulate the training curricula and related
expertise certification
S204 Relaxed or lack of accountability of the professionals High HighMAP18 The community should regulate the employment agreement of
the professionals
S205 Lack of qualified professionals High HighMAP19 The community should ensure a balanced number of certified
professionals with the community size
S3Community
related
S301
If after disclosing FinTP the community does not enthusiastically adopt
the solution competitors might more successfully develop a similar
strategy
Medium MediumMAP20 FinTP promotion should be convincing and realistic A well
organized marketing campaign by Allevo
S302The community mentor andor early adhering members have no
undeniable prestige or are not largely trustfulMedium Medium MAP99 Project status review Ending the project could be one option
S303 The Mentor does not strongly commit for the project Medium Medium MAP99 Project status review Ending the project could be one option
S4 Legal
S401Exposure to copyright and IP infringement due to working team unaware of
the legal consequences of using third party softwareMedium Medium
MAP21 Allevo should keep records and fully document the use of open
source code
S402Copyright or intellectual property infringement can lead to injunctive relief
and monetary damagesHigh High
MAP23 Allevo should institutionalize a tight licensing and technical
control
S403 All risks related to open source compliance High HighMAP24 Allevo should appoint as soon as possible a FinTP compliance
Officer
S5 Financial
S501 Lack of financing institutions Medium MediumMAP25 Allevo should urge consultant to provide a consistent list of
potential investors
S502 Dependency on the financing institution approval Medium Medium
S503Not thoroughly planned project overlooking one or some project cost that
need to be financedMedium Medium
Sp
ec
ific
ris
ks
tec
hn
ica
lm
ark
eti
ng
leg
al
fun
din
g
MAP26 Allevo should carefully draw a consistent and eligible project for
financing
Risks
Riskspdf
FinTP - Vision and Scope
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11 Appendix - Bibliography 1 Accenture Open Source Research Geographic Findings
2 Accenture Open Source Research Industry Findings
3 Producing Open Source Software - How to Run a Successful Free Software
Project by Karl Fogel
4 Open Source Software Risks and Rewards by Gary Hein
5 A Business Case Study of Open Source Software by Carolyn A Kenwood
6 6 critical success factors for product development by Christian Wig
7 Bank 20 by Brett King
8 Managing the business risks of open innovation by Oliver Alexy and Markus
9 Product idea evaluation checklist shared by Startgass AS
10 SWIFT 2015 Strategy
11 Customers and business impact of product changes
FinTP - Vision and Scope
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12 Appendix - Glossary ACH Automated Clearing House that is used to clear retail payments
between banks in a country or region
APAC Asia and Pacific
AML Anti-Money Laundering
BCampDR Business continuity amp disaster recovery
B2B Business to business
C2B Consumer to business
CET Central European Time
CMMI Capability Maturity Model Integration
CMS Configuration Management System
Coexistence The situation of multiple standards existing at the same time in the same business space Within SWIFT this refers to the coexistence between the MT and MX standards This also refers to the set of measures being taken to make the situation easier to handle by the community (publication of mapping rules translation serviceshellip)
CSM Clearing and Settlement Mechanism
CUG Closed User Group
Dictionary Part of the ISO 20022 Repository that contains all items that can be re-used during business modelling and message definition activities
EAI Enterprise Application Integration - middleware to connect applications and communication interfaces Typical EAI software includes features for mapping data between various formats enriching messages with data from other systems and orchestrating message flows
ECB European Central Bank
EMEA Europe Middle-East Africa
EPC European Payment Council
ERP Enterprise Resource Planning
EU European Union
EUCLID Connectivity to EuroClear Bank services
FIN The messaging service offered by SWIFT for the secure and reliable exchange of MT messages in store-and-forward mode By extension the syntax used to format these MTs
IP intellectual property
Interoperability Capability to easily exchange business information while using different message standards ISO 20022 promotes global use of syntax-neutral business and message components as a common denominator to achieve interoperability between standards using different syntaxes
ISO The International Organization for Standardization - an international standard-setting body composed of representatives from more than 160 national standards organizations that promulgates worldwide standards in a variety of domains aiming at facilitating cross-border exchanges of goods services and techniques
FinTP - Vision and Scope
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ISO 15022 An ISO standard that describes the syntax to be used for developing securities messages used mainly to support back office related transaction flows It replaced the previous securities messaging standard ISO 7775
ISO 20022 RA Registration Authority - offers the services described in an ISO standard on behalf of and under a contractual agreement with the International Organization for Standardization
ISO 20022 Repository
Repository maintained by the ISO20022 RA which contains the financial business models message definitions and components defined in compliance with the ISO 20022 standard
ISO 20022 RMG Registration Management Group - in charge of the overall management of the ISO 20022 development and registration process in accordance with the ISO 20022 standard
ISO 20022 SEG Standards Evaluation Groups -in charge of validating candidate ISO 20022 messages within the scope of the business justification and ensuring that they address the needs of their future international community of users
ISV Independent Software Vendor
KYC Know Your Customer
MACUG Member Administered Closed User Group
Message A set of structured information exchanged between two parties involved in a financial transaction
Message component and element
A re-usable data structure used for assembling message definitions The data defined in a message component is bdquotraced‟ back to the business components and business elements In simple terms business components define the business meaning message components create data structures for messaging
MI Market Infrastructure - a system that provides services to the financial industry for trading clearing and settlement matching of financial transactions and depository functions
Middleware Software that enables data to be exchanged among different systems with standard communication components and tools for formatting mapping and processing
MT The traditional bdquotag value‟ Message Types for use on the FIN service offered by SWIFT
MX An XML message exchanged over SWIFTNet whether or not ISO 20022 compliant
OS Open source
PSP Payment service provider
QA Quality assurance
RMA Relationship Management Access
RTGS Real Time Gross Settlement System
SAA SWIFT Alliance Access
SAE SWIFT Alliance Entry
SAG SWIFT Alliance Gateway
SaaS Software as a Service
SCORE Standardized CORporate Environment
FinTP - Vision and Scope
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Semantics The study of meaning usually in language The word is often used in ordinary language to denote a problem of understanding that comes down to word selection or connotation
SEPA Single Euro Payment Area
SLA Service level agreement
SME Small and Medium-sized Business(es)
SOA Service Oriented Architecture
SSB SWIFT Service Bureau
STP Straight Through Processing
SWIFT Society for Worldwide Interbank Financial Telecommunication Visit wwwswiftcom
Syntax Physical format of a message used to identify and represent the conveyed pieces of information
T2S TARGET2 Securities - an initiative of the Eurosystem It is an IT platform that aims to make settlements across national borders simpler and more cost-efficient
TARGET2 The Eurosystem-owned European Real Time Gross Settlement (RTGS) system (Trans-European Automated Real-time Gross Settlement Express Transfer System) TARGET2 is one of the largest high-value payment systems in the world
Taxonomy The classification in a hierarchical system typically organized by super type - sub type relationships also called generalization-specialization relationships or less formally parent-child relationships
TSU Trade Service Utility
TCO Total cost of ownership
Translation rules
Set of rules to be used to map the pieces of information included in a message expressed in one syntax to the equivalent message expressed in another syntax
Remit Remittances
XML eXtensible Mark-up Language - popular syntax to encode documents (or messages) electronically on the Internet XML allows communities to define their own identifiers (or tags) and format (or data type) for each component of a message
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Bureaus etc) ISV regulatory institutionsMarketing plan feasibility campaign efficiency and costs
2 MentorPreferable SWIFT
Also eligible SunGard IBM affiliation to other OS communitySWIFT decision
3 Legalcopyright Expert legal consultant and RO apprentice Cost and time shift dependent
4 Tight regulation Clear membership admission amp software contribution criteria The quality of the consultant advice
5 Marketing Actively recruiting community members Marketing plan feasibility campaign efficiency amp customer skepticism
a community portala provide content amp debate space information consolidation amp dissemination virtual
showroom subscription management support
a business analysis solution availability and maintenance by one of the
members or employed company
b press releases amp
announcementsb PR and AR b communicators availability and costs
c events c periodical conferences user focused meetings c cost dependent
6 Financing World Bank EU amp private funds Lobby amp funds availability
Item
FinTP
FinTP community
FinTP - Vision and Scope
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FinTP shifts the competitive space and consequently the innovation drive (from back-
office and mostly financial institutions and large corporations) to SWIFT traditional and
new business areas (treasury and front-office of the banks large financial institutions
corporations and SMEs - including MFIs)
43 FinTP Applicability
The usage of FintP in several domains ndash banks micro-finance institutions CSMs corporations and public administration ndash is discussed The main building blocks provided by FinTP for the processing of financial transactions are shown in each case
For setting the scene consider the naiumlve drawing (see below figure) which depicts
1 the bank‟s applications - implementing the core products and services the banks provides to its customers (FX Lending Payments TF custody etc)
2 banking correspondent business and infrastructures they connect to to settle for example their payments
3 corporate customers or local financial institutions engaged in distributing their products and services
4 the individuals who benefit from the service of the bank directly or intermediated by partnering financial institutions or corporations - including retail chains connectivity channels that are either SWIFTNet or VPNs over internet or bank‟s own private network
FinTP - Vision and Scope
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Given the application scalability FinTP is fitted to deal with
1 B2B environment type FinTP performs transactions routing and processing between the before depicted institutions thus achieving cross industry interoperability Additionally FinTP helps the business customers to consolidate their financial or treasury operations similarly helps the retail chains to reconcile and settle the available stock with the registered sales
To exemplify ensuring SEPA Readiness for banking institutions and for their customers is briefly discussed
By 2014 banks in EURO zone should be ready to process instructions in ISO20022 format FinTP can be an efficient solution to achieve rapidly compliance with the EPC provisions
Are the bank‟s customers ready to send the instructions data in the right format Are you ready to accept this type of data Are you able to extend solutions to help your customers better preparing for SEPA instructions FinTP has the right building blocks for banks and corporations
2 B2C environment type FinTP goes further down to the end customers The individuals can interact directly in a branch or remotely using their computers tablets smart phones to provide them with personal financial portfolio management It enables them to operate on their bank account or to do shopping It also supports new financial instruments such as PayPal Google wallet Facebook UK faster payments mobile payments amp commerce M-Pesa NFC etc
FinTP applicability profiled on beneficiary type
FinTP - Vision and Scope
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a Banks
Regional and international banks are rethinking and often improving their business architecture because of strong penetration of traditionally non-financial business in the money supply chain
The banks have in general the following choices
i Stay the course This often means keep on muddling
ii Outsource the processing of financial transactions in its entirety or in parts
iii Lower the recurring costs dramatically and benefit from joint developments by implementing Open Source solutions for commoditized parts of the needed infrastructure
Allevo provides the building blocks for the processing of financial transactions (FinTP) for those organisations who want to go for the third strategic choice
Toolbox3 (see 51 Features for details) as illustrated in bellow figure
Business flow consolidation
External interfaces to market infrastructure(s)
Funds transfer (credit transfer direct debit debit instruments duplicate detection treasury flows)
Operational functionalities such as liquidity reporting accounting reconciliation AML transactions filtering remittances management competitive reports etc
All helping the bank to manage the operational risk
3 Toolbox means a comprehensive collection of ready to deploy operational features
FinTP - Vision and Scope
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Payment factory - as illustrated in the bellow figure - is the bank-centralized service for smaller financial institutions or corporations to provide payment and collections processing in compliance with regional or global regulation along with additional service (eg intra-day limits etc)
A similar type of architecture can be used to set-up a bank administrated Member Concentrator or a (SWIFT) Service Bureau or a Payment Service Provider
FinTP - Vision and Scope
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b Micro-finance institutions
Toolbox3 (see 51 Features)
Integration of micro-financing application with mobile payment operator(s) and banks It provides support for loan applications loan disbursement and repayments It integrates the mobile payments and the banking payments and as such provides working capital management Multi-MMTs amp multi country operations are also supported
FinTP - Vision and Scope
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c CSMs
Toolbox3 (see 51 Features)
CSMs can use FinTP (as shown in the bellow figure) to provide its customers an
effective connectivity readiness package Likewise CSMs can use FinTP to connect
themselves to other CSMs they need to
FinTP - Vision and Scope
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d Corporations
Toolbox3 (see 51 Features)
The financial or treasury department of the corporation can use FinTP (as depicted in
the figure bellow) to concentrate the processing and management of all their financial
business in one single operation window FinTP provides the building blocks for a highly
effective money supply chain between banks providers and customers Beyond that
FinTP empowers control on the working capital and financial resources
FinTP - Vision and Scope
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e Public administrations
Toolbox3 (see 51 Features)
Public debt business automation through Treasury Bonds settlement on all trade phases eg pre- sales post-
Wages and pensions payment in compliance with SEPA regulations
Structural funds financial management (in a business group managed by the State Treasury)
FinTP plays a multiple roles in the Public Administration financial business
a Bridge between the global banks secure network (SWIFTNet) and the Government
secure national network performing format conversion and business flow mapping
thus FinTP acts as a financial integrator of the different public institutions
b Interoperability gateway with the banking community and financial market
infrastructures
c Auctioning portal for the Treasury Bonds allocation and settlement for the Primary
market
d Management of the payments related to Structural Funds financed projects and to
the providers of the public institutions
e Payments (such as wages pensions state subsidies) due to individuals intermediated by banks using SWIFTRemit framework Similarly the taxes collection should be handled by the same system and framework FinTP provides means to perform the operations using either mobile devices or the internet
FinTP - Vision and Scope
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44 Key Business Objectives and Success Criteria
Today Allevo faces two major limitations in fulfilling its business objectives
1 Strong dependency on its narrow national market and thus being limited to the
known European Union and particularly Romanian practice
2 Significant allocation of the development talents to maintaining qPayIntegrator
rather than working to new business oriented products
Allevo is going to expand its business footprint and simultaneously shift its revenue
source from back-office solutions towards its customers business area (treasury front-
office) applications
To achieve this goal Allevo will focus on developing FinTP business and on gathering
a strong supporting community formed by representatives of the targeted market The
coherence of the community should be ensured by a trustful and committed
moderator
Therefore for the success of the project Allevo deems instrumental the go-to-market
process the solid take-up tempo and the quality of the community
On the FinTP side Allevo should tightly focus on
1 Understanding the community members‟ needs values and priorities in
relationship with their business competitive ecosystem
2 Improving the product management process and the technical commercial amp
distribution documentation
3 Identifying and centring the attention on strong idea generation selection and
monitoring processes
4 Elaborating the right product architecture to enable easy functional and technical
scalability maintainability diagnose native features for flexible customization
compliance to global and regional financial standards and preserving the initial
licensing structure across various customers business models
5 Strengthening project management
6 Designing coherent knowledge transfer process
7 Designing efficient customer support
As a member of this FinTP open source community Allevo will provide
1) the open source FinTP application
2) knowledge transfer (training amp consultancy) to both early adopters and to the
product development amp maintenance body (see 46 The community)
3) for a limited period of time
- support amp maintenance
- alignment to technology standards amp regulation
4) further improvements
5) contribution to relevant proofs of concept community web site conferences
articles online awareness
The power of the community will draw other vendors to partner together to ensure
market coverage each of them complementing the other through their expertise
FinTP - Vision and Scope
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FinTP distribution will be performed via the communitys portal while the initial
consultancy product installation and support services will be delivered remotely
Following the free open source software model FinTP will be available under an open
license free of charge
In designing the new products Allevo will benefit on mid and long term from the deep
insight both of FinTP internals and the structure and operation of the community
45 Market Sizing
Our evaluation of the FinTP targeted market size
- the global market size taken into account is 26100 institutions out of which
- an average FinTP engine licensing fee is euro30000 resulting in potential
maximum expenses of euro783 million
- the corresponding yearly maintenance fee is euro5400 resulting in potential
maximum expenses of euro700 million in 5 years
- the number of potential institutions adopting FinTP in the first 5 years of
availability 250 tier3 amp 2000 tier4
- consequently the savings in 5 years could reach euro675 million in license
fee and euro2025 million in maintenance fee resulting in a total of almost euro90
million
Allevo believes that (at least) during 2013 and 2014 its current income source will be
preserved while after that period the main replacement of the lost (new licensing and
recurring maintenance) fees will mainly consist of services (consulting
implementation support education) and sales of licenses for newly launched
applications
FinTP - Vision and Scope
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46 The FINkers United community
The community structure comprises three main entities (as depicted in the bellow
figure)
1 The adopters (beneficiaries) consumer companies choosing to adopt the
FinTP product in compliance with the community line of business and ethical
conduct
2 The moderator the instrumental inspirational authority expected to draw both
the development vision and the guidelines of the community
3 The contributors
a institutionalized bodies eg development and maintenance test and
validation audit legal marketing
b independent contributors eg ISVs (Allevo falling under this category)
solution providers integrators or passionate developersindividuals
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5 Solution Description amp Parameters Like qPayIntegrator FinTP offers a
standard compliant processing
engine for the financial transactions
exchanged between the back-office
or ERP applications and the financial
community (banks MFIs market
infrastructures corporations)
FinTP is able to process financial
messages in both FIN and ISO20022
formats and at the same time offers
a rich set of interfaces to different
financial applications FinTP provides
compliance with various clearing and
settlement mechanisms
Consequently FinTP ensures a high
level automation of the end-to-end
financial transactions processing
51 Features
The FinTP project has two major deliverable components
1 the FinTP application itself
2 the community built around FinTP
All subsequent chapters will refer to both of these
Component code
Component description Comments
FinTP4 FinTP is a financial transactions processing engine for 3rd or 4th tier banks microfinance corporate or SMEs treasuries available as open source application Functional characteristics
1 Operational features
o Predefined flows and message formats
Includes reconciliation of confirmations with transactions
o Single and multiple funds transfer instructions securities settlement amp reconciliation (Romanian Euroclear) messages
The supported payment instruments are credit transfer direct debit debit instruments
o MTMX coexistence Based on FinTP native internal data format (ISO20022)
o Multi-BIC multi-currency
o SEPA ready (certification) Compliancy with EPC regulations for SEPA formatting and business flows (for SCT and SDD) enables bank-to-bank and bank-to-CSM settlement
4 FinTP root is Allevo equivalent product qPayIntegrator a commercially available amp practice proven (since
2005) application qPayIntegrator provides a consistent set of functionalities and it is fully aligned to both industry regulations and technology
FinTP - Vision and Scope
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Component code
Component description Comments
o TARGET 2 ready Compliance with TARGET2 settlement and operations as regulated by the ECB
o SAGSAASAE SAL interfaces
Integration with SWIFTNet to enable banking business
o Liquidity reports Real time cash reports and forecasts using several criteria (currency subsidiary profit centre)
o Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
Analysis and reports of market trends based on volumes amount BIC etc along with early alerts on behaviour changes beyond the standard deviation
o Accounting reconciliation Automatic NOSTROVOSTRO accounts reconciliation intraday liquidity reports and integrated exception management
o AML (sanctions list matching)
High and low value payments filtering uses 20+ black lists and ensures their content maintainability
o Duplicate detection Detection and investigation of possible duplicates the detection window and criteria are configurable
o Remittances processing Covers banks business and operations area as well as distribution channel
o Treasury markets Automation of treasury flows (FX and money market)
o Statements Processing of SWIFT messages related to correspondent banks accounts administration
2 Technical features
o Financial message routing and monitoring
o Multi-threading capabilities
o Persistent end-to-end transactions
During each phase of the entire processing cycle permanent copies of the transaction are kept until the final completion thus avoiding any transaction duplication or loss
o Batching unpacking
o Resilience at transaction level
o Archiving
o Tracing and logging transactions and user events
o Transient errors detection and recovery
o Real-time search and reports
o Security access and user administration
o SaaS cloud ready
FinTP - Vision and Scope
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Component code
Component description Comments
FINkers United - community
Since FinTP is an application handling financial transactions the product releases and the related community should be tightly regulated and controlled As the project matures these components will be further refined The following main components of the community have been identified
‐ the moderator ‐ the product development
and maintenance body ‐ the product and
community auditor body (acting as a gatekeeper of official releases) to control and maintain the change requests integer and eliminate any malware exposures
‐ the test and validation body
‐ the legal body for defining the frame for product distribution amp licensing
‐ the marketing entity responsible for creating awareness and attracting contributors and adopters
‐ the portal used as a channel for marketing support and version control
‐ individual contributors namely ISVs solution providers developers integrators who wish to use their skills and knowledge to the benefit of the community
These tools strongly depend on the available budget and widespread
organization culture It is not mandatory for these to be open source if usage of
open source tools would mean lower quality
3) Licensing
The licensing model highly depends on the results of the open source legal and
business consultancy However we assume the following frame
‐ free of charge initial and recurring maintenance license for using FinTP
‐ FinTP does not use software components enforcing liabilities for the user
‐ consumers using FinTP source code (in part or entirely) should comply to
the licensing policy of the community
‐ the version released by the development amp maintenance body is the only
official amp to be trusted version of the community ensuring product integrity
unity and stability
4) Regulatory compliance
The regulatory compliance strongly depends on the early adaptation of new amp
changed rules via the recurring maintenance and on the quality of the audits
performed by the specific bodies of the community
Thus it is ensured that ISO20022 and FIN standards TARGET2 and TARGET2
Securities SEPA or country specific regulations (as stated respectively by
FinTP - Vision and Scope
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SWIFT standards EPC specification ECB or regional Central Banks
regulations that the community chooses to comply with) stay the most
important business specific anchors of FinTP
The FinTP design also offers support for flexible definition of new compliance
sources
5) Consultancy
The needed consultancy is twofold
‐ legal to ensure that FinTP does not infringe other licensing constraints
‐ open source specific to enable the right choice of the community type and of its governing law
The main constraint relies in choosing the right advisors true experts in the
open source industry amp with appropriate ethic profile - able to deliver as
promised The consultants have to be available 800 am divide 800 pm CET and
easily reachable - geo-location is of utmost importance Selection of the
consultant will basically be done on price assuming the right mix of expertise
and availability is achieved
6) Financing
While Allevo partially undertakes the financing of FinTP development the
ancillary consultancy necessary team education or acquisition of productivity
tools are far beyond the companys 2012 budget
To overcome possible delays in the project Allevo needs to sturdily act to
identify both the most appropriate commercial offer and additional necessary
financing source(s)
FinTP community
The community related items are members moderator legal tight regulation
marketing and financing For each of these items several assumptions and the
corresponding dependencies are provided in the following paragraphs
1) Members
We assume that the communitys members span several business profiles
(such as financial services institutions corporations market infrastructures
PSPs SSBs public administrations regulatory institutions and ISVs) sharing
the mutual focus on financial operations performance and improvement
By now after some tests on market acceptance there have been identified a
few supporters comprising financial services institutions and small ISVs
To ensure the success of building the community there is need for attracting
prestige influencers (market analysts consulting companies of scale - starting
with big four key industry providers - such as SWIFT other communities - ie
professional such as banking insurers capital market associations) and a
credible pool of financial institutions and corporations
To this end Allevo unrolls its own awareness campaign through direct
meetings publications blog posts and social media public presentations and
by officially launching the initiative in a conference focused on free of charge
financial transactions processing applications
Allevo further plans to use Sibos 2012 as opportunity to organize a less
traditional communication session gathering a relevant international panel to
FinTP - Vision and Scope
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debate the strong and weak aspects of this initiative amp to get the public involved
as much as possible
The goal is that by the end of 2012 some tens of different institutions are
committed to co-found the community and to actively contribute to establishing
the legal frame and to forming the required action bodies
2) Moderator
Allevo perceives the Moderator as the critical member of the community since
his prestige and influence will warrant the outcome of all performed activities
The moderator must commit on long term to develop the community and to
sponsor it with its share of trust
Allevo strongly believes that the Moderator should have a global footprint be a
reputable and trustful institution
3) Legalcopyright
The legal consultant and advisor needs to provide the coherent legal frame to
cover all community activities by roles and accountability While making it easy
for the members it should be more demanding as far as contributors are
concerned (though still encouraging ISVs to actively participate) It has to draw
very precise responsibilities for the independent and institutionalized bodies
(for instance product maintenance amp development and audit) and for the
Moderators status
The quality of this legal work fully relies on the expertise and experience of the
advisor
The law governing the community has to be in harmony with the European
(either French or Anglo-Saxon) legal system and with the open source legal
regulations largely practiced in other business regions (US and APAC)
4) Tight regulation
FinTP the product meant to gather a community which uses and supports it is
all about moving values between different entities Thats critical irrespective of
the amount because failing to perform properly opens the doors to arguments
amp loss of reputation with the related tangible costs Moreover the product has
to be beyond any doubt during its entire lifecycle free of any malefic
embedded functions meaning that contamination has to be avoided by all
means
Allevo strongly believes that this requirement can be attained only by tight
regulation of the community specific approval of the initially launched version
of FinTP and of the recurring contributions
This approach can be felt strange compared to most open source communities
and can lead to little interest from IT talents making them feel banned or
restricted It remains the Moderator‟s duty to make them feel privileged if
accepted and rewarded as such However this censorship is a price to be paid
since the community and the project are about processing transactions
initiating value transfer
FinTP - Vision and Scope
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5) Marketing
The community needs to have the clear objective of spreading both
geographically and over a consistent number of industries
To achieve this goal the community should be able to actively provide open
access to relevant information (including explanations of concepts hands-on
evaluation) to non-members and to also answer their questions on FinTP and
on the community itself
The same level of information needs to be ensured for the members to whom
supplementary updates on the community events decisions available
releases patches and fixes should be made available They need to also get
focused forum discussions on specific business areas and subsequent
processes need to be distributed
These functionalities have to be hosted on the community‟s dedicated portal
This portal has to provide content dialogue space information consolidation
and broadcasting It must be a virtual showroom for FinTP It needs to host
documents and virtual meetings subscription management and product
support amp development
The community has to be able to run its own meetings enabling direct contact
between active members or their representatives
Meaningful press releases have to be regularly issued along with actively
maintaining a productive relationship with market analysts to consolidate a
clear public understanding of the community spirit and goals
6) Financing
Its all about money-money-money since at least for the first 2-3 years the
community needs to be financed
Upon reaching maturity the institutionalized bodies of the community can earn their income from collateral activities - such as organizing conferences providing education and specialized support services - either for the initial FinTP installations and customizations or for recurring services requested by the members An alternative can be trialling and certifying interested providers enabling them to perform support services for FinTP
Thus who could pump money into this project It could be one or a mix of
‐ World Bank - if governmental programs are implied and provided a proper project which convincingly demonstrates the beneficed social impact
‐ EU development funding
‐ interested wealthy members of the community
The most critical dependencies are external such as (arranged according to
their impact) availability of funds for building the community finding trustful
and skilled open source consultants (legal business community licensing)
The synthetic view of the main assumptions and dependencies is provided in
the attached file
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Maintenance amp user support 1-Jan-13 Marketing inst action
4 Activities
Initial planning amp budgeting 15-Dec-12 document
Roles allocation 15-Dec-12 document
Community inst Implementation 15-Dec-12 action
Awareness campaign 1-Jan-13 action ongoing process
Members recruiting 1-Jan-13 action ongoing process
Continued operation 1-Jan-13 action ongoing process
Service sales 1-Jan-13 action ongoing process
Future development planning 1-Jan-13 document ongoing process
5 Resource allocation
If existing institution - allocation 15-Dec-12 action
If newly formed - recruiting 15-Dec-12 action
Make FinTP available to comm 1-Jan-13 action ongoing process
Start community financing 1-Jan-13 action ongoing process
6 Financing
Initial investment 1-Jan-13 action secured by that date
First period of comm operation 31-Aug-13 action secured by that date
co
mm
un
ity
Project approach
Project approachpdf
FinTP - Vision and Scope
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8 Scope This chapter deals with the phased availability of various FinTP features again considered from application and community points of view
In the first phase (due Dec 2012) the core of FinTP application is ready including the following technical features
- financial message routing between services and monitoring of exchanges
- multi-threading capabilities
- persistent end-to-end transactions
- batching de-batching
- archiving
- tracing and logging of transactions and user events
- transient errors detection and recovery
- real time search and reports
- security access and user administration
Similarly during the first phase the main community components need to be in place
- moderator
- software development and maintenance body (Allevo also available in the first and second phase of the project)
- test amp validation body
- (software) auditor
- legal
- main contributors (Allevo falls into this position)
- platform
- marketing
In the second phase (Dec2012 - Dec2013) several operational features of FinTP will be added
- predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit instruments securities settlement reconciliations
- MTMX coexistence
- multi-BIC multi-currency
- SEPA ready certification
- TARGET2 ready
- SAGSAASAE interfaces
- duplicate detection
- liquidity reports
- competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
- accounting reconciliation
- AML (sanctions list matching)
- SaaS and cloud ready
along with resilience and start of maintenance and knowledge transfer (the last two obviously continuing in the next phases)
FinTP - Vision and Scope
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The synthetic view of the project scope is provided in the following table
Crt No
Feature Activity Phase1 31Dec12
Phase2 31Dec13
Phase3 31Dec14
Phase4 31Dec15
Fin
TP
A Operational features
1
Predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit Instruments bonds (Romanian Euroclear) reconciliations
2 MTMX coexistence
3 Multi-BIC multi-currency
4 SaaS ready cloud ready
5 SEPA ready certification
6 TARGET2 ready
7 SAGSAASAE interfaces
8 Liquidity reports
9 Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
10 Accounting reconciliation
11 AML (sanctions list matching)
12 Duplicate detection
B Technical features
1 Routing financial message between services and monitoring of data flows
2 Multi-threading capabilities
3 Persistent end-to-end transactions
4 Batching de-batching
5 Resilience (at transaction level)
6 Archiving
7 Tracing and logging of transactions and user events
8 Transient errors detection and recovery
9 Real time search and reports
10 Security access and user administration
C Other activities
1 FinTP maintenance
2 Knowledge transfer
Co
mm
un
ity
Establishing the institutionscomponents
1 Mentor
2 Software Auditor amp Provider
3 Legal service
4 Members
5 Allevo initial role
6 Platform
7 Marketing
FinTP - Vision and Scope
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9 Limitations The main limitations in the economy of the project consist of phasing several FinTP
operational features for the following year (eg debit instruments liquidity reporting
AML filtering accounting reconciliation resilience SaaS ready cloud ready etc)
At the same time for features intended to front-office usage like Remit it was not yet
decided to publish them as open source product
The synthetic view of the main limitations is provided in the following table
Crt
nrItem Limitation Exclusion Comments
1
FinTP
a
Operational features Available in 2013
b
Remit Not included in
open source
package
2
Community
a
Rules Tightly controlled The statute should
ensure the right
balance between
safety and free
association of talents
Given the significant budget allocation (at least from Allevo perspective) the strong
requirement to meet the maximum ceiling will limit the FinTP product initial preparation
and maintenance expenses
Community wise the obligation of a tight regulated statute will have to ensure the right
balance between safety (mandatory in an environment dealing with financial
transactions) and a free association of talents (typical in an open source community)
In the first period after launch (at least the first two years) of the initiative the
maintenance and support activities will be provided by Allevo (as initial contributor)
A major restriction would be to meet the budgeted development and maintenance
FinTP - Vision and Scope
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10 Appendix - Risks
Specific risks
1 Product
a Long delivery lead time This is a medium probability and impact risk however Allevo should make available the needed resources and motivate the entire team for the job
b Credibility loss if FinTP fails to further become certified on meaningful operations andor business tracks (ie SWIFT business certification tracks or similar) The single possible containment is lobbying if the application certification program rejects open source products Anyway the impact is very important and its materialization should be avoided
c Low quality of the allocated team and improper version management are highly unlikely to occur as long as the formal transfer of responsibility is smoothly made from Allevo to the corresponding body put in place by the community The real hidden risk is that this process could take too long and it thus has a very high impact
d Poor FinTP quality may result if the community fails to institutionalize proper quality assurance (QA) and verification amp validation (VampV) processes This is most expected not to happen but if it does the impact is at least medium The single path to overcome this risk consists in a professional approach to these items based on institutionalizing practice proven QA and VampV processes
e Allevo lack of expertise in the open source business This can be contained by carefully selecting trustful amp truly expert consultants Otherwise it means more money longer time spent on project and expenses without proper return
2 Service
a The software maintenance does not properly deliver as expected ie on-time and on-quality bug fixing regulation amp standards alignment and productivity amp technological improvement The key to contain this risk materialization is the community status having provisions to neatly provide maintenance and further development of the rules for FinTP as well as the applicable rules and fees for the ancillary services
b Low quality and safety of the service received by the members of the community To avoid the risk of performing the one-time amp recurring support services by under-prepared professionals the community has to rule the process of training and qualifying the companies willing to contribute in this area
c Not meeting the minimal SLA criteria The community should regulate and periodically revise the training curricula and to further audit both the teachers and the certified experts to ensure the service level agreements are met
d Under motivated service providing professionals - up to the level of not feeling the high impact of their activity The community status must provide guidance to the contributors on the minimal standards the professionals should meet
FinTP - Vision and Scope
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e Constrained expert resource pool This risk could be overcome by the communitys policy to ensure at all time a balanced number of motivated experts to the communitys size Failing to do so may result in high negative impact of the community business and public perception
3 Community
a Emergence of a parallel competitive community If the optimal timing between publically disclosing FinTP and community take-off is not achieved then there are high chances that following a competitive initiative other entrepreneurs successfully launch their own similar or derived community This could be avoided by periodical reviews of the progress of both FinTP and community status and deciding whether the project needs to be put on hold or not
b Unfit reputation of the Moderator or main contributors If either the Moderator or the initial contributors are not beyond any dispute and are reputable institutes then there is certainly something rotten in Denmark and the project should be put on-hold
c No commitment from the Moderator‟s side Similarly if the Moderator does not commit to the project it means that Denmark has a serious problem to solve The project should relinquish until the matter is fixed
4 Legal
a Misuse of copyright and intellectual property (IP)The assigned working team could not be aware of the limitations and liabilities of using (entirely or partially) third party software this risk can be contained by delivering the right training providing proper working procedures carefully recording and documenting the use of open source code and carefully cross-scanning
b Injunctive relief and financial damages can be caused by not properly and continuously controlling the use of third party open source code resulting in copyright or IP infringement There are two containment measures which can be taken tighten the compliance check during the product lifecycle or apply the sanction policy as to set an example
c The competition starts a class action - this may result in delaying the project
5 Financing
a Lack of long term financing institutions Allevo should urge its consultant to identify and draw a reasonable list of financial options institutions
b Exceeding the budget given that this type of project has no precedent in Allevo and to avoid exposing to the dependency on engagement to financial institutions or to commitments beyond the existing budget a further carefully drawn project plan is needed along with its explicit approval from the board of the company
Market related risks
1 False expectations
a Expensive services Not everything is free aside the initial and maintenance free licensing the training the support and other professional services can amount to more than in general expected Allevo rates this risk as medium possible but with low impact as long as the law governing the community and its initial period of operation will consecrate fair market prices and competitive sources of contribution
FinTP - Vision and Scope
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b Hidden costs for patches updates and upgrades While of similarly weight in terms of probability and impact this should be no real concern as long as the law governing the community clearly provides for free and accountable maintenance
2 Poor image on quality
a Too many releases making FinTP hard to manage and unsafe to operate Given proper regulation of the community and the mature root of FinTP Allevo disregards the possibility of this risk to materialize However if this were to happen this is a high impact risk and by all means should be avoided
b Backward technological (in)compatibility looks to us as a low risk in all respects and within organizations applying practice proven software engineering processes and professional - accountable team this is not likely to materialize
c Support can be perceived as the highest impact risk for FinTP This can be overcome by tight regulation of the commercial and professional conditions to deliver the service (for instance only qualified organizations should be recommended to members for supporting FinTP)
d SLA and accountability for both internally or externally performed services is closely correlated to the previous risk and the community status should provide the support for growing a community of competencies and accountable professionals around FinTP Periodical auditing (by the specialized community body) of this pool of professionals will further ensure the confidence that the skills are preserved at the required level
e Code fragmentation and forking is a high impact risk with a low probability of happening in the initial period provided the knowledge transfer is done orderly and in an institutionalized manner
3 Inherent uncertainty
a Community disputes can jeopardize its cohesion the project viability and future This is a high impact possibly high probability risk and it is the definite role of the Moderator to feel prevent and while materializing mitigate any conflicting situation
b FinTP going commercial post-launch This is a huge impact possibly high occurrence probability but manageable with the right legal instruments provisioned in the community
c Loss of alignment to industry standards and regulations This risk has medium probability and medium impact given the assumption that the community is tightly regulated and the working bodies institutionalized and gathering professionals
4 Legal
Copyright infringement given Allevo experience in the open source business this risk is highly probable and has a high impact on FinTP especially if mistakes are made in the launching phase Similarly if during the product maintenance and further development phase the community fails to institutionalize proper formal software development processes (covering all FinTP lifecycle phases) based on industry practice proven model(s) Supplementary the expert code scanning audit for compliance is the single resort to preclude external software source misuse
FinTP - Vision and Scope
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5 GPL specific
a Noncompliance to the GPL license If GPL license is used the product should further distribute in compliance with this part provisions High impact and probability but manageable if proper software development processes are used and if the statute clearly defines the licensing model for FinTP
b FinTP unconformity The risk that software engineers get inspired by a chic solution which they import and emulate similarly in FinTP And this is also highly possible since les grands esprits se rencontre
6 Existing customers attitude
Anger for having paid for something which now is free The existent customers can be concerned about the future of their installed system its further development (in one word its future) and on the quality of the service (SLA including) Some recent adopters can possibly be furious for spending their money on buying licenses for a piece of software that differently packaged becomes free of charge
For the first situation the single best solution for Allevo is to ensure a smooth transition from the current status to the new solution deployed Also highly probable Allevo should provide for simultaneous (for at most one more year) maintenance of both FinTP and for qPayIntegrator
For the 2012 new qPayIntegrator adopters Allevo should transparently state the product‟s future and propose a commercially attractive migration towards FinTP when it becomes publically available (like the option for the installation migration and recurring services) The decision should clearly stay with the customer if he still buys Allevo licenses delays the implementation until FinTP is available or if he goes for a competitive solution
In other words the key to mitigate the existing customer perception is switching places and discarding if the situation proves to be uncomfortable
Bottom-line is that to avoid most of the risks the FinTP community must be a rather tightly controlled one though still opened to anyone willingly abiding to the rules
The synthetic view of the main risks their assigned probability impact and the corresponding containment approach is provided in the attached file
Risk IDRisk
CategoryRisk
Probability
(High
Medium
Low)
Severity
(High
Medium
Low)
Containment (Mitigation Action Proposed)
M1Free as in a
Free Puppy
M101
The training service amp support cost could account more than the
commercial product its replacing (application software is typically 30 of
the total cost of ownership of most projects)
Medium Low
M102 Hidden costs ie charge for patches updates and upgrades Medium Low
M2Frequent
updates
M201
Projects might be updated frequently - as often as everyday Too frequent
updates could have a negative impact on the implementation
interoperability and support
Low HighMAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M3Backwards
compatibility
M301 Less accountability Low LowMAP03 Access to prior versions of source code (additional in-house
development and support procedures might be necessary)
M4Support
related risks
M401Support could be perceived as the biggest issue with open source
software deploymentsHigh High
M402 Internal External Accountability SLAs High High
M403Code fragmentation or forking if the community fails to institutionalize
corporate like formal structureHigh High
M404Support could require greater involvement and different skills set from
operations staffMedium Medium
M5Community
immaturity Low Low
M501Could generate incompatibility of FinTP with industry standards amp
regulationsMedium Medium
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M6 Uncertainty The inherent uncertainty in every open source project
M601 Community disputes might impact project viability and future High HighMAP04 The Mentor should prevent amp mitigate any conflicts inside the
community
M602 Open source projects may not stay open in future releases High HighMAP05 The originator liabilities should be strongly enforced by the
community statute
M7 Legal risks
M701 Copyright infringement High High
M702 Can open source software deployments pass an audit
M8 GPL General Public License specific development concerns
M801Software thatrsquos derived from an existing GPL project in whole or in part
might not be released under the same licenseHigh High M08 The community should regulate the licensing model
M802
Developer contamination - developer could review an existing open source
project could see an elegant solution then implement a similar function in
closed source project
High HighMAP09 Procedurals constrains for the software developers should be
enforced
M9
Current
customers
attitude
The actual customer perception could be negative High High
M12 To prevent a negative attitude Allevo should involve the customers
in the FinTP project Allevo needs their active support for a smooth and
issues less transition
ma
rke
t re
late
d r
isk
s
co
st
rela
ted
ris
ks
MAP01 The community should regulate the applicable rules and fees for
services and maintenance
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
bu
sin
es
s a
nd
le
ga
l ri
sk
s
MAP06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S1Product
related
S101 Late delivery lead time Medium MediumMAP15 Allevo should provide proper resources (funding and human
resources)
S102 Credibility loss if fail to certify with SWIFT Medium High MAP16 Should be discussedamp agreed with SWIFT
S103 Inexperienced team or allocation below needs Low HighMAP15 Allevo should provide proper resources (funding and human
resources)
S104 Improper or non efficient version management Low High MAP16 Review the current Allevo Configuration Management System
S105Poor quality if the community fails to institutionalize proper verification and
validation practices3
M06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S106 Lack of expertise in open source projects 2 Allevo should engage thoroughly selected Open Source consultants
S2Service
related
S201
The software maintenance not properly providing for bugs fixing
regulationamp standard alignment technological improvements communities
improvement requests
High HighMAP01 The community should regulate the applicable rules and fees for
services and maintenance
S202 One-time amp recurring services might be provided by unqualified resources High HighMAP17 The community should regulate the training curricula and related
expertise certification
S203 Provided services might not meet the minimal SLA performance criteria High HighMAP17 The community should regulate the training curricula and related
expertise certification
S204 Relaxed or lack of accountability of the professionals High HighMAP18 The community should regulate the employment agreement of
the professionals
S205 Lack of qualified professionals High HighMAP19 The community should ensure a balanced number of certified
professionals with the community size
S3Community
related
S301
If after disclosing FinTP the community does not enthusiastically adopt
the solution competitors might more successfully develop a similar
strategy
Medium MediumMAP20 FinTP promotion should be convincing and realistic A well
organized marketing campaign by Allevo
S302The community mentor andor early adhering members have no
undeniable prestige or are not largely trustfulMedium Medium MAP99 Project status review Ending the project could be one option
S303 The Mentor does not strongly commit for the project Medium Medium MAP99 Project status review Ending the project could be one option
S4 Legal
S401Exposure to copyright and IP infringement due to working team unaware of
the legal consequences of using third party softwareMedium Medium
MAP21 Allevo should keep records and fully document the use of open
source code
S402Copyright or intellectual property infringement can lead to injunctive relief
and monetary damagesHigh High
MAP23 Allevo should institutionalize a tight licensing and technical
control
S403 All risks related to open source compliance High HighMAP24 Allevo should appoint as soon as possible a FinTP compliance
Officer
S5 Financial
S501 Lack of financing institutions Medium MediumMAP25 Allevo should urge consultant to provide a consistent list of
potential investors
S502 Dependency on the financing institution approval Medium Medium
S503Not thoroughly planned project overlooking one or some project cost that
need to be financedMedium Medium
Sp
ec
ific
ris
ks
tec
hn
ica
lm
ark
eti
ng
leg
al
fun
din
g
MAP26 Allevo should carefully draw a consistent and eligible project for
financing
Risks
Riskspdf
FinTP - Vision and Scope
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Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
11 Appendix - Bibliography 1 Accenture Open Source Research Geographic Findings
2 Accenture Open Source Research Industry Findings
3 Producing Open Source Software - How to Run a Successful Free Software
Project by Karl Fogel
4 Open Source Software Risks and Rewards by Gary Hein
5 A Business Case Study of Open Source Software by Carolyn A Kenwood
6 6 critical success factors for product development by Christian Wig
7 Bank 20 by Brett King
8 Managing the business risks of open innovation by Oliver Alexy and Markus
9 Product idea evaluation checklist shared by Startgass AS
10 SWIFT 2015 Strategy
11 Customers and business impact of product changes
FinTP - Vision and Scope
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12 Appendix - Glossary ACH Automated Clearing House that is used to clear retail payments
between banks in a country or region
APAC Asia and Pacific
AML Anti-Money Laundering
BCampDR Business continuity amp disaster recovery
B2B Business to business
C2B Consumer to business
CET Central European Time
CMMI Capability Maturity Model Integration
CMS Configuration Management System
Coexistence The situation of multiple standards existing at the same time in the same business space Within SWIFT this refers to the coexistence between the MT and MX standards This also refers to the set of measures being taken to make the situation easier to handle by the community (publication of mapping rules translation serviceshellip)
CSM Clearing and Settlement Mechanism
CUG Closed User Group
Dictionary Part of the ISO 20022 Repository that contains all items that can be re-used during business modelling and message definition activities
EAI Enterprise Application Integration - middleware to connect applications and communication interfaces Typical EAI software includes features for mapping data between various formats enriching messages with data from other systems and orchestrating message flows
ECB European Central Bank
EMEA Europe Middle-East Africa
EPC European Payment Council
ERP Enterprise Resource Planning
EU European Union
EUCLID Connectivity to EuroClear Bank services
FIN The messaging service offered by SWIFT for the secure and reliable exchange of MT messages in store-and-forward mode By extension the syntax used to format these MTs
IP intellectual property
Interoperability Capability to easily exchange business information while using different message standards ISO 20022 promotes global use of syntax-neutral business and message components as a common denominator to achieve interoperability between standards using different syntaxes
ISO The International Organization for Standardization - an international standard-setting body composed of representatives from more than 160 national standards organizations that promulgates worldwide standards in a variety of domains aiming at facilitating cross-border exchanges of goods services and techniques
FinTP - Vision and Scope
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ISO 15022 An ISO standard that describes the syntax to be used for developing securities messages used mainly to support back office related transaction flows It replaced the previous securities messaging standard ISO 7775
ISO 20022 RA Registration Authority - offers the services described in an ISO standard on behalf of and under a contractual agreement with the International Organization for Standardization
ISO 20022 Repository
Repository maintained by the ISO20022 RA which contains the financial business models message definitions and components defined in compliance with the ISO 20022 standard
ISO 20022 RMG Registration Management Group - in charge of the overall management of the ISO 20022 development and registration process in accordance with the ISO 20022 standard
ISO 20022 SEG Standards Evaluation Groups -in charge of validating candidate ISO 20022 messages within the scope of the business justification and ensuring that they address the needs of their future international community of users
ISV Independent Software Vendor
KYC Know Your Customer
MACUG Member Administered Closed User Group
Message A set of structured information exchanged between two parties involved in a financial transaction
Message component and element
A re-usable data structure used for assembling message definitions The data defined in a message component is bdquotraced‟ back to the business components and business elements In simple terms business components define the business meaning message components create data structures for messaging
MI Market Infrastructure - a system that provides services to the financial industry for trading clearing and settlement matching of financial transactions and depository functions
Middleware Software that enables data to be exchanged among different systems with standard communication components and tools for formatting mapping and processing
MT The traditional bdquotag value‟ Message Types for use on the FIN service offered by SWIFT
MX An XML message exchanged over SWIFTNet whether or not ISO 20022 compliant
OS Open source
PSP Payment service provider
QA Quality assurance
RMA Relationship Management Access
RTGS Real Time Gross Settlement System
SAA SWIFT Alliance Access
SAE SWIFT Alliance Entry
SAG SWIFT Alliance Gateway
SaaS Software as a Service
SCORE Standardized CORporate Environment
FinTP - Vision and Scope
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Semantics The study of meaning usually in language The word is often used in ordinary language to denote a problem of understanding that comes down to word selection or connotation
SEPA Single Euro Payment Area
SLA Service level agreement
SME Small and Medium-sized Business(es)
SOA Service Oriented Architecture
SSB SWIFT Service Bureau
STP Straight Through Processing
SWIFT Society for Worldwide Interbank Financial Telecommunication Visit wwwswiftcom
Syntax Physical format of a message used to identify and represent the conveyed pieces of information
T2S TARGET2 Securities - an initiative of the Eurosystem It is an IT platform that aims to make settlements across national borders simpler and more cost-efficient
TARGET2 The Eurosystem-owned European Real Time Gross Settlement (RTGS) system (Trans-European Automated Real-time Gross Settlement Express Transfer System) TARGET2 is one of the largest high-value payment systems in the world
Taxonomy The classification in a hierarchical system typically organized by super type - sub type relationships also called generalization-specialization relationships or less formally parent-child relationships
TSU Trade Service Utility
TCO Total cost of ownership
Translation rules
Set of rules to be used to map the pieces of information included in a message expressed in one syntax to the equivalent message expressed in another syntax
Remit Remittances
XML eXtensible Mark-up Language - popular syntax to encode documents (or messages) electronically on the Internet XML allows communities to define their own identifiers (or tags) and format (or data type) for each component of a message
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Bureaus etc) ISV regulatory institutionsMarketing plan feasibility campaign efficiency and costs
2 MentorPreferable SWIFT
Also eligible SunGard IBM affiliation to other OS communitySWIFT decision
3 Legalcopyright Expert legal consultant and RO apprentice Cost and time shift dependent
4 Tight regulation Clear membership admission amp software contribution criteria The quality of the consultant advice
5 Marketing Actively recruiting community members Marketing plan feasibility campaign efficiency amp customer skepticism
a community portala provide content amp debate space information consolidation amp dissemination virtual
showroom subscription management support
a business analysis solution availability and maintenance by one of the
members or employed company
b press releases amp
announcementsb PR and AR b communicators availability and costs
c events c periodical conferences user focused meetings c cost dependent
6 Financing World Bank EU amp private funds Lobby amp funds availability
Item
FinTP
FinTP community
FinTP - Vision and Scope
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Given the application scalability FinTP is fitted to deal with
1 B2B environment type FinTP performs transactions routing and processing between the before depicted institutions thus achieving cross industry interoperability Additionally FinTP helps the business customers to consolidate their financial or treasury operations similarly helps the retail chains to reconcile and settle the available stock with the registered sales
To exemplify ensuring SEPA Readiness for banking institutions and for their customers is briefly discussed
By 2014 banks in EURO zone should be ready to process instructions in ISO20022 format FinTP can be an efficient solution to achieve rapidly compliance with the EPC provisions
Are the bank‟s customers ready to send the instructions data in the right format Are you ready to accept this type of data Are you able to extend solutions to help your customers better preparing for SEPA instructions FinTP has the right building blocks for banks and corporations
2 B2C environment type FinTP goes further down to the end customers The individuals can interact directly in a branch or remotely using their computers tablets smart phones to provide them with personal financial portfolio management It enables them to operate on their bank account or to do shopping It also supports new financial instruments such as PayPal Google wallet Facebook UK faster payments mobile payments amp commerce M-Pesa NFC etc
FinTP applicability profiled on beneficiary type
FinTP - Vision and Scope
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a Banks
Regional and international banks are rethinking and often improving their business architecture because of strong penetration of traditionally non-financial business in the money supply chain
The banks have in general the following choices
i Stay the course This often means keep on muddling
ii Outsource the processing of financial transactions in its entirety or in parts
iii Lower the recurring costs dramatically and benefit from joint developments by implementing Open Source solutions for commoditized parts of the needed infrastructure
Allevo provides the building blocks for the processing of financial transactions (FinTP) for those organisations who want to go for the third strategic choice
Toolbox3 (see 51 Features for details) as illustrated in bellow figure
Business flow consolidation
External interfaces to market infrastructure(s)
Funds transfer (credit transfer direct debit debit instruments duplicate detection treasury flows)
Operational functionalities such as liquidity reporting accounting reconciliation AML transactions filtering remittances management competitive reports etc
All helping the bank to manage the operational risk
3 Toolbox means a comprehensive collection of ready to deploy operational features
FinTP - Vision and Scope
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Payment factory - as illustrated in the bellow figure - is the bank-centralized service for smaller financial institutions or corporations to provide payment and collections processing in compliance with regional or global regulation along with additional service (eg intra-day limits etc)
A similar type of architecture can be used to set-up a bank administrated Member Concentrator or a (SWIFT) Service Bureau or a Payment Service Provider
FinTP - Vision and Scope
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b Micro-finance institutions
Toolbox3 (see 51 Features)
Integration of micro-financing application with mobile payment operator(s) and banks It provides support for loan applications loan disbursement and repayments It integrates the mobile payments and the banking payments and as such provides working capital management Multi-MMTs amp multi country operations are also supported
FinTP - Vision and Scope
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c CSMs
Toolbox3 (see 51 Features)
CSMs can use FinTP (as shown in the bellow figure) to provide its customers an
effective connectivity readiness package Likewise CSMs can use FinTP to connect
themselves to other CSMs they need to
FinTP - Vision and Scope
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d Corporations
Toolbox3 (see 51 Features)
The financial or treasury department of the corporation can use FinTP (as depicted in
the figure bellow) to concentrate the processing and management of all their financial
business in one single operation window FinTP provides the building blocks for a highly
effective money supply chain between banks providers and customers Beyond that
FinTP empowers control on the working capital and financial resources
FinTP - Vision and Scope
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e Public administrations
Toolbox3 (see 51 Features)
Public debt business automation through Treasury Bonds settlement on all trade phases eg pre- sales post-
Wages and pensions payment in compliance with SEPA regulations
Structural funds financial management (in a business group managed by the State Treasury)
FinTP plays a multiple roles in the Public Administration financial business
a Bridge between the global banks secure network (SWIFTNet) and the Government
secure national network performing format conversion and business flow mapping
thus FinTP acts as a financial integrator of the different public institutions
b Interoperability gateway with the banking community and financial market
infrastructures
c Auctioning portal for the Treasury Bonds allocation and settlement for the Primary
market
d Management of the payments related to Structural Funds financed projects and to
the providers of the public institutions
e Payments (such as wages pensions state subsidies) due to individuals intermediated by banks using SWIFTRemit framework Similarly the taxes collection should be handled by the same system and framework FinTP provides means to perform the operations using either mobile devices or the internet
FinTP - Vision and Scope
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44 Key Business Objectives and Success Criteria
Today Allevo faces two major limitations in fulfilling its business objectives
1 Strong dependency on its narrow national market and thus being limited to the
known European Union and particularly Romanian practice
2 Significant allocation of the development talents to maintaining qPayIntegrator
rather than working to new business oriented products
Allevo is going to expand its business footprint and simultaneously shift its revenue
source from back-office solutions towards its customers business area (treasury front-
office) applications
To achieve this goal Allevo will focus on developing FinTP business and on gathering
a strong supporting community formed by representatives of the targeted market The
coherence of the community should be ensured by a trustful and committed
moderator
Therefore for the success of the project Allevo deems instrumental the go-to-market
process the solid take-up tempo and the quality of the community
On the FinTP side Allevo should tightly focus on
1 Understanding the community members‟ needs values and priorities in
relationship with their business competitive ecosystem
2 Improving the product management process and the technical commercial amp
distribution documentation
3 Identifying and centring the attention on strong idea generation selection and
monitoring processes
4 Elaborating the right product architecture to enable easy functional and technical
scalability maintainability diagnose native features for flexible customization
compliance to global and regional financial standards and preserving the initial
licensing structure across various customers business models
5 Strengthening project management
6 Designing coherent knowledge transfer process
7 Designing efficient customer support
As a member of this FinTP open source community Allevo will provide
1) the open source FinTP application
2) knowledge transfer (training amp consultancy) to both early adopters and to the
product development amp maintenance body (see 46 The community)
3) for a limited period of time
- support amp maintenance
- alignment to technology standards amp regulation
4) further improvements
5) contribution to relevant proofs of concept community web site conferences
articles online awareness
The power of the community will draw other vendors to partner together to ensure
market coverage each of them complementing the other through their expertise
FinTP - Vision and Scope
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FinTP distribution will be performed via the communitys portal while the initial
consultancy product installation and support services will be delivered remotely
Following the free open source software model FinTP will be available under an open
license free of charge
In designing the new products Allevo will benefit on mid and long term from the deep
insight both of FinTP internals and the structure and operation of the community
45 Market Sizing
Our evaluation of the FinTP targeted market size
- the global market size taken into account is 26100 institutions out of which
- an average FinTP engine licensing fee is euro30000 resulting in potential
maximum expenses of euro783 million
- the corresponding yearly maintenance fee is euro5400 resulting in potential
maximum expenses of euro700 million in 5 years
- the number of potential institutions adopting FinTP in the first 5 years of
availability 250 tier3 amp 2000 tier4
- consequently the savings in 5 years could reach euro675 million in license
fee and euro2025 million in maintenance fee resulting in a total of almost euro90
million
Allevo believes that (at least) during 2013 and 2014 its current income source will be
preserved while after that period the main replacement of the lost (new licensing and
recurring maintenance) fees will mainly consist of services (consulting
implementation support education) and sales of licenses for newly launched
applications
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46 The FINkers United community
The community structure comprises three main entities (as depicted in the bellow
figure)
1 The adopters (beneficiaries) consumer companies choosing to adopt the
FinTP product in compliance with the community line of business and ethical
conduct
2 The moderator the instrumental inspirational authority expected to draw both
the development vision and the guidelines of the community
3 The contributors
a institutionalized bodies eg development and maintenance test and
validation audit legal marketing
b independent contributors eg ISVs (Allevo falling under this category)
solution providers integrators or passionate developersindividuals
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5 Solution Description amp Parameters Like qPayIntegrator FinTP offers a
standard compliant processing
engine for the financial transactions
exchanged between the back-office
or ERP applications and the financial
community (banks MFIs market
infrastructures corporations)
FinTP is able to process financial
messages in both FIN and ISO20022
formats and at the same time offers
a rich set of interfaces to different
financial applications FinTP provides
compliance with various clearing and
settlement mechanisms
Consequently FinTP ensures a high
level automation of the end-to-end
financial transactions processing
51 Features
The FinTP project has two major deliverable components
1 the FinTP application itself
2 the community built around FinTP
All subsequent chapters will refer to both of these
Component code
Component description Comments
FinTP4 FinTP is a financial transactions processing engine for 3rd or 4th tier banks microfinance corporate or SMEs treasuries available as open source application Functional characteristics
1 Operational features
o Predefined flows and message formats
Includes reconciliation of confirmations with transactions
o Single and multiple funds transfer instructions securities settlement amp reconciliation (Romanian Euroclear) messages
The supported payment instruments are credit transfer direct debit debit instruments
o MTMX coexistence Based on FinTP native internal data format (ISO20022)
o Multi-BIC multi-currency
o SEPA ready (certification) Compliancy with EPC regulations for SEPA formatting and business flows (for SCT and SDD) enables bank-to-bank and bank-to-CSM settlement
4 FinTP root is Allevo equivalent product qPayIntegrator a commercially available amp practice proven (since
2005) application qPayIntegrator provides a consistent set of functionalities and it is fully aligned to both industry regulations and technology
FinTP - Vision and Scope
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Component code
Component description Comments
o TARGET 2 ready Compliance with TARGET2 settlement and operations as regulated by the ECB
o SAGSAASAE SAL interfaces
Integration with SWIFTNet to enable banking business
o Liquidity reports Real time cash reports and forecasts using several criteria (currency subsidiary profit centre)
o Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
Analysis and reports of market trends based on volumes amount BIC etc along with early alerts on behaviour changes beyond the standard deviation
o Accounting reconciliation Automatic NOSTROVOSTRO accounts reconciliation intraday liquidity reports and integrated exception management
o AML (sanctions list matching)
High and low value payments filtering uses 20+ black lists and ensures their content maintainability
o Duplicate detection Detection and investigation of possible duplicates the detection window and criteria are configurable
o Remittances processing Covers banks business and operations area as well as distribution channel
o Treasury markets Automation of treasury flows (FX and money market)
o Statements Processing of SWIFT messages related to correspondent banks accounts administration
2 Technical features
o Financial message routing and monitoring
o Multi-threading capabilities
o Persistent end-to-end transactions
During each phase of the entire processing cycle permanent copies of the transaction are kept until the final completion thus avoiding any transaction duplication or loss
o Batching unpacking
o Resilience at transaction level
o Archiving
o Tracing and logging transactions and user events
o Transient errors detection and recovery
o Real-time search and reports
o Security access and user administration
o SaaS cloud ready
FinTP - Vision and Scope
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Component code
Component description Comments
FINkers United - community
Since FinTP is an application handling financial transactions the product releases and the related community should be tightly regulated and controlled As the project matures these components will be further refined The following main components of the community have been identified
‐ the moderator ‐ the product development
and maintenance body ‐ the product and
community auditor body (acting as a gatekeeper of official releases) to control and maintain the change requests integer and eliminate any malware exposures
‐ the test and validation body
‐ the legal body for defining the frame for product distribution amp licensing
‐ the marketing entity responsible for creating awareness and attracting contributors and adopters
‐ the portal used as a channel for marketing support and version control
‐ individual contributors namely ISVs solution providers developers integrators who wish to use their skills and knowledge to the benefit of the community
These tools strongly depend on the available budget and widespread
organization culture It is not mandatory for these to be open source if usage of
open source tools would mean lower quality
3) Licensing
The licensing model highly depends on the results of the open source legal and
business consultancy However we assume the following frame
‐ free of charge initial and recurring maintenance license for using FinTP
‐ FinTP does not use software components enforcing liabilities for the user
‐ consumers using FinTP source code (in part or entirely) should comply to
the licensing policy of the community
‐ the version released by the development amp maintenance body is the only
official amp to be trusted version of the community ensuring product integrity
unity and stability
4) Regulatory compliance
The regulatory compliance strongly depends on the early adaptation of new amp
changed rules via the recurring maintenance and on the quality of the audits
performed by the specific bodies of the community
Thus it is ensured that ISO20022 and FIN standards TARGET2 and TARGET2
Securities SEPA or country specific regulations (as stated respectively by
FinTP - Vision and Scope
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SWIFT standards EPC specification ECB or regional Central Banks
regulations that the community chooses to comply with) stay the most
important business specific anchors of FinTP
The FinTP design also offers support for flexible definition of new compliance
sources
5) Consultancy
The needed consultancy is twofold
‐ legal to ensure that FinTP does not infringe other licensing constraints
‐ open source specific to enable the right choice of the community type and of its governing law
The main constraint relies in choosing the right advisors true experts in the
open source industry amp with appropriate ethic profile - able to deliver as
promised The consultants have to be available 800 am divide 800 pm CET and
easily reachable - geo-location is of utmost importance Selection of the
consultant will basically be done on price assuming the right mix of expertise
and availability is achieved
6) Financing
While Allevo partially undertakes the financing of FinTP development the
ancillary consultancy necessary team education or acquisition of productivity
tools are far beyond the companys 2012 budget
To overcome possible delays in the project Allevo needs to sturdily act to
identify both the most appropriate commercial offer and additional necessary
financing source(s)
FinTP community
The community related items are members moderator legal tight regulation
marketing and financing For each of these items several assumptions and the
corresponding dependencies are provided in the following paragraphs
1) Members
We assume that the communitys members span several business profiles
(such as financial services institutions corporations market infrastructures
PSPs SSBs public administrations regulatory institutions and ISVs) sharing
the mutual focus on financial operations performance and improvement
By now after some tests on market acceptance there have been identified a
few supporters comprising financial services institutions and small ISVs
To ensure the success of building the community there is need for attracting
prestige influencers (market analysts consulting companies of scale - starting
with big four key industry providers - such as SWIFT other communities - ie
professional such as banking insurers capital market associations) and a
credible pool of financial institutions and corporations
To this end Allevo unrolls its own awareness campaign through direct
meetings publications blog posts and social media public presentations and
by officially launching the initiative in a conference focused on free of charge
financial transactions processing applications
Allevo further plans to use Sibos 2012 as opportunity to organize a less
traditional communication session gathering a relevant international panel to
FinTP - Vision and Scope
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debate the strong and weak aspects of this initiative amp to get the public involved
as much as possible
The goal is that by the end of 2012 some tens of different institutions are
committed to co-found the community and to actively contribute to establishing
the legal frame and to forming the required action bodies
2) Moderator
Allevo perceives the Moderator as the critical member of the community since
his prestige and influence will warrant the outcome of all performed activities
The moderator must commit on long term to develop the community and to
sponsor it with its share of trust
Allevo strongly believes that the Moderator should have a global footprint be a
reputable and trustful institution
3) Legalcopyright
The legal consultant and advisor needs to provide the coherent legal frame to
cover all community activities by roles and accountability While making it easy
for the members it should be more demanding as far as contributors are
concerned (though still encouraging ISVs to actively participate) It has to draw
very precise responsibilities for the independent and institutionalized bodies
(for instance product maintenance amp development and audit) and for the
Moderators status
The quality of this legal work fully relies on the expertise and experience of the
advisor
The law governing the community has to be in harmony with the European
(either French or Anglo-Saxon) legal system and with the open source legal
regulations largely practiced in other business regions (US and APAC)
4) Tight regulation
FinTP the product meant to gather a community which uses and supports it is
all about moving values between different entities Thats critical irrespective of
the amount because failing to perform properly opens the doors to arguments
amp loss of reputation with the related tangible costs Moreover the product has
to be beyond any doubt during its entire lifecycle free of any malefic
embedded functions meaning that contamination has to be avoided by all
means
Allevo strongly believes that this requirement can be attained only by tight
regulation of the community specific approval of the initially launched version
of FinTP and of the recurring contributions
This approach can be felt strange compared to most open source communities
and can lead to little interest from IT talents making them feel banned or
restricted It remains the Moderator‟s duty to make them feel privileged if
accepted and rewarded as such However this censorship is a price to be paid
since the community and the project are about processing transactions
initiating value transfer
FinTP - Vision and Scope
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5) Marketing
The community needs to have the clear objective of spreading both
geographically and over a consistent number of industries
To achieve this goal the community should be able to actively provide open
access to relevant information (including explanations of concepts hands-on
evaluation) to non-members and to also answer their questions on FinTP and
on the community itself
The same level of information needs to be ensured for the members to whom
supplementary updates on the community events decisions available
releases patches and fixes should be made available They need to also get
focused forum discussions on specific business areas and subsequent
processes need to be distributed
These functionalities have to be hosted on the community‟s dedicated portal
This portal has to provide content dialogue space information consolidation
and broadcasting It must be a virtual showroom for FinTP It needs to host
documents and virtual meetings subscription management and product
support amp development
The community has to be able to run its own meetings enabling direct contact
between active members or their representatives
Meaningful press releases have to be regularly issued along with actively
maintaining a productive relationship with market analysts to consolidate a
clear public understanding of the community spirit and goals
6) Financing
Its all about money-money-money since at least for the first 2-3 years the
community needs to be financed
Upon reaching maturity the institutionalized bodies of the community can earn their income from collateral activities - such as organizing conferences providing education and specialized support services - either for the initial FinTP installations and customizations or for recurring services requested by the members An alternative can be trialling and certifying interested providers enabling them to perform support services for FinTP
Thus who could pump money into this project It could be one or a mix of
‐ World Bank - if governmental programs are implied and provided a proper project which convincingly demonstrates the beneficed social impact
‐ EU development funding
‐ interested wealthy members of the community
The most critical dependencies are external such as (arranged according to
their impact) availability of funds for building the community finding trustful
and skilled open source consultants (legal business community licensing)
The synthetic view of the main assumptions and dependencies is provided in
the attached file
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Maintenance amp user support 1-Jan-13 Marketing inst action
4 Activities
Initial planning amp budgeting 15-Dec-12 document
Roles allocation 15-Dec-12 document
Community inst Implementation 15-Dec-12 action
Awareness campaign 1-Jan-13 action ongoing process
Members recruiting 1-Jan-13 action ongoing process
Continued operation 1-Jan-13 action ongoing process
Service sales 1-Jan-13 action ongoing process
Future development planning 1-Jan-13 document ongoing process
5 Resource allocation
If existing institution - allocation 15-Dec-12 action
If newly formed - recruiting 15-Dec-12 action
Make FinTP available to comm 1-Jan-13 action ongoing process
Start community financing 1-Jan-13 action ongoing process
6 Financing
Initial investment 1-Jan-13 action secured by that date
First period of comm operation 31-Aug-13 action secured by that date
co
mm
un
ity
Project approach
Project approachpdf
FinTP - Vision and Scope
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8 Scope This chapter deals with the phased availability of various FinTP features again considered from application and community points of view
In the first phase (due Dec 2012) the core of FinTP application is ready including the following technical features
- financial message routing between services and monitoring of exchanges
- multi-threading capabilities
- persistent end-to-end transactions
- batching de-batching
- archiving
- tracing and logging of transactions and user events
- transient errors detection and recovery
- real time search and reports
- security access and user administration
Similarly during the first phase the main community components need to be in place
- moderator
- software development and maintenance body (Allevo also available in the first and second phase of the project)
- test amp validation body
- (software) auditor
- legal
- main contributors (Allevo falls into this position)
- platform
- marketing
In the second phase (Dec2012 - Dec2013) several operational features of FinTP will be added
- predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit instruments securities settlement reconciliations
- MTMX coexistence
- multi-BIC multi-currency
- SEPA ready certification
- TARGET2 ready
- SAGSAASAE interfaces
- duplicate detection
- liquidity reports
- competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
- accounting reconciliation
- AML (sanctions list matching)
- SaaS and cloud ready
along with resilience and start of maintenance and knowledge transfer (the last two obviously continuing in the next phases)
FinTP - Vision and Scope
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The synthetic view of the project scope is provided in the following table
Crt No
Feature Activity Phase1 31Dec12
Phase2 31Dec13
Phase3 31Dec14
Phase4 31Dec15
Fin
TP
A Operational features
1
Predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit Instruments bonds (Romanian Euroclear) reconciliations
2 MTMX coexistence
3 Multi-BIC multi-currency
4 SaaS ready cloud ready
5 SEPA ready certification
6 TARGET2 ready
7 SAGSAASAE interfaces
8 Liquidity reports
9 Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
10 Accounting reconciliation
11 AML (sanctions list matching)
12 Duplicate detection
B Technical features
1 Routing financial message between services and monitoring of data flows
2 Multi-threading capabilities
3 Persistent end-to-end transactions
4 Batching de-batching
5 Resilience (at transaction level)
6 Archiving
7 Tracing and logging of transactions and user events
8 Transient errors detection and recovery
9 Real time search and reports
10 Security access and user administration
C Other activities
1 FinTP maintenance
2 Knowledge transfer
Co
mm
un
ity
Establishing the institutionscomponents
1 Mentor
2 Software Auditor amp Provider
3 Legal service
4 Members
5 Allevo initial role
6 Platform
7 Marketing
FinTP - Vision and Scope
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9 Limitations The main limitations in the economy of the project consist of phasing several FinTP
operational features for the following year (eg debit instruments liquidity reporting
AML filtering accounting reconciliation resilience SaaS ready cloud ready etc)
At the same time for features intended to front-office usage like Remit it was not yet
decided to publish them as open source product
The synthetic view of the main limitations is provided in the following table
Crt
nrItem Limitation Exclusion Comments
1
FinTP
a
Operational features Available in 2013
b
Remit Not included in
open source
package
2
Community
a
Rules Tightly controlled The statute should
ensure the right
balance between
safety and free
association of talents
Given the significant budget allocation (at least from Allevo perspective) the strong
requirement to meet the maximum ceiling will limit the FinTP product initial preparation
and maintenance expenses
Community wise the obligation of a tight regulated statute will have to ensure the right
balance between safety (mandatory in an environment dealing with financial
transactions) and a free association of talents (typical in an open source community)
In the first period after launch (at least the first two years) of the initiative the
maintenance and support activities will be provided by Allevo (as initial contributor)
A major restriction would be to meet the budgeted development and maintenance
FinTP - Vision and Scope
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10 Appendix - Risks
Specific risks
1 Product
a Long delivery lead time This is a medium probability and impact risk however Allevo should make available the needed resources and motivate the entire team for the job
b Credibility loss if FinTP fails to further become certified on meaningful operations andor business tracks (ie SWIFT business certification tracks or similar) The single possible containment is lobbying if the application certification program rejects open source products Anyway the impact is very important and its materialization should be avoided
c Low quality of the allocated team and improper version management are highly unlikely to occur as long as the formal transfer of responsibility is smoothly made from Allevo to the corresponding body put in place by the community The real hidden risk is that this process could take too long and it thus has a very high impact
d Poor FinTP quality may result if the community fails to institutionalize proper quality assurance (QA) and verification amp validation (VampV) processes This is most expected not to happen but if it does the impact is at least medium The single path to overcome this risk consists in a professional approach to these items based on institutionalizing practice proven QA and VampV processes
e Allevo lack of expertise in the open source business This can be contained by carefully selecting trustful amp truly expert consultants Otherwise it means more money longer time spent on project and expenses without proper return
2 Service
a The software maintenance does not properly deliver as expected ie on-time and on-quality bug fixing regulation amp standards alignment and productivity amp technological improvement The key to contain this risk materialization is the community status having provisions to neatly provide maintenance and further development of the rules for FinTP as well as the applicable rules and fees for the ancillary services
b Low quality and safety of the service received by the members of the community To avoid the risk of performing the one-time amp recurring support services by under-prepared professionals the community has to rule the process of training and qualifying the companies willing to contribute in this area
c Not meeting the minimal SLA criteria The community should regulate and periodically revise the training curricula and to further audit both the teachers and the certified experts to ensure the service level agreements are met
d Under motivated service providing professionals - up to the level of not feeling the high impact of their activity The community status must provide guidance to the contributors on the minimal standards the professionals should meet
FinTP - Vision and Scope
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e Constrained expert resource pool This risk could be overcome by the communitys policy to ensure at all time a balanced number of motivated experts to the communitys size Failing to do so may result in high negative impact of the community business and public perception
3 Community
a Emergence of a parallel competitive community If the optimal timing between publically disclosing FinTP and community take-off is not achieved then there are high chances that following a competitive initiative other entrepreneurs successfully launch their own similar or derived community This could be avoided by periodical reviews of the progress of both FinTP and community status and deciding whether the project needs to be put on hold or not
b Unfit reputation of the Moderator or main contributors If either the Moderator or the initial contributors are not beyond any dispute and are reputable institutes then there is certainly something rotten in Denmark and the project should be put on-hold
c No commitment from the Moderator‟s side Similarly if the Moderator does not commit to the project it means that Denmark has a serious problem to solve The project should relinquish until the matter is fixed
4 Legal
a Misuse of copyright and intellectual property (IP)The assigned working team could not be aware of the limitations and liabilities of using (entirely or partially) third party software this risk can be contained by delivering the right training providing proper working procedures carefully recording and documenting the use of open source code and carefully cross-scanning
b Injunctive relief and financial damages can be caused by not properly and continuously controlling the use of third party open source code resulting in copyright or IP infringement There are two containment measures which can be taken tighten the compliance check during the product lifecycle or apply the sanction policy as to set an example
c The competition starts a class action - this may result in delaying the project
5 Financing
a Lack of long term financing institutions Allevo should urge its consultant to identify and draw a reasonable list of financial options institutions
b Exceeding the budget given that this type of project has no precedent in Allevo and to avoid exposing to the dependency on engagement to financial institutions or to commitments beyond the existing budget a further carefully drawn project plan is needed along with its explicit approval from the board of the company
Market related risks
1 False expectations
a Expensive services Not everything is free aside the initial and maintenance free licensing the training the support and other professional services can amount to more than in general expected Allevo rates this risk as medium possible but with low impact as long as the law governing the community and its initial period of operation will consecrate fair market prices and competitive sources of contribution
FinTP - Vision and Scope
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b Hidden costs for patches updates and upgrades While of similarly weight in terms of probability and impact this should be no real concern as long as the law governing the community clearly provides for free and accountable maintenance
2 Poor image on quality
a Too many releases making FinTP hard to manage and unsafe to operate Given proper regulation of the community and the mature root of FinTP Allevo disregards the possibility of this risk to materialize However if this were to happen this is a high impact risk and by all means should be avoided
b Backward technological (in)compatibility looks to us as a low risk in all respects and within organizations applying practice proven software engineering processes and professional - accountable team this is not likely to materialize
c Support can be perceived as the highest impact risk for FinTP This can be overcome by tight regulation of the commercial and professional conditions to deliver the service (for instance only qualified organizations should be recommended to members for supporting FinTP)
d SLA and accountability for both internally or externally performed services is closely correlated to the previous risk and the community status should provide the support for growing a community of competencies and accountable professionals around FinTP Periodical auditing (by the specialized community body) of this pool of professionals will further ensure the confidence that the skills are preserved at the required level
e Code fragmentation and forking is a high impact risk with a low probability of happening in the initial period provided the knowledge transfer is done orderly and in an institutionalized manner
3 Inherent uncertainty
a Community disputes can jeopardize its cohesion the project viability and future This is a high impact possibly high probability risk and it is the definite role of the Moderator to feel prevent and while materializing mitigate any conflicting situation
b FinTP going commercial post-launch This is a huge impact possibly high occurrence probability but manageable with the right legal instruments provisioned in the community
c Loss of alignment to industry standards and regulations This risk has medium probability and medium impact given the assumption that the community is tightly regulated and the working bodies institutionalized and gathering professionals
4 Legal
Copyright infringement given Allevo experience in the open source business this risk is highly probable and has a high impact on FinTP especially if mistakes are made in the launching phase Similarly if during the product maintenance and further development phase the community fails to institutionalize proper formal software development processes (covering all FinTP lifecycle phases) based on industry practice proven model(s) Supplementary the expert code scanning audit for compliance is the single resort to preclude external software source misuse
FinTP - Vision and Scope
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5 GPL specific
a Noncompliance to the GPL license If GPL license is used the product should further distribute in compliance with this part provisions High impact and probability but manageable if proper software development processes are used and if the statute clearly defines the licensing model for FinTP
b FinTP unconformity The risk that software engineers get inspired by a chic solution which they import and emulate similarly in FinTP And this is also highly possible since les grands esprits se rencontre
6 Existing customers attitude
Anger for having paid for something which now is free The existent customers can be concerned about the future of their installed system its further development (in one word its future) and on the quality of the service (SLA including) Some recent adopters can possibly be furious for spending their money on buying licenses for a piece of software that differently packaged becomes free of charge
For the first situation the single best solution for Allevo is to ensure a smooth transition from the current status to the new solution deployed Also highly probable Allevo should provide for simultaneous (for at most one more year) maintenance of both FinTP and for qPayIntegrator
For the 2012 new qPayIntegrator adopters Allevo should transparently state the product‟s future and propose a commercially attractive migration towards FinTP when it becomes publically available (like the option for the installation migration and recurring services) The decision should clearly stay with the customer if he still buys Allevo licenses delays the implementation until FinTP is available or if he goes for a competitive solution
In other words the key to mitigate the existing customer perception is switching places and discarding if the situation proves to be uncomfortable
Bottom-line is that to avoid most of the risks the FinTP community must be a rather tightly controlled one though still opened to anyone willingly abiding to the rules
The synthetic view of the main risks their assigned probability impact and the corresponding containment approach is provided in the attached file
Risk IDRisk
CategoryRisk
Probability
(High
Medium
Low)
Severity
(High
Medium
Low)
Containment (Mitigation Action Proposed)
M1Free as in a
Free Puppy
M101
The training service amp support cost could account more than the
commercial product its replacing (application software is typically 30 of
the total cost of ownership of most projects)
Medium Low
M102 Hidden costs ie charge for patches updates and upgrades Medium Low
M2Frequent
updates
M201
Projects might be updated frequently - as often as everyday Too frequent
updates could have a negative impact on the implementation
interoperability and support
Low HighMAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M3Backwards
compatibility
M301 Less accountability Low LowMAP03 Access to prior versions of source code (additional in-house
development and support procedures might be necessary)
M4Support
related risks
M401Support could be perceived as the biggest issue with open source
software deploymentsHigh High
M402 Internal External Accountability SLAs High High
M403Code fragmentation or forking if the community fails to institutionalize
corporate like formal structureHigh High
M404Support could require greater involvement and different skills set from
operations staffMedium Medium
M5Community
immaturity Low Low
M501Could generate incompatibility of FinTP with industry standards amp
regulationsMedium Medium
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M6 Uncertainty The inherent uncertainty in every open source project
M601 Community disputes might impact project viability and future High HighMAP04 The Mentor should prevent amp mitigate any conflicts inside the
community
M602 Open source projects may not stay open in future releases High HighMAP05 The originator liabilities should be strongly enforced by the
community statute
M7 Legal risks
M701 Copyright infringement High High
M702 Can open source software deployments pass an audit
M8 GPL General Public License specific development concerns
M801Software thatrsquos derived from an existing GPL project in whole or in part
might not be released under the same licenseHigh High M08 The community should regulate the licensing model
M802
Developer contamination - developer could review an existing open source
project could see an elegant solution then implement a similar function in
closed source project
High HighMAP09 Procedurals constrains for the software developers should be
enforced
M9
Current
customers
attitude
The actual customer perception could be negative High High
M12 To prevent a negative attitude Allevo should involve the customers
in the FinTP project Allevo needs their active support for a smooth and
issues less transition
ma
rke
t re
late
d r
isk
s
co
st
rela
ted
ris
ks
MAP01 The community should regulate the applicable rules and fees for
services and maintenance
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
bu
sin
es
s a
nd
le
ga
l ri
sk
s
MAP06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S1Product
related
S101 Late delivery lead time Medium MediumMAP15 Allevo should provide proper resources (funding and human
resources)
S102 Credibility loss if fail to certify with SWIFT Medium High MAP16 Should be discussedamp agreed with SWIFT
S103 Inexperienced team or allocation below needs Low HighMAP15 Allevo should provide proper resources (funding and human
resources)
S104 Improper or non efficient version management Low High MAP16 Review the current Allevo Configuration Management System
S105Poor quality if the community fails to institutionalize proper verification and
validation practices3
M06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S106 Lack of expertise in open source projects 2 Allevo should engage thoroughly selected Open Source consultants
S2Service
related
S201
The software maintenance not properly providing for bugs fixing
regulationamp standard alignment technological improvements communities
improvement requests
High HighMAP01 The community should regulate the applicable rules and fees for
services and maintenance
S202 One-time amp recurring services might be provided by unqualified resources High HighMAP17 The community should regulate the training curricula and related
expertise certification
S203 Provided services might not meet the minimal SLA performance criteria High HighMAP17 The community should regulate the training curricula and related
expertise certification
S204 Relaxed or lack of accountability of the professionals High HighMAP18 The community should regulate the employment agreement of
the professionals
S205 Lack of qualified professionals High HighMAP19 The community should ensure a balanced number of certified
professionals with the community size
S3Community
related
S301
If after disclosing FinTP the community does not enthusiastically adopt
the solution competitors might more successfully develop a similar
strategy
Medium MediumMAP20 FinTP promotion should be convincing and realistic A well
organized marketing campaign by Allevo
S302The community mentor andor early adhering members have no
undeniable prestige or are not largely trustfulMedium Medium MAP99 Project status review Ending the project could be one option
S303 The Mentor does not strongly commit for the project Medium Medium MAP99 Project status review Ending the project could be one option
S4 Legal
S401Exposure to copyright and IP infringement due to working team unaware of
the legal consequences of using third party softwareMedium Medium
MAP21 Allevo should keep records and fully document the use of open
source code
S402Copyright or intellectual property infringement can lead to injunctive relief
and monetary damagesHigh High
MAP23 Allevo should institutionalize a tight licensing and technical
control
S403 All risks related to open source compliance High HighMAP24 Allevo should appoint as soon as possible a FinTP compliance
Officer
S5 Financial
S501 Lack of financing institutions Medium MediumMAP25 Allevo should urge consultant to provide a consistent list of
potential investors
S502 Dependency on the financing institution approval Medium Medium
S503Not thoroughly planned project overlooking one or some project cost that
need to be financedMedium Medium
Sp
ec
ific
ris
ks
tec
hn
ica
lm
ark
eti
ng
leg
al
fun
din
g
MAP26 Allevo should carefully draw a consistent and eligible project for
financing
Risks
Riskspdf
FinTP - Vision and Scope
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Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
11 Appendix - Bibliography 1 Accenture Open Source Research Geographic Findings
2 Accenture Open Source Research Industry Findings
3 Producing Open Source Software - How to Run a Successful Free Software
Project by Karl Fogel
4 Open Source Software Risks and Rewards by Gary Hein
5 A Business Case Study of Open Source Software by Carolyn A Kenwood
6 6 critical success factors for product development by Christian Wig
7 Bank 20 by Brett King
8 Managing the business risks of open innovation by Oliver Alexy and Markus
9 Product idea evaluation checklist shared by Startgass AS
10 SWIFT 2015 Strategy
11 Customers and business impact of product changes
FinTP - Vision and Scope
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12 Appendix - Glossary ACH Automated Clearing House that is used to clear retail payments
between banks in a country or region
APAC Asia and Pacific
AML Anti-Money Laundering
BCampDR Business continuity amp disaster recovery
B2B Business to business
C2B Consumer to business
CET Central European Time
CMMI Capability Maturity Model Integration
CMS Configuration Management System
Coexistence The situation of multiple standards existing at the same time in the same business space Within SWIFT this refers to the coexistence between the MT and MX standards This also refers to the set of measures being taken to make the situation easier to handle by the community (publication of mapping rules translation serviceshellip)
CSM Clearing and Settlement Mechanism
CUG Closed User Group
Dictionary Part of the ISO 20022 Repository that contains all items that can be re-used during business modelling and message definition activities
EAI Enterprise Application Integration - middleware to connect applications and communication interfaces Typical EAI software includes features for mapping data between various formats enriching messages with data from other systems and orchestrating message flows
ECB European Central Bank
EMEA Europe Middle-East Africa
EPC European Payment Council
ERP Enterprise Resource Planning
EU European Union
EUCLID Connectivity to EuroClear Bank services
FIN The messaging service offered by SWIFT for the secure and reliable exchange of MT messages in store-and-forward mode By extension the syntax used to format these MTs
IP intellectual property
Interoperability Capability to easily exchange business information while using different message standards ISO 20022 promotes global use of syntax-neutral business and message components as a common denominator to achieve interoperability between standards using different syntaxes
ISO The International Organization for Standardization - an international standard-setting body composed of representatives from more than 160 national standards organizations that promulgates worldwide standards in a variety of domains aiming at facilitating cross-border exchanges of goods services and techniques
FinTP - Vision and Scope
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ISO 15022 An ISO standard that describes the syntax to be used for developing securities messages used mainly to support back office related transaction flows It replaced the previous securities messaging standard ISO 7775
ISO 20022 RA Registration Authority - offers the services described in an ISO standard on behalf of and under a contractual agreement with the International Organization for Standardization
ISO 20022 Repository
Repository maintained by the ISO20022 RA which contains the financial business models message definitions and components defined in compliance with the ISO 20022 standard
ISO 20022 RMG Registration Management Group - in charge of the overall management of the ISO 20022 development and registration process in accordance with the ISO 20022 standard
ISO 20022 SEG Standards Evaluation Groups -in charge of validating candidate ISO 20022 messages within the scope of the business justification and ensuring that they address the needs of their future international community of users
ISV Independent Software Vendor
KYC Know Your Customer
MACUG Member Administered Closed User Group
Message A set of structured information exchanged between two parties involved in a financial transaction
Message component and element
A re-usable data structure used for assembling message definitions The data defined in a message component is bdquotraced‟ back to the business components and business elements In simple terms business components define the business meaning message components create data structures for messaging
MI Market Infrastructure - a system that provides services to the financial industry for trading clearing and settlement matching of financial transactions and depository functions
Middleware Software that enables data to be exchanged among different systems with standard communication components and tools for formatting mapping and processing
MT The traditional bdquotag value‟ Message Types for use on the FIN service offered by SWIFT
MX An XML message exchanged over SWIFTNet whether or not ISO 20022 compliant
OS Open source
PSP Payment service provider
QA Quality assurance
RMA Relationship Management Access
RTGS Real Time Gross Settlement System
SAA SWIFT Alliance Access
SAE SWIFT Alliance Entry
SAG SWIFT Alliance Gateway
SaaS Software as a Service
SCORE Standardized CORporate Environment
FinTP - Vision and Scope
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Semantics The study of meaning usually in language The word is often used in ordinary language to denote a problem of understanding that comes down to word selection or connotation
SEPA Single Euro Payment Area
SLA Service level agreement
SME Small and Medium-sized Business(es)
SOA Service Oriented Architecture
SSB SWIFT Service Bureau
STP Straight Through Processing
SWIFT Society for Worldwide Interbank Financial Telecommunication Visit wwwswiftcom
Syntax Physical format of a message used to identify and represent the conveyed pieces of information
T2S TARGET2 Securities - an initiative of the Eurosystem It is an IT platform that aims to make settlements across national borders simpler and more cost-efficient
TARGET2 The Eurosystem-owned European Real Time Gross Settlement (RTGS) system (Trans-European Automated Real-time Gross Settlement Express Transfer System) TARGET2 is one of the largest high-value payment systems in the world
Taxonomy The classification in a hierarchical system typically organized by super type - sub type relationships also called generalization-specialization relationships or less formally parent-child relationships
TSU Trade Service Utility
TCO Total cost of ownership
Translation rules
Set of rules to be used to map the pieces of information included in a message expressed in one syntax to the equivalent message expressed in another syntax
Remit Remittances
XML eXtensible Mark-up Language - popular syntax to encode documents (or messages) electronically on the Internet XML allows communities to define their own identifiers (or tags) and format (or data type) for each component of a message
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Bureaus etc) ISV regulatory institutionsMarketing plan feasibility campaign efficiency and costs
2 MentorPreferable SWIFT
Also eligible SunGard IBM affiliation to other OS communitySWIFT decision
3 Legalcopyright Expert legal consultant and RO apprentice Cost and time shift dependent
4 Tight regulation Clear membership admission amp software contribution criteria The quality of the consultant advice
5 Marketing Actively recruiting community members Marketing plan feasibility campaign efficiency amp customer skepticism
a community portala provide content amp debate space information consolidation amp dissemination virtual
showroom subscription management support
a business analysis solution availability and maintenance by one of the
members or employed company
b press releases amp
announcementsb PR and AR b communicators availability and costs
c events c periodical conferences user focused meetings c cost dependent
6 Financing World Bank EU amp private funds Lobby amp funds availability
Item
FinTP
FinTP community
FinTP - Vision and Scope
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a Banks
Regional and international banks are rethinking and often improving their business architecture because of strong penetration of traditionally non-financial business in the money supply chain
The banks have in general the following choices
i Stay the course This often means keep on muddling
ii Outsource the processing of financial transactions in its entirety or in parts
iii Lower the recurring costs dramatically and benefit from joint developments by implementing Open Source solutions for commoditized parts of the needed infrastructure
Allevo provides the building blocks for the processing of financial transactions (FinTP) for those organisations who want to go for the third strategic choice
Toolbox3 (see 51 Features for details) as illustrated in bellow figure
Business flow consolidation
External interfaces to market infrastructure(s)
Funds transfer (credit transfer direct debit debit instruments duplicate detection treasury flows)
Operational functionalities such as liquidity reporting accounting reconciliation AML transactions filtering remittances management competitive reports etc
All helping the bank to manage the operational risk
3 Toolbox means a comprehensive collection of ready to deploy operational features
FinTP - Vision and Scope
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Payment factory - as illustrated in the bellow figure - is the bank-centralized service for smaller financial institutions or corporations to provide payment and collections processing in compliance with regional or global regulation along with additional service (eg intra-day limits etc)
A similar type of architecture can be used to set-up a bank administrated Member Concentrator or a (SWIFT) Service Bureau or a Payment Service Provider
FinTP - Vision and Scope
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b Micro-finance institutions
Toolbox3 (see 51 Features)
Integration of micro-financing application with mobile payment operator(s) and banks It provides support for loan applications loan disbursement and repayments It integrates the mobile payments and the banking payments and as such provides working capital management Multi-MMTs amp multi country operations are also supported
FinTP - Vision and Scope
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c CSMs
Toolbox3 (see 51 Features)
CSMs can use FinTP (as shown in the bellow figure) to provide its customers an
effective connectivity readiness package Likewise CSMs can use FinTP to connect
themselves to other CSMs they need to
FinTP - Vision and Scope
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d Corporations
Toolbox3 (see 51 Features)
The financial or treasury department of the corporation can use FinTP (as depicted in
the figure bellow) to concentrate the processing and management of all their financial
business in one single operation window FinTP provides the building blocks for a highly
effective money supply chain between banks providers and customers Beyond that
FinTP empowers control on the working capital and financial resources
FinTP - Vision and Scope
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e Public administrations
Toolbox3 (see 51 Features)
Public debt business automation through Treasury Bonds settlement on all trade phases eg pre- sales post-
Wages and pensions payment in compliance with SEPA regulations
Structural funds financial management (in a business group managed by the State Treasury)
FinTP plays a multiple roles in the Public Administration financial business
a Bridge between the global banks secure network (SWIFTNet) and the Government
secure national network performing format conversion and business flow mapping
thus FinTP acts as a financial integrator of the different public institutions
b Interoperability gateway with the banking community and financial market
infrastructures
c Auctioning portal for the Treasury Bonds allocation and settlement for the Primary
market
d Management of the payments related to Structural Funds financed projects and to
the providers of the public institutions
e Payments (such as wages pensions state subsidies) due to individuals intermediated by banks using SWIFTRemit framework Similarly the taxes collection should be handled by the same system and framework FinTP provides means to perform the operations using either mobile devices or the internet
FinTP - Vision and Scope
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44 Key Business Objectives and Success Criteria
Today Allevo faces two major limitations in fulfilling its business objectives
1 Strong dependency on its narrow national market and thus being limited to the
known European Union and particularly Romanian practice
2 Significant allocation of the development talents to maintaining qPayIntegrator
rather than working to new business oriented products
Allevo is going to expand its business footprint and simultaneously shift its revenue
source from back-office solutions towards its customers business area (treasury front-
office) applications
To achieve this goal Allevo will focus on developing FinTP business and on gathering
a strong supporting community formed by representatives of the targeted market The
coherence of the community should be ensured by a trustful and committed
moderator
Therefore for the success of the project Allevo deems instrumental the go-to-market
process the solid take-up tempo and the quality of the community
On the FinTP side Allevo should tightly focus on
1 Understanding the community members‟ needs values and priorities in
relationship with their business competitive ecosystem
2 Improving the product management process and the technical commercial amp
distribution documentation
3 Identifying and centring the attention on strong idea generation selection and
monitoring processes
4 Elaborating the right product architecture to enable easy functional and technical
scalability maintainability diagnose native features for flexible customization
compliance to global and regional financial standards and preserving the initial
licensing structure across various customers business models
5 Strengthening project management
6 Designing coherent knowledge transfer process
7 Designing efficient customer support
As a member of this FinTP open source community Allevo will provide
1) the open source FinTP application
2) knowledge transfer (training amp consultancy) to both early adopters and to the
product development amp maintenance body (see 46 The community)
3) for a limited period of time
- support amp maintenance
- alignment to technology standards amp regulation
4) further improvements
5) contribution to relevant proofs of concept community web site conferences
articles online awareness
The power of the community will draw other vendors to partner together to ensure
market coverage each of them complementing the other through their expertise
FinTP - Vision and Scope
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FinTP distribution will be performed via the communitys portal while the initial
consultancy product installation and support services will be delivered remotely
Following the free open source software model FinTP will be available under an open
license free of charge
In designing the new products Allevo will benefit on mid and long term from the deep
insight both of FinTP internals and the structure and operation of the community
45 Market Sizing
Our evaluation of the FinTP targeted market size
- the global market size taken into account is 26100 institutions out of which
- an average FinTP engine licensing fee is euro30000 resulting in potential
maximum expenses of euro783 million
- the corresponding yearly maintenance fee is euro5400 resulting in potential
maximum expenses of euro700 million in 5 years
- the number of potential institutions adopting FinTP in the first 5 years of
availability 250 tier3 amp 2000 tier4
- consequently the savings in 5 years could reach euro675 million in license
fee and euro2025 million in maintenance fee resulting in a total of almost euro90
million
Allevo believes that (at least) during 2013 and 2014 its current income source will be
preserved while after that period the main replacement of the lost (new licensing and
recurring maintenance) fees will mainly consist of services (consulting
implementation support education) and sales of licenses for newly launched
applications
FinTP - Vision and Scope
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46 The FINkers United community
The community structure comprises three main entities (as depicted in the bellow
figure)
1 The adopters (beneficiaries) consumer companies choosing to adopt the
FinTP product in compliance with the community line of business and ethical
conduct
2 The moderator the instrumental inspirational authority expected to draw both
the development vision and the guidelines of the community
3 The contributors
a institutionalized bodies eg development and maintenance test and
validation audit legal marketing
b independent contributors eg ISVs (Allevo falling under this category)
solution providers integrators or passionate developersindividuals
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5 Solution Description amp Parameters Like qPayIntegrator FinTP offers a
standard compliant processing
engine for the financial transactions
exchanged between the back-office
or ERP applications and the financial
community (banks MFIs market
infrastructures corporations)
FinTP is able to process financial
messages in both FIN and ISO20022
formats and at the same time offers
a rich set of interfaces to different
financial applications FinTP provides
compliance with various clearing and
settlement mechanisms
Consequently FinTP ensures a high
level automation of the end-to-end
financial transactions processing
51 Features
The FinTP project has two major deliverable components
1 the FinTP application itself
2 the community built around FinTP
All subsequent chapters will refer to both of these
Component code
Component description Comments
FinTP4 FinTP is a financial transactions processing engine for 3rd or 4th tier banks microfinance corporate or SMEs treasuries available as open source application Functional characteristics
1 Operational features
o Predefined flows and message formats
Includes reconciliation of confirmations with transactions
o Single and multiple funds transfer instructions securities settlement amp reconciliation (Romanian Euroclear) messages
The supported payment instruments are credit transfer direct debit debit instruments
o MTMX coexistence Based on FinTP native internal data format (ISO20022)
o Multi-BIC multi-currency
o SEPA ready (certification) Compliancy with EPC regulations for SEPA formatting and business flows (for SCT and SDD) enables bank-to-bank and bank-to-CSM settlement
4 FinTP root is Allevo equivalent product qPayIntegrator a commercially available amp practice proven (since
2005) application qPayIntegrator provides a consistent set of functionalities and it is fully aligned to both industry regulations and technology
FinTP - Vision and Scope
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Component code
Component description Comments
o TARGET 2 ready Compliance with TARGET2 settlement and operations as regulated by the ECB
o SAGSAASAE SAL interfaces
Integration with SWIFTNet to enable banking business
o Liquidity reports Real time cash reports and forecasts using several criteria (currency subsidiary profit centre)
o Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
Analysis and reports of market trends based on volumes amount BIC etc along with early alerts on behaviour changes beyond the standard deviation
o Accounting reconciliation Automatic NOSTROVOSTRO accounts reconciliation intraday liquidity reports and integrated exception management
o AML (sanctions list matching)
High and low value payments filtering uses 20+ black lists and ensures their content maintainability
o Duplicate detection Detection and investigation of possible duplicates the detection window and criteria are configurable
o Remittances processing Covers banks business and operations area as well as distribution channel
o Treasury markets Automation of treasury flows (FX and money market)
o Statements Processing of SWIFT messages related to correspondent banks accounts administration
2 Technical features
o Financial message routing and monitoring
o Multi-threading capabilities
o Persistent end-to-end transactions
During each phase of the entire processing cycle permanent copies of the transaction are kept until the final completion thus avoiding any transaction duplication or loss
o Batching unpacking
o Resilience at transaction level
o Archiving
o Tracing and logging transactions and user events
o Transient errors detection and recovery
o Real-time search and reports
o Security access and user administration
o SaaS cloud ready
FinTP - Vision and Scope
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Component code
Component description Comments
FINkers United - community
Since FinTP is an application handling financial transactions the product releases and the related community should be tightly regulated and controlled As the project matures these components will be further refined The following main components of the community have been identified
‐ the moderator ‐ the product development
and maintenance body ‐ the product and
community auditor body (acting as a gatekeeper of official releases) to control and maintain the change requests integer and eliminate any malware exposures
‐ the test and validation body
‐ the legal body for defining the frame for product distribution amp licensing
‐ the marketing entity responsible for creating awareness and attracting contributors and adopters
‐ the portal used as a channel for marketing support and version control
‐ individual contributors namely ISVs solution providers developers integrators who wish to use their skills and knowledge to the benefit of the community
These tools strongly depend on the available budget and widespread
organization culture It is not mandatory for these to be open source if usage of
open source tools would mean lower quality
3) Licensing
The licensing model highly depends on the results of the open source legal and
business consultancy However we assume the following frame
‐ free of charge initial and recurring maintenance license for using FinTP
‐ FinTP does not use software components enforcing liabilities for the user
‐ consumers using FinTP source code (in part or entirely) should comply to
the licensing policy of the community
‐ the version released by the development amp maintenance body is the only
official amp to be trusted version of the community ensuring product integrity
unity and stability
4) Regulatory compliance
The regulatory compliance strongly depends on the early adaptation of new amp
changed rules via the recurring maintenance and on the quality of the audits
performed by the specific bodies of the community
Thus it is ensured that ISO20022 and FIN standards TARGET2 and TARGET2
Securities SEPA or country specific regulations (as stated respectively by
FinTP - Vision and Scope
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SWIFT standards EPC specification ECB or regional Central Banks
regulations that the community chooses to comply with) stay the most
important business specific anchors of FinTP
The FinTP design also offers support for flexible definition of new compliance
sources
5) Consultancy
The needed consultancy is twofold
‐ legal to ensure that FinTP does not infringe other licensing constraints
‐ open source specific to enable the right choice of the community type and of its governing law
The main constraint relies in choosing the right advisors true experts in the
open source industry amp with appropriate ethic profile - able to deliver as
promised The consultants have to be available 800 am divide 800 pm CET and
easily reachable - geo-location is of utmost importance Selection of the
consultant will basically be done on price assuming the right mix of expertise
and availability is achieved
6) Financing
While Allevo partially undertakes the financing of FinTP development the
ancillary consultancy necessary team education or acquisition of productivity
tools are far beyond the companys 2012 budget
To overcome possible delays in the project Allevo needs to sturdily act to
identify both the most appropriate commercial offer and additional necessary
financing source(s)
FinTP community
The community related items are members moderator legal tight regulation
marketing and financing For each of these items several assumptions and the
corresponding dependencies are provided in the following paragraphs
1) Members
We assume that the communitys members span several business profiles
(such as financial services institutions corporations market infrastructures
PSPs SSBs public administrations regulatory institutions and ISVs) sharing
the mutual focus on financial operations performance and improvement
By now after some tests on market acceptance there have been identified a
few supporters comprising financial services institutions and small ISVs
To ensure the success of building the community there is need for attracting
prestige influencers (market analysts consulting companies of scale - starting
with big four key industry providers - such as SWIFT other communities - ie
professional such as banking insurers capital market associations) and a
credible pool of financial institutions and corporations
To this end Allevo unrolls its own awareness campaign through direct
meetings publications blog posts and social media public presentations and
by officially launching the initiative in a conference focused on free of charge
financial transactions processing applications
Allevo further plans to use Sibos 2012 as opportunity to organize a less
traditional communication session gathering a relevant international panel to
FinTP - Vision and Scope
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debate the strong and weak aspects of this initiative amp to get the public involved
as much as possible
The goal is that by the end of 2012 some tens of different institutions are
committed to co-found the community and to actively contribute to establishing
the legal frame and to forming the required action bodies
2) Moderator
Allevo perceives the Moderator as the critical member of the community since
his prestige and influence will warrant the outcome of all performed activities
The moderator must commit on long term to develop the community and to
sponsor it with its share of trust
Allevo strongly believes that the Moderator should have a global footprint be a
reputable and trustful institution
3) Legalcopyright
The legal consultant and advisor needs to provide the coherent legal frame to
cover all community activities by roles and accountability While making it easy
for the members it should be more demanding as far as contributors are
concerned (though still encouraging ISVs to actively participate) It has to draw
very precise responsibilities for the independent and institutionalized bodies
(for instance product maintenance amp development and audit) and for the
Moderators status
The quality of this legal work fully relies on the expertise and experience of the
advisor
The law governing the community has to be in harmony with the European
(either French or Anglo-Saxon) legal system and with the open source legal
regulations largely practiced in other business regions (US and APAC)
4) Tight regulation
FinTP the product meant to gather a community which uses and supports it is
all about moving values between different entities Thats critical irrespective of
the amount because failing to perform properly opens the doors to arguments
amp loss of reputation with the related tangible costs Moreover the product has
to be beyond any doubt during its entire lifecycle free of any malefic
embedded functions meaning that contamination has to be avoided by all
means
Allevo strongly believes that this requirement can be attained only by tight
regulation of the community specific approval of the initially launched version
of FinTP and of the recurring contributions
This approach can be felt strange compared to most open source communities
and can lead to little interest from IT talents making them feel banned or
restricted It remains the Moderator‟s duty to make them feel privileged if
accepted and rewarded as such However this censorship is a price to be paid
since the community and the project are about processing transactions
initiating value transfer
FinTP - Vision and Scope
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5) Marketing
The community needs to have the clear objective of spreading both
geographically and over a consistent number of industries
To achieve this goal the community should be able to actively provide open
access to relevant information (including explanations of concepts hands-on
evaluation) to non-members and to also answer their questions on FinTP and
on the community itself
The same level of information needs to be ensured for the members to whom
supplementary updates on the community events decisions available
releases patches and fixes should be made available They need to also get
focused forum discussions on specific business areas and subsequent
processes need to be distributed
These functionalities have to be hosted on the community‟s dedicated portal
This portal has to provide content dialogue space information consolidation
and broadcasting It must be a virtual showroom for FinTP It needs to host
documents and virtual meetings subscription management and product
support amp development
The community has to be able to run its own meetings enabling direct contact
between active members or their representatives
Meaningful press releases have to be regularly issued along with actively
maintaining a productive relationship with market analysts to consolidate a
clear public understanding of the community spirit and goals
6) Financing
Its all about money-money-money since at least for the first 2-3 years the
community needs to be financed
Upon reaching maturity the institutionalized bodies of the community can earn their income from collateral activities - such as organizing conferences providing education and specialized support services - either for the initial FinTP installations and customizations or for recurring services requested by the members An alternative can be trialling and certifying interested providers enabling them to perform support services for FinTP
Thus who could pump money into this project It could be one or a mix of
‐ World Bank - if governmental programs are implied and provided a proper project which convincingly demonstrates the beneficed social impact
‐ EU development funding
‐ interested wealthy members of the community
The most critical dependencies are external such as (arranged according to
their impact) availability of funds for building the community finding trustful
and skilled open source consultants (legal business community licensing)
The synthetic view of the main assumptions and dependencies is provided in
the attached file
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Maintenance amp user support 1-Jan-13 Marketing inst action
4 Activities
Initial planning amp budgeting 15-Dec-12 document
Roles allocation 15-Dec-12 document
Community inst Implementation 15-Dec-12 action
Awareness campaign 1-Jan-13 action ongoing process
Members recruiting 1-Jan-13 action ongoing process
Continued operation 1-Jan-13 action ongoing process
Service sales 1-Jan-13 action ongoing process
Future development planning 1-Jan-13 document ongoing process
5 Resource allocation
If existing institution - allocation 15-Dec-12 action
If newly formed - recruiting 15-Dec-12 action
Make FinTP available to comm 1-Jan-13 action ongoing process
Start community financing 1-Jan-13 action ongoing process
6 Financing
Initial investment 1-Jan-13 action secured by that date
First period of comm operation 31-Aug-13 action secured by that date
co
mm
un
ity
Project approach
Project approachpdf
FinTP - Vision and Scope
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8 Scope This chapter deals with the phased availability of various FinTP features again considered from application and community points of view
In the first phase (due Dec 2012) the core of FinTP application is ready including the following technical features
- financial message routing between services and monitoring of exchanges
- multi-threading capabilities
- persistent end-to-end transactions
- batching de-batching
- archiving
- tracing and logging of transactions and user events
- transient errors detection and recovery
- real time search and reports
- security access and user administration
Similarly during the first phase the main community components need to be in place
- moderator
- software development and maintenance body (Allevo also available in the first and second phase of the project)
- test amp validation body
- (software) auditor
- legal
- main contributors (Allevo falls into this position)
- platform
- marketing
In the second phase (Dec2012 - Dec2013) several operational features of FinTP will be added
- predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit instruments securities settlement reconciliations
- MTMX coexistence
- multi-BIC multi-currency
- SEPA ready certification
- TARGET2 ready
- SAGSAASAE interfaces
- duplicate detection
- liquidity reports
- competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
- accounting reconciliation
- AML (sanctions list matching)
- SaaS and cloud ready
along with resilience and start of maintenance and knowledge transfer (the last two obviously continuing in the next phases)
FinTP - Vision and Scope
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The synthetic view of the project scope is provided in the following table
Crt No
Feature Activity Phase1 31Dec12
Phase2 31Dec13
Phase3 31Dec14
Phase4 31Dec15
Fin
TP
A Operational features
1
Predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit Instruments bonds (Romanian Euroclear) reconciliations
2 MTMX coexistence
3 Multi-BIC multi-currency
4 SaaS ready cloud ready
5 SEPA ready certification
6 TARGET2 ready
7 SAGSAASAE interfaces
8 Liquidity reports
9 Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
10 Accounting reconciliation
11 AML (sanctions list matching)
12 Duplicate detection
B Technical features
1 Routing financial message between services and monitoring of data flows
2 Multi-threading capabilities
3 Persistent end-to-end transactions
4 Batching de-batching
5 Resilience (at transaction level)
6 Archiving
7 Tracing and logging of transactions and user events
8 Transient errors detection and recovery
9 Real time search and reports
10 Security access and user administration
C Other activities
1 FinTP maintenance
2 Knowledge transfer
Co
mm
un
ity
Establishing the institutionscomponents
1 Mentor
2 Software Auditor amp Provider
3 Legal service
4 Members
5 Allevo initial role
6 Platform
7 Marketing
FinTP - Vision and Scope
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9 Limitations The main limitations in the economy of the project consist of phasing several FinTP
operational features for the following year (eg debit instruments liquidity reporting
AML filtering accounting reconciliation resilience SaaS ready cloud ready etc)
At the same time for features intended to front-office usage like Remit it was not yet
decided to publish them as open source product
The synthetic view of the main limitations is provided in the following table
Crt
nrItem Limitation Exclusion Comments
1
FinTP
a
Operational features Available in 2013
b
Remit Not included in
open source
package
2
Community
a
Rules Tightly controlled The statute should
ensure the right
balance between
safety and free
association of talents
Given the significant budget allocation (at least from Allevo perspective) the strong
requirement to meet the maximum ceiling will limit the FinTP product initial preparation
and maintenance expenses
Community wise the obligation of a tight regulated statute will have to ensure the right
balance between safety (mandatory in an environment dealing with financial
transactions) and a free association of talents (typical in an open source community)
In the first period after launch (at least the first two years) of the initiative the
maintenance and support activities will be provided by Allevo (as initial contributor)
A major restriction would be to meet the budgeted development and maintenance
FinTP - Vision and Scope
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10 Appendix - Risks
Specific risks
1 Product
a Long delivery lead time This is a medium probability and impact risk however Allevo should make available the needed resources and motivate the entire team for the job
b Credibility loss if FinTP fails to further become certified on meaningful operations andor business tracks (ie SWIFT business certification tracks or similar) The single possible containment is lobbying if the application certification program rejects open source products Anyway the impact is very important and its materialization should be avoided
c Low quality of the allocated team and improper version management are highly unlikely to occur as long as the formal transfer of responsibility is smoothly made from Allevo to the corresponding body put in place by the community The real hidden risk is that this process could take too long and it thus has a very high impact
d Poor FinTP quality may result if the community fails to institutionalize proper quality assurance (QA) and verification amp validation (VampV) processes This is most expected not to happen but if it does the impact is at least medium The single path to overcome this risk consists in a professional approach to these items based on institutionalizing practice proven QA and VampV processes
e Allevo lack of expertise in the open source business This can be contained by carefully selecting trustful amp truly expert consultants Otherwise it means more money longer time spent on project and expenses without proper return
2 Service
a The software maintenance does not properly deliver as expected ie on-time and on-quality bug fixing regulation amp standards alignment and productivity amp technological improvement The key to contain this risk materialization is the community status having provisions to neatly provide maintenance and further development of the rules for FinTP as well as the applicable rules and fees for the ancillary services
b Low quality and safety of the service received by the members of the community To avoid the risk of performing the one-time amp recurring support services by under-prepared professionals the community has to rule the process of training and qualifying the companies willing to contribute in this area
c Not meeting the minimal SLA criteria The community should regulate and periodically revise the training curricula and to further audit both the teachers and the certified experts to ensure the service level agreements are met
d Under motivated service providing professionals - up to the level of not feeling the high impact of their activity The community status must provide guidance to the contributors on the minimal standards the professionals should meet
FinTP - Vision and Scope
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e Constrained expert resource pool This risk could be overcome by the communitys policy to ensure at all time a balanced number of motivated experts to the communitys size Failing to do so may result in high negative impact of the community business and public perception
3 Community
a Emergence of a parallel competitive community If the optimal timing between publically disclosing FinTP and community take-off is not achieved then there are high chances that following a competitive initiative other entrepreneurs successfully launch their own similar or derived community This could be avoided by periodical reviews of the progress of both FinTP and community status and deciding whether the project needs to be put on hold or not
b Unfit reputation of the Moderator or main contributors If either the Moderator or the initial contributors are not beyond any dispute and are reputable institutes then there is certainly something rotten in Denmark and the project should be put on-hold
c No commitment from the Moderator‟s side Similarly if the Moderator does not commit to the project it means that Denmark has a serious problem to solve The project should relinquish until the matter is fixed
4 Legal
a Misuse of copyright and intellectual property (IP)The assigned working team could not be aware of the limitations and liabilities of using (entirely or partially) third party software this risk can be contained by delivering the right training providing proper working procedures carefully recording and documenting the use of open source code and carefully cross-scanning
b Injunctive relief and financial damages can be caused by not properly and continuously controlling the use of third party open source code resulting in copyright or IP infringement There are two containment measures which can be taken tighten the compliance check during the product lifecycle or apply the sanction policy as to set an example
c The competition starts a class action - this may result in delaying the project
5 Financing
a Lack of long term financing institutions Allevo should urge its consultant to identify and draw a reasonable list of financial options institutions
b Exceeding the budget given that this type of project has no precedent in Allevo and to avoid exposing to the dependency on engagement to financial institutions or to commitments beyond the existing budget a further carefully drawn project plan is needed along with its explicit approval from the board of the company
Market related risks
1 False expectations
a Expensive services Not everything is free aside the initial and maintenance free licensing the training the support and other professional services can amount to more than in general expected Allevo rates this risk as medium possible but with low impact as long as the law governing the community and its initial period of operation will consecrate fair market prices and competitive sources of contribution
FinTP - Vision and Scope
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b Hidden costs for patches updates and upgrades While of similarly weight in terms of probability and impact this should be no real concern as long as the law governing the community clearly provides for free and accountable maintenance
2 Poor image on quality
a Too many releases making FinTP hard to manage and unsafe to operate Given proper regulation of the community and the mature root of FinTP Allevo disregards the possibility of this risk to materialize However if this were to happen this is a high impact risk and by all means should be avoided
b Backward technological (in)compatibility looks to us as a low risk in all respects and within organizations applying practice proven software engineering processes and professional - accountable team this is not likely to materialize
c Support can be perceived as the highest impact risk for FinTP This can be overcome by tight regulation of the commercial and professional conditions to deliver the service (for instance only qualified organizations should be recommended to members for supporting FinTP)
d SLA and accountability for both internally or externally performed services is closely correlated to the previous risk and the community status should provide the support for growing a community of competencies and accountable professionals around FinTP Periodical auditing (by the specialized community body) of this pool of professionals will further ensure the confidence that the skills are preserved at the required level
e Code fragmentation and forking is a high impact risk with a low probability of happening in the initial period provided the knowledge transfer is done orderly and in an institutionalized manner
3 Inherent uncertainty
a Community disputes can jeopardize its cohesion the project viability and future This is a high impact possibly high probability risk and it is the definite role of the Moderator to feel prevent and while materializing mitigate any conflicting situation
b FinTP going commercial post-launch This is a huge impact possibly high occurrence probability but manageable with the right legal instruments provisioned in the community
c Loss of alignment to industry standards and regulations This risk has medium probability and medium impact given the assumption that the community is tightly regulated and the working bodies institutionalized and gathering professionals
4 Legal
Copyright infringement given Allevo experience in the open source business this risk is highly probable and has a high impact on FinTP especially if mistakes are made in the launching phase Similarly if during the product maintenance and further development phase the community fails to institutionalize proper formal software development processes (covering all FinTP lifecycle phases) based on industry practice proven model(s) Supplementary the expert code scanning audit for compliance is the single resort to preclude external software source misuse
FinTP - Vision and Scope
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5 GPL specific
a Noncompliance to the GPL license If GPL license is used the product should further distribute in compliance with this part provisions High impact and probability but manageable if proper software development processes are used and if the statute clearly defines the licensing model for FinTP
b FinTP unconformity The risk that software engineers get inspired by a chic solution which they import and emulate similarly in FinTP And this is also highly possible since les grands esprits se rencontre
6 Existing customers attitude
Anger for having paid for something which now is free The existent customers can be concerned about the future of their installed system its further development (in one word its future) and on the quality of the service (SLA including) Some recent adopters can possibly be furious for spending their money on buying licenses for a piece of software that differently packaged becomes free of charge
For the first situation the single best solution for Allevo is to ensure a smooth transition from the current status to the new solution deployed Also highly probable Allevo should provide for simultaneous (for at most one more year) maintenance of both FinTP and for qPayIntegrator
For the 2012 new qPayIntegrator adopters Allevo should transparently state the product‟s future and propose a commercially attractive migration towards FinTP when it becomes publically available (like the option for the installation migration and recurring services) The decision should clearly stay with the customer if he still buys Allevo licenses delays the implementation until FinTP is available or if he goes for a competitive solution
In other words the key to mitigate the existing customer perception is switching places and discarding if the situation proves to be uncomfortable
Bottom-line is that to avoid most of the risks the FinTP community must be a rather tightly controlled one though still opened to anyone willingly abiding to the rules
The synthetic view of the main risks their assigned probability impact and the corresponding containment approach is provided in the attached file
Risk IDRisk
CategoryRisk
Probability
(High
Medium
Low)
Severity
(High
Medium
Low)
Containment (Mitigation Action Proposed)
M1Free as in a
Free Puppy
M101
The training service amp support cost could account more than the
commercial product its replacing (application software is typically 30 of
the total cost of ownership of most projects)
Medium Low
M102 Hidden costs ie charge for patches updates and upgrades Medium Low
M2Frequent
updates
M201
Projects might be updated frequently - as often as everyday Too frequent
updates could have a negative impact on the implementation
interoperability and support
Low HighMAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M3Backwards
compatibility
M301 Less accountability Low LowMAP03 Access to prior versions of source code (additional in-house
development and support procedures might be necessary)
M4Support
related risks
M401Support could be perceived as the biggest issue with open source
software deploymentsHigh High
M402 Internal External Accountability SLAs High High
M403Code fragmentation or forking if the community fails to institutionalize
corporate like formal structureHigh High
M404Support could require greater involvement and different skills set from
operations staffMedium Medium
M5Community
immaturity Low Low
M501Could generate incompatibility of FinTP with industry standards amp
regulationsMedium Medium
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M6 Uncertainty The inherent uncertainty in every open source project
M601 Community disputes might impact project viability and future High HighMAP04 The Mentor should prevent amp mitigate any conflicts inside the
community
M602 Open source projects may not stay open in future releases High HighMAP05 The originator liabilities should be strongly enforced by the
community statute
M7 Legal risks
M701 Copyright infringement High High
M702 Can open source software deployments pass an audit
M8 GPL General Public License specific development concerns
M801Software thatrsquos derived from an existing GPL project in whole or in part
might not be released under the same licenseHigh High M08 The community should regulate the licensing model
M802
Developer contamination - developer could review an existing open source
project could see an elegant solution then implement a similar function in
closed source project
High HighMAP09 Procedurals constrains for the software developers should be
enforced
M9
Current
customers
attitude
The actual customer perception could be negative High High
M12 To prevent a negative attitude Allevo should involve the customers
in the FinTP project Allevo needs their active support for a smooth and
issues less transition
ma
rke
t re
late
d r
isk
s
co
st
rela
ted
ris
ks
MAP01 The community should regulate the applicable rules and fees for
services and maintenance
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
bu
sin
es
s a
nd
le
ga
l ri
sk
s
MAP06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S1Product
related
S101 Late delivery lead time Medium MediumMAP15 Allevo should provide proper resources (funding and human
resources)
S102 Credibility loss if fail to certify with SWIFT Medium High MAP16 Should be discussedamp agreed with SWIFT
S103 Inexperienced team or allocation below needs Low HighMAP15 Allevo should provide proper resources (funding and human
resources)
S104 Improper or non efficient version management Low High MAP16 Review the current Allevo Configuration Management System
S105Poor quality if the community fails to institutionalize proper verification and
validation practices3
M06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S106 Lack of expertise in open source projects 2 Allevo should engage thoroughly selected Open Source consultants
S2Service
related
S201
The software maintenance not properly providing for bugs fixing
regulationamp standard alignment technological improvements communities
improvement requests
High HighMAP01 The community should regulate the applicable rules and fees for
services and maintenance
S202 One-time amp recurring services might be provided by unqualified resources High HighMAP17 The community should regulate the training curricula and related
expertise certification
S203 Provided services might not meet the minimal SLA performance criteria High HighMAP17 The community should regulate the training curricula and related
expertise certification
S204 Relaxed or lack of accountability of the professionals High HighMAP18 The community should regulate the employment agreement of
the professionals
S205 Lack of qualified professionals High HighMAP19 The community should ensure a balanced number of certified
professionals with the community size
S3Community
related
S301
If after disclosing FinTP the community does not enthusiastically adopt
the solution competitors might more successfully develop a similar
strategy
Medium MediumMAP20 FinTP promotion should be convincing and realistic A well
organized marketing campaign by Allevo
S302The community mentor andor early adhering members have no
undeniable prestige or are not largely trustfulMedium Medium MAP99 Project status review Ending the project could be one option
S303 The Mentor does not strongly commit for the project Medium Medium MAP99 Project status review Ending the project could be one option
S4 Legal
S401Exposure to copyright and IP infringement due to working team unaware of
the legal consequences of using third party softwareMedium Medium
MAP21 Allevo should keep records and fully document the use of open
source code
S402Copyright or intellectual property infringement can lead to injunctive relief
and monetary damagesHigh High
MAP23 Allevo should institutionalize a tight licensing and technical
control
S403 All risks related to open source compliance High HighMAP24 Allevo should appoint as soon as possible a FinTP compliance
Officer
S5 Financial
S501 Lack of financing institutions Medium MediumMAP25 Allevo should urge consultant to provide a consistent list of
potential investors
S502 Dependency on the financing institution approval Medium Medium
S503Not thoroughly planned project overlooking one or some project cost that
need to be financedMedium Medium
Sp
ec
ific
ris
ks
tec
hn
ica
lm
ark
eti
ng
leg
al
fun
din
g
MAP26 Allevo should carefully draw a consistent and eligible project for
financing
Risks
Riskspdf
FinTP - Vision and Scope
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11 Appendix - Bibliography 1 Accenture Open Source Research Geographic Findings
2 Accenture Open Source Research Industry Findings
3 Producing Open Source Software - How to Run a Successful Free Software
Project by Karl Fogel
4 Open Source Software Risks and Rewards by Gary Hein
5 A Business Case Study of Open Source Software by Carolyn A Kenwood
6 6 critical success factors for product development by Christian Wig
7 Bank 20 by Brett King
8 Managing the business risks of open innovation by Oliver Alexy and Markus
9 Product idea evaluation checklist shared by Startgass AS
10 SWIFT 2015 Strategy
11 Customers and business impact of product changes
FinTP - Vision and Scope
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12 Appendix - Glossary ACH Automated Clearing House that is used to clear retail payments
between banks in a country or region
APAC Asia and Pacific
AML Anti-Money Laundering
BCampDR Business continuity amp disaster recovery
B2B Business to business
C2B Consumer to business
CET Central European Time
CMMI Capability Maturity Model Integration
CMS Configuration Management System
Coexistence The situation of multiple standards existing at the same time in the same business space Within SWIFT this refers to the coexistence between the MT and MX standards This also refers to the set of measures being taken to make the situation easier to handle by the community (publication of mapping rules translation serviceshellip)
CSM Clearing and Settlement Mechanism
CUG Closed User Group
Dictionary Part of the ISO 20022 Repository that contains all items that can be re-used during business modelling and message definition activities
EAI Enterprise Application Integration - middleware to connect applications and communication interfaces Typical EAI software includes features for mapping data between various formats enriching messages with data from other systems and orchestrating message flows
ECB European Central Bank
EMEA Europe Middle-East Africa
EPC European Payment Council
ERP Enterprise Resource Planning
EU European Union
EUCLID Connectivity to EuroClear Bank services
FIN The messaging service offered by SWIFT for the secure and reliable exchange of MT messages in store-and-forward mode By extension the syntax used to format these MTs
IP intellectual property
Interoperability Capability to easily exchange business information while using different message standards ISO 20022 promotes global use of syntax-neutral business and message components as a common denominator to achieve interoperability between standards using different syntaxes
ISO The International Organization for Standardization - an international standard-setting body composed of representatives from more than 160 national standards organizations that promulgates worldwide standards in a variety of domains aiming at facilitating cross-border exchanges of goods services and techniques
FinTP - Vision and Scope
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ISO 15022 An ISO standard that describes the syntax to be used for developing securities messages used mainly to support back office related transaction flows It replaced the previous securities messaging standard ISO 7775
ISO 20022 RA Registration Authority - offers the services described in an ISO standard on behalf of and under a contractual agreement with the International Organization for Standardization
ISO 20022 Repository
Repository maintained by the ISO20022 RA which contains the financial business models message definitions and components defined in compliance with the ISO 20022 standard
ISO 20022 RMG Registration Management Group - in charge of the overall management of the ISO 20022 development and registration process in accordance with the ISO 20022 standard
ISO 20022 SEG Standards Evaluation Groups -in charge of validating candidate ISO 20022 messages within the scope of the business justification and ensuring that they address the needs of their future international community of users
ISV Independent Software Vendor
KYC Know Your Customer
MACUG Member Administered Closed User Group
Message A set of structured information exchanged between two parties involved in a financial transaction
Message component and element
A re-usable data structure used for assembling message definitions The data defined in a message component is bdquotraced‟ back to the business components and business elements In simple terms business components define the business meaning message components create data structures for messaging
MI Market Infrastructure - a system that provides services to the financial industry for trading clearing and settlement matching of financial transactions and depository functions
Middleware Software that enables data to be exchanged among different systems with standard communication components and tools for formatting mapping and processing
MT The traditional bdquotag value‟ Message Types for use on the FIN service offered by SWIFT
MX An XML message exchanged over SWIFTNet whether or not ISO 20022 compliant
OS Open source
PSP Payment service provider
QA Quality assurance
RMA Relationship Management Access
RTGS Real Time Gross Settlement System
SAA SWIFT Alliance Access
SAE SWIFT Alliance Entry
SAG SWIFT Alliance Gateway
SaaS Software as a Service
SCORE Standardized CORporate Environment
FinTP - Vision and Scope
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Semantics The study of meaning usually in language The word is often used in ordinary language to denote a problem of understanding that comes down to word selection or connotation
SEPA Single Euro Payment Area
SLA Service level agreement
SME Small and Medium-sized Business(es)
SOA Service Oriented Architecture
SSB SWIFT Service Bureau
STP Straight Through Processing
SWIFT Society for Worldwide Interbank Financial Telecommunication Visit wwwswiftcom
Syntax Physical format of a message used to identify and represent the conveyed pieces of information
T2S TARGET2 Securities - an initiative of the Eurosystem It is an IT platform that aims to make settlements across national borders simpler and more cost-efficient
TARGET2 The Eurosystem-owned European Real Time Gross Settlement (RTGS) system (Trans-European Automated Real-time Gross Settlement Express Transfer System) TARGET2 is one of the largest high-value payment systems in the world
Taxonomy The classification in a hierarchical system typically organized by super type - sub type relationships also called generalization-specialization relationships or less formally parent-child relationships
TSU Trade Service Utility
TCO Total cost of ownership
Translation rules
Set of rules to be used to map the pieces of information included in a message expressed in one syntax to the equivalent message expressed in another syntax
Remit Remittances
XML eXtensible Mark-up Language - popular syntax to encode documents (or messages) electronically on the Internet XML allows communities to define their own identifiers (or tags) and format (or data type) for each component of a message
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Bureaus etc) ISV regulatory institutionsMarketing plan feasibility campaign efficiency and costs
2 MentorPreferable SWIFT
Also eligible SunGard IBM affiliation to other OS communitySWIFT decision
3 Legalcopyright Expert legal consultant and RO apprentice Cost and time shift dependent
4 Tight regulation Clear membership admission amp software contribution criteria The quality of the consultant advice
5 Marketing Actively recruiting community members Marketing plan feasibility campaign efficiency amp customer skepticism
a community portala provide content amp debate space information consolidation amp dissemination virtual
showroom subscription management support
a business analysis solution availability and maintenance by one of the
members or employed company
b press releases amp
announcementsb PR and AR b communicators availability and costs
c events c periodical conferences user focused meetings c cost dependent
6 Financing World Bank EU amp private funds Lobby amp funds availability
Item
FinTP
FinTP community
FinTP - Vision and Scope
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Payment factory - as illustrated in the bellow figure - is the bank-centralized service for smaller financial institutions or corporations to provide payment and collections processing in compliance with regional or global regulation along with additional service (eg intra-day limits etc)
A similar type of architecture can be used to set-up a bank administrated Member Concentrator or a (SWIFT) Service Bureau or a Payment Service Provider
FinTP - Vision and Scope
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b Micro-finance institutions
Toolbox3 (see 51 Features)
Integration of micro-financing application with mobile payment operator(s) and banks It provides support for loan applications loan disbursement and repayments It integrates the mobile payments and the banking payments and as such provides working capital management Multi-MMTs amp multi country operations are also supported
FinTP - Vision and Scope
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c CSMs
Toolbox3 (see 51 Features)
CSMs can use FinTP (as shown in the bellow figure) to provide its customers an
effective connectivity readiness package Likewise CSMs can use FinTP to connect
themselves to other CSMs they need to
FinTP - Vision and Scope
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d Corporations
Toolbox3 (see 51 Features)
The financial or treasury department of the corporation can use FinTP (as depicted in
the figure bellow) to concentrate the processing and management of all their financial
business in one single operation window FinTP provides the building blocks for a highly
effective money supply chain between banks providers and customers Beyond that
FinTP empowers control on the working capital and financial resources
FinTP - Vision and Scope
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e Public administrations
Toolbox3 (see 51 Features)
Public debt business automation through Treasury Bonds settlement on all trade phases eg pre- sales post-
Wages and pensions payment in compliance with SEPA regulations
Structural funds financial management (in a business group managed by the State Treasury)
FinTP plays a multiple roles in the Public Administration financial business
a Bridge between the global banks secure network (SWIFTNet) and the Government
secure national network performing format conversion and business flow mapping
thus FinTP acts as a financial integrator of the different public institutions
b Interoperability gateway with the banking community and financial market
infrastructures
c Auctioning portal for the Treasury Bonds allocation and settlement for the Primary
market
d Management of the payments related to Structural Funds financed projects and to
the providers of the public institutions
e Payments (such as wages pensions state subsidies) due to individuals intermediated by banks using SWIFTRemit framework Similarly the taxes collection should be handled by the same system and framework FinTP provides means to perform the operations using either mobile devices or the internet
FinTP - Vision and Scope
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44 Key Business Objectives and Success Criteria
Today Allevo faces two major limitations in fulfilling its business objectives
1 Strong dependency on its narrow national market and thus being limited to the
known European Union and particularly Romanian practice
2 Significant allocation of the development talents to maintaining qPayIntegrator
rather than working to new business oriented products
Allevo is going to expand its business footprint and simultaneously shift its revenue
source from back-office solutions towards its customers business area (treasury front-
office) applications
To achieve this goal Allevo will focus on developing FinTP business and on gathering
a strong supporting community formed by representatives of the targeted market The
coherence of the community should be ensured by a trustful and committed
moderator
Therefore for the success of the project Allevo deems instrumental the go-to-market
process the solid take-up tempo and the quality of the community
On the FinTP side Allevo should tightly focus on
1 Understanding the community members‟ needs values and priorities in
relationship with their business competitive ecosystem
2 Improving the product management process and the technical commercial amp
distribution documentation
3 Identifying and centring the attention on strong idea generation selection and
monitoring processes
4 Elaborating the right product architecture to enable easy functional and technical
scalability maintainability diagnose native features for flexible customization
compliance to global and regional financial standards and preserving the initial
licensing structure across various customers business models
5 Strengthening project management
6 Designing coherent knowledge transfer process
7 Designing efficient customer support
As a member of this FinTP open source community Allevo will provide
1) the open source FinTP application
2) knowledge transfer (training amp consultancy) to both early adopters and to the
product development amp maintenance body (see 46 The community)
3) for a limited period of time
- support amp maintenance
- alignment to technology standards amp regulation
4) further improvements
5) contribution to relevant proofs of concept community web site conferences
articles online awareness
The power of the community will draw other vendors to partner together to ensure
market coverage each of them complementing the other through their expertise
FinTP - Vision and Scope
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FinTP distribution will be performed via the communitys portal while the initial
consultancy product installation and support services will be delivered remotely
Following the free open source software model FinTP will be available under an open
license free of charge
In designing the new products Allevo will benefit on mid and long term from the deep
insight both of FinTP internals and the structure and operation of the community
45 Market Sizing
Our evaluation of the FinTP targeted market size
- the global market size taken into account is 26100 institutions out of which
- an average FinTP engine licensing fee is euro30000 resulting in potential
maximum expenses of euro783 million
- the corresponding yearly maintenance fee is euro5400 resulting in potential
maximum expenses of euro700 million in 5 years
- the number of potential institutions adopting FinTP in the first 5 years of
availability 250 tier3 amp 2000 tier4
- consequently the savings in 5 years could reach euro675 million in license
fee and euro2025 million in maintenance fee resulting in a total of almost euro90
million
Allevo believes that (at least) during 2013 and 2014 its current income source will be
preserved while after that period the main replacement of the lost (new licensing and
recurring maintenance) fees will mainly consist of services (consulting
implementation support education) and sales of licenses for newly launched
applications
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46 The FINkers United community
The community structure comprises three main entities (as depicted in the bellow
figure)
1 The adopters (beneficiaries) consumer companies choosing to adopt the
FinTP product in compliance with the community line of business and ethical
conduct
2 The moderator the instrumental inspirational authority expected to draw both
the development vision and the guidelines of the community
3 The contributors
a institutionalized bodies eg development and maintenance test and
validation audit legal marketing
b independent contributors eg ISVs (Allevo falling under this category)
solution providers integrators or passionate developersindividuals
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5 Solution Description amp Parameters Like qPayIntegrator FinTP offers a
standard compliant processing
engine for the financial transactions
exchanged between the back-office
or ERP applications and the financial
community (banks MFIs market
infrastructures corporations)
FinTP is able to process financial
messages in both FIN and ISO20022
formats and at the same time offers
a rich set of interfaces to different
financial applications FinTP provides
compliance with various clearing and
settlement mechanisms
Consequently FinTP ensures a high
level automation of the end-to-end
financial transactions processing
51 Features
The FinTP project has two major deliverable components
1 the FinTP application itself
2 the community built around FinTP
All subsequent chapters will refer to both of these
Component code
Component description Comments
FinTP4 FinTP is a financial transactions processing engine for 3rd or 4th tier banks microfinance corporate or SMEs treasuries available as open source application Functional characteristics
1 Operational features
o Predefined flows and message formats
Includes reconciliation of confirmations with transactions
o Single and multiple funds transfer instructions securities settlement amp reconciliation (Romanian Euroclear) messages
The supported payment instruments are credit transfer direct debit debit instruments
o MTMX coexistence Based on FinTP native internal data format (ISO20022)
o Multi-BIC multi-currency
o SEPA ready (certification) Compliancy with EPC regulations for SEPA formatting and business flows (for SCT and SDD) enables bank-to-bank and bank-to-CSM settlement
4 FinTP root is Allevo equivalent product qPayIntegrator a commercially available amp practice proven (since
2005) application qPayIntegrator provides a consistent set of functionalities and it is fully aligned to both industry regulations and technology
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Component code
Component description Comments
o TARGET 2 ready Compliance with TARGET2 settlement and operations as regulated by the ECB
o SAGSAASAE SAL interfaces
Integration with SWIFTNet to enable banking business
o Liquidity reports Real time cash reports and forecasts using several criteria (currency subsidiary profit centre)
o Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
Analysis and reports of market trends based on volumes amount BIC etc along with early alerts on behaviour changes beyond the standard deviation
o Accounting reconciliation Automatic NOSTROVOSTRO accounts reconciliation intraday liquidity reports and integrated exception management
o AML (sanctions list matching)
High and low value payments filtering uses 20+ black lists and ensures their content maintainability
o Duplicate detection Detection and investigation of possible duplicates the detection window and criteria are configurable
o Remittances processing Covers banks business and operations area as well as distribution channel
o Treasury markets Automation of treasury flows (FX and money market)
o Statements Processing of SWIFT messages related to correspondent banks accounts administration
2 Technical features
o Financial message routing and monitoring
o Multi-threading capabilities
o Persistent end-to-end transactions
During each phase of the entire processing cycle permanent copies of the transaction are kept until the final completion thus avoiding any transaction duplication or loss
o Batching unpacking
o Resilience at transaction level
o Archiving
o Tracing and logging transactions and user events
o Transient errors detection and recovery
o Real-time search and reports
o Security access and user administration
o SaaS cloud ready
FinTP - Vision and Scope
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Component code
Component description Comments
FINkers United - community
Since FinTP is an application handling financial transactions the product releases and the related community should be tightly regulated and controlled As the project matures these components will be further refined The following main components of the community have been identified
‐ the moderator ‐ the product development
and maintenance body ‐ the product and
community auditor body (acting as a gatekeeper of official releases) to control and maintain the change requests integer and eliminate any malware exposures
‐ the test and validation body
‐ the legal body for defining the frame for product distribution amp licensing
‐ the marketing entity responsible for creating awareness and attracting contributors and adopters
‐ the portal used as a channel for marketing support and version control
‐ individual contributors namely ISVs solution providers developers integrators who wish to use their skills and knowledge to the benefit of the community
These tools strongly depend on the available budget and widespread
organization culture It is not mandatory for these to be open source if usage of
open source tools would mean lower quality
3) Licensing
The licensing model highly depends on the results of the open source legal and
business consultancy However we assume the following frame
‐ free of charge initial and recurring maintenance license for using FinTP
‐ FinTP does not use software components enforcing liabilities for the user
‐ consumers using FinTP source code (in part or entirely) should comply to
the licensing policy of the community
‐ the version released by the development amp maintenance body is the only
official amp to be trusted version of the community ensuring product integrity
unity and stability
4) Regulatory compliance
The regulatory compliance strongly depends on the early adaptation of new amp
changed rules via the recurring maintenance and on the quality of the audits
performed by the specific bodies of the community
Thus it is ensured that ISO20022 and FIN standards TARGET2 and TARGET2
Securities SEPA or country specific regulations (as stated respectively by
FinTP - Vision and Scope
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SWIFT standards EPC specification ECB or regional Central Banks
regulations that the community chooses to comply with) stay the most
important business specific anchors of FinTP
The FinTP design also offers support for flexible definition of new compliance
sources
5) Consultancy
The needed consultancy is twofold
‐ legal to ensure that FinTP does not infringe other licensing constraints
‐ open source specific to enable the right choice of the community type and of its governing law
The main constraint relies in choosing the right advisors true experts in the
open source industry amp with appropriate ethic profile - able to deliver as
promised The consultants have to be available 800 am divide 800 pm CET and
easily reachable - geo-location is of utmost importance Selection of the
consultant will basically be done on price assuming the right mix of expertise
and availability is achieved
6) Financing
While Allevo partially undertakes the financing of FinTP development the
ancillary consultancy necessary team education or acquisition of productivity
tools are far beyond the companys 2012 budget
To overcome possible delays in the project Allevo needs to sturdily act to
identify both the most appropriate commercial offer and additional necessary
financing source(s)
FinTP community
The community related items are members moderator legal tight regulation
marketing and financing For each of these items several assumptions and the
corresponding dependencies are provided in the following paragraphs
1) Members
We assume that the communitys members span several business profiles
(such as financial services institutions corporations market infrastructures
PSPs SSBs public administrations regulatory institutions and ISVs) sharing
the mutual focus on financial operations performance and improvement
By now after some tests on market acceptance there have been identified a
few supporters comprising financial services institutions and small ISVs
To ensure the success of building the community there is need for attracting
prestige influencers (market analysts consulting companies of scale - starting
with big four key industry providers - such as SWIFT other communities - ie
professional such as banking insurers capital market associations) and a
credible pool of financial institutions and corporations
To this end Allevo unrolls its own awareness campaign through direct
meetings publications blog posts and social media public presentations and
by officially launching the initiative in a conference focused on free of charge
financial transactions processing applications
Allevo further plans to use Sibos 2012 as opportunity to organize a less
traditional communication session gathering a relevant international panel to
FinTP - Vision and Scope
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debate the strong and weak aspects of this initiative amp to get the public involved
as much as possible
The goal is that by the end of 2012 some tens of different institutions are
committed to co-found the community and to actively contribute to establishing
the legal frame and to forming the required action bodies
2) Moderator
Allevo perceives the Moderator as the critical member of the community since
his prestige and influence will warrant the outcome of all performed activities
The moderator must commit on long term to develop the community and to
sponsor it with its share of trust
Allevo strongly believes that the Moderator should have a global footprint be a
reputable and trustful institution
3) Legalcopyright
The legal consultant and advisor needs to provide the coherent legal frame to
cover all community activities by roles and accountability While making it easy
for the members it should be more demanding as far as contributors are
concerned (though still encouraging ISVs to actively participate) It has to draw
very precise responsibilities for the independent and institutionalized bodies
(for instance product maintenance amp development and audit) and for the
Moderators status
The quality of this legal work fully relies on the expertise and experience of the
advisor
The law governing the community has to be in harmony with the European
(either French or Anglo-Saxon) legal system and with the open source legal
regulations largely practiced in other business regions (US and APAC)
4) Tight regulation
FinTP the product meant to gather a community which uses and supports it is
all about moving values between different entities Thats critical irrespective of
the amount because failing to perform properly opens the doors to arguments
amp loss of reputation with the related tangible costs Moreover the product has
to be beyond any doubt during its entire lifecycle free of any malefic
embedded functions meaning that contamination has to be avoided by all
means
Allevo strongly believes that this requirement can be attained only by tight
regulation of the community specific approval of the initially launched version
of FinTP and of the recurring contributions
This approach can be felt strange compared to most open source communities
and can lead to little interest from IT talents making them feel banned or
restricted It remains the Moderator‟s duty to make them feel privileged if
accepted and rewarded as such However this censorship is a price to be paid
since the community and the project are about processing transactions
initiating value transfer
FinTP - Vision and Scope
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5) Marketing
The community needs to have the clear objective of spreading both
geographically and over a consistent number of industries
To achieve this goal the community should be able to actively provide open
access to relevant information (including explanations of concepts hands-on
evaluation) to non-members and to also answer their questions on FinTP and
on the community itself
The same level of information needs to be ensured for the members to whom
supplementary updates on the community events decisions available
releases patches and fixes should be made available They need to also get
focused forum discussions on specific business areas and subsequent
processes need to be distributed
These functionalities have to be hosted on the community‟s dedicated portal
This portal has to provide content dialogue space information consolidation
and broadcasting It must be a virtual showroom for FinTP It needs to host
documents and virtual meetings subscription management and product
support amp development
The community has to be able to run its own meetings enabling direct contact
between active members or their representatives
Meaningful press releases have to be regularly issued along with actively
maintaining a productive relationship with market analysts to consolidate a
clear public understanding of the community spirit and goals
6) Financing
Its all about money-money-money since at least for the first 2-3 years the
community needs to be financed
Upon reaching maturity the institutionalized bodies of the community can earn their income from collateral activities - such as organizing conferences providing education and specialized support services - either for the initial FinTP installations and customizations or for recurring services requested by the members An alternative can be trialling and certifying interested providers enabling them to perform support services for FinTP
Thus who could pump money into this project It could be one or a mix of
‐ World Bank - if governmental programs are implied and provided a proper project which convincingly demonstrates the beneficed social impact
‐ EU development funding
‐ interested wealthy members of the community
The most critical dependencies are external such as (arranged according to
their impact) availability of funds for building the community finding trustful
and skilled open source consultants (legal business community licensing)
The synthetic view of the main assumptions and dependencies is provided in
the attached file
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Maintenance amp user support 1-Jan-13 Marketing inst action
4 Activities
Initial planning amp budgeting 15-Dec-12 document
Roles allocation 15-Dec-12 document
Community inst Implementation 15-Dec-12 action
Awareness campaign 1-Jan-13 action ongoing process
Members recruiting 1-Jan-13 action ongoing process
Continued operation 1-Jan-13 action ongoing process
Service sales 1-Jan-13 action ongoing process
Future development planning 1-Jan-13 document ongoing process
5 Resource allocation
If existing institution - allocation 15-Dec-12 action
If newly formed - recruiting 15-Dec-12 action
Make FinTP available to comm 1-Jan-13 action ongoing process
Start community financing 1-Jan-13 action ongoing process
6 Financing
Initial investment 1-Jan-13 action secured by that date
First period of comm operation 31-Aug-13 action secured by that date
co
mm
un
ity
Project approach
Project approachpdf
FinTP - Vision and Scope
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8 Scope This chapter deals with the phased availability of various FinTP features again considered from application and community points of view
In the first phase (due Dec 2012) the core of FinTP application is ready including the following technical features
- financial message routing between services and monitoring of exchanges
- multi-threading capabilities
- persistent end-to-end transactions
- batching de-batching
- archiving
- tracing and logging of transactions and user events
- transient errors detection and recovery
- real time search and reports
- security access and user administration
Similarly during the first phase the main community components need to be in place
- moderator
- software development and maintenance body (Allevo also available in the first and second phase of the project)
- test amp validation body
- (software) auditor
- legal
- main contributors (Allevo falls into this position)
- platform
- marketing
In the second phase (Dec2012 - Dec2013) several operational features of FinTP will be added
- predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit instruments securities settlement reconciliations
- MTMX coexistence
- multi-BIC multi-currency
- SEPA ready certification
- TARGET2 ready
- SAGSAASAE interfaces
- duplicate detection
- liquidity reports
- competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
- accounting reconciliation
- AML (sanctions list matching)
- SaaS and cloud ready
along with resilience and start of maintenance and knowledge transfer (the last two obviously continuing in the next phases)
FinTP - Vision and Scope
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The synthetic view of the project scope is provided in the following table
Crt No
Feature Activity Phase1 31Dec12
Phase2 31Dec13
Phase3 31Dec14
Phase4 31Dec15
Fin
TP
A Operational features
1
Predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit Instruments bonds (Romanian Euroclear) reconciliations
2 MTMX coexistence
3 Multi-BIC multi-currency
4 SaaS ready cloud ready
5 SEPA ready certification
6 TARGET2 ready
7 SAGSAASAE interfaces
8 Liquidity reports
9 Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
10 Accounting reconciliation
11 AML (sanctions list matching)
12 Duplicate detection
B Technical features
1 Routing financial message between services and monitoring of data flows
2 Multi-threading capabilities
3 Persistent end-to-end transactions
4 Batching de-batching
5 Resilience (at transaction level)
6 Archiving
7 Tracing and logging of transactions and user events
8 Transient errors detection and recovery
9 Real time search and reports
10 Security access and user administration
C Other activities
1 FinTP maintenance
2 Knowledge transfer
Co
mm
un
ity
Establishing the institutionscomponents
1 Mentor
2 Software Auditor amp Provider
3 Legal service
4 Members
5 Allevo initial role
6 Platform
7 Marketing
FinTP - Vision and Scope
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9 Limitations The main limitations in the economy of the project consist of phasing several FinTP
operational features for the following year (eg debit instruments liquidity reporting
AML filtering accounting reconciliation resilience SaaS ready cloud ready etc)
At the same time for features intended to front-office usage like Remit it was not yet
decided to publish them as open source product
The synthetic view of the main limitations is provided in the following table
Crt
nrItem Limitation Exclusion Comments
1
FinTP
a
Operational features Available in 2013
b
Remit Not included in
open source
package
2
Community
a
Rules Tightly controlled The statute should
ensure the right
balance between
safety and free
association of talents
Given the significant budget allocation (at least from Allevo perspective) the strong
requirement to meet the maximum ceiling will limit the FinTP product initial preparation
and maintenance expenses
Community wise the obligation of a tight regulated statute will have to ensure the right
balance between safety (mandatory in an environment dealing with financial
transactions) and a free association of talents (typical in an open source community)
In the first period after launch (at least the first two years) of the initiative the
maintenance and support activities will be provided by Allevo (as initial contributor)
A major restriction would be to meet the budgeted development and maintenance
FinTP - Vision and Scope
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10 Appendix - Risks
Specific risks
1 Product
a Long delivery lead time This is a medium probability and impact risk however Allevo should make available the needed resources and motivate the entire team for the job
b Credibility loss if FinTP fails to further become certified on meaningful operations andor business tracks (ie SWIFT business certification tracks or similar) The single possible containment is lobbying if the application certification program rejects open source products Anyway the impact is very important and its materialization should be avoided
c Low quality of the allocated team and improper version management are highly unlikely to occur as long as the formal transfer of responsibility is smoothly made from Allevo to the corresponding body put in place by the community The real hidden risk is that this process could take too long and it thus has a very high impact
d Poor FinTP quality may result if the community fails to institutionalize proper quality assurance (QA) and verification amp validation (VampV) processes This is most expected not to happen but if it does the impact is at least medium The single path to overcome this risk consists in a professional approach to these items based on institutionalizing practice proven QA and VampV processes
e Allevo lack of expertise in the open source business This can be contained by carefully selecting trustful amp truly expert consultants Otherwise it means more money longer time spent on project and expenses without proper return
2 Service
a The software maintenance does not properly deliver as expected ie on-time and on-quality bug fixing regulation amp standards alignment and productivity amp technological improvement The key to contain this risk materialization is the community status having provisions to neatly provide maintenance and further development of the rules for FinTP as well as the applicable rules and fees for the ancillary services
b Low quality and safety of the service received by the members of the community To avoid the risk of performing the one-time amp recurring support services by under-prepared professionals the community has to rule the process of training and qualifying the companies willing to contribute in this area
c Not meeting the minimal SLA criteria The community should regulate and periodically revise the training curricula and to further audit both the teachers and the certified experts to ensure the service level agreements are met
d Under motivated service providing professionals - up to the level of not feeling the high impact of their activity The community status must provide guidance to the contributors on the minimal standards the professionals should meet
FinTP - Vision and Scope
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e Constrained expert resource pool This risk could be overcome by the communitys policy to ensure at all time a balanced number of motivated experts to the communitys size Failing to do so may result in high negative impact of the community business and public perception
3 Community
a Emergence of a parallel competitive community If the optimal timing between publically disclosing FinTP and community take-off is not achieved then there are high chances that following a competitive initiative other entrepreneurs successfully launch their own similar or derived community This could be avoided by periodical reviews of the progress of both FinTP and community status and deciding whether the project needs to be put on hold or not
b Unfit reputation of the Moderator or main contributors If either the Moderator or the initial contributors are not beyond any dispute and are reputable institutes then there is certainly something rotten in Denmark and the project should be put on-hold
c No commitment from the Moderator‟s side Similarly if the Moderator does not commit to the project it means that Denmark has a serious problem to solve The project should relinquish until the matter is fixed
4 Legal
a Misuse of copyright and intellectual property (IP)The assigned working team could not be aware of the limitations and liabilities of using (entirely or partially) third party software this risk can be contained by delivering the right training providing proper working procedures carefully recording and documenting the use of open source code and carefully cross-scanning
b Injunctive relief and financial damages can be caused by not properly and continuously controlling the use of third party open source code resulting in copyright or IP infringement There are two containment measures which can be taken tighten the compliance check during the product lifecycle or apply the sanction policy as to set an example
c The competition starts a class action - this may result in delaying the project
5 Financing
a Lack of long term financing institutions Allevo should urge its consultant to identify and draw a reasonable list of financial options institutions
b Exceeding the budget given that this type of project has no precedent in Allevo and to avoid exposing to the dependency on engagement to financial institutions or to commitments beyond the existing budget a further carefully drawn project plan is needed along with its explicit approval from the board of the company
Market related risks
1 False expectations
a Expensive services Not everything is free aside the initial and maintenance free licensing the training the support and other professional services can amount to more than in general expected Allevo rates this risk as medium possible but with low impact as long as the law governing the community and its initial period of operation will consecrate fair market prices and competitive sources of contribution
FinTP - Vision and Scope
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b Hidden costs for patches updates and upgrades While of similarly weight in terms of probability and impact this should be no real concern as long as the law governing the community clearly provides for free and accountable maintenance
2 Poor image on quality
a Too many releases making FinTP hard to manage and unsafe to operate Given proper regulation of the community and the mature root of FinTP Allevo disregards the possibility of this risk to materialize However if this were to happen this is a high impact risk and by all means should be avoided
b Backward technological (in)compatibility looks to us as a low risk in all respects and within organizations applying practice proven software engineering processes and professional - accountable team this is not likely to materialize
c Support can be perceived as the highest impact risk for FinTP This can be overcome by tight regulation of the commercial and professional conditions to deliver the service (for instance only qualified organizations should be recommended to members for supporting FinTP)
d SLA and accountability for both internally or externally performed services is closely correlated to the previous risk and the community status should provide the support for growing a community of competencies and accountable professionals around FinTP Periodical auditing (by the specialized community body) of this pool of professionals will further ensure the confidence that the skills are preserved at the required level
e Code fragmentation and forking is a high impact risk with a low probability of happening in the initial period provided the knowledge transfer is done orderly and in an institutionalized manner
3 Inherent uncertainty
a Community disputes can jeopardize its cohesion the project viability and future This is a high impact possibly high probability risk and it is the definite role of the Moderator to feel prevent and while materializing mitigate any conflicting situation
b FinTP going commercial post-launch This is a huge impact possibly high occurrence probability but manageable with the right legal instruments provisioned in the community
c Loss of alignment to industry standards and regulations This risk has medium probability and medium impact given the assumption that the community is tightly regulated and the working bodies institutionalized and gathering professionals
4 Legal
Copyright infringement given Allevo experience in the open source business this risk is highly probable and has a high impact on FinTP especially if mistakes are made in the launching phase Similarly if during the product maintenance and further development phase the community fails to institutionalize proper formal software development processes (covering all FinTP lifecycle phases) based on industry practice proven model(s) Supplementary the expert code scanning audit for compliance is the single resort to preclude external software source misuse
FinTP - Vision and Scope
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5 GPL specific
a Noncompliance to the GPL license If GPL license is used the product should further distribute in compliance with this part provisions High impact and probability but manageable if proper software development processes are used and if the statute clearly defines the licensing model for FinTP
b FinTP unconformity The risk that software engineers get inspired by a chic solution which they import and emulate similarly in FinTP And this is also highly possible since les grands esprits se rencontre
6 Existing customers attitude
Anger for having paid for something which now is free The existent customers can be concerned about the future of their installed system its further development (in one word its future) and on the quality of the service (SLA including) Some recent adopters can possibly be furious for spending their money on buying licenses for a piece of software that differently packaged becomes free of charge
For the first situation the single best solution for Allevo is to ensure a smooth transition from the current status to the new solution deployed Also highly probable Allevo should provide for simultaneous (for at most one more year) maintenance of both FinTP and for qPayIntegrator
For the 2012 new qPayIntegrator adopters Allevo should transparently state the product‟s future and propose a commercially attractive migration towards FinTP when it becomes publically available (like the option for the installation migration and recurring services) The decision should clearly stay with the customer if he still buys Allevo licenses delays the implementation until FinTP is available or if he goes for a competitive solution
In other words the key to mitigate the existing customer perception is switching places and discarding if the situation proves to be uncomfortable
Bottom-line is that to avoid most of the risks the FinTP community must be a rather tightly controlled one though still opened to anyone willingly abiding to the rules
The synthetic view of the main risks their assigned probability impact and the corresponding containment approach is provided in the attached file
Risk IDRisk
CategoryRisk
Probability
(High
Medium
Low)
Severity
(High
Medium
Low)
Containment (Mitigation Action Proposed)
M1Free as in a
Free Puppy
M101
The training service amp support cost could account more than the
commercial product its replacing (application software is typically 30 of
the total cost of ownership of most projects)
Medium Low
M102 Hidden costs ie charge for patches updates and upgrades Medium Low
M2Frequent
updates
M201
Projects might be updated frequently - as often as everyday Too frequent
updates could have a negative impact on the implementation
interoperability and support
Low HighMAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M3Backwards
compatibility
M301 Less accountability Low LowMAP03 Access to prior versions of source code (additional in-house
development and support procedures might be necessary)
M4Support
related risks
M401Support could be perceived as the biggest issue with open source
software deploymentsHigh High
M402 Internal External Accountability SLAs High High
M403Code fragmentation or forking if the community fails to institutionalize
corporate like formal structureHigh High
M404Support could require greater involvement and different skills set from
operations staffMedium Medium
M5Community
immaturity Low Low
M501Could generate incompatibility of FinTP with industry standards amp
regulationsMedium Medium
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M6 Uncertainty The inherent uncertainty in every open source project
M601 Community disputes might impact project viability and future High HighMAP04 The Mentor should prevent amp mitigate any conflicts inside the
community
M602 Open source projects may not stay open in future releases High HighMAP05 The originator liabilities should be strongly enforced by the
community statute
M7 Legal risks
M701 Copyright infringement High High
M702 Can open source software deployments pass an audit
M8 GPL General Public License specific development concerns
M801Software thatrsquos derived from an existing GPL project in whole or in part
might not be released under the same licenseHigh High M08 The community should regulate the licensing model
M802
Developer contamination - developer could review an existing open source
project could see an elegant solution then implement a similar function in
closed source project
High HighMAP09 Procedurals constrains for the software developers should be
enforced
M9
Current
customers
attitude
The actual customer perception could be negative High High
M12 To prevent a negative attitude Allevo should involve the customers
in the FinTP project Allevo needs their active support for a smooth and
issues less transition
ma
rke
t re
late
d r
isk
s
co
st
rela
ted
ris
ks
MAP01 The community should regulate the applicable rules and fees for
services and maintenance
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
bu
sin
es
s a
nd
le
ga
l ri
sk
s
MAP06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S1Product
related
S101 Late delivery lead time Medium MediumMAP15 Allevo should provide proper resources (funding and human
resources)
S102 Credibility loss if fail to certify with SWIFT Medium High MAP16 Should be discussedamp agreed with SWIFT
S103 Inexperienced team or allocation below needs Low HighMAP15 Allevo should provide proper resources (funding and human
resources)
S104 Improper or non efficient version management Low High MAP16 Review the current Allevo Configuration Management System
S105Poor quality if the community fails to institutionalize proper verification and
validation practices3
M06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S106 Lack of expertise in open source projects 2 Allevo should engage thoroughly selected Open Source consultants
S2Service
related
S201
The software maintenance not properly providing for bugs fixing
regulationamp standard alignment technological improvements communities
improvement requests
High HighMAP01 The community should regulate the applicable rules and fees for
services and maintenance
S202 One-time amp recurring services might be provided by unqualified resources High HighMAP17 The community should regulate the training curricula and related
expertise certification
S203 Provided services might not meet the minimal SLA performance criteria High HighMAP17 The community should regulate the training curricula and related
expertise certification
S204 Relaxed or lack of accountability of the professionals High HighMAP18 The community should regulate the employment agreement of
the professionals
S205 Lack of qualified professionals High HighMAP19 The community should ensure a balanced number of certified
professionals with the community size
S3Community
related
S301
If after disclosing FinTP the community does not enthusiastically adopt
the solution competitors might more successfully develop a similar
strategy
Medium MediumMAP20 FinTP promotion should be convincing and realistic A well
organized marketing campaign by Allevo
S302The community mentor andor early adhering members have no
undeniable prestige or are not largely trustfulMedium Medium MAP99 Project status review Ending the project could be one option
S303 The Mentor does not strongly commit for the project Medium Medium MAP99 Project status review Ending the project could be one option
S4 Legal
S401Exposure to copyright and IP infringement due to working team unaware of
the legal consequences of using third party softwareMedium Medium
MAP21 Allevo should keep records and fully document the use of open
source code
S402Copyright or intellectual property infringement can lead to injunctive relief
and monetary damagesHigh High
MAP23 Allevo should institutionalize a tight licensing and technical
control
S403 All risks related to open source compliance High HighMAP24 Allevo should appoint as soon as possible a FinTP compliance
Officer
S5 Financial
S501 Lack of financing institutions Medium MediumMAP25 Allevo should urge consultant to provide a consistent list of
potential investors
S502 Dependency on the financing institution approval Medium Medium
S503Not thoroughly planned project overlooking one or some project cost that
need to be financedMedium Medium
Sp
ec
ific
ris
ks
tec
hn
ica
lm
ark
eti
ng
leg
al
fun
din
g
MAP26 Allevo should carefully draw a consistent and eligible project for
financing
Risks
Riskspdf
FinTP - Vision and Scope
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11 Appendix - Bibliography 1 Accenture Open Source Research Geographic Findings
2 Accenture Open Source Research Industry Findings
3 Producing Open Source Software - How to Run a Successful Free Software
Project by Karl Fogel
4 Open Source Software Risks and Rewards by Gary Hein
5 A Business Case Study of Open Source Software by Carolyn A Kenwood
6 6 critical success factors for product development by Christian Wig
7 Bank 20 by Brett King
8 Managing the business risks of open innovation by Oliver Alexy and Markus
9 Product idea evaluation checklist shared by Startgass AS
10 SWIFT 2015 Strategy
11 Customers and business impact of product changes
FinTP - Vision and Scope
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12 Appendix - Glossary ACH Automated Clearing House that is used to clear retail payments
between banks in a country or region
APAC Asia and Pacific
AML Anti-Money Laundering
BCampDR Business continuity amp disaster recovery
B2B Business to business
C2B Consumer to business
CET Central European Time
CMMI Capability Maturity Model Integration
CMS Configuration Management System
Coexistence The situation of multiple standards existing at the same time in the same business space Within SWIFT this refers to the coexistence between the MT and MX standards This also refers to the set of measures being taken to make the situation easier to handle by the community (publication of mapping rules translation serviceshellip)
CSM Clearing and Settlement Mechanism
CUG Closed User Group
Dictionary Part of the ISO 20022 Repository that contains all items that can be re-used during business modelling and message definition activities
EAI Enterprise Application Integration - middleware to connect applications and communication interfaces Typical EAI software includes features for mapping data between various formats enriching messages with data from other systems and orchestrating message flows
ECB European Central Bank
EMEA Europe Middle-East Africa
EPC European Payment Council
ERP Enterprise Resource Planning
EU European Union
EUCLID Connectivity to EuroClear Bank services
FIN The messaging service offered by SWIFT for the secure and reliable exchange of MT messages in store-and-forward mode By extension the syntax used to format these MTs
IP intellectual property
Interoperability Capability to easily exchange business information while using different message standards ISO 20022 promotes global use of syntax-neutral business and message components as a common denominator to achieve interoperability between standards using different syntaxes
ISO The International Organization for Standardization - an international standard-setting body composed of representatives from more than 160 national standards organizations that promulgates worldwide standards in a variety of domains aiming at facilitating cross-border exchanges of goods services and techniques
FinTP - Vision and Scope
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ISO 15022 An ISO standard that describes the syntax to be used for developing securities messages used mainly to support back office related transaction flows It replaced the previous securities messaging standard ISO 7775
ISO 20022 RA Registration Authority - offers the services described in an ISO standard on behalf of and under a contractual agreement with the International Organization for Standardization
ISO 20022 Repository
Repository maintained by the ISO20022 RA which contains the financial business models message definitions and components defined in compliance with the ISO 20022 standard
ISO 20022 RMG Registration Management Group - in charge of the overall management of the ISO 20022 development and registration process in accordance with the ISO 20022 standard
ISO 20022 SEG Standards Evaluation Groups -in charge of validating candidate ISO 20022 messages within the scope of the business justification and ensuring that they address the needs of their future international community of users
ISV Independent Software Vendor
KYC Know Your Customer
MACUG Member Administered Closed User Group
Message A set of structured information exchanged between two parties involved in a financial transaction
Message component and element
A re-usable data structure used for assembling message definitions The data defined in a message component is bdquotraced‟ back to the business components and business elements In simple terms business components define the business meaning message components create data structures for messaging
MI Market Infrastructure - a system that provides services to the financial industry for trading clearing and settlement matching of financial transactions and depository functions
Middleware Software that enables data to be exchanged among different systems with standard communication components and tools for formatting mapping and processing
MT The traditional bdquotag value‟ Message Types for use on the FIN service offered by SWIFT
MX An XML message exchanged over SWIFTNet whether or not ISO 20022 compliant
OS Open source
PSP Payment service provider
QA Quality assurance
RMA Relationship Management Access
RTGS Real Time Gross Settlement System
SAA SWIFT Alliance Access
SAE SWIFT Alliance Entry
SAG SWIFT Alliance Gateway
SaaS Software as a Service
SCORE Standardized CORporate Environment
FinTP - Vision and Scope
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Semantics The study of meaning usually in language The word is often used in ordinary language to denote a problem of understanding that comes down to word selection or connotation
SEPA Single Euro Payment Area
SLA Service level agreement
SME Small and Medium-sized Business(es)
SOA Service Oriented Architecture
SSB SWIFT Service Bureau
STP Straight Through Processing
SWIFT Society for Worldwide Interbank Financial Telecommunication Visit wwwswiftcom
Syntax Physical format of a message used to identify and represent the conveyed pieces of information
T2S TARGET2 Securities - an initiative of the Eurosystem It is an IT platform that aims to make settlements across national borders simpler and more cost-efficient
TARGET2 The Eurosystem-owned European Real Time Gross Settlement (RTGS) system (Trans-European Automated Real-time Gross Settlement Express Transfer System) TARGET2 is one of the largest high-value payment systems in the world
Taxonomy The classification in a hierarchical system typically organized by super type - sub type relationships also called generalization-specialization relationships or less formally parent-child relationships
TSU Trade Service Utility
TCO Total cost of ownership
Translation rules
Set of rules to be used to map the pieces of information included in a message expressed in one syntax to the equivalent message expressed in another syntax
Remit Remittances
XML eXtensible Mark-up Language - popular syntax to encode documents (or messages) electronically on the Internet XML allows communities to define their own identifiers (or tags) and format (or data type) for each component of a message
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Bureaus etc) ISV regulatory institutionsMarketing plan feasibility campaign efficiency and costs
2 MentorPreferable SWIFT
Also eligible SunGard IBM affiliation to other OS communitySWIFT decision
3 Legalcopyright Expert legal consultant and RO apprentice Cost and time shift dependent
4 Tight regulation Clear membership admission amp software contribution criteria The quality of the consultant advice
5 Marketing Actively recruiting community members Marketing plan feasibility campaign efficiency amp customer skepticism
a community portala provide content amp debate space information consolidation amp dissemination virtual
showroom subscription management support
a business analysis solution availability and maintenance by one of the
members or employed company
b press releases amp
announcementsb PR and AR b communicators availability and costs
c events c periodical conferences user focused meetings c cost dependent
6 Financing World Bank EU amp private funds Lobby amp funds availability
Item
FinTP
FinTP community
FinTP - Vision and Scope
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b Micro-finance institutions
Toolbox3 (see 51 Features)
Integration of micro-financing application with mobile payment operator(s) and banks It provides support for loan applications loan disbursement and repayments It integrates the mobile payments and the banking payments and as such provides working capital management Multi-MMTs amp multi country operations are also supported
FinTP - Vision and Scope
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c CSMs
Toolbox3 (see 51 Features)
CSMs can use FinTP (as shown in the bellow figure) to provide its customers an
effective connectivity readiness package Likewise CSMs can use FinTP to connect
themselves to other CSMs they need to
FinTP - Vision and Scope
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d Corporations
Toolbox3 (see 51 Features)
The financial or treasury department of the corporation can use FinTP (as depicted in
the figure bellow) to concentrate the processing and management of all their financial
business in one single operation window FinTP provides the building blocks for a highly
effective money supply chain between banks providers and customers Beyond that
FinTP empowers control on the working capital and financial resources
FinTP - Vision and Scope
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e Public administrations
Toolbox3 (see 51 Features)
Public debt business automation through Treasury Bonds settlement on all trade phases eg pre- sales post-
Wages and pensions payment in compliance with SEPA regulations
Structural funds financial management (in a business group managed by the State Treasury)
FinTP plays a multiple roles in the Public Administration financial business
a Bridge between the global banks secure network (SWIFTNet) and the Government
secure national network performing format conversion and business flow mapping
thus FinTP acts as a financial integrator of the different public institutions
b Interoperability gateway with the banking community and financial market
infrastructures
c Auctioning portal for the Treasury Bonds allocation and settlement for the Primary
market
d Management of the payments related to Structural Funds financed projects and to
the providers of the public institutions
e Payments (such as wages pensions state subsidies) due to individuals intermediated by banks using SWIFTRemit framework Similarly the taxes collection should be handled by the same system and framework FinTP provides means to perform the operations using either mobile devices or the internet
FinTP - Vision and Scope
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44 Key Business Objectives and Success Criteria
Today Allevo faces two major limitations in fulfilling its business objectives
1 Strong dependency on its narrow national market and thus being limited to the
known European Union and particularly Romanian practice
2 Significant allocation of the development talents to maintaining qPayIntegrator
rather than working to new business oriented products
Allevo is going to expand its business footprint and simultaneously shift its revenue
source from back-office solutions towards its customers business area (treasury front-
office) applications
To achieve this goal Allevo will focus on developing FinTP business and on gathering
a strong supporting community formed by representatives of the targeted market The
coherence of the community should be ensured by a trustful and committed
moderator
Therefore for the success of the project Allevo deems instrumental the go-to-market
process the solid take-up tempo and the quality of the community
On the FinTP side Allevo should tightly focus on
1 Understanding the community members‟ needs values and priorities in
relationship with their business competitive ecosystem
2 Improving the product management process and the technical commercial amp
distribution documentation
3 Identifying and centring the attention on strong idea generation selection and
monitoring processes
4 Elaborating the right product architecture to enable easy functional and technical
scalability maintainability diagnose native features for flexible customization
compliance to global and regional financial standards and preserving the initial
licensing structure across various customers business models
5 Strengthening project management
6 Designing coherent knowledge transfer process
7 Designing efficient customer support
As a member of this FinTP open source community Allevo will provide
1) the open source FinTP application
2) knowledge transfer (training amp consultancy) to both early adopters and to the
product development amp maintenance body (see 46 The community)
3) for a limited period of time
- support amp maintenance
- alignment to technology standards amp regulation
4) further improvements
5) contribution to relevant proofs of concept community web site conferences
articles online awareness
The power of the community will draw other vendors to partner together to ensure
market coverage each of them complementing the other through their expertise
FinTP - Vision and Scope
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FinTP distribution will be performed via the communitys portal while the initial
consultancy product installation and support services will be delivered remotely
Following the free open source software model FinTP will be available under an open
license free of charge
In designing the new products Allevo will benefit on mid and long term from the deep
insight both of FinTP internals and the structure and operation of the community
45 Market Sizing
Our evaluation of the FinTP targeted market size
- the global market size taken into account is 26100 institutions out of which
- an average FinTP engine licensing fee is euro30000 resulting in potential
maximum expenses of euro783 million
- the corresponding yearly maintenance fee is euro5400 resulting in potential
maximum expenses of euro700 million in 5 years
- the number of potential institutions adopting FinTP in the first 5 years of
availability 250 tier3 amp 2000 tier4
- consequently the savings in 5 years could reach euro675 million in license
fee and euro2025 million in maintenance fee resulting in a total of almost euro90
million
Allevo believes that (at least) during 2013 and 2014 its current income source will be
preserved while after that period the main replacement of the lost (new licensing and
recurring maintenance) fees will mainly consist of services (consulting
implementation support education) and sales of licenses for newly launched
applications
FinTP - Vision and Scope
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46 The FINkers United community
The community structure comprises three main entities (as depicted in the bellow
figure)
1 The adopters (beneficiaries) consumer companies choosing to adopt the
FinTP product in compliance with the community line of business and ethical
conduct
2 The moderator the instrumental inspirational authority expected to draw both
the development vision and the guidelines of the community
3 The contributors
a institutionalized bodies eg development and maintenance test and
validation audit legal marketing
b independent contributors eg ISVs (Allevo falling under this category)
solution providers integrators or passionate developersindividuals
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5 Solution Description amp Parameters Like qPayIntegrator FinTP offers a
standard compliant processing
engine for the financial transactions
exchanged between the back-office
or ERP applications and the financial
community (banks MFIs market
infrastructures corporations)
FinTP is able to process financial
messages in both FIN and ISO20022
formats and at the same time offers
a rich set of interfaces to different
financial applications FinTP provides
compliance with various clearing and
settlement mechanisms
Consequently FinTP ensures a high
level automation of the end-to-end
financial transactions processing
51 Features
The FinTP project has two major deliverable components
1 the FinTP application itself
2 the community built around FinTP
All subsequent chapters will refer to both of these
Component code
Component description Comments
FinTP4 FinTP is a financial transactions processing engine for 3rd or 4th tier banks microfinance corporate or SMEs treasuries available as open source application Functional characteristics
1 Operational features
o Predefined flows and message formats
Includes reconciliation of confirmations with transactions
o Single and multiple funds transfer instructions securities settlement amp reconciliation (Romanian Euroclear) messages
The supported payment instruments are credit transfer direct debit debit instruments
o MTMX coexistence Based on FinTP native internal data format (ISO20022)
o Multi-BIC multi-currency
o SEPA ready (certification) Compliancy with EPC regulations for SEPA formatting and business flows (for SCT and SDD) enables bank-to-bank and bank-to-CSM settlement
4 FinTP root is Allevo equivalent product qPayIntegrator a commercially available amp practice proven (since
2005) application qPayIntegrator provides a consistent set of functionalities and it is fully aligned to both industry regulations and technology
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Component code
Component description Comments
o TARGET 2 ready Compliance with TARGET2 settlement and operations as regulated by the ECB
o SAGSAASAE SAL interfaces
Integration with SWIFTNet to enable banking business
o Liquidity reports Real time cash reports and forecasts using several criteria (currency subsidiary profit centre)
o Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
Analysis and reports of market trends based on volumes amount BIC etc along with early alerts on behaviour changes beyond the standard deviation
o Accounting reconciliation Automatic NOSTROVOSTRO accounts reconciliation intraday liquidity reports and integrated exception management
o AML (sanctions list matching)
High and low value payments filtering uses 20+ black lists and ensures their content maintainability
o Duplicate detection Detection and investigation of possible duplicates the detection window and criteria are configurable
o Remittances processing Covers banks business and operations area as well as distribution channel
o Treasury markets Automation of treasury flows (FX and money market)
o Statements Processing of SWIFT messages related to correspondent banks accounts administration
2 Technical features
o Financial message routing and monitoring
o Multi-threading capabilities
o Persistent end-to-end transactions
During each phase of the entire processing cycle permanent copies of the transaction are kept until the final completion thus avoiding any transaction duplication or loss
o Batching unpacking
o Resilience at transaction level
o Archiving
o Tracing and logging transactions and user events
o Transient errors detection and recovery
o Real-time search and reports
o Security access and user administration
o SaaS cloud ready
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Component code
Component description Comments
FINkers United - community
Since FinTP is an application handling financial transactions the product releases and the related community should be tightly regulated and controlled As the project matures these components will be further refined The following main components of the community have been identified
‐ the moderator ‐ the product development
and maintenance body ‐ the product and
community auditor body (acting as a gatekeeper of official releases) to control and maintain the change requests integer and eliminate any malware exposures
‐ the test and validation body
‐ the legal body for defining the frame for product distribution amp licensing
‐ the marketing entity responsible for creating awareness and attracting contributors and adopters
‐ the portal used as a channel for marketing support and version control
‐ individual contributors namely ISVs solution providers developers integrators who wish to use their skills and knowledge to the benefit of the community
These tools strongly depend on the available budget and widespread
organization culture It is not mandatory for these to be open source if usage of
open source tools would mean lower quality
3) Licensing
The licensing model highly depends on the results of the open source legal and
business consultancy However we assume the following frame
‐ free of charge initial and recurring maintenance license for using FinTP
‐ FinTP does not use software components enforcing liabilities for the user
‐ consumers using FinTP source code (in part or entirely) should comply to
the licensing policy of the community
‐ the version released by the development amp maintenance body is the only
official amp to be trusted version of the community ensuring product integrity
unity and stability
4) Regulatory compliance
The regulatory compliance strongly depends on the early adaptation of new amp
changed rules via the recurring maintenance and on the quality of the audits
performed by the specific bodies of the community
Thus it is ensured that ISO20022 and FIN standards TARGET2 and TARGET2
Securities SEPA or country specific regulations (as stated respectively by
FinTP - Vision and Scope
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SWIFT standards EPC specification ECB or regional Central Banks
regulations that the community chooses to comply with) stay the most
important business specific anchors of FinTP
The FinTP design also offers support for flexible definition of new compliance
sources
5) Consultancy
The needed consultancy is twofold
‐ legal to ensure that FinTP does not infringe other licensing constraints
‐ open source specific to enable the right choice of the community type and of its governing law
The main constraint relies in choosing the right advisors true experts in the
open source industry amp with appropriate ethic profile - able to deliver as
promised The consultants have to be available 800 am divide 800 pm CET and
easily reachable - geo-location is of utmost importance Selection of the
consultant will basically be done on price assuming the right mix of expertise
and availability is achieved
6) Financing
While Allevo partially undertakes the financing of FinTP development the
ancillary consultancy necessary team education or acquisition of productivity
tools are far beyond the companys 2012 budget
To overcome possible delays in the project Allevo needs to sturdily act to
identify both the most appropriate commercial offer and additional necessary
financing source(s)
FinTP community
The community related items are members moderator legal tight regulation
marketing and financing For each of these items several assumptions and the
corresponding dependencies are provided in the following paragraphs
1) Members
We assume that the communitys members span several business profiles
(such as financial services institutions corporations market infrastructures
PSPs SSBs public administrations regulatory institutions and ISVs) sharing
the mutual focus on financial operations performance and improvement
By now after some tests on market acceptance there have been identified a
few supporters comprising financial services institutions and small ISVs
To ensure the success of building the community there is need for attracting
prestige influencers (market analysts consulting companies of scale - starting
with big four key industry providers - such as SWIFT other communities - ie
professional such as banking insurers capital market associations) and a
credible pool of financial institutions and corporations
To this end Allevo unrolls its own awareness campaign through direct
meetings publications blog posts and social media public presentations and
by officially launching the initiative in a conference focused on free of charge
financial transactions processing applications
Allevo further plans to use Sibos 2012 as opportunity to organize a less
traditional communication session gathering a relevant international panel to
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debate the strong and weak aspects of this initiative amp to get the public involved
as much as possible
The goal is that by the end of 2012 some tens of different institutions are
committed to co-found the community and to actively contribute to establishing
the legal frame and to forming the required action bodies
2) Moderator
Allevo perceives the Moderator as the critical member of the community since
his prestige and influence will warrant the outcome of all performed activities
The moderator must commit on long term to develop the community and to
sponsor it with its share of trust
Allevo strongly believes that the Moderator should have a global footprint be a
reputable and trustful institution
3) Legalcopyright
The legal consultant and advisor needs to provide the coherent legal frame to
cover all community activities by roles and accountability While making it easy
for the members it should be more demanding as far as contributors are
concerned (though still encouraging ISVs to actively participate) It has to draw
very precise responsibilities for the independent and institutionalized bodies
(for instance product maintenance amp development and audit) and for the
Moderators status
The quality of this legal work fully relies on the expertise and experience of the
advisor
The law governing the community has to be in harmony with the European
(either French or Anglo-Saxon) legal system and with the open source legal
regulations largely practiced in other business regions (US and APAC)
4) Tight regulation
FinTP the product meant to gather a community which uses and supports it is
all about moving values between different entities Thats critical irrespective of
the amount because failing to perform properly opens the doors to arguments
amp loss of reputation with the related tangible costs Moreover the product has
to be beyond any doubt during its entire lifecycle free of any malefic
embedded functions meaning that contamination has to be avoided by all
means
Allevo strongly believes that this requirement can be attained only by tight
regulation of the community specific approval of the initially launched version
of FinTP and of the recurring contributions
This approach can be felt strange compared to most open source communities
and can lead to little interest from IT talents making them feel banned or
restricted It remains the Moderator‟s duty to make them feel privileged if
accepted and rewarded as such However this censorship is a price to be paid
since the community and the project are about processing transactions
initiating value transfer
FinTP - Vision and Scope
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5) Marketing
The community needs to have the clear objective of spreading both
geographically and over a consistent number of industries
To achieve this goal the community should be able to actively provide open
access to relevant information (including explanations of concepts hands-on
evaluation) to non-members and to also answer their questions on FinTP and
on the community itself
The same level of information needs to be ensured for the members to whom
supplementary updates on the community events decisions available
releases patches and fixes should be made available They need to also get
focused forum discussions on specific business areas and subsequent
processes need to be distributed
These functionalities have to be hosted on the community‟s dedicated portal
This portal has to provide content dialogue space information consolidation
and broadcasting It must be a virtual showroom for FinTP It needs to host
documents and virtual meetings subscription management and product
support amp development
The community has to be able to run its own meetings enabling direct contact
between active members or their representatives
Meaningful press releases have to be regularly issued along with actively
maintaining a productive relationship with market analysts to consolidate a
clear public understanding of the community spirit and goals
6) Financing
Its all about money-money-money since at least for the first 2-3 years the
community needs to be financed
Upon reaching maturity the institutionalized bodies of the community can earn their income from collateral activities - such as organizing conferences providing education and specialized support services - either for the initial FinTP installations and customizations or for recurring services requested by the members An alternative can be trialling and certifying interested providers enabling them to perform support services for FinTP
Thus who could pump money into this project It could be one or a mix of
‐ World Bank - if governmental programs are implied and provided a proper project which convincingly demonstrates the beneficed social impact
‐ EU development funding
‐ interested wealthy members of the community
The most critical dependencies are external such as (arranged according to
their impact) availability of funds for building the community finding trustful
and skilled open source consultants (legal business community licensing)
The synthetic view of the main assumptions and dependencies is provided in
the attached file
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Maintenance amp user support 1-Jan-13 Marketing inst action
4 Activities
Initial planning amp budgeting 15-Dec-12 document
Roles allocation 15-Dec-12 document
Community inst Implementation 15-Dec-12 action
Awareness campaign 1-Jan-13 action ongoing process
Members recruiting 1-Jan-13 action ongoing process
Continued operation 1-Jan-13 action ongoing process
Service sales 1-Jan-13 action ongoing process
Future development planning 1-Jan-13 document ongoing process
5 Resource allocation
If existing institution - allocation 15-Dec-12 action
If newly formed - recruiting 15-Dec-12 action
Make FinTP available to comm 1-Jan-13 action ongoing process
Start community financing 1-Jan-13 action ongoing process
6 Financing
Initial investment 1-Jan-13 action secured by that date
First period of comm operation 31-Aug-13 action secured by that date
co
mm
un
ity
Project approach
Project approachpdf
FinTP - Vision and Scope
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8 Scope This chapter deals with the phased availability of various FinTP features again considered from application and community points of view
In the first phase (due Dec 2012) the core of FinTP application is ready including the following technical features
- financial message routing between services and monitoring of exchanges
- multi-threading capabilities
- persistent end-to-end transactions
- batching de-batching
- archiving
- tracing and logging of transactions and user events
- transient errors detection and recovery
- real time search and reports
- security access and user administration
Similarly during the first phase the main community components need to be in place
- moderator
- software development and maintenance body (Allevo also available in the first and second phase of the project)
- test amp validation body
- (software) auditor
- legal
- main contributors (Allevo falls into this position)
- platform
- marketing
In the second phase (Dec2012 - Dec2013) several operational features of FinTP will be added
- predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit instruments securities settlement reconciliations
- MTMX coexistence
- multi-BIC multi-currency
- SEPA ready certification
- TARGET2 ready
- SAGSAASAE interfaces
- duplicate detection
- liquidity reports
- competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
- accounting reconciliation
- AML (sanctions list matching)
- SaaS and cloud ready
along with resilience and start of maintenance and knowledge transfer (the last two obviously continuing in the next phases)
FinTP - Vision and Scope
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The synthetic view of the project scope is provided in the following table
Crt No
Feature Activity Phase1 31Dec12
Phase2 31Dec13
Phase3 31Dec14
Phase4 31Dec15
Fin
TP
A Operational features
1
Predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit Instruments bonds (Romanian Euroclear) reconciliations
2 MTMX coexistence
3 Multi-BIC multi-currency
4 SaaS ready cloud ready
5 SEPA ready certification
6 TARGET2 ready
7 SAGSAASAE interfaces
8 Liquidity reports
9 Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
10 Accounting reconciliation
11 AML (sanctions list matching)
12 Duplicate detection
B Technical features
1 Routing financial message between services and monitoring of data flows
2 Multi-threading capabilities
3 Persistent end-to-end transactions
4 Batching de-batching
5 Resilience (at transaction level)
6 Archiving
7 Tracing and logging of transactions and user events
8 Transient errors detection and recovery
9 Real time search and reports
10 Security access and user administration
C Other activities
1 FinTP maintenance
2 Knowledge transfer
Co
mm
un
ity
Establishing the institutionscomponents
1 Mentor
2 Software Auditor amp Provider
3 Legal service
4 Members
5 Allevo initial role
6 Platform
7 Marketing
FinTP - Vision and Scope
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9 Limitations The main limitations in the economy of the project consist of phasing several FinTP
operational features for the following year (eg debit instruments liquidity reporting
AML filtering accounting reconciliation resilience SaaS ready cloud ready etc)
At the same time for features intended to front-office usage like Remit it was not yet
decided to publish them as open source product
The synthetic view of the main limitations is provided in the following table
Crt
nrItem Limitation Exclusion Comments
1
FinTP
a
Operational features Available in 2013
b
Remit Not included in
open source
package
2
Community
a
Rules Tightly controlled The statute should
ensure the right
balance between
safety and free
association of talents
Given the significant budget allocation (at least from Allevo perspective) the strong
requirement to meet the maximum ceiling will limit the FinTP product initial preparation
and maintenance expenses
Community wise the obligation of a tight regulated statute will have to ensure the right
balance between safety (mandatory in an environment dealing with financial
transactions) and a free association of talents (typical in an open source community)
In the first period after launch (at least the first two years) of the initiative the
maintenance and support activities will be provided by Allevo (as initial contributor)
A major restriction would be to meet the budgeted development and maintenance
FinTP - Vision and Scope
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10 Appendix - Risks
Specific risks
1 Product
a Long delivery lead time This is a medium probability and impact risk however Allevo should make available the needed resources and motivate the entire team for the job
b Credibility loss if FinTP fails to further become certified on meaningful operations andor business tracks (ie SWIFT business certification tracks or similar) The single possible containment is lobbying if the application certification program rejects open source products Anyway the impact is very important and its materialization should be avoided
c Low quality of the allocated team and improper version management are highly unlikely to occur as long as the formal transfer of responsibility is smoothly made from Allevo to the corresponding body put in place by the community The real hidden risk is that this process could take too long and it thus has a very high impact
d Poor FinTP quality may result if the community fails to institutionalize proper quality assurance (QA) and verification amp validation (VampV) processes This is most expected not to happen but if it does the impact is at least medium The single path to overcome this risk consists in a professional approach to these items based on institutionalizing practice proven QA and VampV processes
e Allevo lack of expertise in the open source business This can be contained by carefully selecting trustful amp truly expert consultants Otherwise it means more money longer time spent on project and expenses without proper return
2 Service
a The software maintenance does not properly deliver as expected ie on-time and on-quality bug fixing regulation amp standards alignment and productivity amp technological improvement The key to contain this risk materialization is the community status having provisions to neatly provide maintenance and further development of the rules for FinTP as well as the applicable rules and fees for the ancillary services
b Low quality and safety of the service received by the members of the community To avoid the risk of performing the one-time amp recurring support services by under-prepared professionals the community has to rule the process of training and qualifying the companies willing to contribute in this area
c Not meeting the minimal SLA criteria The community should regulate and periodically revise the training curricula and to further audit both the teachers and the certified experts to ensure the service level agreements are met
d Under motivated service providing professionals - up to the level of not feeling the high impact of their activity The community status must provide guidance to the contributors on the minimal standards the professionals should meet
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e Constrained expert resource pool This risk could be overcome by the communitys policy to ensure at all time a balanced number of motivated experts to the communitys size Failing to do so may result in high negative impact of the community business and public perception
3 Community
a Emergence of a parallel competitive community If the optimal timing between publically disclosing FinTP and community take-off is not achieved then there are high chances that following a competitive initiative other entrepreneurs successfully launch their own similar or derived community This could be avoided by periodical reviews of the progress of both FinTP and community status and deciding whether the project needs to be put on hold or not
b Unfit reputation of the Moderator or main contributors If either the Moderator or the initial contributors are not beyond any dispute and are reputable institutes then there is certainly something rotten in Denmark and the project should be put on-hold
c No commitment from the Moderator‟s side Similarly if the Moderator does not commit to the project it means that Denmark has a serious problem to solve The project should relinquish until the matter is fixed
4 Legal
a Misuse of copyright and intellectual property (IP)The assigned working team could not be aware of the limitations and liabilities of using (entirely or partially) third party software this risk can be contained by delivering the right training providing proper working procedures carefully recording and documenting the use of open source code and carefully cross-scanning
b Injunctive relief and financial damages can be caused by not properly and continuously controlling the use of third party open source code resulting in copyright or IP infringement There are two containment measures which can be taken tighten the compliance check during the product lifecycle or apply the sanction policy as to set an example
c The competition starts a class action - this may result in delaying the project
5 Financing
a Lack of long term financing institutions Allevo should urge its consultant to identify and draw a reasonable list of financial options institutions
b Exceeding the budget given that this type of project has no precedent in Allevo and to avoid exposing to the dependency on engagement to financial institutions or to commitments beyond the existing budget a further carefully drawn project plan is needed along with its explicit approval from the board of the company
Market related risks
1 False expectations
a Expensive services Not everything is free aside the initial and maintenance free licensing the training the support and other professional services can amount to more than in general expected Allevo rates this risk as medium possible but with low impact as long as the law governing the community and its initial period of operation will consecrate fair market prices and competitive sources of contribution
FinTP - Vision and Scope
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b Hidden costs for patches updates and upgrades While of similarly weight in terms of probability and impact this should be no real concern as long as the law governing the community clearly provides for free and accountable maintenance
2 Poor image on quality
a Too many releases making FinTP hard to manage and unsafe to operate Given proper regulation of the community and the mature root of FinTP Allevo disregards the possibility of this risk to materialize However if this were to happen this is a high impact risk and by all means should be avoided
b Backward technological (in)compatibility looks to us as a low risk in all respects and within organizations applying practice proven software engineering processes and professional - accountable team this is not likely to materialize
c Support can be perceived as the highest impact risk for FinTP This can be overcome by tight regulation of the commercial and professional conditions to deliver the service (for instance only qualified organizations should be recommended to members for supporting FinTP)
d SLA and accountability for both internally or externally performed services is closely correlated to the previous risk and the community status should provide the support for growing a community of competencies and accountable professionals around FinTP Periodical auditing (by the specialized community body) of this pool of professionals will further ensure the confidence that the skills are preserved at the required level
e Code fragmentation and forking is a high impact risk with a low probability of happening in the initial period provided the knowledge transfer is done orderly and in an institutionalized manner
3 Inherent uncertainty
a Community disputes can jeopardize its cohesion the project viability and future This is a high impact possibly high probability risk and it is the definite role of the Moderator to feel prevent and while materializing mitigate any conflicting situation
b FinTP going commercial post-launch This is a huge impact possibly high occurrence probability but manageable with the right legal instruments provisioned in the community
c Loss of alignment to industry standards and regulations This risk has medium probability and medium impact given the assumption that the community is tightly regulated and the working bodies institutionalized and gathering professionals
4 Legal
Copyright infringement given Allevo experience in the open source business this risk is highly probable and has a high impact on FinTP especially if mistakes are made in the launching phase Similarly if during the product maintenance and further development phase the community fails to institutionalize proper formal software development processes (covering all FinTP lifecycle phases) based on industry practice proven model(s) Supplementary the expert code scanning audit for compliance is the single resort to preclude external software source misuse
FinTP - Vision and Scope
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5 GPL specific
a Noncompliance to the GPL license If GPL license is used the product should further distribute in compliance with this part provisions High impact and probability but manageable if proper software development processes are used and if the statute clearly defines the licensing model for FinTP
b FinTP unconformity The risk that software engineers get inspired by a chic solution which they import and emulate similarly in FinTP And this is also highly possible since les grands esprits se rencontre
6 Existing customers attitude
Anger for having paid for something which now is free The existent customers can be concerned about the future of their installed system its further development (in one word its future) and on the quality of the service (SLA including) Some recent adopters can possibly be furious for spending their money on buying licenses for a piece of software that differently packaged becomes free of charge
For the first situation the single best solution for Allevo is to ensure a smooth transition from the current status to the new solution deployed Also highly probable Allevo should provide for simultaneous (for at most one more year) maintenance of both FinTP and for qPayIntegrator
For the 2012 new qPayIntegrator adopters Allevo should transparently state the product‟s future and propose a commercially attractive migration towards FinTP when it becomes publically available (like the option for the installation migration and recurring services) The decision should clearly stay with the customer if he still buys Allevo licenses delays the implementation until FinTP is available or if he goes for a competitive solution
In other words the key to mitigate the existing customer perception is switching places and discarding if the situation proves to be uncomfortable
Bottom-line is that to avoid most of the risks the FinTP community must be a rather tightly controlled one though still opened to anyone willingly abiding to the rules
The synthetic view of the main risks their assigned probability impact and the corresponding containment approach is provided in the attached file
Risk IDRisk
CategoryRisk
Probability
(High
Medium
Low)
Severity
(High
Medium
Low)
Containment (Mitigation Action Proposed)
M1Free as in a
Free Puppy
M101
The training service amp support cost could account more than the
commercial product its replacing (application software is typically 30 of
the total cost of ownership of most projects)
Medium Low
M102 Hidden costs ie charge for patches updates and upgrades Medium Low
M2Frequent
updates
M201
Projects might be updated frequently - as often as everyday Too frequent
updates could have a negative impact on the implementation
interoperability and support
Low HighMAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M3Backwards
compatibility
M301 Less accountability Low LowMAP03 Access to prior versions of source code (additional in-house
development and support procedures might be necessary)
M4Support
related risks
M401Support could be perceived as the biggest issue with open source
software deploymentsHigh High
M402 Internal External Accountability SLAs High High
M403Code fragmentation or forking if the community fails to institutionalize
corporate like formal structureHigh High
M404Support could require greater involvement and different skills set from
operations staffMedium Medium
M5Community
immaturity Low Low
M501Could generate incompatibility of FinTP with industry standards amp
regulationsMedium Medium
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M6 Uncertainty The inherent uncertainty in every open source project
M601 Community disputes might impact project viability and future High HighMAP04 The Mentor should prevent amp mitigate any conflicts inside the
community
M602 Open source projects may not stay open in future releases High HighMAP05 The originator liabilities should be strongly enforced by the
community statute
M7 Legal risks
M701 Copyright infringement High High
M702 Can open source software deployments pass an audit
M8 GPL General Public License specific development concerns
M801Software thatrsquos derived from an existing GPL project in whole or in part
might not be released under the same licenseHigh High M08 The community should regulate the licensing model
M802
Developer contamination - developer could review an existing open source
project could see an elegant solution then implement a similar function in
closed source project
High HighMAP09 Procedurals constrains for the software developers should be
enforced
M9
Current
customers
attitude
The actual customer perception could be negative High High
M12 To prevent a negative attitude Allevo should involve the customers
in the FinTP project Allevo needs their active support for a smooth and
issues less transition
ma
rke
t re
late
d r
isk
s
co
st
rela
ted
ris
ks
MAP01 The community should regulate the applicable rules and fees for
services and maintenance
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
bu
sin
es
s a
nd
le
ga
l ri
sk
s
MAP06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S1Product
related
S101 Late delivery lead time Medium MediumMAP15 Allevo should provide proper resources (funding and human
resources)
S102 Credibility loss if fail to certify with SWIFT Medium High MAP16 Should be discussedamp agreed with SWIFT
S103 Inexperienced team or allocation below needs Low HighMAP15 Allevo should provide proper resources (funding and human
resources)
S104 Improper or non efficient version management Low High MAP16 Review the current Allevo Configuration Management System
S105Poor quality if the community fails to institutionalize proper verification and
validation practices3
M06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S106 Lack of expertise in open source projects 2 Allevo should engage thoroughly selected Open Source consultants
S2Service
related
S201
The software maintenance not properly providing for bugs fixing
regulationamp standard alignment technological improvements communities
improvement requests
High HighMAP01 The community should regulate the applicable rules and fees for
services and maintenance
S202 One-time amp recurring services might be provided by unqualified resources High HighMAP17 The community should regulate the training curricula and related
expertise certification
S203 Provided services might not meet the minimal SLA performance criteria High HighMAP17 The community should regulate the training curricula and related
expertise certification
S204 Relaxed or lack of accountability of the professionals High HighMAP18 The community should regulate the employment agreement of
the professionals
S205 Lack of qualified professionals High HighMAP19 The community should ensure a balanced number of certified
professionals with the community size
S3Community
related
S301
If after disclosing FinTP the community does not enthusiastically adopt
the solution competitors might more successfully develop a similar
strategy
Medium MediumMAP20 FinTP promotion should be convincing and realistic A well
organized marketing campaign by Allevo
S302The community mentor andor early adhering members have no
undeniable prestige or are not largely trustfulMedium Medium MAP99 Project status review Ending the project could be one option
S303 The Mentor does not strongly commit for the project Medium Medium MAP99 Project status review Ending the project could be one option
S4 Legal
S401Exposure to copyright and IP infringement due to working team unaware of
the legal consequences of using third party softwareMedium Medium
MAP21 Allevo should keep records and fully document the use of open
source code
S402Copyright or intellectual property infringement can lead to injunctive relief
and monetary damagesHigh High
MAP23 Allevo should institutionalize a tight licensing and technical
control
S403 All risks related to open source compliance High HighMAP24 Allevo should appoint as soon as possible a FinTP compliance
Officer
S5 Financial
S501 Lack of financing institutions Medium MediumMAP25 Allevo should urge consultant to provide a consistent list of
potential investors
S502 Dependency on the financing institution approval Medium Medium
S503Not thoroughly planned project overlooking one or some project cost that
need to be financedMedium Medium
Sp
ec
ific
ris
ks
tec
hn
ica
lm
ark
eti
ng
leg
al
fun
din
g
MAP26 Allevo should carefully draw a consistent and eligible project for
financing
Risks
Riskspdf
FinTP - Vision and Scope
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11 Appendix - Bibliography 1 Accenture Open Source Research Geographic Findings
2 Accenture Open Source Research Industry Findings
3 Producing Open Source Software - How to Run a Successful Free Software
Project by Karl Fogel
4 Open Source Software Risks and Rewards by Gary Hein
5 A Business Case Study of Open Source Software by Carolyn A Kenwood
6 6 critical success factors for product development by Christian Wig
7 Bank 20 by Brett King
8 Managing the business risks of open innovation by Oliver Alexy and Markus
9 Product idea evaluation checklist shared by Startgass AS
10 SWIFT 2015 Strategy
11 Customers and business impact of product changes
FinTP - Vision and Scope
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12 Appendix - Glossary ACH Automated Clearing House that is used to clear retail payments
between banks in a country or region
APAC Asia and Pacific
AML Anti-Money Laundering
BCampDR Business continuity amp disaster recovery
B2B Business to business
C2B Consumer to business
CET Central European Time
CMMI Capability Maturity Model Integration
CMS Configuration Management System
Coexistence The situation of multiple standards existing at the same time in the same business space Within SWIFT this refers to the coexistence between the MT and MX standards This also refers to the set of measures being taken to make the situation easier to handle by the community (publication of mapping rules translation serviceshellip)
CSM Clearing and Settlement Mechanism
CUG Closed User Group
Dictionary Part of the ISO 20022 Repository that contains all items that can be re-used during business modelling and message definition activities
EAI Enterprise Application Integration - middleware to connect applications and communication interfaces Typical EAI software includes features for mapping data between various formats enriching messages with data from other systems and orchestrating message flows
ECB European Central Bank
EMEA Europe Middle-East Africa
EPC European Payment Council
ERP Enterprise Resource Planning
EU European Union
EUCLID Connectivity to EuroClear Bank services
FIN The messaging service offered by SWIFT for the secure and reliable exchange of MT messages in store-and-forward mode By extension the syntax used to format these MTs
IP intellectual property
Interoperability Capability to easily exchange business information while using different message standards ISO 20022 promotes global use of syntax-neutral business and message components as a common denominator to achieve interoperability between standards using different syntaxes
ISO The International Organization for Standardization - an international standard-setting body composed of representatives from more than 160 national standards organizations that promulgates worldwide standards in a variety of domains aiming at facilitating cross-border exchanges of goods services and techniques
FinTP - Vision and Scope
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ISO 15022 An ISO standard that describes the syntax to be used for developing securities messages used mainly to support back office related transaction flows It replaced the previous securities messaging standard ISO 7775
ISO 20022 RA Registration Authority - offers the services described in an ISO standard on behalf of and under a contractual agreement with the International Organization for Standardization
ISO 20022 Repository
Repository maintained by the ISO20022 RA which contains the financial business models message definitions and components defined in compliance with the ISO 20022 standard
ISO 20022 RMG Registration Management Group - in charge of the overall management of the ISO 20022 development and registration process in accordance with the ISO 20022 standard
ISO 20022 SEG Standards Evaluation Groups -in charge of validating candidate ISO 20022 messages within the scope of the business justification and ensuring that they address the needs of their future international community of users
ISV Independent Software Vendor
KYC Know Your Customer
MACUG Member Administered Closed User Group
Message A set of structured information exchanged between two parties involved in a financial transaction
Message component and element
A re-usable data structure used for assembling message definitions The data defined in a message component is bdquotraced‟ back to the business components and business elements In simple terms business components define the business meaning message components create data structures for messaging
MI Market Infrastructure - a system that provides services to the financial industry for trading clearing and settlement matching of financial transactions and depository functions
Middleware Software that enables data to be exchanged among different systems with standard communication components and tools for formatting mapping and processing
MT The traditional bdquotag value‟ Message Types for use on the FIN service offered by SWIFT
MX An XML message exchanged over SWIFTNet whether or not ISO 20022 compliant
OS Open source
PSP Payment service provider
QA Quality assurance
RMA Relationship Management Access
RTGS Real Time Gross Settlement System
SAA SWIFT Alliance Access
SAE SWIFT Alliance Entry
SAG SWIFT Alliance Gateway
SaaS Software as a Service
SCORE Standardized CORporate Environment
FinTP - Vision and Scope
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Semantics The study of meaning usually in language The word is often used in ordinary language to denote a problem of understanding that comes down to word selection or connotation
SEPA Single Euro Payment Area
SLA Service level agreement
SME Small and Medium-sized Business(es)
SOA Service Oriented Architecture
SSB SWIFT Service Bureau
STP Straight Through Processing
SWIFT Society for Worldwide Interbank Financial Telecommunication Visit wwwswiftcom
Syntax Physical format of a message used to identify and represent the conveyed pieces of information
T2S TARGET2 Securities - an initiative of the Eurosystem It is an IT platform that aims to make settlements across national borders simpler and more cost-efficient
TARGET2 The Eurosystem-owned European Real Time Gross Settlement (RTGS) system (Trans-European Automated Real-time Gross Settlement Express Transfer System) TARGET2 is one of the largest high-value payment systems in the world
Taxonomy The classification in a hierarchical system typically organized by super type - sub type relationships also called generalization-specialization relationships or less formally parent-child relationships
TSU Trade Service Utility
TCO Total cost of ownership
Translation rules
Set of rules to be used to map the pieces of information included in a message expressed in one syntax to the equivalent message expressed in another syntax
Remit Remittances
XML eXtensible Mark-up Language - popular syntax to encode documents (or messages) electronically on the Internet XML allows communities to define their own identifiers (or tags) and format (or data type) for each component of a message
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Bureaus etc) ISV regulatory institutionsMarketing plan feasibility campaign efficiency and costs
2 MentorPreferable SWIFT
Also eligible SunGard IBM affiliation to other OS communitySWIFT decision
3 Legalcopyright Expert legal consultant and RO apprentice Cost and time shift dependent
4 Tight regulation Clear membership admission amp software contribution criteria The quality of the consultant advice
5 Marketing Actively recruiting community members Marketing plan feasibility campaign efficiency amp customer skepticism
a community portala provide content amp debate space information consolidation amp dissemination virtual
showroom subscription management support
a business analysis solution availability and maintenance by one of the
members or employed company
b press releases amp
announcementsb PR and AR b communicators availability and costs
c events c periodical conferences user focused meetings c cost dependent
6 Financing World Bank EU amp private funds Lobby amp funds availability
Item
FinTP
FinTP community
FinTP - Vision and Scope
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c CSMs
Toolbox3 (see 51 Features)
CSMs can use FinTP (as shown in the bellow figure) to provide its customers an
effective connectivity readiness package Likewise CSMs can use FinTP to connect
themselves to other CSMs they need to
FinTP - Vision and Scope
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d Corporations
Toolbox3 (see 51 Features)
The financial or treasury department of the corporation can use FinTP (as depicted in
the figure bellow) to concentrate the processing and management of all their financial
business in one single operation window FinTP provides the building blocks for a highly
effective money supply chain between banks providers and customers Beyond that
FinTP empowers control on the working capital and financial resources
FinTP - Vision and Scope
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e Public administrations
Toolbox3 (see 51 Features)
Public debt business automation through Treasury Bonds settlement on all trade phases eg pre- sales post-
Wages and pensions payment in compliance with SEPA regulations
Structural funds financial management (in a business group managed by the State Treasury)
FinTP plays a multiple roles in the Public Administration financial business
a Bridge between the global banks secure network (SWIFTNet) and the Government
secure national network performing format conversion and business flow mapping
thus FinTP acts as a financial integrator of the different public institutions
b Interoperability gateway with the banking community and financial market
infrastructures
c Auctioning portal for the Treasury Bonds allocation and settlement for the Primary
market
d Management of the payments related to Structural Funds financed projects and to
the providers of the public institutions
e Payments (such as wages pensions state subsidies) due to individuals intermediated by banks using SWIFTRemit framework Similarly the taxes collection should be handled by the same system and framework FinTP provides means to perform the operations using either mobile devices or the internet
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
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44 Key Business Objectives and Success Criteria
Today Allevo faces two major limitations in fulfilling its business objectives
1 Strong dependency on its narrow national market and thus being limited to the
known European Union and particularly Romanian practice
2 Significant allocation of the development talents to maintaining qPayIntegrator
rather than working to new business oriented products
Allevo is going to expand its business footprint and simultaneously shift its revenue
source from back-office solutions towards its customers business area (treasury front-
office) applications
To achieve this goal Allevo will focus on developing FinTP business and on gathering
a strong supporting community formed by representatives of the targeted market The
coherence of the community should be ensured by a trustful and committed
moderator
Therefore for the success of the project Allevo deems instrumental the go-to-market
process the solid take-up tempo and the quality of the community
On the FinTP side Allevo should tightly focus on
1 Understanding the community members‟ needs values and priorities in
relationship with their business competitive ecosystem
2 Improving the product management process and the technical commercial amp
distribution documentation
3 Identifying and centring the attention on strong idea generation selection and
monitoring processes
4 Elaborating the right product architecture to enable easy functional and technical
scalability maintainability diagnose native features for flexible customization
compliance to global and regional financial standards and preserving the initial
licensing structure across various customers business models
5 Strengthening project management
6 Designing coherent knowledge transfer process
7 Designing efficient customer support
As a member of this FinTP open source community Allevo will provide
1) the open source FinTP application
2) knowledge transfer (training amp consultancy) to both early adopters and to the
product development amp maintenance body (see 46 The community)
3) for a limited period of time
- support amp maintenance
- alignment to technology standards amp regulation
4) further improvements
5) contribution to relevant proofs of concept community web site conferences
articles online awareness
The power of the community will draw other vendors to partner together to ensure
market coverage each of them complementing the other through their expertise
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
FinTP distribution will be performed via the communitys portal while the initial
consultancy product installation and support services will be delivered remotely
Following the free open source software model FinTP will be available under an open
license free of charge
In designing the new products Allevo will benefit on mid and long term from the deep
insight both of FinTP internals and the structure and operation of the community
45 Market Sizing
Our evaluation of the FinTP targeted market size
- the global market size taken into account is 26100 institutions out of which
- an average FinTP engine licensing fee is euro30000 resulting in potential
maximum expenses of euro783 million
- the corresponding yearly maintenance fee is euro5400 resulting in potential
maximum expenses of euro700 million in 5 years
- the number of potential institutions adopting FinTP in the first 5 years of
availability 250 tier3 amp 2000 tier4
- consequently the savings in 5 years could reach euro675 million in license
fee and euro2025 million in maintenance fee resulting in a total of almost euro90
million
Allevo believes that (at least) during 2013 and 2014 its current income source will be
preserved while after that period the main replacement of the lost (new licensing and
recurring maintenance) fees will mainly consist of services (consulting
implementation support education) and sales of licenses for newly launched
applications
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
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46 The FINkers United community
The community structure comprises three main entities (as depicted in the bellow
figure)
1 The adopters (beneficiaries) consumer companies choosing to adopt the
FinTP product in compliance with the community line of business and ethical
conduct
2 The moderator the instrumental inspirational authority expected to draw both
the development vision and the guidelines of the community
3 The contributors
a institutionalized bodies eg development and maintenance test and
validation audit legal marketing
b independent contributors eg ISVs (Allevo falling under this category)
solution providers integrators or passionate developersindividuals
FinTP - Vision and Scope
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Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
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Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
5 Solution Description amp Parameters Like qPayIntegrator FinTP offers a
standard compliant processing
engine for the financial transactions
exchanged between the back-office
or ERP applications and the financial
community (banks MFIs market
infrastructures corporations)
FinTP is able to process financial
messages in both FIN and ISO20022
formats and at the same time offers
a rich set of interfaces to different
financial applications FinTP provides
compliance with various clearing and
settlement mechanisms
Consequently FinTP ensures a high
level automation of the end-to-end
financial transactions processing
51 Features
The FinTP project has two major deliverable components
1 the FinTP application itself
2 the community built around FinTP
All subsequent chapters will refer to both of these
Component code
Component description Comments
FinTP4 FinTP is a financial transactions processing engine for 3rd or 4th tier banks microfinance corporate or SMEs treasuries available as open source application Functional characteristics
1 Operational features
o Predefined flows and message formats
Includes reconciliation of confirmations with transactions
o Single and multiple funds transfer instructions securities settlement amp reconciliation (Romanian Euroclear) messages
The supported payment instruments are credit transfer direct debit debit instruments
o MTMX coexistence Based on FinTP native internal data format (ISO20022)
o Multi-BIC multi-currency
o SEPA ready (certification) Compliancy with EPC regulations for SEPA formatting and business flows (for SCT and SDD) enables bank-to-bank and bank-to-CSM settlement
4 FinTP root is Allevo equivalent product qPayIntegrator a commercially available amp practice proven (since
2005) application qPayIntegrator provides a consistent set of functionalities and it is fully aligned to both industry regulations and technology
FinTP - Vision and Scope
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Component code
Component description Comments
o TARGET 2 ready Compliance with TARGET2 settlement and operations as regulated by the ECB
o SAGSAASAE SAL interfaces
Integration with SWIFTNet to enable banking business
o Liquidity reports Real time cash reports and forecasts using several criteria (currency subsidiary profit centre)
o Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
Analysis and reports of market trends based on volumes amount BIC etc along with early alerts on behaviour changes beyond the standard deviation
o Accounting reconciliation Automatic NOSTROVOSTRO accounts reconciliation intraday liquidity reports and integrated exception management
o AML (sanctions list matching)
High and low value payments filtering uses 20+ black lists and ensures their content maintainability
o Duplicate detection Detection and investigation of possible duplicates the detection window and criteria are configurable
o Remittances processing Covers banks business and operations area as well as distribution channel
o Treasury markets Automation of treasury flows (FX and money market)
o Statements Processing of SWIFT messages related to correspondent banks accounts administration
2 Technical features
o Financial message routing and monitoring
o Multi-threading capabilities
o Persistent end-to-end transactions
During each phase of the entire processing cycle permanent copies of the transaction are kept until the final completion thus avoiding any transaction duplication or loss
o Batching unpacking
o Resilience at transaction level
o Archiving
o Tracing and logging transactions and user events
o Transient errors detection and recovery
o Real-time search and reports
o Security access and user administration
o SaaS cloud ready
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Component code
Component description Comments
FINkers United - community
Since FinTP is an application handling financial transactions the product releases and the related community should be tightly regulated and controlled As the project matures these components will be further refined The following main components of the community have been identified
‐ the moderator ‐ the product development
and maintenance body ‐ the product and
community auditor body (acting as a gatekeeper of official releases) to control and maintain the change requests integer and eliminate any malware exposures
‐ the test and validation body
‐ the legal body for defining the frame for product distribution amp licensing
‐ the marketing entity responsible for creating awareness and attracting contributors and adopters
‐ the portal used as a channel for marketing support and version control
‐ individual contributors namely ISVs solution providers developers integrators who wish to use their skills and knowledge to the benefit of the community
These tools strongly depend on the available budget and widespread
organization culture It is not mandatory for these to be open source if usage of
open source tools would mean lower quality
3) Licensing
The licensing model highly depends on the results of the open source legal and
business consultancy However we assume the following frame
‐ free of charge initial and recurring maintenance license for using FinTP
‐ FinTP does not use software components enforcing liabilities for the user
‐ consumers using FinTP source code (in part or entirely) should comply to
the licensing policy of the community
‐ the version released by the development amp maintenance body is the only
official amp to be trusted version of the community ensuring product integrity
unity and stability
4) Regulatory compliance
The regulatory compliance strongly depends on the early adaptation of new amp
changed rules via the recurring maintenance and on the quality of the audits
performed by the specific bodies of the community
Thus it is ensured that ISO20022 and FIN standards TARGET2 and TARGET2
Securities SEPA or country specific regulations (as stated respectively by
FinTP - Vision and Scope
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SWIFT standards EPC specification ECB or regional Central Banks
regulations that the community chooses to comply with) stay the most
important business specific anchors of FinTP
The FinTP design also offers support for flexible definition of new compliance
sources
5) Consultancy
The needed consultancy is twofold
‐ legal to ensure that FinTP does not infringe other licensing constraints
‐ open source specific to enable the right choice of the community type and of its governing law
The main constraint relies in choosing the right advisors true experts in the
open source industry amp with appropriate ethic profile - able to deliver as
promised The consultants have to be available 800 am divide 800 pm CET and
easily reachable - geo-location is of utmost importance Selection of the
consultant will basically be done on price assuming the right mix of expertise
and availability is achieved
6) Financing
While Allevo partially undertakes the financing of FinTP development the
ancillary consultancy necessary team education or acquisition of productivity
tools are far beyond the companys 2012 budget
To overcome possible delays in the project Allevo needs to sturdily act to
identify both the most appropriate commercial offer and additional necessary
financing source(s)
FinTP community
The community related items are members moderator legal tight regulation
marketing and financing For each of these items several assumptions and the
corresponding dependencies are provided in the following paragraphs
1) Members
We assume that the communitys members span several business profiles
(such as financial services institutions corporations market infrastructures
PSPs SSBs public administrations regulatory institutions and ISVs) sharing
the mutual focus on financial operations performance and improvement
By now after some tests on market acceptance there have been identified a
few supporters comprising financial services institutions and small ISVs
To ensure the success of building the community there is need for attracting
prestige influencers (market analysts consulting companies of scale - starting
with big four key industry providers - such as SWIFT other communities - ie
professional such as banking insurers capital market associations) and a
credible pool of financial institutions and corporations
To this end Allevo unrolls its own awareness campaign through direct
meetings publications blog posts and social media public presentations and
by officially launching the initiative in a conference focused on free of charge
financial transactions processing applications
Allevo further plans to use Sibos 2012 as opportunity to organize a less
traditional communication session gathering a relevant international panel to
FinTP - Vision and Scope
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debate the strong and weak aspects of this initiative amp to get the public involved
as much as possible
The goal is that by the end of 2012 some tens of different institutions are
committed to co-found the community and to actively contribute to establishing
the legal frame and to forming the required action bodies
2) Moderator
Allevo perceives the Moderator as the critical member of the community since
his prestige and influence will warrant the outcome of all performed activities
The moderator must commit on long term to develop the community and to
sponsor it with its share of trust
Allevo strongly believes that the Moderator should have a global footprint be a
reputable and trustful institution
3) Legalcopyright
The legal consultant and advisor needs to provide the coherent legal frame to
cover all community activities by roles and accountability While making it easy
for the members it should be more demanding as far as contributors are
concerned (though still encouraging ISVs to actively participate) It has to draw
very precise responsibilities for the independent and institutionalized bodies
(for instance product maintenance amp development and audit) and for the
Moderators status
The quality of this legal work fully relies on the expertise and experience of the
advisor
The law governing the community has to be in harmony with the European
(either French or Anglo-Saxon) legal system and with the open source legal
regulations largely practiced in other business regions (US and APAC)
4) Tight regulation
FinTP the product meant to gather a community which uses and supports it is
all about moving values between different entities Thats critical irrespective of
the amount because failing to perform properly opens the doors to arguments
amp loss of reputation with the related tangible costs Moreover the product has
to be beyond any doubt during its entire lifecycle free of any malefic
embedded functions meaning that contamination has to be avoided by all
means
Allevo strongly believes that this requirement can be attained only by tight
regulation of the community specific approval of the initially launched version
of FinTP and of the recurring contributions
This approach can be felt strange compared to most open source communities
and can lead to little interest from IT talents making them feel banned or
restricted It remains the Moderator‟s duty to make them feel privileged if
accepted and rewarded as such However this censorship is a price to be paid
since the community and the project are about processing transactions
initiating value transfer
FinTP - Vision and Scope
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5) Marketing
The community needs to have the clear objective of spreading both
geographically and over a consistent number of industries
To achieve this goal the community should be able to actively provide open
access to relevant information (including explanations of concepts hands-on
evaluation) to non-members and to also answer their questions on FinTP and
on the community itself
The same level of information needs to be ensured for the members to whom
supplementary updates on the community events decisions available
releases patches and fixes should be made available They need to also get
focused forum discussions on specific business areas and subsequent
processes need to be distributed
These functionalities have to be hosted on the community‟s dedicated portal
This portal has to provide content dialogue space information consolidation
and broadcasting It must be a virtual showroom for FinTP It needs to host
documents and virtual meetings subscription management and product
support amp development
The community has to be able to run its own meetings enabling direct contact
between active members or their representatives
Meaningful press releases have to be regularly issued along with actively
maintaining a productive relationship with market analysts to consolidate a
clear public understanding of the community spirit and goals
6) Financing
Its all about money-money-money since at least for the first 2-3 years the
community needs to be financed
Upon reaching maturity the institutionalized bodies of the community can earn their income from collateral activities - such as organizing conferences providing education and specialized support services - either for the initial FinTP installations and customizations or for recurring services requested by the members An alternative can be trialling and certifying interested providers enabling them to perform support services for FinTP
Thus who could pump money into this project It could be one or a mix of
‐ World Bank - if governmental programs are implied and provided a proper project which convincingly demonstrates the beneficed social impact
‐ EU development funding
‐ interested wealthy members of the community
The most critical dependencies are external such as (arranged according to
their impact) availability of funds for building the community finding trustful
and skilled open source consultants (legal business community licensing)
The synthetic view of the main assumptions and dependencies is provided in
the attached file
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Maintenance amp user support 1-Jan-13 Marketing inst action
4 Activities
Initial planning amp budgeting 15-Dec-12 document
Roles allocation 15-Dec-12 document
Community inst Implementation 15-Dec-12 action
Awareness campaign 1-Jan-13 action ongoing process
Members recruiting 1-Jan-13 action ongoing process
Continued operation 1-Jan-13 action ongoing process
Service sales 1-Jan-13 action ongoing process
Future development planning 1-Jan-13 document ongoing process
5 Resource allocation
If existing institution - allocation 15-Dec-12 action
If newly formed - recruiting 15-Dec-12 action
Make FinTP available to comm 1-Jan-13 action ongoing process
Start community financing 1-Jan-13 action ongoing process
6 Financing
Initial investment 1-Jan-13 action secured by that date
First period of comm operation 31-Aug-13 action secured by that date
co
mm
un
ity
Project approach
Project approachpdf
FinTP - Vision and Scope
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8 Scope This chapter deals with the phased availability of various FinTP features again considered from application and community points of view
In the first phase (due Dec 2012) the core of FinTP application is ready including the following technical features
- financial message routing between services and monitoring of exchanges
- multi-threading capabilities
- persistent end-to-end transactions
- batching de-batching
- archiving
- tracing and logging of transactions and user events
- transient errors detection and recovery
- real time search and reports
- security access and user administration
Similarly during the first phase the main community components need to be in place
- moderator
- software development and maintenance body (Allevo also available in the first and second phase of the project)
- test amp validation body
- (software) auditor
- legal
- main contributors (Allevo falls into this position)
- platform
- marketing
In the second phase (Dec2012 - Dec2013) several operational features of FinTP will be added
- predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit instruments securities settlement reconciliations
- MTMX coexistence
- multi-BIC multi-currency
- SEPA ready certification
- TARGET2 ready
- SAGSAASAE interfaces
- duplicate detection
- liquidity reports
- competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
- accounting reconciliation
- AML (sanctions list matching)
- SaaS and cloud ready
along with resilience and start of maintenance and knowledge transfer (the last two obviously continuing in the next phases)
FinTP - Vision and Scope
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The synthetic view of the project scope is provided in the following table
Crt No
Feature Activity Phase1 31Dec12
Phase2 31Dec13
Phase3 31Dec14
Phase4 31Dec15
Fin
TP
A Operational features
1
Predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit Instruments bonds (Romanian Euroclear) reconciliations
2 MTMX coexistence
3 Multi-BIC multi-currency
4 SaaS ready cloud ready
5 SEPA ready certification
6 TARGET2 ready
7 SAGSAASAE interfaces
8 Liquidity reports
9 Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
10 Accounting reconciliation
11 AML (sanctions list matching)
12 Duplicate detection
B Technical features
1 Routing financial message between services and monitoring of data flows
2 Multi-threading capabilities
3 Persistent end-to-end transactions
4 Batching de-batching
5 Resilience (at transaction level)
6 Archiving
7 Tracing and logging of transactions and user events
8 Transient errors detection and recovery
9 Real time search and reports
10 Security access and user administration
C Other activities
1 FinTP maintenance
2 Knowledge transfer
Co
mm
un
ity
Establishing the institutionscomponents
1 Mentor
2 Software Auditor amp Provider
3 Legal service
4 Members
5 Allevo initial role
6 Platform
7 Marketing
FinTP - Vision and Scope
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9 Limitations The main limitations in the economy of the project consist of phasing several FinTP
operational features for the following year (eg debit instruments liquidity reporting
AML filtering accounting reconciliation resilience SaaS ready cloud ready etc)
At the same time for features intended to front-office usage like Remit it was not yet
decided to publish them as open source product
The synthetic view of the main limitations is provided in the following table
Crt
nrItem Limitation Exclusion Comments
1
FinTP
a
Operational features Available in 2013
b
Remit Not included in
open source
package
2
Community
a
Rules Tightly controlled The statute should
ensure the right
balance between
safety and free
association of talents
Given the significant budget allocation (at least from Allevo perspective) the strong
requirement to meet the maximum ceiling will limit the FinTP product initial preparation
and maintenance expenses
Community wise the obligation of a tight regulated statute will have to ensure the right
balance between safety (mandatory in an environment dealing with financial
transactions) and a free association of talents (typical in an open source community)
In the first period after launch (at least the first two years) of the initiative the
maintenance and support activities will be provided by Allevo (as initial contributor)
A major restriction would be to meet the budgeted development and maintenance
FinTP - Vision and Scope
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10 Appendix - Risks
Specific risks
1 Product
a Long delivery lead time This is a medium probability and impact risk however Allevo should make available the needed resources and motivate the entire team for the job
b Credibility loss if FinTP fails to further become certified on meaningful operations andor business tracks (ie SWIFT business certification tracks or similar) The single possible containment is lobbying if the application certification program rejects open source products Anyway the impact is very important and its materialization should be avoided
c Low quality of the allocated team and improper version management are highly unlikely to occur as long as the formal transfer of responsibility is smoothly made from Allevo to the corresponding body put in place by the community The real hidden risk is that this process could take too long and it thus has a very high impact
d Poor FinTP quality may result if the community fails to institutionalize proper quality assurance (QA) and verification amp validation (VampV) processes This is most expected not to happen but if it does the impact is at least medium The single path to overcome this risk consists in a professional approach to these items based on institutionalizing practice proven QA and VampV processes
e Allevo lack of expertise in the open source business This can be contained by carefully selecting trustful amp truly expert consultants Otherwise it means more money longer time spent on project and expenses without proper return
2 Service
a The software maintenance does not properly deliver as expected ie on-time and on-quality bug fixing regulation amp standards alignment and productivity amp technological improvement The key to contain this risk materialization is the community status having provisions to neatly provide maintenance and further development of the rules for FinTP as well as the applicable rules and fees for the ancillary services
b Low quality and safety of the service received by the members of the community To avoid the risk of performing the one-time amp recurring support services by under-prepared professionals the community has to rule the process of training and qualifying the companies willing to contribute in this area
c Not meeting the minimal SLA criteria The community should regulate and periodically revise the training curricula and to further audit both the teachers and the certified experts to ensure the service level agreements are met
d Under motivated service providing professionals - up to the level of not feeling the high impact of their activity The community status must provide guidance to the contributors on the minimal standards the professionals should meet
FinTP - Vision and Scope
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e Constrained expert resource pool This risk could be overcome by the communitys policy to ensure at all time a balanced number of motivated experts to the communitys size Failing to do so may result in high negative impact of the community business and public perception
3 Community
a Emergence of a parallel competitive community If the optimal timing between publically disclosing FinTP and community take-off is not achieved then there are high chances that following a competitive initiative other entrepreneurs successfully launch their own similar or derived community This could be avoided by periodical reviews of the progress of both FinTP and community status and deciding whether the project needs to be put on hold or not
b Unfit reputation of the Moderator or main contributors If either the Moderator or the initial contributors are not beyond any dispute and are reputable institutes then there is certainly something rotten in Denmark and the project should be put on-hold
c No commitment from the Moderator‟s side Similarly if the Moderator does not commit to the project it means that Denmark has a serious problem to solve The project should relinquish until the matter is fixed
4 Legal
a Misuse of copyright and intellectual property (IP)The assigned working team could not be aware of the limitations and liabilities of using (entirely or partially) third party software this risk can be contained by delivering the right training providing proper working procedures carefully recording and documenting the use of open source code and carefully cross-scanning
b Injunctive relief and financial damages can be caused by not properly and continuously controlling the use of third party open source code resulting in copyright or IP infringement There are two containment measures which can be taken tighten the compliance check during the product lifecycle or apply the sanction policy as to set an example
c The competition starts a class action - this may result in delaying the project
5 Financing
a Lack of long term financing institutions Allevo should urge its consultant to identify and draw a reasonable list of financial options institutions
b Exceeding the budget given that this type of project has no precedent in Allevo and to avoid exposing to the dependency on engagement to financial institutions or to commitments beyond the existing budget a further carefully drawn project plan is needed along with its explicit approval from the board of the company
Market related risks
1 False expectations
a Expensive services Not everything is free aside the initial and maintenance free licensing the training the support and other professional services can amount to more than in general expected Allevo rates this risk as medium possible but with low impact as long as the law governing the community and its initial period of operation will consecrate fair market prices and competitive sources of contribution
FinTP - Vision and Scope
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b Hidden costs for patches updates and upgrades While of similarly weight in terms of probability and impact this should be no real concern as long as the law governing the community clearly provides for free and accountable maintenance
2 Poor image on quality
a Too many releases making FinTP hard to manage and unsafe to operate Given proper regulation of the community and the mature root of FinTP Allevo disregards the possibility of this risk to materialize However if this were to happen this is a high impact risk and by all means should be avoided
b Backward technological (in)compatibility looks to us as a low risk in all respects and within organizations applying practice proven software engineering processes and professional - accountable team this is not likely to materialize
c Support can be perceived as the highest impact risk for FinTP This can be overcome by tight regulation of the commercial and professional conditions to deliver the service (for instance only qualified organizations should be recommended to members for supporting FinTP)
d SLA and accountability for both internally or externally performed services is closely correlated to the previous risk and the community status should provide the support for growing a community of competencies and accountable professionals around FinTP Periodical auditing (by the specialized community body) of this pool of professionals will further ensure the confidence that the skills are preserved at the required level
e Code fragmentation and forking is a high impact risk with a low probability of happening in the initial period provided the knowledge transfer is done orderly and in an institutionalized manner
3 Inherent uncertainty
a Community disputes can jeopardize its cohesion the project viability and future This is a high impact possibly high probability risk and it is the definite role of the Moderator to feel prevent and while materializing mitigate any conflicting situation
b FinTP going commercial post-launch This is a huge impact possibly high occurrence probability but manageable with the right legal instruments provisioned in the community
c Loss of alignment to industry standards and regulations This risk has medium probability and medium impact given the assumption that the community is tightly regulated and the working bodies institutionalized and gathering professionals
4 Legal
Copyright infringement given Allevo experience in the open source business this risk is highly probable and has a high impact on FinTP especially if mistakes are made in the launching phase Similarly if during the product maintenance and further development phase the community fails to institutionalize proper formal software development processes (covering all FinTP lifecycle phases) based on industry practice proven model(s) Supplementary the expert code scanning audit for compliance is the single resort to preclude external software source misuse
FinTP - Vision and Scope
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5 GPL specific
a Noncompliance to the GPL license If GPL license is used the product should further distribute in compliance with this part provisions High impact and probability but manageable if proper software development processes are used and if the statute clearly defines the licensing model for FinTP
b FinTP unconformity The risk that software engineers get inspired by a chic solution which they import and emulate similarly in FinTP And this is also highly possible since les grands esprits se rencontre
6 Existing customers attitude
Anger for having paid for something which now is free The existent customers can be concerned about the future of their installed system its further development (in one word its future) and on the quality of the service (SLA including) Some recent adopters can possibly be furious for spending their money on buying licenses for a piece of software that differently packaged becomes free of charge
For the first situation the single best solution for Allevo is to ensure a smooth transition from the current status to the new solution deployed Also highly probable Allevo should provide for simultaneous (for at most one more year) maintenance of both FinTP and for qPayIntegrator
For the 2012 new qPayIntegrator adopters Allevo should transparently state the product‟s future and propose a commercially attractive migration towards FinTP when it becomes publically available (like the option for the installation migration and recurring services) The decision should clearly stay with the customer if he still buys Allevo licenses delays the implementation until FinTP is available or if he goes for a competitive solution
In other words the key to mitigate the existing customer perception is switching places and discarding if the situation proves to be uncomfortable
Bottom-line is that to avoid most of the risks the FinTP community must be a rather tightly controlled one though still opened to anyone willingly abiding to the rules
The synthetic view of the main risks their assigned probability impact and the corresponding containment approach is provided in the attached file
Risk IDRisk
CategoryRisk
Probability
(High
Medium
Low)
Severity
(High
Medium
Low)
Containment (Mitigation Action Proposed)
M1Free as in a
Free Puppy
M101
The training service amp support cost could account more than the
commercial product its replacing (application software is typically 30 of
the total cost of ownership of most projects)
Medium Low
M102 Hidden costs ie charge for patches updates and upgrades Medium Low
M2Frequent
updates
M201
Projects might be updated frequently - as often as everyday Too frequent
updates could have a negative impact on the implementation
interoperability and support
Low HighMAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M3Backwards
compatibility
M301 Less accountability Low LowMAP03 Access to prior versions of source code (additional in-house
development and support procedures might be necessary)
M4Support
related risks
M401Support could be perceived as the biggest issue with open source
software deploymentsHigh High
M402 Internal External Accountability SLAs High High
M403Code fragmentation or forking if the community fails to institutionalize
corporate like formal structureHigh High
M404Support could require greater involvement and different skills set from
operations staffMedium Medium
M5Community
immaturity Low Low
M501Could generate incompatibility of FinTP with industry standards amp
regulationsMedium Medium
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M6 Uncertainty The inherent uncertainty in every open source project
M601 Community disputes might impact project viability and future High HighMAP04 The Mentor should prevent amp mitigate any conflicts inside the
community
M602 Open source projects may not stay open in future releases High HighMAP05 The originator liabilities should be strongly enforced by the
community statute
M7 Legal risks
M701 Copyright infringement High High
M702 Can open source software deployments pass an audit
M8 GPL General Public License specific development concerns
M801Software thatrsquos derived from an existing GPL project in whole or in part
might not be released under the same licenseHigh High M08 The community should regulate the licensing model
M802
Developer contamination - developer could review an existing open source
project could see an elegant solution then implement a similar function in
closed source project
High HighMAP09 Procedurals constrains for the software developers should be
enforced
M9
Current
customers
attitude
The actual customer perception could be negative High High
M12 To prevent a negative attitude Allevo should involve the customers
in the FinTP project Allevo needs their active support for a smooth and
issues less transition
ma
rke
t re
late
d r
isk
s
co
st
rela
ted
ris
ks
MAP01 The community should regulate the applicable rules and fees for
services and maintenance
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
bu
sin
es
s a
nd
le
ga
l ri
sk
s
MAP06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S1Product
related
S101 Late delivery lead time Medium MediumMAP15 Allevo should provide proper resources (funding and human
resources)
S102 Credibility loss if fail to certify with SWIFT Medium High MAP16 Should be discussedamp agreed with SWIFT
S103 Inexperienced team or allocation below needs Low HighMAP15 Allevo should provide proper resources (funding and human
resources)
S104 Improper or non efficient version management Low High MAP16 Review the current Allevo Configuration Management System
S105Poor quality if the community fails to institutionalize proper verification and
validation practices3
M06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S106 Lack of expertise in open source projects 2 Allevo should engage thoroughly selected Open Source consultants
S2Service
related
S201
The software maintenance not properly providing for bugs fixing
regulationamp standard alignment technological improvements communities
improvement requests
High HighMAP01 The community should regulate the applicable rules and fees for
services and maintenance
S202 One-time amp recurring services might be provided by unqualified resources High HighMAP17 The community should regulate the training curricula and related
expertise certification
S203 Provided services might not meet the minimal SLA performance criteria High HighMAP17 The community should regulate the training curricula and related
expertise certification
S204 Relaxed or lack of accountability of the professionals High HighMAP18 The community should regulate the employment agreement of
the professionals
S205 Lack of qualified professionals High HighMAP19 The community should ensure a balanced number of certified
professionals with the community size
S3Community
related
S301
If after disclosing FinTP the community does not enthusiastically adopt
the solution competitors might more successfully develop a similar
strategy
Medium MediumMAP20 FinTP promotion should be convincing and realistic A well
organized marketing campaign by Allevo
S302The community mentor andor early adhering members have no
undeniable prestige or are not largely trustfulMedium Medium MAP99 Project status review Ending the project could be one option
S303 The Mentor does not strongly commit for the project Medium Medium MAP99 Project status review Ending the project could be one option
S4 Legal
S401Exposure to copyright and IP infringement due to working team unaware of
the legal consequences of using third party softwareMedium Medium
MAP21 Allevo should keep records and fully document the use of open
source code
S402Copyright or intellectual property infringement can lead to injunctive relief
and monetary damagesHigh High
MAP23 Allevo should institutionalize a tight licensing and technical
control
S403 All risks related to open source compliance High HighMAP24 Allevo should appoint as soon as possible a FinTP compliance
Officer
S5 Financial
S501 Lack of financing institutions Medium MediumMAP25 Allevo should urge consultant to provide a consistent list of
potential investors
S502 Dependency on the financing institution approval Medium Medium
S503Not thoroughly planned project overlooking one or some project cost that
need to be financedMedium Medium
Sp
ec
ific
ris
ks
tec
hn
ica
lm
ark
eti
ng
leg
al
fun
din
g
MAP26 Allevo should carefully draw a consistent and eligible project for
financing
Risks
Riskspdf
FinTP - Vision and Scope
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11 Appendix - Bibliography 1 Accenture Open Source Research Geographic Findings
2 Accenture Open Source Research Industry Findings
3 Producing Open Source Software - How to Run a Successful Free Software
Project by Karl Fogel
4 Open Source Software Risks and Rewards by Gary Hein
5 A Business Case Study of Open Source Software by Carolyn A Kenwood
6 6 critical success factors for product development by Christian Wig
7 Bank 20 by Brett King
8 Managing the business risks of open innovation by Oliver Alexy and Markus
9 Product idea evaluation checklist shared by Startgass AS
10 SWIFT 2015 Strategy
11 Customers and business impact of product changes
FinTP - Vision and Scope
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12 Appendix - Glossary ACH Automated Clearing House that is used to clear retail payments
between banks in a country or region
APAC Asia and Pacific
AML Anti-Money Laundering
BCampDR Business continuity amp disaster recovery
B2B Business to business
C2B Consumer to business
CET Central European Time
CMMI Capability Maturity Model Integration
CMS Configuration Management System
Coexistence The situation of multiple standards existing at the same time in the same business space Within SWIFT this refers to the coexistence between the MT and MX standards This also refers to the set of measures being taken to make the situation easier to handle by the community (publication of mapping rules translation serviceshellip)
CSM Clearing and Settlement Mechanism
CUG Closed User Group
Dictionary Part of the ISO 20022 Repository that contains all items that can be re-used during business modelling and message definition activities
EAI Enterprise Application Integration - middleware to connect applications and communication interfaces Typical EAI software includes features for mapping data between various formats enriching messages with data from other systems and orchestrating message flows
ECB European Central Bank
EMEA Europe Middle-East Africa
EPC European Payment Council
ERP Enterprise Resource Planning
EU European Union
EUCLID Connectivity to EuroClear Bank services
FIN The messaging service offered by SWIFT for the secure and reliable exchange of MT messages in store-and-forward mode By extension the syntax used to format these MTs
IP intellectual property
Interoperability Capability to easily exchange business information while using different message standards ISO 20022 promotes global use of syntax-neutral business and message components as a common denominator to achieve interoperability between standards using different syntaxes
ISO The International Organization for Standardization - an international standard-setting body composed of representatives from more than 160 national standards organizations that promulgates worldwide standards in a variety of domains aiming at facilitating cross-border exchanges of goods services and techniques
FinTP - Vision and Scope
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ISO 15022 An ISO standard that describes the syntax to be used for developing securities messages used mainly to support back office related transaction flows It replaced the previous securities messaging standard ISO 7775
ISO 20022 RA Registration Authority - offers the services described in an ISO standard on behalf of and under a contractual agreement with the International Organization for Standardization
ISO 20022 Repository
Repository maintained by the ISO20022 RA which contains the financial business models message definitions and components defined in compliance with the ISO 20022 standard
ISO 20022 RMG Registration Management Group - in charge of the overall management of the ISO 20022 development and registration process in accordance with the ISO 20022 standard
ISO 20022 SEG Standards Evaluation Groups -in charge of validating candidate ISO 20022 messages within the scope of the business justification and ensuring that they address the needs of their future international community of users
ISV Independent Software Vendor
KYC Know Your Customer
MACUG Member Administered Closed User Group
Message A set of structured information exchanged between two parties involved in a financial transaction
Message component and element
A re-usable data structure used for assembling message definitions The data defined in a message component is bdquotraced‟ back to the business components and business elements In simple terms business components define the business meaning message components create data structures for messaging
MI Market Infrastructure - a system that provides services to the financial industry for trading clearing and settlement matching of financial transactions and depository functions
Middleware Software that enables data to be exchanged among different systems with standard communication components and tools for formatting mapping and processing
MT The traditional bdquotag value‟ Message Types for use on the FIN service offered by SWIFT
MX An XML message exchanged over SWIFTNet whether or not ISO 20022 compliant
OS Open source
PSP Payment service provider
QA Quality assurance
RMA Relationship Management Access
RTGS Real Time Gross Settlement System
SAA SWIFT Alliance Access
SAE SWIFT Alliance Entry
SAG SWIFT Alliance Gateway
SaaS Software as a Service
SCORE Standardized CORporate Environment
FinTP - Vision and Scope
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Semantics The study of meaning usually in language The word is often used in ordinary language to denote a problem of understanding that comes down to word selection or connotation
SEPA Single Euro Payment Area
SLA Service level agreement
SME Small and Medium-sized Business(es)
SOA Service Oriented Architecture
SSB SWIFT Service Bureau
STP Straight Through Processing
SWIFT Society for Worldwide Interbank Financial Telecommunication Visit wwwswiftcom
Syntax Physical format of a message used to identify and represent the conveyed pieces of information
T2S TARGET2 Securities - an initiative of the Eurosystem It is an IT platform that aims to make settlements across national borders simpler and more cost-efficient
TARGET2 The Eurosystem-owned European Real Time Gross Settlement (RTGS) system (Trans-European Automated Real-time Gross Settlement Express Transfer System) TARGET2 is one of the largest high-value payment systems in the world
Taxonomy The classification in a hierarchical system typically organized by super type - sub type relationships also called generalization-specialization relationships or less formally parent-child relationships
TSU Trade Service Utility
TCO Total cost of ownership
Translation rules
Set of rules to be used to map the pieces of information included in a message expressed in one syntax to the equivalent message expressed in another syntax
Remit Remittances
XML eXtensible Mark-up Language - popular syntax to encode documents (or messages) electronically on the Internet XML allows communities to define their own identifiers (or tags) and format (or data type) for each component of a message
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Bureaus etc) ISV regulatory institutionsMarketing plan feasibility campaign efficiency and costs
2 MentorPreferable SWIFT
Also eligible SunGard IBM affiliation to other OS communitySWIFT decision
3 Legalcopyright Expert legal consultant and RO apprentice Cost and time shift dependent
4 Tight regulation Clear membership admission amp software contribution criteria The quality of the consultant advice
5 Marketing Actively recruiting community members Marketing plan feasibility campaign efficiency amp customer skepticism
a community portala provide content amp debate space information consolidation amp dissemination virtual
showroom subscription management support
a business analysis solution availability and maintenance by one of the
members or employed company
b press releases amp
announcementsb PR and AR b communicators availability and costs
c events c periodical conferences user focused meetings c cost dependent
6 Financing World Bank EU amp private funds Lobby amp funds availability
Item
FinTP
FinTP community
FinTP - Vision and Scope
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d Corporations
Toolbox3 (see 51 Features)
The financial or treasury department of the corporation can use FinTP (as depicted in
the figure bellow) to concentrate the processing and management of all their financial
business in one single operation window FinTP provides the building blocks for a highly
effective money supply chain between banks providers and customers Beyond that
FinTP empowers control on the working capital and financial resources
FinTP - Vision and Scope
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e Public administrations
Toolbox3 (see 51 Features)
Public debt business automation through Treasury Bonds settlement on all trade phases eg pre- sales post-
Wages and pensions payment in compliance with SEPA regulations
Structural funds financial management (in a business group managed by the State Treasury)
FinTP plays a multiple roles in the Public Administration financial business
a Bridge between the global banks secure network (SWIFTNet) and the Government
secure national network performing format conversion and business flow mapping
thus FinTP acts as a financial integrator of the different public institutions
b Interoperability gateway with the banking community and financial market
infrastructures
c Auctioning portal for the Treasury Bonds allocation and settlement for the Primary
market
d Management of the payments related to Structural Funds financed projects and to
the providers of the public institutions
e Payments (such as wages pensions state subsidies) due to individuals intermediated by banks using SWIFTRemit framework Similarly the taxes collection should be handled by the same system and framework FinTP provides means to perform the operations using either mobile devices or the internet
FinTP - Vision and Scope
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44 Key Business Objectives and Success Criteria
Today Allevo faces two major limitations in fulfilling its business objectives
1 Strong dependency on its narrow national market and thus being limited to the
known European Union and particularly Romanian practice
2 Significant allocation of the development talents to maintaining qPayIntegrator
rather than working to new business oriented products
Allevo is going to expand its business footprint and simultaneously shift its revenue
source from back-office solutions towards its customers business area (treasury front-
office) applications
To achieve this goal Allevo will focus on developing FinTP business and on gathering
a strong supporting community formed by representatives of the targeted market The
coherence of the community should be ensured by a trustful and committed
moderator
Therefore for the success of the project Allevo deems instrumental the go-to-market
process the solid take-up tempo and the quality of the community
On the FinTP side Allevo should tightly focus on
1 Understanding the community members‟ needs values and priorities in
relationship with their business competitive ecosystem
2 Improving the product management process and the technical commercial amp
distribution documentation
3 Identifying and centring the attention on strong idea generation selection and
monitoring processes
4 Elaborating the right product architecture to enable easy functional and technical
scalability maintainability diagnose native features for flexible customization
compliance to global and regional financial standards and preserving the initial
licensing structure across various customers business models
5 Strengthening project management
6 Designing coherent knowledge transfer process
7 Designing efficient customer support
As a member of this FinTP open source community Allevo will provide
1) the open source FinTP application
2) knowledge transfer (training amp consultancy) to both early adopters and to the
product development amp maintenance body (see 46 The community)
3) for a limited period of time
- support amp maintenance
- alignment to technology standards amp regulation
4) further improvements
5) contribution to relevant proofs of concept community web site conferences
articles online awareness
The power of the community will draw other vendors to partner together to ensure
market coverage each of them complementing the other through their expertise
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
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FinTP distribution will be performed via the communitys portal while the initial
consultancy product installation and support services will be delivered remotely
Following the free open source software model FinTP will be available under an open
license free of charge
In designing the new products Allevo will benefit on mid and long term from the deep
insight both of FinTP internals and the structure and operation of the community
45 Market Sizing
Our evaluation of the FinTP targeted market size
- the global market size taken into account is 26100 institutions out of which
- an average FinTP engine licensing fee is euro30000 resulting in potential
maximum expenses of euro783 million
- the corresponding yearly maintenance fee is euro5400 resulting in potential
maximum expenses of euro700 million in 5 years
- the number of potential institutions adopting FinTP in the first 5 years of
availability 250 tier3 amp 2000 tier4
- consequently the savings in 5 years could reach euro675 million in license
fee and euro2025 million in maintenance fee resulting in a total of almost euro90
million
Allevo believes that (at least) during 2013 and 2014 its current income source will be
preserved while after that period the main replacement of the lost (new licensing and
recurring maintenance) fees will mainly consist of services (consulting
implementation support education) and sales of licenses for newly launched
applications
FinTP - Vision and Scope
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46 The FINkers United community
The community structure comprises three main entities (as depicted in the bellow
figure)
1 The adopters (beneficiaries) consumer companies choosing to adopt the
FinTP product in compliance with the community line of business and ethical
conduct
2 The moderator the instrumental inspirational authority expected to draw both
the development vision and the guidelines of the community
3 The contributors
a institutionalized bodies eg development and maintenance test and
validation audit legal marketing
b independent contributors eg ISVs (Allevo falling under this category)
solution providers integrators or passionate developersindividuals
FinTP - Vision and Scope
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Business Information Systems (Allevo) SRL
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Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
5 Solution Description amp Parameters Like qPayIntegrator FinTP offers a
standard compliant processing
engine for the financial transactions
exchanged between the back-office
or ERP applications and the financial
community (banks MFIs market
infrastructures corporations)
FinTP is able to process financial
messages in both FIN and ISO20022
formats and at the same time offers
a rich set of interfaces to different
financial applications FinTP provides
compliance with various clearing and
settlement mechanisms
Consequently FinTP ensures a high
level automation of the end-to-end
financial transactions processing
51 Features
The FinTP project has two major deliverable components
1 the FinTP application itself
2 the community built around FinTP
All subsequent chapters will refer to both of these
Component code
Component description Comments
FinTP4 FinTP is a financial transactions processing engine for 3rd or 4th tier banks microfinance corporate or SMEs treasuries available as open source application Functional characteristics
1 Operational features
o Predefined flows and message formats
Includes reconciliation of confirmations with transactions
o Single and multiple funds transfer instructions securities settlement amp reconciliation (Romanian Euroclear) messages
The supported payment instruments are credit transfer direct debit debit instruments
o MTMX coexistence Based on FinTP native internal data format (ISO20022)
o Multi-BIC multi-currency
o SEPA ready (certification) Compliancy with EPC regulations for SEPA formatting and business flows (for SCT and SDD) enables bank-to-bank and bank-to-CSM settlement
4 FinTP root is Allevo equivalent product qPayIntegrator a commercially available amp practice proven (since
2005) application qPayIntegrator provides a consistent set of functionalities and it is fully aligned to both industry regulations and technology
FinTP - Vision and Scope
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Component code
Component description Comments
o TARGET 2 ready Compliance with TARGET2 settlement and operations as regulated by the ECB
o SAGSAASAE SAL interfaces
Integration with SWIFTNet to enable banking business
o Liquidity reports Real time cash reports and forecasts using several criteria (currency subsidiary profit centre)
o Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
Analysis and reports of market trends based on volumes amount BIC etc along with early alerts on behaviour changes beyond the standard deviation
o Accounting reconciliation Automatic NOSTROVOSTRO accounts reconciliation intraday liquidity reports and integrated exception management
o AML (sanctions list matching)
High and low value payments filtering uses 20+ black lists and ensures their content maintainability
o Duplicate detection Detection and investigation of possible duplicates the detection window and criteria are configurable
o Remittances processing Covers banks business and operations area as well as distribution channel
o Treasury markets Automation of treasury flows (FX and money market)
o Statements Processing of SWIFT messages related to correspondent banks accounts administration
2 Technical features
o Financial message routing and monitoring
o Multi-threading capabilities
o Persistent end-to-end transactions
During each phase of the entire processing cycle permanent copies of the transaction are kept until the final completion thus avoiding any transaction duplication or loss
o Batching unpacking
o Resilience at transaction level
o Archiving
o Tracing and logging transactions and user events
o Transient errors detection and recovery
o Real-time search and reports
o Security access and user administration
o SaaS cloud ready
FinTP - Vision and Scope
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Component code
Component description Comments
FINkers United - community
Since FinTP is an application handling financial transactions the product releases and the related community should be tightly regulated and controlled As the project matures these components will be further refined The following main components of the community have been identified
‐ the moderator ‐ the product development
and maintenance body ‐ the product and
community auditor body (acting as a gatekeeper of official releases) to control and maintain the change requests integer and eliminate any malware exposures
‐ the test and validation body
‐ the legal body for defining the frame for product distribution amp licensing
‐ the marketing entity responsible for creating awareness and attracting contributors and adopters
‐ the portal used as a channel for marketing support and version control
‐ individual contributors namely ISVs solution providers developers integrators who wish to use their skills and knowledge to the benefit of the community
These tools strongly depend on the available budget and widespread
organization culture It is not mandatory for these to be open source if usage of
open source tools would mean lower quality
3) Licensing
The licensing model highly depends on the results of the open source legal and
business consultancy However we assume the following frame
‐ free of charge initial and recurring maintenance license for using FinTP
‐ FinTP does not use software components enforcing liabilities for the user
‐ consumers using FinTP source code (in part or entirely) should comply to
the licensing policy of the community
‐ the version released by the development amp maintenance body is the only
official amp to be trusted version of the community ensuring product integrity
unity and stability
4) Regulatory compliance
The regulatory compliance strongly depends on the early adaptation of new amp
changed rules via the recurring maintenance and on the quality of the audits
performed by the specific bodies of the community
Thus it is ensured that ISO20022 and FIN standards TARGET2 and TARGET2
Securities SEPA or country specific regulations (as stated respectively by
FinTP - Vision and Scope
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SWIFT standards EPC specification ECB or regional Central Banks
regulations that the community chooses to comply with) stay the most
important business specific anchors of FinTP
The FinTP design also offers support for flexible definition of new compliance
sources
5) Consultancy
The needed consultancy is twofold
‐ legal to ensure that FinTP does not infringe other licensing constraints
‐ open source specific to enable the right choice of the community type and of its governing law
The main constraint relies in choosing the right advisors true experts in the
open source industry amp with appropriate ethic profile - able to deliver as
promised The consultants have to be available 800 am divide 800 pm CET and
easily reachable - geo-location is of utmost importance Selection of the
consultant will basically be done on price assuming the right mix of expertise
and availability is achieved
6) Financing
While Allevo partially undertakes the financing of FinTP development the
ancillary consultancy necessary team education or acquisition of productivity
tools are far beyond the companys 2012 budget
To overcome possible delays in the project Allevo needs to sturdily act to
identify both the most appropriate commercial offer and additional necessary
financing source(s)
FinTP community
The community related items are members moderator legal tight regulation
marketing and financing For each of these items several assumptions and the
corresponding dependencies are provided in the following paragraphs
1) Members
We assume that the communitys members span several business profiles
(such as financial services institutions corporations market infrastructures
PSPs SSBs public administrations regulatory institutions and ISVs) sharing
the mutual focus on financial operations performance and improvement
By now after some tests on market acceptance there have been identified a
few supporters comprising financial services institutions and small ISVs
To ensure the success of building the community there is need for attracting
prestige influencers (market analysts consulting companies of scale - starting
with big four key industry providers - such as SWIFT other communities - ie
professional such as banking insurers capital market associations) and a
credible pool of financial institutions and corporations
To this end Allevo unrolls its own awareness campaign through direct
meetings publications blog posts and social media public presentations and
by officially launching the initiative in a conference focused on free of charge
financial transactions processing applications
Allevo further plans to use Sibos 2012 as opportunity to organize a less
traditional communication session gathering a relevant international panel to
FinTP - Vision and Scope
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debate the strong and weak aspects of this initiative amp to get the public involved
as much as possible
The goal is that by the end of 2012 some tens of different institutions are
committed to co-found the community and to actively contribute to establishing
the legal frame and to forming the required action bodies
2) Moderator
Allevo perceives the Moderator as the critical member of the community since
his prestige and influence will warrant the outcome of all performed activities
The moderator must commit on long term to develop the community and to
sponsor it with its share of trust
Allevo strongly believes that the Moderator should have a global footprint be a
reputable and trustful institution
3) Legalcopyright
The legal consultant and advisor needs to provide the coherent legal frame to
cover all community activities by roles and accountability While making it easy
for the members it should be more demanding as far as contributors are
concerned (though still encouraging ISVs to actively participate) It has to draw
very precise responsibilities for the independent and institutionalized bodies
(for instance product maintenance amp development and audit) and for the
Moderators status
The quality of this legal work fully relies on the expertise and experience of the
advisor
The law governing the community has to be in harmony with the European
(either French or Anglo-Saxon) legal system and with the open source legal
regulations largely practiced in other business regions (US and APAC)
4) Tight regulation
FinTP the product meant to gather a community which uses and supports it is
all about moving values between different entities Thats critical irrespective of
the amount because failing to perform properly opens the doors to arguments
amp loss of reputation with the related tangible costs Moreover the product has
to be beyond any doubt during its entire lifecycle free of any malefic
embedded functions meaning that contamination has to be avoided by all
means
Allevo strongly believes that this requirement can be attained only by tight
regulation of the community specific approval of the initially launched version
of FinTP and of the recurring contributions
This approach can be felt strange compared to most open source communities
and can lead to little interest from IT talents making them feel banned or
restricted It remains the Moderator‟s duty to make them feel privileged if
accepted and rewarded as such However this censorship is a price to be paid
since the community and the project are about processing transactions
initiating value transfer
FinTP - Vision and Scope
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5) Marketing
The community needs to have the clear objective of spreading both
geographically and over a consistent number of industries
To achieve this goal the community should be able to actively provide open
access to relevant information (including explanations of concepts hands-on
evaluation) to non-members and to also answer their questions on FinTP and
on the community itself
The same level of information needs to be ensured for the members to whom
supplementary updates on the community events decisions available
releases patches and fixes should be made available They need to also get
focused forum discussions on specific business areas and subsequent
processes need to be distributed
These functionalities have to be hosted on the community‟s dedicated portal
This portal has to provide content dialogue space information consolidation
and broadcasting It must be a virtual showroom for FinTP It needs to host
documents and virtual meetings subscription management and product
support amp development
The community has to be able to run its own meetings enabling direct contact
between active members or their representatives
Meaningful press releases have to be regularly issued along with actively
maintaining a productive relationship with market analysts to consolidate a
clear public understanding of the community spirit and goals
6) Financing
Its all about money-money-money since at least for the first 2-3 years the
community needs to be financed
Upon reaching maturity the institutionalized bodies of the community can earn their income from collateral activities - such as organizing conferences providing education and specialized support services - either for the initial FinTP installations and customizations or for recurring services requested by the members An alternative can be trialling and certifying interested providers enabling them to perform support services for FinTP
Thus who could pump money into this project It could be one or a mix of
‐ World Bank - if governmental programs are implied and provided a proper project which convincingly demonstrates the beneficed social impact
‐ EU development funding
‐ interested wealthy members of the community
The most critical dependencies are external such as (arranged according to
their impact) availability of funds for building the community finding trustful
and skilled open source consultants (legal business community licensing)
The synthetic view of the main assumptions and dependencies is provided in
the attached file
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Maintenance amp user support 1-Jan-13 Marketing inst action
4 Activities
Initial planning amp budgeting 15-Dec-12 document
Roles allocation 15-Dec-12 document
Community inst Implementation 15-Dec-12 action
Awareness campaign 1-Jan-13 action ongoing process
Members recruiting 1-Jan-13 action ongoing process
Continued operation 1-Jan-13 action ongoing process
Service sales 1-Jan-13 action ongoing process
Future development planning 1-Jan-13 document ongoing process
5 Resource allocation
If existing institution - allocation 15-Dec-12 action
If newly formed - recruiting 15-Dec-12 action
Make FinTP available to comm 1-Jan-13 action ongoing process
Start community financing 1-Jan-13 action ongoing process
6 Financing
Initial investment 1-Jan-13 action secured by that date
First period of comm operation 31-Aug-13 action secured by that date
co
mm
un
ity
Project approach
Project approachpdf
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
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8 Scope This chapter deals with the phased availability of various FinTP features again considered from application and community points of view
In the first phase (due Dec 2012) the core of FinTP application is ready including the following technical features
- financial message routing between services and monitoring of exchanges
- multi-threading capabilities
- persistent end-to-end transactions
- batching de-batching
- archiving
- tracing and logging of transactions and user events
- transient errors detection and recovery
- real time search and reports
- security access and user administration
Similarly during the first phase the main community components need to be in place
- moderator
- software development and maintenance body (Allevo also available in the first and second phase of the project)
- test amp validation body
- (software) auditor
- legal
- main contributors (Allevo falls into this position)
- platform
- marketing
In the second phase (Dec2012 - Dec2013) several operational features of FinTP will be added
- predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit instruments securities settlement reconciliations
- MTMX coexistence
- multi-BIC multi-currency
- SEPA ready certification
- TARGET2 ready
- SAGSAASAE interfaces
- duplicate detection
- liquidity reports
- competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
- accounting reconciliation
- AML (sanctions list matching)
- SaaS and cloud ready
along with resilience and start of maintenance and knowledge transfer (the last two obviously continuing in the next phases)
FinTP - Vision and Scope
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The synthetic view of the project scope is provided in the following table
Crt No
Feature Activity Phase1 31Dec12
Phase2 31Dec13
Phase3 31Dec14
Phase4 31Dec15
Fin
TP
A Operational features
1
Predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit Instruments bonds (Romanian Euroclear) reconciliations
2 MTMX coexistence
3 Multi-BIC multi-currency
4 SaaS ready cloud ready
5 SEPA ready certification
6 TARGET2 ready
7 SAGSAASAE interfaces
8 Liquidity reports
9 Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
10 Accounting reconciliation
11 AML (sanctions list matching)
12 Duplicate detection
B Technical features
1 Routing financial message between services and monitoring of data flows
2 Multi-threading capabilities
3 Persistent end-to-end transactions
4 Batching de-batching
5 Resilience (at transaction level)
6 Archiving
7 Tracing and logging of transactions and user events
8 Transient errors detection and recovery
9 Real time search and reports
10 Security access and user administration
C Other activities
1 FinTP maintenance
2 Knowledge transfer
Co
mm
un
ity
Establishing the institutionscomponents
1 Mentor
2 Software Auditor amp Provider
3 Legal service
4 Members
5 Allevo initial role
6 Platform
7 Marketing
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
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9 Limitations The main limitations in the economy of the project consist of phasing several FinTP
operational features for the following year (eg debit instruments liquidity reporting
AML filtering accounting reconciliation resilience SaaS ready cloud ready etc)
At the same time for features intended to front-office usage like Remit it was not yet
decided to publish them as open source product
The synthetic view of the main limitations is provided in the following table
Crt
nrItem Limitation Exclusion Comments
1
FinTP
a
Operational features Available in 2013
b
Remit Not included in
open source
package
2
Community
a
Rules Tightly controlled The statute should
ensure the right
balance between
safety and free
association of talents
Given the significant budget allocation (at least from Allevo perspective) the strong
requirement to meet the maximum ceiling will limit the FinTP product initial preparation
and maintenance expenses
Community wise the obligation of a tight regulated statute will have to ensure the right
balance between safety (mandatory in an environment dealing with financial
transactions) and a free association of talents (typical in an open source community)
In the first period after launch (at least the first two years) of the initiative the
maintenance and support activities will be provided by Allevo (as initial contributor)
A major restriction would be to meet the budgeted development and maintenance
FinTP - Vision and Scope
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10 Appendix - Risks
Specific risks
1 Product
a Long delivery lead time This is a medium probability and impact risk however Allevo should make available the needed resources and motivate the entire team for the job
b Credibility loss if FinTP fails to further become certified on meaningful operations andor business tracks (ie SWIFT business certification tracks or similar) The single possible containment is lobbying if the application certification program rejects open source products Anyway the impact is very important and its materialization should be avoided
c Low quality of the allocated team and improper version management are highly unlikely to occur as long as the formal transfer of responsibility is smoothly made from Allevo to the corresponding body put in place by the community The real hidden risk is that this process could take too long and it thus has a very high impact
d Poor FinTP quality may result if the community fails to institutionalize proper quality assurance (QA) and verification amp validation (VampV) processes This is most expected not to happen but if it does the impact is at least medium The single path to overcome this risk consists in a professional approach to these items based on institutionalizing practice proven QA and VampV processes
e Allevo lack of expertise in the open source business This can be contained by carefully selecting trustful amp truly expert consultants Otherwise it means more money longer time spent on project and expenses without proper return
2 Service
a The software maintenance does not properly deliver as expected ie on-time and on-quality bug fixing regulation amp standards alignment and productivity amp technological improvement The key to contain this risk materialization is the community status having provisions to neatly provide maintenance and further development of the rules for FinTP as well as the applicable rules and fees for the ancillary services
b Low quality and safety of the service received by the members of the community To avoid the risk of performing the one-time amp recurring support services by under-prepared professionals the community has to rule the process of training and qualifying the companies willing to contribute in this area
c Not meeting the minimal SLA criteria The community should regulate and periodically revise the training curricula and to further audit both the teachers and the certified experts to ensure the service level agreements are met
d Under motivated service providing professionals - up to the level of not feeling the high impact of their activity The community status must provide guidance to the contributors on the minimal standards the professionals should meet
FinTP - Vision and Scope
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e Constrained expert resource pool This risk could be overcome by the communitys policy to ensure at all time a balanced number of motivated experts to the communitys size Failing to do so may result in high negative impact of the community business and public perception
3 Community
a Emergence of a parallel competitive community If the optimal timing between publically disclosing FinTP and community take-off is not achieved then there are high chances that following a competitive initiative other entrepreneurs successfully launch their own similar or derived community This could be avoided by periodical reviews of the progress of both FinTP and community status and deciding whether the project needs to be put on hold or not
b Unfit reputation of the Moderator or main contributors If either the Moderator or the initial contributors are not beyond any dispute and are reputable institutes then there is certainly something rotten in Denmark and the project should be put on-hold
c No commitment from the Moderator‟s side Similarly if the Moderator does not commit to the project it means that Denmark has a serious problem to solve The project should relinquish until the matter is fixed
4 Legal
a Misuse of copyright and intellectual property (IP)The assigned working team could not be aware of the limitations and liabilities of using (entirely or partially) third party software this risk can be contained by delivering the right training providing proper working procedures carefully recording and documenting the use of open source code and carefully cross-scanning
b Injunctive relief and financial damages can be caused by not properly and continuously controlling the use of third party open source code resulting in copyright or IP infringement There are two containment measures which can be taken tighten the compliance check during the product lifecycle or apply the sanction policy as to set an example
c The competition starts a class action - this may result in delaying the project
5 Financing
a Lack of long term financing institutions Allevo should urge its consultant to identify and draw a reasonable list of financial options institutions
b Exceeding the budget given that this type of project has no precedent in Allevo and to avoid exposing to the dependency on engagement to financial institutions or to commitments beyond the existing budget a further carefully drawn project plan is needed along with its explicit approval from the board of the company
Market related risks
1 False expectations
a Expensive services Not everything is free aside the initial and maintenance free licensing the training the support and other professional services can amount to more than in general expected Allevo rates this risk as medium possible but with low impact as long as the law governing the community and its initial period of operation will consecrate fair market prices and competitive sources of contribution
FinTP - Vision and Scope
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b Hidden costs for patches updates and upgrades While of similarly weight in terms of probability and impact this should be no real concern as long as the law governing the community clearly provides for free and accountable maintenance
2 Poor image on quality
a Too many releases making FinTP hard to manage and unsafe to operate Given proper regulation of the community and the mature root of FinTP Allevo disregards the possibility of this risk to materialize However if this were to happen this is a high impact risk and by all means should be avoided
b Backward technological (in)compatibility looks to us as a low risk in all respects and within organizations applying practice proven software engineering processes and professional - accountable team this is not likely to materialize
c Support can be perceived as the highest impact risk for FinTP This can be overcome by tight regulation of the commercial and professional conditions to deliver the service (for instance only qualified organizations should be recommended to members for supporting FinTP)
d SLA and accountability for both internally or externally performed services is closely correlated to the previous risk and the community status should provide the support for growing a community of competencies and accountable professionals around FinTP Periodical auditing (by the specialized community body) of this pool of professionals will further ensure the confidence that the skills are preserved at the required level
e Code fragmentation and forking is a high impact risk with a low probability of happening in the initial period provided the knowledge transfer is done orderly and in an institutionalized manner
3 Inherent uncertainty
a Community disputes can jeopardize its cohesion the project viability and future This is a high impact possibly high probability risk and it is the definite role of the Moderator to feel prevent and while materializing mitigate any conflicting situation
b FinTP going commercial post-launch This is a huge impact possibly high occurrence probability but manageable with the right legal instruments provisioned in the community
c Loss of alignment to industry standards and regulations This risk has medium probability and medium impact given the assumption that the community is tightly regulated and the working bodies institutionalized and gathering professionals
4 Legal
Copyright infringement given Allevo experience in the open source business this risk is highly probable and has a high impact on FinTP especially if mistakes are made in the launching phase Similarly if during the product maintenance and further development phase the community fails to institutionalize proper formal software development processes (covering all FinTP lifecycle phases) based on industry practice proven model(s) Supplementary the expert code scanning audit for compliance is the single resort to preclude external software source misuse
FinTP - Vision and Scope
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5 GPL specific
a Noncompliance to the GPL license If GPL license is used the product should further distribute in compliance with this part provisions High impact and probability but manageable if proper software development processes are used and if the statute clearly defines the licensing model for FinTP
b FinTP unconformity The risk that software engineers get inspired by a chic solution which they import and emulate similarly in FinTP And this is also highly possible since les grands esprits se rencontre
6 Existing customers attitude
Anger for having paid for something which now is free The existent customers can be concerned about the future of their installed system its further development (in one word its future) and on the quality of the service (SLA including) Some recent adopters can possibly be furious for spending their money on buying licenses for a piece of software that differently packaged becomes free of charge
For the first situation the single best solution for Allevo is to ensure a smooth transition from the current status to the new solution deployed Also highly probable Allevo should provide for simultaneous (for at most one more year) maintenance of both FinTP and for qPayIntegrator
For the 2012 new qPayIntegrator adopters Allevo should transparently state the product‟s future and propose a commercially attractive migration towards FinTP when it becomes publically available (like the option for the installation migration and recurring services) The decision should clearly stay with the customer if he still buys Allevo licenses delays the implementation until FinTP is available or if he goes for a competitive solution
In other words the key to mitigate the existing customer perception is switching places and discarding if the situation proves to be uncomfortable
Bottom-line is that to avoid most of the risks the FinTP community must be a rather tightly controlled one though still opened to anyone willingly abiding to the rules
The synthetic view of the main risks their assigned probability impact and the corresponding containment approach is provided in the attached file
Risk IDRisk
CategoryRisk
Probability
(High
Medium
Low)
Severity
(High
Medium
Low)
Containment (Mitigation Action Proposed)
M1Free as in a
Free Puppy
M101
The training service amp support cost could account more than the
commercial product its replacing (application software is typically 30 of
the total cost of ownership of most projects)
Medium Low
M102 Hidden costs ie charge for patches updates and upgrades Medium Low
M2Frequent
updates
M201
Projects might be updated frequently - as often as everyday Too frequent
updates could have a negative impact on the implementation
interoperability and support
Low HighMAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M3Backwards
compatibility
M301 Less accountability Low LowMAP03 Access to prior versions of source code (additional in-house
development and support procedures might be necessary)
M4Support
related risks
M401Support could be perceived as the biggest issue with open source
software deploymentsHigh High
M402 Internal External Accountability SLAs High High
M403Code fragmentation or forking if the community fails to institutionalize
corporate like formal structureHigh High
M404Support could require greater involvement and different skills set from
operations staffMedium Medium
M5Community
immaturity Low Low
M501Could generate incompatibility of FinTP with industry standards amp
regulationsMedium Medium
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M6 Uncertainty The inherent uncertainty in every open source project
M601 Community disputes might impact project viability and future High HighMAP04 The Mentor should prevent amp mitigate any conflicts inside the
community
M602 Open source projects may not stay open in future releases High HighMAP05 The originator liabilities should be strongly enforced by the
community statute
M7 Legal risks
M701 Copyright infringement High High
M702 Can open source software deployments pass an audit
M8 GPL General Public License specific development concerns
M801Software thatrsquos derived from an existing GPL project in whole or in part
might not be released under the same licenseHigh High M08 The community should regulate the licensing model
M802
Developer contamination - developer could review an existing open source
project could see an elegant solution then implement a similar function in
closed source project
High HighMAP09 Procedurals constrains for the software developers should be
enforced
M9
Current
customers
attitude
The actual customer perception could be negative High High
M12 To prevent a negative attitude Allevo should involve the customers
in the FinTP project Allevo needs their active support for a smooth and
issues less transition
ma
rke
t re
late
d r
isk
s
co
st
rela
ted
ris
ks
MAP01 The community should regulate the applicable rules and fees for
services and maintenance
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
bu
sin
es
s a
nd
le
ga
l ri
sk
s
MAP06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S1Product
related
S101 Late delivery lead time Medium MediumMAP15 Allevo should provide proper resources (funding and human
resources)
S102 Credibility loss if fail to certify with SWIFT Medium High MAP16 Should be discussedamp agreed with SWIFT
S103 Inexperienced team or allocation below needs Low HighMAP15 Allevo should provide proper resources (funding and human
resources)
S104 Improper or non efficient version management Low High MAP16 Review the current Allevo Configuration Management System
S105Poor quality if the community fails to institutionalize proper verification and
validation practices3
M06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S106 Lack of expertise in open source projects 2 Allevo should engage thoroughly selected Open Source consultants
S2Service
related
S201
The software maintenance not properly providing for bugs fixing
regulationamp standard alignment technological improvements communities
improvement requests
High HighMAP01 The community should regulate the applicable rules and fees for
services and maintenance
S202 One-time amp recurring services might be provided by unqualified resources High HighMAP17 The community should regulate the training curricula and related
expertise certification
S203 Provided services might not meet the minimal SLA performance criteria High HighMAP17 The community should regulate the training curricula and related
expertise certification
S204 Relaxed or lack of accountability of the professionals High HighMAP18 The community should regulate the employment agreement of
the professionals
S205 Lack of qualified professionals High HighMAP19 The community should ensure a balanced number of certified
professionals with the community size
S3Community
related
S301
If after disclosing FinTP the community does not enthusiastically adopt
the solution competitors might more successfully develop a similar
strategy
Medium MediumMAP20 FinTP promotion should be convincing and realistic A well
organized marketing campaign by Allevo
S302The community mentor andor early adhering members have no
undeniable prestige or are not largely trustfulMedium Medium MAP99 Project status review Ending the project could be one option
S303 The Mentor does not strongly commit for the project Medium Medium MAP99 Project status review Ending the project could be one option
S4 Legal
S401Exposure to copyright and IP infringement due to working team unaware of
the legal consequences of using third party softwareMedium Medium
MAP21 Allevo should keep records and fully document the use of open
source code
S402Copyright or intellectual property infringement can lead to injunctive relief
and monetary damagesHigh High
MAP23 Allevo should institutionalize a tight licensing and technical
control
S403 All risks related to open source compliance High HighMAP24 Allevo should appoint as soon as possible a FinTP compliance
Officer
S5 Financial
S501 Lack of financing institutions Medium MediumMAP25 Allevo should urge consultant to provide a consistent list of
potential investors
S502 Dependency on the financing institution approval Medium Medium
S503Not thoroughly planned project overlooking one or some project cost that
need to be financedMedium Medium
Sp
ec
ific
ris
ks
tec
hn
ica
lm
ark
eti
ng
leg
al
fun
din
g
MAP26 Allevo should carefully draw a consistent and eligible project for
financing
Risks
Riskspdf
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11 Appendix - Bibliography 1 Accenture Open Source Research Geographic Findings
2 Accenture Open Source Research Industry Findings
3 Producing Open Source Software - How to Run a Successful Free Software
Project by Karl Fogel
4 Open Source Software Risks and Rewards by Gary Hein
5 A Business Case Study of Open Source Software by Carolyn A Kenwood
6 6 critical success factors for product development by Christian Wig
7 Bank 20 by Brett King
8 Managing the business risks of open innovation by Oliver Alexy and Markus
9 Product idea evaluation checklist shared by Startgass AS
10 SWIFT 2015 Strategy
11 Customers and business impact of product changes
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12 Appendix - Glossary ACH Automated Clearing House that is used to clear retail payments
between banks in a country or region
APAC Asia and Pacific
AML Anti-Money Laundering
BCampDR Business continuity amp disaster recovery
B2B Business to business
C2B Consumer to business
CET Central European Time
CMMI Capability Maturity Model Integration
CMS Configuration Management System
Coexistence The situation of multiple standards existing at the same time in the same business space Within SWIFT this refers to the coexistence between the MT and MX standards This also refers to the set of measures being taken to make the situation easier to handle by the community (publication of mapping rules translation serviceshellip)
CSM Clearing and Settlement Mechanism
CUG Closed User Group
Dictionary Part of the ISO 20022 Repository that contains all items that can be re-used during business modelling and message definition activities
EAI Enterprise Application Integration - middleware to connect applications and communication interfaces Typical EAI software includes features for mapping data between various formats enriching messages with data from other systems and orchestrating message flows
ECB European Central Bank
EMEA Europe Middle-East Africa
EPC European Payment Council
ERP Enterprise Resource Planning
EU European Union
EUCLID Connectivity to EuroClear Bank services
FIN The messaging service offered by SWIFT for the secure and reliable exchange of MT messages in store-and-forward mode By extension the syntax used to format these MTs
IP intellectual property
Interoperability Capability to easily exchange business information while using different message standards ISO 20022 promotes global use of syntax-neutral business and message components as a common denominator to achieve interoperability between standards using different syntaxes
ISO The International Organization for Standardization - an international standard-setting body composed of representatives from more than 160 national standards organizations that promulgates worldwide standards in a variety of domains aiming at facilitating cross-border exchanges of goods services and techniques
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ISO 15022 An ISO standard that describes the syntax to be used for developing securities messages used mainly to support back office related transaction flows It replaced the previous securities messaging standard ISO 7775
ISO 20022 RA Registration Authority - offers the services described in an ISO standard on behalf of and under a contractual agreement with the International Organization for Standardization
ISO 20022 Repository
Repository maintained by the ISO20022 RA which contains the financial business models message definitions and components defined in compliance with the ISO 20022 standard
ISO 20022 RMG Registration Management Group - in charge of the overall management of the ISO 20022 development and registration process in accordance with the ISO 20022 standard
ISO 20022 SEG Standards Evaluation Groups -in charge of validating candidate ISO 20022 messages within the scope of the business justification and ensuring that they address the needs of their future international community of users
ISV Independent Software Vendor
KYC Know Your Customer
MACUG Member Administered Closed User Group
Message A set of structured information exchanged between two parties involved in a financial transaction
Message component and element
A re-usable data structure used for assembling message definitions The data defined in a message component is bdquotraced‟ back to the business components and business elements In simple terms business components define the business meaning message components create data structures for messaging
MI Market Infrastructure - a system that provides services to the financial industry for trading clearing and settlement matching of financial transactions and depository functions
Middleware Software that enables data to be exchanged among different systems with standard communication components and tools for formatting mapping and processing
MT The traditional bdquotag value‟ Message Types for use on the FIN service offered by SWIFT
MX An XML message exchanged over SWIFTNet whether or not ISO 20022 compliant
OS Open source
PSP Payment service provider
QA Quality assurance
RMA Relationship Management Access
RTGS Real Time Gross Settlement System
SAA SWIFT Alliance Access
SAE SWIFT Alliance Entry
SAG SWIFT Alliance Gateway
SaaS Software as a Service
SCORE Standardized CORporate Environment
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Semantics The study of meaning usually in language The word is often used in ordinary language to denote a problem of understanding that comes down to word selection or connotation
SEPA Single Euro Payment Area
SLA Service level agreement
SME Small and Medium-sized Business(es)
SOA Service Oriented Architecture
SSB SWIFT Service Bureau
STP Straight Through Processing
SWIFT Society for Worldwide Interbank Financial Telecommunication Visit wwwswiftcom
Syntax Physical format of a message used to identify and represent the conveyed pieces of information
T2S TARGET2 Securities - an initiative of the Eurosystem It is an IT platform that aims to make settlements across national borders simpler and more cost-efficient
TARGET2 The Eurosystem-owned European Real Time Gross Settlement (RTGS) system (Trans-European Automated Real-time Gross Settlement Express Transfer System) TARGET2 is one of the largest high-value payment systems in the world
Taxonomy The classification in a hierarchical system typically organized by super type - sub type relationships also called generalization-specialization relationships or less formally parent-child relationships
TSU Trade Service Utility
TCO Total cost of ownership
Translation rules
Set of rules to be used to map the pieces of information included in a message expressed in one syntax to the equivalent message expressed in another syntax
Remit Remittances
XML eXtensible Mark-up Language - popular syntax to encode documents (or messages) electronically on the Internet XML allows communities to define their own identifiers (or tags) and format (or data type) for each component of a message
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Bureaus etc) ISV regulatory institutionsMarketing plan feasibility campaign efficiency and costs
2 MentorPreferable SWIFT
Also eligible SunGard IBM affiliation to other OS communitySWIFT decision
3 Legalcopyright Expert legal consultant and RO apprentice Cost and time shift dependent
4 Tight regulation Clear membership admission amp software contribution criteria The quality of the consultant advice
5 Marketing Actively recruiting community members Marketing plan feasibility campaign efficiency amp customer skepticism
a community portala provide content amp debate space information consolidation amp dissemination virtual
showroom subscription management support
a business analysis solution availability and maintenance by one of the
members or employed company
b press releases amp
announcementsb PR and AR b communicators availability and costs
c events c periodical conferences user focused meetings c cost dependent
6 Financing World Bank EU amp private funds Lobby amp funds availability
Item
FinTP
FinTP community
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e Public administrations
Toolbox3 (see 51 Features)
Public debt business automation through Treasury Bonds settlement on all trade phases eg pre- sales post-
Wages and pensions payment in compliance with SEPA regulations
Structural funds financial management (in a business group managed by the State Treasury)
FinTP plays a multiple roles in the Public Administration financial business
a Bridge between the global banks secure network (SWIFTNet) and the Government
secure national network performing format conversion and business flow mapping
thus FinTP acts as a financial integrator of the different public institutions
b Interoperability gateway with the banking community and financial market
infrastructures
c Auctioning portal for the Treasury Bonds allocation and settlement for the Primary
market
d Management of the payments related to Structural Funds financed projects and to
the providers of the public institutions
e Payments (such as wages pensions state subsidies) due to individuals intermediated by banks using SWIFTRemit framework Similarly the taxes collection should be handled by the same system and framework FinTP provides means to perform the operations using either mobile devices or the internet
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44 Key Business Objectives and Success Criteria
Today Allevo faces two major limitations in fulfilling its business objectives
1 Strong dependency on its narrow national market and thus being limited to the
known European Union and particularly Romanian practice
2 Significant allocation of the development talents to maintaining qPayIntegrator
rather than working to new business oriented products
Allevo is going to expand its business footprint and simultaneously shift its revenue
source from back-office solutions towards its customers business area (treasury front-
office) applications
To achieve this goal Allevo will focus on developing FinTP business and on gathering
a strong supporting community formed by representatives of the targeted market The
coherence of the community should be ensured by a trustful and committed
moderator
Therefore for the success of the project Allevo deems instrumental the go-to-market
process the solid take-up tempo and the quality of the community
On the FinTP side Allevo should tightly focus on
1 Understanding the community members‟ needs values and priorities in
relationship with their business competitive ecosystem
2 Improving the product management process and the technical commercial amp
distribution documentation
3 Identifying and centring the attention on strong idea generation selection and
monitoring processes
4 Elaborating the right product architecture to enable easy functional and technical
scalability maintainability diagnose native features for flexible customization
compliance to global and regional financial standards and preserving the initial
licensing structure across various customers business models
5 Strengthening project management
6 Designing coherent knowledge transfer process
7 Designing efficient customer support
As a member of this FinTP open source community Allevo will provide
1) the open source FinTP application
2) knowledge transfer (training amp consultancy) to both early adopters and to the
product development amp maintenance body (see 46 The community)
3) for a limited period of time
- support amp maintenance
- alignment to technology standards amp regulation
4) further improvements
5) contribution to relevant proofs of concept community web site conferences
articles online awareness
The power of the community will draw other vendors to partner together to ensure
market coverage each of them complementing the other through their expertise
FinTP - Vision and Scope
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FinTP distribution will be performed via the communitys portal while the initial
consultancy product installation and support services will be delivered remotely
Following the free open source software model FinTP will be available under an open
license free of charge
In designing the new products Allevo will benefit on mid and long term from the deep
insight both of FinTP internals and the structure and operation of the community
45 Market Sizing
Our evaluation of the FinTP targeted market size
- the global market size taken into account is 26100 institutions out of which
- an average FinTP engine licensing fee is euro30000 resulting in potential
maximum expenses of euro783 million
- the corresponding yearly maintenance fee is euro5400 resulting in potential
maximum expenses of euro700 million in 5 years
- the number of potential institutions adopting FinTP in the first 5 years of
availability 250 tier3 amp 2000 tier4
- consequently the savings in 5 years could reach euro675 million in license
fee and euro2025 million in maintenance fee resulting in a total of almost euro90
million
Allevo believes that (at least) during 2013 and 2014 its current income source will be
preserved while after that period the main replacement of the lost (new licensing and
recurring maintenance) fees will mainly consist of services (consulting
implementation support education) and sales of licenses for newly launched
applications
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46 The FINkers United community
The community structure comprises three main entities (as depicted in the bellow
figure)
1 The adopters (beneficiaries) consumer companies choosing to adopt the
FinTP product in compliance with the community line of business and ethical
conduct
2 The moderator the instrumental inspirational authority expected to draw both
the development vision and the guidelines of the community
3 The contributors
a institutionalized bodies eg development and maintenance test and
validation audit legal marketing
b independent contributors eg ISVs (Allevo falling under this category)
solution providers integrators or passionate developersindividuals
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5 Solution Description amp Parameters Like qPayIntegrator FinTP offers a
standard compliant processing
engine for the financial transactions
exchanged between the back-office
or ERP applications and the financial
community (banks MFIs market
infrastructures corporations)
FinTP is able to process financial
messages in both FIN and ISO20022
formats and at the same time offers
a rich set of interfaces to different
financial applications FinTP provides
compliance with various clearing and
settlement mechanisms
Consequently FinTP ensures a high
level automation of the end-to-end
financial transactions processing
51 Features
The FinTP project has two major deliverable components
1 the FinTP application itself
2 the community built around FinTP
All subsequent chapters will refer to both of these
Component code
Component description Comments
FinTP4 FinTP is a financial transactions processing engine for 3rd or 4th tier banks microfinance corporate or SMEs treasuries available as open source application Functional characteristics
1 Operational features
o Predefined flows and message formats
Includes reconciliation of confirmations with transactions
o Single and multiple funds transfer instructions securities settlement amp reconciliation (Romanian Euroclear) messages
The supported payment instruments are credit transfer direct debit debit instruments
o MTMX coexistence Based on FinTP native internal data format (ISO20022)
o Multi-BIC multi-currency
o SEPA ready (certification) Compliancy with EPC regulations for SEPA formatting and business flows (for SCT and SDD) enables bank-to-bank and bank-to-CSM settlement
4 FinTP root is Allevo equivalent product qPayIntegrator a commercially available amp practice proven (since
2005) application qPayIntegrator provides a consistent set of functionalities and it is fully aligned to both industry regulations and technology
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Component code
Component description Comments
o TARGET 2 ready Compliance with TARGET2 settlement and operations as regulated by the ECB
o SAGSAASAE SAL interfaces
Integration with SWIFTNet to enable banking business
o Liquidity reports Real time cash reports and forecasts using several criteria (currency subsidiary profit centre)
o Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
Analysis and reports of market trends based on volumes amount BIC etc along with early alerts on behaviour changes beyond the standard deviation
o Accounting reconciliation Automatic NOSTROVOSTRO accounts reconciliation intraday liquidity reports and integrated exception management
o AML (sanctions list matching)
High and low value payments filtering uses 20+ black lists and ensures their content maintainability
o Duplicate detection Detection and investigation of possible duplicates the detection window and criteria are configurable
o Remittances processing Covers banks business and operations area as well as distribution channel
o Treasury markets Automation of treasury flows (FX and money market)
o Statements Processing of SWIFT messages related to correspondent banks accounts administration
2 Technical features
o Financial message routing and monitoring
o Multi-threading capabilities
o Persistent end-to-end transactions
During each phase of the entire processing cycle permanent copies of the transaction are kept until the final completion thus avoiding any transaction duplication or loss
o Batching unpacking
o Resilience at transaction level
o Archiving
o Tracing and logging transactions and user events
o Transient errors detection and recovery
o Real-time search and reports
o Security access and user administration
o SaaS cloud ready
FinTP - Vision and Scope
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Component code
Component description Comments
FINkers United - community
Since FinTP is an application handling financial transactions the product releases and the related community should be tightly regulated and controlled As the project matures these components will be further refined The following main components of the community have been identified
‐ the moderator ‐ the product development
and maintenance body ‐ the product and
community auditor body (acting as a gatekeeper of official releases) to control and maintain the change requests integer and eliminate any malware exposures
‐ the test and validation body
‐ the legal body for defining the frame for product distribution amp licensing
‐ the marketing entity responsible for creating awareness and attracting contributors and adopters
‐ the portal used as a channel for marketing support and version control
‐ individual contributors namely ISVs solution providers developers integrators who wish to use their skills and knowledge to the benefit of the community
These tools strongly depend on the available budget and widespread
organization culture It is not mandatory for these to be open source if usage of
open source tools would mean lower quality
3) Licensing
The licensing model highly depends on the results of the open source legal and
business consultancy However we assume the following frame
‐ free of charge initial and recurring maintenance license for using FinTP
‐ FinTP does not use software components enforcing liabilities for the user
‐ consumers using FinTP source code (in part or entirely) should comply to
the licensing policy of the community
‐ the version released by the development amp maintenance body is the only
official amp to be trusted version of the community ensuring product integrity
unity and stability
4) Regulatory compliance
The regulatory compliance strongly depends on the early adaptation of new amp
changed rules via the recurring maintenance and on the quality of the audits
performed by the specific bodies of the community
Thus it is ensured that ISO20022 and FIN standards TARGET2 and TARGET2
Securities SEPA or country specific regulations (as stated respectively by
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SWIFT standards EPC specification ECB or regional Central Banks
regulations that the community chooses to comply with) stay the most
important business specific anchors of FinTP
The FinTP design also offers support for flexible definition of new compliance
sources
5) Consultancy
The needed consultancy is twofold
‐ legal to ensure that FinTP does not infringe other licensing constraints
‐ open source specific to enable the right choice of the community type and of its governing law
The main constraint relies in choosing the right advisors true experts in the
open source industry amp with appropriate ethic profile - able to deliver as
promised The consultants have to be available 800 am divide 800 pm CET and
easily reachable - geo-location is of utmost importance Selection of the
consultant will basically be done on price assuming the right mix of expertise
and availability is achieved
6) Financing
While Allevo partially undertakes the financing of FinTP development the
ancillary consultancy necessary team education or acquisition of productivity
tools are far beyond the companys 2012 budget
To overcome possible delays in the project Allevo needs to sturdily act to
identify both the most appropriate commercial offer and additional necessary
financing source(s)
FinTP community
The community related items are members moderator legal tight regulation
marketing and financing For each of these items several assumptions and the
corresponding dependencies are provided in the following paragraphs
1) Members
We assume that the communitys members span several business profiles
(such as financial services institutions corporations market infrastructures
PSPs SSBs public administrations regulatory institutions and ISVs) sharing
the mutual focus on financial operations performance and improvement
By now after some tests on market acceptance there have been identified a
few supporters comprising financial services institutions and small ISVs
To ensure the success of building the community there is need for attracting
prestige influencers (market analysts consulting companies of scale - starting
with big four key industry providers - such as SWIFT other communities - ie
professional such as banking insurers capital market associations) and a
credible pool of financial institutions and corporations
To this end Allevo unrolls its own awareness campaign through direct
meetings publications blog posts and social media public presentations and
by officially launching the initiative in a conference focused on free of charge
financial transactions processing applications
Allevo further plans to use Sibos 2012 as opportunity to organize a less
traditional communication session gathering a relevant international panel to
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debate the strong and weak aspects of this initiative amp to get the public involved
as much as possible
The goal is that by the end of 2012 some tens of different institutions are
committed to co-found the community and to actively contribute to establishing
the legal frame and to forming the required action bodies
2) Moderator
Allevo perceives the Moderator as the critical member of the community since
his prestige and influence will warrant the outcome of all performed activities
The moderator must commit on long term to develop the community and to
sponsor it with its share of trust
Allevo strongly believes that the Moderator should have a global footprint be a
reputable and trustful institution
3) Legalcopyright
The legal consultant and advisor needs to provide the coherent legal frame to
cover all community activities by roles and accountability While making it easy
for the members it should be more demanding as far as contributors are
concerned (though still encouraging ISVs to actively participate) It has to draw
very precise responsibilities for the independent and institutionalized bodies
(for instance product maintenance amp development and audit) and for the
Moderators status
The quality of this legal work fully relies on the expertise and experience of the
advisor
The law governing the community has to be in harmony with the European
(either French or Anglo-Saxon) legal system and with the open source legal
regulations largely practiced in other business regions (US and APAC)
4) Tight regulation
FinTP the product meant to gather a community which uses and supports it is
all about moving values between different entities Thats critical irrespective of
the amount because failing to perform properly opens the doors to arguments
amp loss of reputation with the related tangible costs Moreover the product has
to be beyond any doubt during its entire lifecycle free of any malefic
embedded functions meaning that contamination has to be avoided by all
means
Allevo strongly believes that this requirement can be attained only by tight
regulation of the community specific approval of the initially launched version
of FinTP and of the recurring contributions
This approach can be felt strange compared to most open source communities
and can lead to little interest from IT talents making them feel banned or
restricted It remains the Moderator‟s duty to make them feel privileged if
accepted and rewarded as such However this censorship is a price to be paid
since the community and the project are about processing transactions
initiating value transfer
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5) Marketing
The community needs to have the clear objective of spreading both
geographically and over a consistent number of industries
To achieve this goal the community should be able to actively provide open
access to relevant information (including explanations of concepts hands-on
evaluation) to non-members and to also answer their questions on FinTP and
on the community itself
The same level of information needs to be ensured for the members to whom
supplementary updates on the community events decisions available
releases patches and fixes should be made available They need to also get
focused forum discussions on specific business areas and subsequent
processes need to be distributed
These functionalities have to be hosted on the community‟s dedicated portal
This portal has to provide content dialogue space information consolidation
and broadcasting It must be a virtual showroom for FinTP It needs to host
documents and virtual meetings subscription management and product
support amp development
The community has to be able to run its own meetings enabling direct contact
between active members or their representatives
Meaningful press releases have to be regularly issued along with actively
maintaining a productive relationship with market analysts to consolidate a
clear public understanding of the community spirit and goals
6) Financing
Its all about money-money-money since at least for the first 2-3 years the
community needs to be financed
Upon reaching maturity the institutionalized bodies of the community can earn their income from collateral activities - such as organizing conferences providing education and specialized support services - either for the initial FinTP installations and customizations or for recurring services requested by the members An alternative can be trialling and certifying interested providers enabling them to perform support services for FinTP
Thus who could pump money into this project It could be one or a mix of
‐ World Bank - if governmental programs are implied and provided a proper project which convincingly demonstrates the beneficed social impact
‐ EU development funding
‐ interested wealthy members of the community
The most critical dependencies are external such as (arranged according to
their impact) availability of funds for building the community finding trustful
and skilled open source consultants (legal business community licensing)
The synthetic view of the main assumptions and dependencies is provided in
the attached file
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Maintenance amp user support 1-Jan-13 Marketing inst action
4 Activities
Initial planning amp budgeting 15-Dec-12 document
Roles allocation 15-Dec-12 document
Community inst Implementation 15-Dec-12 action
Awareness campaign 1-Jan-13 action ongoing process
Members recruiting 1-Jan-13 action ongoing process
Continued operation 1-Jan-13 action ongoing process
Service sales 1-Jan-13 action ongoing process
Future development planning 1-Jan-13 document ongoing process
5 Resource allocation
If existing institution - allocation 15-Dec-12 action
If newly formed - recruiting 15-Dec-12 action
Make FinTP available to comm 1-Jan-13 action ongoing process
Start community financing 1-Jan-13 action ongoing process
6 Financing
Initial investment 1-Jan-13 action secured by that date
First period of comm operation 31-Aug-13 action secured by that date
co
mm
un
ity
Project approach
Project approachpdf
FinTP - Vision and Scope
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Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
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8 Scope This chapter deals with the phased availability of various FinTP features again considered from application and community points of view
In the first phase (due Dec 2012) the core of FinTP application is ready including the following technical features
- financial message routing between services and monitoring of exchanges
- multi-threading capabilities
- persistent end-to-end transactions
- batching de-batching
- archiving
- tracing and logging of transactions and user events
- transient errors detection and recovery
- real time search and reports
- security access and user administration
Similarly during the first phase the main community components need to be in place
- moderator
- software development and maintenance body (Allevo also available in the first and second phase of the project)
- test amp validation body
- (software) auditor
- legal
- main contributors (Allevo falls into this position)
- platform
- marketing
In the second phase (Dec2012 - Dec2013) several operational features of FinTP will be added
- predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit instruments securities settlement reconciliations
- MTMX coexistence
- multi-BIC multi-currency
- SEPA ready certification
- TARGET2 ready
- SAGSAASAE interfaces
- duplicate detection
- liquidity reports
- competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
- accounting reconciliation
- AML (sanctions list matching)
- SaaS and cloud ready
along with resilience and start of maintenance and knowledge transfer (the last two obviously continuing in the next phases)
FinTP - Vision and Scope
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Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
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The synthetic view of the project scope is provided in the following table
Crt No
Feature Activity Phase1 31Dec12
Phase2 31Dec13
Phase3 31Dec14
Phase4 31Dec15
Fin
TP
A Operational features
1
Predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit Instruments bonds (Romanian Euroclear) reconciliations
2 MTMX coexistence
3 Multi-BIC multi-currency
4 SaaS ready cloud ready
5 SEPA ready certification
6 TARGET2 ready
7 SAGSAASAE interfaces
8 Liquidity reports
9 Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
10 Accounting reconciliation
11 AML (sanctions list matching)
12 Duplicate detection
B Technical features
1 Routing financial message between services and monitoring of data flows
2 Multi-threading capabilities
3 Persistent end-to-end transactions
4 Batching de-batching
5 Resilience (at transaction level)
6 Archiving
7 Tracing and logging of transactions and user events
8 Transient errors detection and recovery
9 Real time search and reports
10 Security access and user administration
C Other activities
1 FinTP maintenance
2 Knowledge transfer
Co
mm
un
ity
Establishing the institutionscomponents
1 Mentor
2 Software Auditor amp Provider
3 Legal service
4 Members
5 Allevo initial role
6 Platform
7 Marketing
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
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9 Limitations The main limitations in the economy of the project consist of phasing several FinTP
operational features for the following year (eg debit instruments liquidity reporting
AML filtering accounting reconciliation resilience SaaS ready cloud ready etc)
At the same time for features intended to front-office usage like Remit it was not yet
decided to publish them as open source product
The synthetic view of the main limitations is provided in the following table
Crt
nrItem Limitation Exclusion Comments
1
FinTP
a
Operational features Available in 2013
b
Remit Not included in
open source
package
2
Community
a
Rules Tightly controlled The statute should
ensure the right
balance between
safety and free
association of talents
Given the significant budget allocation (at least from Allevo perspective) the strong
requirement to meet the maximum ceiling will limit the FinTP product initial preparation
and maintenance expenses
Community wise the obligation of a tight regulated statute will have to ensure the right
balance between safety (mandatory in an environment dealing with financial
transactions) and a free association of talents (typical in an open source community)
In the first period after launch (at least the first two years) of the initiative the
maintenance and support activities will be provided by Allevo (as initial contributor)
A major restriction would be to meet the budgeted development and maintenance
FinTP - Vision and Scope
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10 Appendix - Risks
Specific risks
1 Product
a Long delivery lead time This is a medium probability and impact risk however Allevo should make available the needed resources and motivate the entire team for the job
b Credibility loss if FinTP fails to further become certified on meaningful operations andor business tracks (ie SWIFT business certification tracks or similar) The single possible containment is lobbying if the application certification program rejects open source products Anyway the impact is very important and its materialization should be avoided
c Low quality of the allocated team and improper version management are highly unlikely to occur as long as the formal transfer of responsibility is smoothly made from Allevo to the corresponding body put in place by the community The real hidden risk is that this process could take too long and it thus has a very high impact
d Poor FinTP quality may result if the community fails to institutionalize proper quality assurance (QA) and verification amp validation (VampV) processes This is most expected not to happen but if it does the impact is at least medium The single path to overcome this risk consists in a professional approach to these items based on institutionalizing practice proven QA and VampV processes
e Allevo lack of expertise in the open source business This can be contained by carefully selecting trustful amp truly expert consultants Otherwise it means more money longer time spent on project and expenses without proper return
2 Service
a The software maintenance does not properly deliver as expected ie on-time and on-quality bug fixing regulation amp standards alignment and productivity amp technological improvement The key to contain this risk materialization is the community status having provisions to neatly provide maintenance and further development of the rules for FinTP as well as the applicable rules and fees for the ancillary services
b Low quality and safety of the service received by the members of the community To avoid the risk of performing the one-time amp recurring support services by under-prepared professionals the community has to rule the process of training and qualifying the companies willing to contribute in this area
c Not meeting the minimal SLA criteria The community should regulate and periodically revise the training curricula and to further audit both the teachers and the certified experts to ensure the service level agreements are met
d Under motivated service providing professionals - up to the level of not feeling the high impact of their activity The community status must provide guidance to the contributors on the minimal standards the professionals should meet
FinTP - Vision and Scope
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e Constrained expert resource pool This risk could be overcome by the communitys policy to ensure at all time a balanced number of motivated experts to the communitys size Failing to do so may result in high negative impact of the community business and public perception
3 Community
a Emergence of a parallel competitive community If the optimal timing between publically disclosing FinTP and community take-off is not achieved then there are high chances that following a competitive initiative other entrepreneurs successfully launch their own similar or derived community This could be avoided by periodical reviews of the progress of both FinTP and community status and deciding whether the project needs to be put on hold or not
b Unfit reputation of the Moderator or main contributors If either the Moderator or the initial contributors are not beyond any dispute and are reputable institutes then there is certainly something rotten in Denmark and the project should be put on-hold
c No commitment from the Moderator‟s side Similarly if the Moderator does not commit to the project it means that Denmark has a serious problem to solve The project should relinquish until the matter is fixed
4 Legal
a Misuse of copyright and intellectual property (IP)The assigned working team could not be aware of the limitations and liabilities of using (entirely or partially) third party software this risk can be contained by delivering the right training providing proper working procedures carefully recording and documenting the use of open source code and carefully cross-scanning
b Injunctive relief and financial damages can be caused by not properly and continuously controlling the use of third party open source code resulting in copyright or IP infringement There are two containment measures which can be taken tighten the compliance check during the product lifecycle or apply the sanction policy as to set an example
c The competition starts a class action - this may result in delaying the project
5 Financing
a Lack of long term financing institutions Allevo should urge its consultant to identify and draw a reasonable list of financial options institutions
b Exceeding the budget given that this type of project has no precedent in Allevo and to avoid exposing to the dependency on engagement to financial institutions or to commitments beyond the existing budget a further carefully drawn project plan is needed along with its explicit approval from the board of the company
Market related risks
1 False expectations
a Expensive services Not everything is free aside the initial and maintenance free licensing the training the support and other professional services can amount to more than in general expected Allevo rates this risk as medium possible but with low impact as long as the law governing the community and its initial period of operation will consecrate fair market prices and competitive sources of contribution
FinTP - Vision and Scope
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b Hidden costs for patches updates and upgrades While of similarly weight in terms of probability and impact this should be no real concern as long as the law governing the community clearly provides for free and accountable maintenance
2 Poor image on quality
a Too many releases making FinTP hard to manage and unsafe to operate Given proper regulation of the community and the mature root of FinTP Allevo disregards the possibility of this risk to materialize However if this were to happen this is a high impact risk and by all means should be avoided
b Backward technological (in)compatibility looks to us as a low risk in all respects and within organizations applying practice proven software engineering processes and professional - accountable team this is not likely to materialize
c Support can be perceived as the highest impact risk for FinTP This can be overcome by tight regulation of the commercial and professional conditions to deliver the service (for instance only qualified organizations should be recommended to members for supporting FinTP)
d SLA and accountability for both internally or externally performed services is closely correlated to the previous risk and the community status should provide the support for growing a community of competencies and accountable professionals around FinTP Periodical auditing (by the specialized community body) of this pool of professionals will further ensure the confidence that the skills are preserved at the required level
e Code fragmentation and forking is a high impact risk with a low probability of happening in the initial period provided the knowledge transfer is done orderly and in an institutionalized manner
3 Inherent uncertainty
a Community disputes can jeopardize its cohesion the project viability and future This is a high impact possibly high probability risk and it is the definite role of the Moderator to feel prevent and while materializing mitigate any conflicting situation
b FinTP going commercial post-launch This is a huge impact possibly high occurrence probability but manageable with the right legal instruments provisioned in the community
c Loss of alignment to industry standards and regulations This risk has medium probability and medium impact given the assumption that the community is tightly regulated and the working bodies institutionalized and gathering professionals
4 Legal
Copyright infringement given Allevo experience in the open source business this risk is highly probable and has a high impact on FinTP especially if mistakes are made in the launching phase Similarly if during the product maintenance and further development phase the community fails to institutionalize proper formal software development processes (covering all FinTP lifecycle phases) based on industry practice proven model(s) Supplementary the expert code scanning audit for compliance is the single resort to preclude external software source misuse
FinTP - Vision and Scope
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5 GPL specific
a Noncompliance to the GPL license If GPL license is used the product should further distribute in compliance with this part provisions High impact and probability but manageable if proper software development processes are used and if the statute clearly defines the licensing model for FinTP
b FinTP unconformity The risk that software engineers get inspired by a chic solution which they import and emulate similarly in FinTP And this is also highly possible since les grands esprits se rencontre
6 Existing customers attitude
Anger for having paid for something which now is free The existent customers can be concerned about the future of their installed system its further development (in one word its future) and on the quality of the service (SLA including) Some recent adopters can possibly be furious for spending their money on buying licenses for a piece of software that differently packaged becomes free of charge
For the first situation the single best solution for Allevo is to ensure a smooth transition from the current status to the new solution deployed Also highly probable Allevo should provide for simultaneous (for at most one more year) maintenance of both FinTP and for qPayIntegrator
For the 2012 new qPayIntegrator adopters Allevo should transparently state the product‟s future and propose a commercially attractive migration towards FinTP when it becomes publically available (like the option for the installation migration and recurring services) The decision should clearly stay with the customer if he still buys Allevo licenses delays the implementation until FinTP is available or if he goes for a competitive solution
In other words the key to mitigate the existing customer perception is switching places and discarding if the situation proves to be uncomfortable
Bottom-line is that to avoid most of the risks the FinTP community must be a rather tightly controlled one though still opened to anyone willingly abiding to the rules
The synthetic view of the main risks their assigned probability impact and the corresponding containment approach is provided in the attached file
Risk IDRisk
CategoryRisk
Probability
(High
Medium
Low)
Severity
(High
Medium
Low)
Containment (Mitigation Action Proposed)
M1Free as in a
Free Puppy
M101
The training service amp support cost could account more than the
commercial product its replacing (application software is typically 30 of
the total cost of ownership of most projects)
Medium Low
M102 Hidden costs ie charge for patches updates and upgrades Medium Low
M2Frequent
updates
M201
Projects might be updated frequently - as often as everyday Too frequent
updates could have a negative impact on the implementation
interoperability and support
Low HighMAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M3Backwards
compatibility
M301 Less accountability Low LowMAP03 Access to prior versions of source code (additional in-house
development and support procedures might be necessary)
M4Support
related risks
M401Support could be perceived as the biggest issue with open source
software deploymentsHigh High
M402 Internal External Accountability SLAs High High
M403Code fragmentation or forking if the community fails to institutionalize
corporate like formal structureHigh High
M404Support could require greater involvement and different skills set from
operations staffMedium Medium
M5Community
immaturity Low Low
M501Could generate incompatibility of FinTP with industry standards amp
regulationsMedium Medium
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M6 Uncertainty The inherent uncertainty in every open source project
M601 Community disputes might impact project viability and future High HighMAP04 The Mentor should prevent amp mitigate any conflicts inside the
community
M602 Open source projects may not stay open in future releases High HighMAP05 The originator liabilities should be strongly enforced by the
community statute
M7 Legal risks
M701 Copyright infringement High High
M702 Can open source software deployments pass an audit
M8 GPL General Public License specific development concerns
M801Software thatrsquos derived from an existing GPL project in whole or in part
might not be released under the same licenseHigh High M08 The community should regulate the licensing model
M802
Developer contamination - developer could review an existing open source
project could see an elegant solution then implement a similar function in
closed source project
High HighMAP09 Procedurals constrains for the software developers should be
enforced
M9
Current
customers
attitude
The actual customer perception could be negative High High
M12 To prevent a negative attitude Allevo should involve the customers
in the FinTP project Allevo needs their active support for a smooth and
issues less transition
ma
rke
t re
late
d r
isk
s
co
st
rela
ted
ris
ks
MAP01 The community should regulate the applicable rules and fees for
services and maintenance
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
bu
sin
es
s a
nd
le
ga
l ri
sk
s
MAP06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S1Product
related
S101 Late delivery lead time Medium MediumMAP15 Allevo should provide proper resources (funding and human
resources)
S102 Credibility loss if fail to certify with SWIFT Medium High MAP16 Should be discussedamp agreed with SWIFT
S103 Inexperienced team or allocation below needs Low HighMAP15 Allevo should provide proper resources (funding and human
resources)
S104 Improper or non efficient version management Low High MAP16 Review the current Allevo Configuration Management System
S105Poor quality if the community fails to institutionalize proper verification and
validation practices3
M06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S106 Lack of expertise in open source projects 2 Allevo should engage thoroughly selected Open Source consultants
S2Service
related
S201
The software maintenance not properly providing for bugs fixing
regulationamp standard alignment technological improvements communities
improvement requests
High HighMAP01 The community should regulate the applicable rules and fees for
services and maintenance
S202 One-time amp recurring services might be provided by unqualified resources High HighMAP17 The community should regulate the training curricula and related
expertise certification
S203 Provided services might not meet the minimal SLA performance criteria High HighMAP17 The community should regulate the training curricula and related
expertise certification
S204 Relaxed or lack of accountability of the professionals High HighMAP18 The community should regulate the employment agreement of
the professionals
S205 Lack of qualified professionals High HighMAP19 The community should ensure a balanced number of certified
professionals with the community size
S3Community
related
S301
If after disclosing FinTP the community does not enthusiastically adopt
the solution competitors might more successfully develop a similar
strategy
Medium MediumMAP20 FinTP promotion should be convincing and realistic A well
organized marketing campaign by Allevo
S302The community mentor andor early adhering members have no
undeniable prestige or are not largely trustfulMedium Medium MAP99 Project status review Ending the project could be one option
S303 The Mentor does not strongly commit for the project Medium Medium MAP99 Project status review Ending the project could be one option
S4 Legal
S401Exposure to copyright and IP infringement due to working team unaware of
the legal consequences of using third party softwareMedium Medium
MAP21 Allevo should keep records and fully document the use of open
source code
S402Copyright or intellectual property infringement can lead to injunctive relief
and monetary damagesHigh High
MAP23 Allevo should institutionalize a tight licensing and technical
control
S403 All risks related to open source compliance High HighMAP24 Allevo should appoint as soon as possible a FinTP compliance
Officer
S5 Financial
S501 Lack of financing institutions Medium MediumMAP25 Allevo should urge consultant to provide a consistent list of
potential investors
S502 Dependency on the financing institution approval Medium Medium
S503Not thoroughly planned project overlooking one or some project cost that
need to be financedMedium Medium
Sp
ec
ific
ris
ks
tec
hn
ica
lm
ark
eti
ng
leg
al
fun
din
g
MAP26 Allevo should carefully draw a consistent and eligible project for
financing
Risks
Riskspdf
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 40 of 43 Allevo Confidential
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Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
11 Appendix - Bibliography 1 Accenture Open Source Research Geographic Findings
2 Accenture Open Source Research Industry Findings
3 Producing Open Source Software - How to Run a Successful Free Software
Project by Karl Fogel
4 Open Source Software Risks and Rewards by Gary Hein
5 A Business Case Study of Open Source Software by Carolyn A Kenwood
6 6 critical success factors for product development by Christian Wig
7 Bank 20 by Brett King
8 Managing the business risks of open innovation by Oliver Alexy and Markus
9 Product idea evaluation checklist shared by Startgass AS
10 SWIFT 2015 Strategy
11 Customers and business impact of product changes
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
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Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
12 Appendix - Glossary ACH Automated Clearing House that is used to clear retail payments
between banks in a country or region
APAC Asia and Pacific
AML Anti-Money Laundering
BCampDR Business continuity amp disaster recovery
B2B Business to business
C2B Consumer to business
CET Central European Time
CMMI Capability Maturity Model Integration
CMS Configuration Management System
Coexistence The situation of multiple standards existing at the same time in the same business space Within SWIFT this refers to the coexistence between the MT and MX standards This also refers to the set of measures being taken to make the situation easier to handle by the community (publication of mapping rules translation serviceshellip)
CSM Clearing and Settlement Mechanism
CUG Closed User Group
Dictionary Part of the ISO 20022 Repository that contains all items that can be re-used during business modelling and message definition activities
EAI Enterprise Application Integration - middleware to connect applications and communication interfaces Typical EAI software includes features for mapping data between various formats enriching messages with data from other systems and orchestrating message flows
ECB European Central Bank
EMEA Europe Middle-East Africa
EPC European Payment Council
ERP Enterprise Resource Planning
EU European Union
EUCLID Connectivity to EuroClear Bank services
FIN The messaging service offered by SWIFT for the secure and reliable exchange of MT messages in store-and-forward mode By extension the syntax used to format these MTs
IP intellectual property
Interoperability Capability to easily exchange business information while using different message standards ISO 20022 promotes global use of syntax-neutral business and message components as a common denominator to achieve interoperability between standards using different syntaxes
ISO The International Organization for Standardization - an international standard-setting body composed of representatives from more than 160 national standards organizations that promulgates worldwide standards in a variety of domains aiming at facilitating cross-border exchanges of goods services and techniques
FinTP - Vision and Scope
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ISO 15022 An ISO standard that describes the syntax to be used for developing securities messages used mainly to support back office related transaction flows It replaced the previous securities messaging standard ISO 7775
ISO 20022 RA Registration Authority - offers the services described in an ISO standard on behalf of and under a contractual agreement with the International Organization for Standardization
ISO 20022 Repository
Repository maintained by the ISO20022 RA which contains the financial business models message definitions and components defined in compliance with the ISO 20022 standard
ISO 20022 RMG Registration Management Group - in charge of the overall management of the ISO 20022 development and registration process in accordance with the ISO 20022 standard
ISO 20022 SEG Standards Evaluation Groups -in charge of validating candidate ISO 20022 messages within the scope of the business justification and ensuring that they address the needs of their future international community of users
ISV Independent Software Vendor
KYC Know Your Customer
MACUG Member Administered Closed User Group
Message A set of structured information exchanged between two parties involved in a financial transaction
Message component and element
A re-usable data structure used for assembling message definitions The data defined in a message component is bdquotraced‟ back to the business components and business elements In simple terms business components define the business meaning message components create data structures for messaging
MI Market Infrastructure - a system that provides services to the financial industry for trading clearing and settlement matching of financial transactions and depository functions
Middleware Software that enables data to be exchanged among different systems with standard communication components and tools for formatting mapping and processing
MT The traditional bdquotag value‟ Message Types for use on the FIN service offered by SWIFT
MX An XML message exchanged over SWIFTNet whether or not ISO 20022 compliant
OS Open source
PSP Payment service provider
QA Quality assurance
RMA Relationship Management Access
RTGS Real Time Gross Settlement System
SAA SWIFT Alliance Access
SAE SWIFT Alliance Entry
SAG SWIFT Alliance Gateway
SaaS Software as a Service
SCORE Standardized CORporate Environment
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Semantics The study of meaning usually in language The word is often used in ordinary language to denote a problem of understanding that comes down to word selection or connotation
SEPA Single Euro Payment Area
SLA Service level agreement
SME Small and Medium-sized Business(es)
SOA Service Oriented Architecture
SSB SWIFT Service Bureau
STP Straight Through Processing
SWIFT Society for Worldwide Interbank Financial Telecommunication Visit wwwswiftcom
Syntax Physical format of a message used to identify and represent the conveyed pieces of information
T2S TARGET2 Securities - an initiative of the Eurosystem It is an IT platform that aims to make settlements across national borders simpler and more cost-efficient
TARGET2 The Eurosystem-owned European Real Time Gross Settlement (RTGS) system (Trans-European Automated Real-time Gross Settlement Express Transfer System) TARGET2 is one of the largest high-value payment systems in the world
Taxonomy The classification in a hierarchical system typically organized by super type - sub type relationships also called generalization-specialization relationships or less formally parent-child relationships
TSU Trade Service Utility
TCO Total cost of ownership
Translation rules
Set of rules to be used to map the pieces of information included in a message expressed in one syntax to the equivalent message expressed in another syntax
Remit Remittances
XML eXtensible Mark-up Language - popular syntax to encode documents (or messages) electronically on the Internet XML allows communities to define their own identifiers (or tags) and format (or data type) for each component of a message
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
- an average FinTP engine licensing fee is euro30000 resulting in potential
maximum expenses of euro783 million
- the corresponding yearly maintenance fee is euro5400 resulting in potential
maximum expenses of euro700 million in 5 years
- the number of potential institutions adopting FinTP in the first 5 years of
availability 250 tier3 amp 2000 tier4
- consequently the savings in 5 years could reach euro675 million in license
fee and euro2025 million in maintenance fee resulting in a total of almost euro90
million
Allevo believes that (at least) during 2013 and 2014 its current income source will be
preserved while after that period the main replacement of the lost (new licensing and
recurring maintenance) fees will mainly consist of services (consulting
implementation support education) and sales of licenses for newly launched
applications
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46 The FINkers United community
The community structure comprises three main entities (as depicted in the bellow
figure)
1 The adopters (beneficiaries) consumer companies choosing to adopt the
FinTP product in compliance with the community line of business and ethical
conduct
2 The moderator the instrumental inspirational authority expected to draw both
the development vision and the guidelines of the community
3 The contributors
a institutionalized bodies eg development and maintenance test and
validation audit legal marketing
b independent contributors eg ISVs (Allevo falling under this category)
solution providers integrators or passionate developersindividuals
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5 Solution Description amp Parameters Like qPayIntegrator FinTP offers a
standard compliant processing
engine for the financial transactions
exchanged between the back-office
or ERP applications and the financial
community (banks MFIs market
infrastructures corporations)
FinTP is able to process financial
messages in both FIN and ISO20022
formats and at the same time offers
a rich set of interfaces to different
financial applications FinTP provides
compliance with various clearing and
settlement mechanisms
Consequently FinTP ensures a high
level automation of the end-to-end
financial transactions processing
51 Features
The FinTP project has two major deliverable components
1 the FinTP application itself
2 the community built around FinTP
All subsequent chapters will refer to both of these
Component code
Component description Comments
FinTP4 FinTP is a financial transactions processing engine for 3rd or 4th tier banks microfinance corporate or SMEs treasuries available as open source application Functional characteristics
1 Operational features
o Predefined flows and message formats
Includes reconciliation of confirmations with transactions
o Single and multiple funds transfer instructions securities settlement amp reconciliation (Romanian Euroclear) messages
The supported payment instruments are credit transfer direct debit debit instruments
o MTMX coexistence Based on FinTP native internal data format (ISO20022)
o Multi-BIC multi-currency
o SEPA ready (certification) Compliancy with EPC regulations for SEPA formatting and business flows (for SCT and SDD) enables bank-to-bank and bank-to-CSM settlement
4 FinTP root is Allevo equivalent product qPayIntegrator a commercially available amp practice proven (since
2005) application qPayIntegrator provides a consistent set of functionalities and it is fully aligned to both industry regulations and technology
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Component code
Component description Comments
o TARGET 2 ready Compliance with TARGET2 settlement and operations as regulated by the ECB
o SAGSAASAE SAL interfaces
Integration with SWIFTNet to enable banking business
o Liquidity reports Real time cash reports and forecasts using several criteria (currency subsidiary profit centre)
o Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
Analysis and reports of market trends based on volumes amount BIC etc along with early alerts on behaviour changes beyond the standard deviation
o Accounting reconciliation Automatic NOSTROVOSTRO accounts reconciliation intraday liquidity reports and integrated exception management
o AML (sanctions list matching)
High and low value payments filtering uses 20+ black lists and ensures their content maintainability
o Duplicate detection Detection and investigation of possible duplicates the detection window and criteria are configurable
o Remittances processing Covers banks business and operations area as well as distribution channel
o Treasury markets Automation of treasury flows (FX and money market)
o Statements Processing of SWIFT messages related to correspondent banks accounts administration
2 Technical features
o Financial message routing and monitoring
o Multi-threading capabilities
o Persistent end-to-end transactions
During each phase of the entire processing cycle permanent copies of the transaction are kept until the final completion thus avoiding any transaction duplication or loss
o Batching unpacking
o Resilience at transaction level
o Archiving
o Tracing and logging transactions and user events
o Transient errors detection and recovery
o Real-time search and reports
o Security access and user administration
o SaaS cloud ready
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Component code
Component description Comments
FINkers United - community
Since FinTP is an application handling financial transactions the product releases and the related community should be tightly regulated and controlled As the project matures these components will be further refined The following main components of the community have been identified
‐ the moderator ‐ the product development
and maintenance body ‐ the product and
community auditor body (acting as a gatekeeper of official releases) to control and maintain the change requests integer and eliminate any malware exposures
‐ the test and validation body
‐ the legal body for defining the frame for product distribution amp licensing
‐ the marketing entity responsible for creating awareness and attracting contributors and adopters
‐ the portal used as a channel for marketing support and version control
‐ individual contributors namely ISVs solution providers developers integrators who wish to use their skills and knowledge to the benefit of the community
These tools strongly depend on the available budget and widespread
organization culture It is not mandatory for these to be open source if usage of
open source tools would mean lower quality
3) Licensing
The licensing model highly depends on the results of the open source legal and
business consultancy However we assume the following frame
‐ free of charge initial and recurring maintenance license for using FinTP
‐ FinTP does not use software components enforcing liabilities for the user
‐ consumers using FinTP source code (in part or entirely) should comply to
the licensing policy of the community
‐ the version released by the development amp maintenance body is the only
official amp to be trusted version of the community ensuring product integrity
unity and stability
4) Regulatory compliance
The regulatory compliance strongly depends on the early adaptation of new amp
changed rules via the recurring maintenance and on the quality of the audits
performed by the specific bodies of the community
Thus it is ensured that ISO20022 and FIN standards TARGET2 and TARGET2
Securities SEPA or country specific regulations (as stated respectively by
FinTP - Vision and Scope
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SWIFT standards EPC specification ECB or regional Central Banks
regulations that the community chooses to comply with) stay the most
important business specific anchors of FinTP
The FinTP design also offers support for flexible definition of new compliance
sources
5) Consultancy
The needed consultancy is twofold
‐ legal to ensure that FinTP does not infringe other licensing constraints
‐ open source specific to enable the right choice of the community type and of its governing law
The main constraint relies in choosing the right advisors true experts in the
open source industry amp with appropriate ethic profile - able to deliver as
promised The consultants have to be available 800 am divide 800 pm CET and
easily reachable - geo-location is of utmost importance Selection of the
consultant will basically be done on price assuming the right mix of expertise
and availability is achieved
6) Financing
While Allevo partially undertakes the financing of FinTP development the
ancillary consultancy necessary team education or acquisition of productivity
tools are far beyond the companys 2012 budget
To overcome possible delays in the project Allevo needs to sturdily act to
identify both the most appropriate commercial offer and additional necessary
financing source(s)
FinTP community
The community related items are members moderator legal tight regulation
marketing and financing For each of these items several assumptions and the
corresponding dependencies are provided in the following paragraphs
1) Members
We assume that the communitys members span several business profiles
(such as financial services institutions corporations market infrastructures
PSPs SSBs public administrations regulatory institutions and ISVs) sharing
the mutual focus on financial operations performance and improvement
By now after some tests on market acceptance there have been identified a
few supporters comprising financial services institutions and small ISVs
To ensure the success of building the community there is need for attracting
prestige influencers (market analysts consulting companies of scale - starting
with big four key industry providers - such as SWIFT other communities - ie
professional such as banking insurers capital market associations) and a
credible pool of financial institutions and corporations
To this end Allevo unrolls its own awareness campaign through direct
meetings publications blog posts and social media public presentations and
by officially launching the initiative in a conference focused on free of charge
financial transactions processing applications
Allevo further plans to use Sibos 2012 as opportunity to organize a less
traditional communication session gathering a relevant international panel to
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debate the strong and weak aspects of this initiative amp to get the public involved
as much as possible
The goal is that by the end of 2012 some tens of different institutions are
committed to co-found the community and to actively contribute to establishing
the legal frame and to forming the required action bodies
2) Moderator
Allevo perceives the Moderator as the critical member of the community since
his prestige and influence will warrant the outcome of all performed activities
The moderator must commit on long term to develop the community and to
sponsor it with its share of trust
Allevo strongly believes that the Moderator should have a global footprint be a
reputable and trustful institution
3) Legalcopyright
The legal consultant and advisor needs to provide the coherent legal frame to
cover all community activities by roles and accountability While making it easy
for the members it should be more demanding as far as contributors are
concerned (though still encouraging ISVs to actively participate) It has to draw
very precise responsibilities for the independent and institutionalized bodies
(for instance product maintenance amp development and audit) and for the
Moderators status
The quality of this legal work fully relies on the expertise and experience of the
advisor
The law governing the community has to be in harmony with the European
(either French or Anglo-Saxon) legal system and with the open source legal
regulations largely practiced in other business regions (US and APAC)
4) Tight regulation
FinTP the product meant to gather a community which uses and supports it is
all about moving values between different entities Thats critical irrespective of
the amount because failing to perform properly opens the doors to arguments
amp loss of reputation with the related tangible costs Moreover the product has
to be beyond any doubt during its entire lifecycle free of any malefic
embedded functions meaning that contamination has to be avoided by all
means
Allevo strongly believes that this requirement can be attained only by tight
regulation of the community specific approval of the initially launched version
of FinTP and of the recurring contributions
This approach can be felt strange compared to most open source communities
and can lead to little interest from IT talents making them feel banned or
restricted It remains the Moderator‟s duty to make them feel privileged if
accepted and rewarded as such However this censorship is a price to be paid
since the community and the project are about processing transactions
initiating value transfer
FinTP - Vision and Scope
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5) Marketing
The community needs to have the clear objective of spreading both
geographically and over a consistent number of industries
To achieve this goal the community should be able to actively provide open
access to relevant information (including explanations of concepts hands-on
evaluation) to non-members and to also answer their questions on FinTP and
on the community itself
The same level of information needs to be ensured for the members to whom
supplementary updates on the community events decisions available
releases patches and fixes should be made available They need to also get
focused forum discussions on specific business areas and subsequent
processes need to be distributed
These functionalities have to be hosted on the community‟s dedicated portal
This portal has to provide content dialogue space information consolidation
and broadcasting It must be a virtual showroom for FinTP It needs to host
documents and virtual meetings subscription management and product
support amp development
The community has to be able to run its own meetings enabling direct contact
between active members or their representatives
Meaningful press releases have to be regularly issued along with actively
maintaining a productive relationship with market analysts to consolidate a
clear public understanding of the community spirit and goals
6) Financing
Its all about money-money-money since at least for the first 2-3 years the
community needs to be financed
Upon reaching maturity the institutionalized bodies of the community can earn their income from collateral activities - such as organizing conferences providing education and specialized support services - either for the initial FinTP installations and customizations or for recurring services requested by the members An alternative can be trialling and certifying interested providers enabling them to perform support services for FinTP
Thus who could pump money into this project It could be one or a mix of
‐ World Bank - if governmental programs are implied and provided a proper project which convincingly demonstrates the beneficed social impact
‐ EU development funding
‐ interested wealthy members of the community
The most critical dependencies are external such as (arranged according to
their impact) availability of funds for building the community finding trustful
and skilled open source consultants (legal business community licensing)
The synthetic view of the main assumptions and dependencies is provided in
the attached file
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Maintenance amp user support 1-Jan-13 Marketing inst action
4 Activities
Initial planning amp budgeting 15-Dec-12 document
Roles allocation 15-Dec-12 document
Community inst Implementation 15-Dec-12 action
Awareness campaign 1-Jan-13 action ongoing process
Members recruiting 1-Jan-13 action ongoing process
Continued operation 1-Jan-13 action ongoing process
Service sales 1-Jan-13 action ongoing process
Future development planning 1-Jan-13 document ongoing process
5 Resource allocation
If existing institution - allocation 15-Dec-12 action
If newly formed - recruiting 15-Dec-12 action
Make FinTP available to comm 1-Jan-13 action ongoing process
Start community financing 1-Jan-13 action ongoing process
6 Financing
Initial investment 1-Jan-13 action secured by that date
First period of comm operation 31-Aug-13 action secured by that date
co
mm
un
ity
Project approach
Project approachpdf
FinTP - Vision and Scope
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8 Scope This chapter deals with the phased availability of various FinTP features again considered from application and community points of view
In the first phase (due Dec 2012) the core of FinTP application is ready including the following technical features
- financial message routing between services and monitoring of exchanges
- multi-threading capabilities
- persistent end-to-end transactions
- batching de-batching
- archiving
- tracing and logging of transactions and user events
- transient errors detection and recovery
- real time search and reports
- security access and user administration
Similarly during the first phase the main community components need to be in place
- moderator
- software development and maintenance body (Allevo also available in the first and second phase of the project)
- test amp validation body
- (software) auditor
- legal
- main contributors (Allevo falls into this position)
- platform
- marketing
In the second phase (Dec2012 - Dec2013) several operational features of FinTP will be added
- predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit instruments securities settlement reconciliations
- MTMX coexistence
- multi-BIC multi-currency
- SEPA ready certification
- TARGET2 ready
- SAGSAASAE interfaces
- duplicate detection
- liquidity reports
- competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
- accounting reconciliation
- AML (sanctions list matching)
- SaaS and cloud ready
along with resilience and start of maintenance and knowledge transfer (the last two obviously continuing in the next phases)
FinTP - Vision and Scope
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The synthetic view of the project scope is provided in the following table
Crt No
Feature Activity Phase1 31Dec12
Phase2 31Dec13
Phase3 31Dec14
Phase4 31Dec15
Fin
TP
A Operational features
1
Predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit Instruments bonds (Romanian Euroclear) reconciliations
2 MTMX coexistence
3 Multi-BIC multi-currency
4 SaaS ready cloud ready
5 SEPA ready certification
6 TARGET2 ready
7 SAGSAASAE interfaces
8 Liquidity reports
9 Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
10 Accounting reconciliation
11 AML (sanctions list matching)
12 Duplicate detection
B Technical features
1 Routing financial message between services and monitoring of data flows
2 Multi-threading capabilities
3 Persistent end-to-end transactions
4 Batching de-batching
5 Resilience (at transaction level)
6 Archiving
7 Tracing and logging of transactions and user events
8 Transient errors detection and recovery
9 Real time search and reports
10 Security access and user administration
C Other activities
1 FinTP maintenance
2 Knowledge transfer
Co
mm
un
ity
Establishing the institutionscomponents
1 Mentor
2 Software Auditor amp Provider
3 Legal service
4 Members
5 Allevo initial role
6 Platform
7 Marketing
FinTP - Vision and Scope
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9 Limitations The main limitations in the economy of the project consist of phasing several FinTP
operational features for the following year (eg debit instruments liquidity reporting
AML filtering accounting reconciliation resilience SaaS ready cloud ready etc)
At the same time for features intended to front-office usage like Remit it was not yet
decided to publish them as open source product
The synthetic view of the main limitations is provided in the following table
Crt
nrItem Limitation Exclusion Comments
1
FinTP
a
Operational features Available in 2013
b
Remit Not included in
open source
package
2
Community
a
Rules Tightly controlled The statute should
ensure the right
balance between
safety and free
association of talents
Given the significant budget allocation (at least from Allevo perspective) the strong
requirement to meet the maximum ceiling will limit the FinTP product initial preparation
and maintenance expenses
Community wise the obligation of a tight regulated statute will have to ensure the right
balance between safety (mandatory in an environment dealing with financial
transactions) and a free association of talents (typical in an open source community)
In the first period after launch (at least the first two years) of the initiative the
maintenance and support activities will be provided by Allevo (as initial contributor)
A major restriction would be to meet the budgeted development and maintenance
FinTP - Vision and Scope
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10 Appendix - Risks
Specific risks
1 Product
a Long delivery lead time This is a medium probability and impact risk however Allevo should make available the needed resources and motivate the entire team for the job
b Credibility loss if FinTP fails to further become certified on meaningful operations andor business tracks (ie SWIFT business certification tracks or similar) The single possible containment is lobbying if the application certification program rejects open source products Anyway the impact is very important and its materialization should be avoided
c Low quality of the allocated team and improper version management are highly unlikely to occur as long as the formal transfer of responsibility is smoothly made from Allevo to the corresponding body put in place by the community The real hidden risk is that this process could take too long and it thus has a very high impact
d Poor FinTP quality may result if the community fails to institutionalize proper quality assurance (QA) and verification amp validation (VampV) processes This is most expected not to happen but if it does the impact is at least medium The single path to overcome this risk consists in a professional approach to these items based on institutionalizing practice proven QA and VampV processes
e Allevo lack of expertise in the open source business This can be contained by carefully selecting trustful amp truly expert consultants Otherwise it means more money longer time spent on project and expenses without proper return
2 Service
a The software maintenance does not properly deliver as expected ie on-time and on-quality bug fixing regulation amp standards alignment and productivity amp technological improvement The key to contain this risk materialization is the community status having provisions to neatly provide maintenance and further development of the rules for FinTP as well as the applicable rules and fees for the ancillary services
b Low quality and safety of the service received by the members of the community To avoid the risk of performing the one-time amp recurring support services by under-prepared professionals the community has to rule the process of training and qualifying the companies willing to contribute in this area
c Not meeting the minimal SLA criteria The community should regulate and periodically revise the training curricula and to further audit both the teachers and the certified experts to ensure the service level agreements are met
d Under motivated service providing professionals - up to the level of not feeling the high impact of their activity The community status must provide guidance to the contributors on the minimal standards the professionals should meet
FinTP - Vision and Scope
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e Constrained expert resource pool This risk could be overcome by the communitys policy to ensure at all time a balanced number of motivated experts to the communitys size Failing to do so may result in high negative impact of the community business and public perception
3 Community
a Emergence of a parallel competitive community If the optimal timing between publically disclosing FinTP and community take-off is not achieved then there are high chances that following a competitive initiative other entrepreneurs successfully launch their own similar or derived community This could be avoided by periodical reviews of the progress of both FinTP and community status and deciding whether the project needs to be put on hold or not
b Unfit reputation of the Moderator or main contributors If either the Moderator or the initial contributors are not beyond any dispute and are reputable institutes then there is certainly something rotten in Denmark and the project should be put on-hold
c No commitment from the Moderator‟s side Similarly if the Moderator does not commit to the project it means that Denmark has a serious problem to solve The project should relinquish until the matter is fixed
4 Legal
a Misuse of copyright and intellectual property (IP)The assigned working team could not be aware of the limitations and liabilities of using (entirely or partially) third party software this risk can be contained by delivering the right training providing proper working procedures carefully recording and documenting the use of open source code and carefully cross-scanning
b Injunctive relief and financial damages can be caused by not properly and continuously controlling the use of third party open source code resulting in copyright or IP infringement There are two containment measures which can be taken tighten the compliance check during the product lifecycle or apply the sanction policy as to set an example
c The competition starts a class action - this may result in delaying the project
5 Financing
a Lack of long term financing institutions Allevo should urge its consultant to identify and draw a reasonable list of financial options institutions
b Exceeding the budget given that this type of project has no precedent in Allevo and to avoid exposing to the dependency on engagement to financial institutions or to commitments beyond the existing budget a further carefully drawn project plan is needed along with its explicit approval from the board of the company
Market related risks
1 False expectations
a Expensive services Not everything is free aside the initial and maintenance free licensing the training the support and other professional services can amount to more than in general expected Allevo rates this risk as medium possible but with low impact as long as the law governing the community and its initial period of operation will consecrate fair market prices and competitive sources of contribution
FinTP - Vision and Scope
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b Hidden costs for patches updates and upgrades While of similarly weight in terms of probability and impact this should be no real concern as long as the law governing the community clearly provides for free and accountable maintenance
2 Poor image on quality
a Too many releases making FinTP hard to manage and unsafe to operate Given proper regulation of the community and the mature root of FinTP Allevo disregards the possibility of this risk to materialize However if this were to happen this is a high impact risk and by all means should be avoided
b Backward technological (in)compatibility looks to us as a low risk in all respects and within organizations applying practice proven software engineering processes and professional - accountable team this is not likely to materialize
c Support can be perceived as the highest impact risk for FinTP This can be overcome by tight regulation of the commercial and professional conditions to deliver the service (for instance only qualified organizations should be recommended to members for supporting FinTP)
d SLA and accountability for both internally or externally performed services is closely correlated to the previous risk and the community status should provide the support for growing a community of competencies and accountable professionals around FinTP Periodical auditing (by the specialized community body) of this pool of professionals will further ensure the confidence that the skills are preserved at the required level
e Code fragmentation and forking is a high impact risk with a low probability of happening in the initial period provided the knowledge transfer is done orderly and in an institutionalized manner
3 Inherent uncertainty
a Community disputes can jeopardize its cohesion the project viability and future This is a high impact possibly high probability risk and it is the definite role of the Moderator to feel prevent and while materializing mitigate any conflicting situation
b FinTP going commercial post-launch This is a huge impact possibly high occurrence probability but manageable with the right legal instruments provisioned in the community
c Loss of alignment to industry standards and regulations This risk has medium probability and medium impact given the assumption that the community is tightly regulated and the working bodies institutionalized and gathering professionals
4 Legal
Copyright infringement given Allevo experience in the open source business this risk is highly probable and has a high impact on FinTP especially if mistakes are made in the launching phase Similarly if during the product maintenance and further development phase the community fails to institutionalize proper formal software development processes (covering all FinTP lifecycle phases) based on industry practice proven model(s) Supplementary the expert code scanning audit for compliance is the single resort to preclude external software source misuse
FinTP - Vision and Scope
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5 GPL specific
a Noncompliance to the GPL license If GPL license is used the product should further distribute in compliance with this part provisions High impact and probability but manageable if proper software development processes are used and if the statute clearly defines the licensing model for FinTP
b FinTP unconformity The risk that software engineers get inspired by a chic solution which they import and emulate similarly in FinTP And this is also highly possible since les grands esprits se rencontre
6 Existing customers attitude
Anger for having paid for something which now is free The existent customers can be concerned about the future of their installed system its further development (in one word its future) and on the quality of the service (SLA including) Some recent adopters can possibly be furious for spending their money on buying licenses for a piece of software that differently packaged becomes free of charge
For the first situation the single best solution for Allevo is to ensure a smooth transition from the current status to the new solution deployed Also highly probable Allevo should provide for simultaneous (for at most one more year) maintenance of both FinTP and for qPayIntegrator
For the 2012 new qPayIntegrator adopters Allevo should transparently state the product‟s future and propose a commercially attractive migration towards FinTP when it becomes publically available (like the option for the installation migration and recurring services) The decision should clearly stay with the customer if he still buys Allevo licenses delays the implementation until FinTP is available or if he goes for a competitive solution
In other words the key to mitigate the existing customer perception is switching places and discarding if the situation proves to be uncomfortable
Bottom-line is that to avoid most of the risks the FinTP community must be a rather tightly controlled one though still opened to anyone willingly abiding to the rules
The synthetic view of the main risks their assigned probability impact and the corresponding containment approach is provided in the attached file
Risk IDRisk
CategoryRisk
Probability
(High
Medium
Low)
Severity
(High
Medium
Low)
Containment (Mitigation Action Proposed)
M1Free as in a
Free Puppy
M101
The training service amp support cost could account more than the
commercial product its replacing (application software is typically 30 of
the total cost of ownership of most projects)
Medium Low
M102 Hidden costs ie charge for patches updates and upgrades Medium Low
M2Frequent
updates
M201
Projects might be updated frequently - as often as everyday Too frequent
updates could have a negative impact on the implementation
interoperability and support
Low HighMAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M3Backwards
compatibility
M301 Less accountability Low LowMAP03 Access to prior versions of source code (additional in-house
development and support procedures might be necessary)
M4Support
related risks
M401Support could be perceived as the biggest issue with open source
software deploymentsHigh High
M402 Internal External Accountability SLAs High High
M403Code fragmentation or forking if the community fails to institutionalize
corporate like formal structureHigh High
M404Support could require greater involvement and different skills set from
operations staffMedium Medium
M5Community
immaturity Low Low
M501Could generate incompatibility of FinTP with industry standards amp
regulationsMedium Medium
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M6 Uncertainty The inherent uncertainty in every open source project
M601 Community disputes might impact project viability and future High HighMAP04 The Mentor should prevent amp mitigate any conflicts inside the
community
M602 Open source projects may not stay open in future releases High HighMAP05 The originator liabilities should be strongly enforced by the
community statute
M7 Legal risks
M701 Copyright infringement High High
M702 Can open source software deployments pass an audit
M8 GPL General Public License specific development concerns
M801Software thatrsquos derived from an existing GPL project in whole or in part
might not be released under the same licenseHigh High M08 The community should regulate the licensing model
M802
Developer contamination - developer could review an existing open source
project could see an elegant solution then implement a similar function in
closed source project
High HighMAP09 Procedurals constrains for the software developers should be
enforced
M9
Current
customers
attitude
The actual customer perception could be negative High High
M12 To prevent a negative attitude Allevo should involve the customers
in the FinTP project Allevo needs their active support for a smooth and
issues less transition
ma
rke
t re
late
d r
isk
s
co
st
rela
ted
ris
ks
MAP01 The community should regulate the applicable rules and fees for
services and maintenance
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
bu
sin
es
s a
nd
le
ga
l ri
sk
s
MAP06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S1Product
related
S101 Late delivery lead time Medium MediumMAP15 Allevo should provide proper resources (funding and human
resources)
S102 Credibility loss if fail to certify with SWIFT Medium High MAP16 Should be discussedamp agreed with SWIFT
S103 Inexperienced team or allocation below needs Low HighMAP15 Allevo should provide proper resources (funding and human
resources)
S104 Improper or non efficient version management Low High MAP16 Review the current Allevo Configuration Management System
S105Poor quality if the community fails to institutionalize proper verification and
validation practices3
M06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S106 Lack of expertise in open source projects 2 Allevo should engage thoroughly selected Open Source consultants
S2Service
related
S201
The software maintenance not properly providing for bugs fixing
regulationamp standard alignment technological improvements communities
improvement requests
High HighMAP01 The community should regulate the applicable rules and fees for
services and maintenance
S202 One-time amp recurring services might be provided by unqualified resources High HighMAP17 The community should regulate the training curricula and related
expertise certification
S203 Provided services might not meet the minimal SLA performance criteria High HighMAP17 The community should regulate the training curricula and related
expertise certification
S204 Relaxed or lack of accountability of the professionals High HighMAP18 The community should regulate the employment agreement of
the professionals
S205 Lack of qualified professionals High HighMAP19 The community should ensure a balanced number of certified
professionals with the community size
S3Community
related
S301
If after disclosing FinTP the community does not enthusiastically adopt
the solution competitors might more successfully develop a similar
strategy
Medium MediumMAP20 FinTP promotion should be convincing and realistic A well
organized marketing campaign by Allevo
S302The community mentor andor early adhering members have no
undeniable prestige or are not largely trustfulMedium Medium MAP99 Project status review Ending the project could be one option
S303 The Mentor does not strongly commit for the project Medium Medium MAP99 Project status review Ending the project could be one option
S4 Legal
S401Exposure to copyright and IP infringement due to working team unaware of
the legal consequences of using third party softwareMedium Medium
MAP21 Allevo should keep records and fully document the use of open
source code
S402Copyright or intellectual property infringement can lead to injunctive relief
and monetary damagesHigh High
MAP23 Allevo should institutionalize a tight licensing and technical
control
S403 All risks related to open source compliance High HighMAP24 Allevo should appoint as soon as possible a FinTP compliance
Officer
S5 Financial
S501 Lack of financing institutions Medium MediumMAP25 Allevo should urge consultant to provide a consistent list of
potential investors
S502 Dependency on the financing institution approval Medium Medium
S503Not thoroughly planned project overlooking one or some project cost that
need to be financedMedium Medium
Sp
ec
ific
ris
ks
tec
hn
ica
lm
ark
eti
ng
leg
al
fun
din
g
MAP26 Allevo should carefully draw a consistent and eligible project for
financing
Risks
Riskspdf
FinTP - Vision and Scope
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Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
11 Appendix - Bibliography 1 Accenture Open Source Research Geographic Findings
2 Accenture Open Source Research Industry Findings
3 Producing Open Source Software - How to Run a Successful Free Software
Project by Karl Fogel
4 Open Source Software Risks and Rewards by Gary Hein
5 A Business Case Study of Open Source Software by Carolyn A Kenwood
6 6 critical success factors for product development by Christian Wig
7 Bank 20 by Brett King
8 Managing the business risks of open innovation by Oliver Alexy and Markus
9 Product idea evaluation checklist shared by Startgass AS
10 SWIFT 2015 Strategy
11 Customers and business impact of product changes
FinTP - Vision and Scope
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12 Appendix - Glossary ACH Automated Clearing House that is used to clear retail payments
between banks in a country or region
APAC Asia and Pacific
AML Anti-Money Laundering
BCampDR Business continuity amp disaster recovery
B2B Business to business
C2B Consumer to business
CET Central European Time
CMMI Capability Maturity Model Integration
CMS Configuration Management System
Coexistence The situation of multiple standards existing at the same time in the same business space Within SWIFT this refers to the coexistence between the MT and MX standards This also refers to the set of measures being taken to make the situation easier to handle by the community (publication of mapping rules translation serviceshellip)
CSM Clearing and Settlement Mechanism
CUG Closed User Group
Dictionary Part of the ISO 20022 Repository that contains all items that can be re-used during business modelling and message definition activities
EAI Enterprise Application Integration - middleware to connect applications and communication interfaces Typical EAI software includes features for mapping data between various formats enriching messages with data from other systems and orchestrating message flows
ECB European Central Bank
EMEA Europe Middle-East Africa
EPC European Payment Council
ERP Enterprise Resource Planning
EU European Union
EUCLID Connectivity to EuroClear Bank services
FIN The messaging service offered by SWIFT for the secure and reliable exchange of MT messages in store-and-forward mode By extension the syntax used to format these MTs
IP intellectual property
Interoperability Capability to easily exchange business information while using different message standards ISO 20022 promotes global use of syntax-neutral business and message components as a common denominator to achieve interoperability between standards using different syntaxes
ISO The International Organization for Standardization - an international standard-setting body composed of representatives from more than 160 national standards organizations that promulgates worldwide standards in a variety of domains aiming at facilitating cross-border exchanges of goods services and techniques
FinTP - Vision and Scope
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ISO 15022 An ISO standard that describes the syntax to be used for developing securities messages used mainly to support back office related transaction flows It replaced the previous securities messaging standard ISO 7775
ISO 20022 RA Registration Authority - offers the services described in an ISO standard on behalf of and under a contractual agreement with the International Organization for Standardization
ISO 20022 Repository
Repository maintained by the ISO20022 RA which contains the financial business models message definitions and components defined in compliance with the ISO 20022 standard
ISO 20022 RMG Registration Management Group - in charge of the overall management of the ISO 20022 development and registration process in accordance with the ISO 20022 standard
ISO 20022 SEG Standards Evaluation Groups -in charge of validating candidate ISO 20022 messages within the scope of the business justification and ensuring that they address the needs of their future international community of users
ISV Independent Software Vendor
KYC Know Your Customer
MACUG Member Administered Closed User Group
Message A set of structured information exchanged between two parties involved in a financial transaction
Message component and element
A re-usable data structure used for assembling message definitions The data defined in a message component is bdquotraced‟ back to the business components and business elements In simple terms business components define the business meaning message components create data structures for messaging
MI Market Infrastructure - a system that provides services to the financial industry for trading clearing and settlement matching of financial transactions and depository functions
Middleware Software that enables data to be exchanged among different systems with standard communication components and tools for formatting mapping and processing
MT The traditional bdquotag value‟ Message Types for use on the FIN service offered by SWIFT
MX An XML message exchanged over SWIFTNet whether or not ISO 20022 compliant
OS Open source
PSP Payment service provider
QA Quality assurance
RMA Relationship Management Access
RTGS Real Time Gross Settlement System
SAA SWIFT Alliance Access
SAE SWIFT Alliance Entry
SAG SWIFT Alliance Gateway
SaaS Software as a Service
SCORE Standardized CORporate Environment
FinTP - Vision and Scope
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Semantics The study of meaning usually in language The word is often used in ordinary language to denote a problem of understanding that comes down to word selection or connotation
SEPA Single Euro Payment Area
SLA Service level agreement
SME Small and Medium-sized Business(es)
SOA Service Oriented Architecture
SSB SWIFT Service Bureau
STP Straight Through Processing
SWIFT Society for Worldwide Interbank Financial Telecommunication Visit wwwswiftcom
Syntax Physical format of a message used to identify and represent the conveyed pieces of information
T2S TARGET2 Securities - an initiative of the Eurosystem It is an IT platform that aims to make settlements across national borders simpler and more cost-efficient
TARGET2 The Eurosystem-owned European Real Time Gross Settlement (RTGS) system (Trans-European Automated Real-time Gross Settlement Express Transfer System) TARGET2 is one of the largest high-value payment systems in the world
Taxonomy The classification in a hierarchical system typically organized by super type - sub type relationships also called generalization-specialization relationships or less formally parent-child relationships
TSU Trade Service Utility
TCO Total cost of ownership
Translation rules
Set of rules to be used to map the pieces of information included in a message expressed in one syntax to the equivalent message expressed in another syntax
Remit Remittances
XML eXtensible Mark-up Language - popular syntax to encode documents (or messages) electronically on the Internet XML allows communities to define their own identifiers (or tags) and format (or data type) for each component of a message
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
- an average FinTP engine licensing fee is euro30000 resulting in potential
maximum expenses of euro783 million
- the corresponding yearly maintenance fee is euro5400 resulting in potential
maximum expenses of euro700 million in 5 years
- the number of potential institutions adopting FinTP in the first 5 years of
availability 250 tier3 amp 2000 tier4
- consequently the savings in 5 years could reach euro675 million in license
fee and euro2025 million in maintenance fee resulting in a total of almost euro90
million
Allevo believes that (at least) during 2013 and 2014 its current income source will be
preserved while after that period the main replacement of the lost (new licensing and
recurring maintenance) fees will mainly consist of services (consulting
implementation support education) and sales of licenses for newly launched
applications
FinTP - Vision and Scope
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46 The FINkers United community
The community structure comprises three main entities (as depicted in the bellow
figure)
1 The adopters (beneficiaries) consumer companies choosing to adopt the
FinTP product in compliance with the community line of business and ethical
conduct
2 The moderator the instrumental inspirational authority expected to draw both
the development vision and the guidelines of the community
3 The contributors
a institutionalized bodies eg development and maintenance test and
validation audit legal marketing
b independent contributors eg ISVs (Allevo falling under this category)
solution providers integrators or passionate developersindividuals
FinTP - Vision and Scope
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5 Solution Description amp Parameters Like qPayIntegrator FinTP offers a
standard compliant processing
engine for the financial transactions
exchanged between the back-office
or ERP applications and the financial
community (banks MFIs market
infrastructures corporations)
FinTP is able to process financial
messages in both FIN and ISO20022
formats and at the same time offers
a rich set of interfaces to different
financial applications FinTP provides
compliance with various clearing and
settlement mechanisms
Consequently FinTP ensures a high
level automation of the end-to-end
financial transactions processing
51 Features
The FinTP project has two major deliverable components
1 the FinTP application itself
2 the community built around FinTP
All subsequent chapters will refer to both of these
Component code
Component description Comments
FinTP4 FinTP is a financial transactions processing engine for 3rd or 4th tier banks microfinance corporate or SMEs treasuries available as open source application Functional characteristics
1 Operational features
o Predefined flows and message formats
Includes reconciliation of confirmations with transactions
o Single and multiple funds transfer instructions securities settlement amp reconciliation (Romanian Euroclear) messages
The supported payment instruments are credit transfer direct debit debit instruments
o MTMX coexistence Based on FinTP native internal data format (ISO20022)
o Multi-BIC multi-currency
o SEPA ready (certification) Compliancy with EPC regulations for SEPA formatting and business flows (for SCT and SDD) enables bank-to-bank and bank-to-CSM settlement
4 FinTP root is Allevo equivalent product qPayIntegrator a commercially available amp practice proven (since
2005) application qPayIntegrator provides a consistent set of functionalities and it is fully aligned to both industry regulations and technology
FinTP - Vision and Scope
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Component code
Component description Comments
o TARGET 2 ready Compliance with TARGET2 settlement and operations as regulated by the ECB
o SAGSAASAE SAL interfaces
Integration with SWIFTNet to enable banking business
o Liquidity reports Real time cash reports and forecasts using several criteria (currency subsidiary profit centre)
o Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
Analysis and reports of market trends based on volumes amount BIC etc along with early alerts on behaviour changes beyond the standard deviation
o Accounting reconciliation Automatic NOSTROVOSTRO accounts reconciliation intraday liquidity reports and integrated exception management
o AML (sanctions list matching)
High and low value payments filtering uses 20+ black lists and ensures their content maintainability
o Duplicate detection Detection and investigation of possible duplicates the detection window and criteria are configurable
o Remittances processing Covers banks business and operations area as well as distribution channel
o Treasury markets Automation of treasury flows (FX and money market)
o Statements Processing of SWIFT messages related to correspondent banks accounts administration
2 Technical features
o Financial message routing and monitoring
o Multi-threading capabilities
o Persistent end-to-end transactions
During each phase of the entire processing cycle permanent copies of the transaction are kept until the final completion thus avoiding any transaction duplication or loss
o Batching unpacking
o Resilience at transaction level
o Archiving
o Tracing and logging transactions and user events
o Transient errors detection and recovery
o Real-time search and reports
o Security access and user administration
o SaaS cloud ready
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
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Component code
Component description Comments
FINkers United - community
Since FinTP is an application handling financial transactions the product releases and the related community should be tightly regulated and controlled As the project matures these components will be further refined The following main components of the community have been identified
‐ the moderator ‐ the product development
and maintenance body ‐ the product and
community auditor body (acting as a gatekeeper of official releases) to control and maintain the change requests integer and eliminate any malware exposures
‐ the test and validation body
‐ the legal body for defining the frame for product distribution amp licensing
‐ the marketing entity responsible for creating awareness and attracting contributors and adopters
‐ the portal used as a channel for marketing support and version control
‐ individual contributors namely ISVs solution providers developers integrators who wish to use their skills and knowledge to the benefit of the community
These tools strongly depend on the available budget and widespread
organization culture It is not mandatory for these to be open source if usage of
open source tools would mean lower quality
3) Licensing
The licensing model highly depends on the results of the open source legal and
business consultancy However we assume the following frame
‐ free of charge initial and recurring maintenance license for using FinTP
‐ FinTP does not use software components enforcing liabilities for the user
‐ consumers using FinTP source code (in part or entirely) should comply to
the licensing policy of the community
‐ the version released by the development amp maintenance body is the only
official amp to be trusted version of the community ensuring product integrity
unity and stability
4) Regulatory compliance
The regulatory compliance strongly depends on the early adaptation of new amp
changed rules via the recurring maintenance and on the quality of the audits
performed by the specific bodies of the community
Thus it is ensured that ISO20022 and FIN standards TARGET2 and TARGET2
Securities SEPA or country specific regulations (as stated respectively by
FinTP - Vision and Scope
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SWIFT standards EPC specification ECB or regional Central Banks
regulations that the community chooses to comply with) stay the most
important business specific anchors of FinTP
The FinTP design also offers support for flexible definition of new compliance
sources
5) Consultancy
The needed consultancy is twofold
‐ legal to ensure that FinTP does not infringe other licensing constraints
‐ open source specific to enable the right choice of the community type and of its governing law
The main constraint relies in choosing the right advisors true experts in the
open source industry amp with appropriate ethic profile - able to deliver as
promised The consultants have to be available 800 am divide 800 pm CET and
easily reachable - geo-location is of utmost importance Selection of the
consultant will basically be done on price assuming the right mix of expertise
and availability is achieved
6) Financing
While Allevo partially undertakes the financing of FinTP development the
ancillary consultancy necessary team education or acquisition of productivity
tools are far beyond the companys 2012 budget
To overcome possible delays in the project Allevo needs to sturdily act to
identify both the most appropriate commercial offer and additional necessary
financing source(s)
FinTP community
The community related items are members moderator legal tight regulation
marketing and financing For each of these items several assumptions and the
corresponding dependencies are provided in the following paragraphs
1) Members
We assume that the communitys members span several business profiles
(such as financial services institutions corporations market infrastructures
PSPs SSBs public administrations regulatory institutions and ISVs) sharing
the mutual focus on financial operations performance and improvement
By now after some tests on market acceptance there have been identified a
few supporters comprising financial services institutions and small ISVs
To ensure the success of building the community there is need for attracting
prestige influencers (market analysts consulting companies of scale - starting
with big four key industry providers - such as SWIFT other communities - ie
professional such as banking insurers capital market associations) and a
credible pool of financial institutions and corporations
To this end Allevo unrolls its own awareness campaign through direct
meetings publications blog posts and social media public presentations and
by officially launching the initiative in a conference focused on free of charge
financial transactions processing applications
Allevo further plans to use Sibos 2012 as opportunity to organize a less
traditional communication session gathering a relevant international panel to
FinTP - Vision and Scope
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debate the strong and weak aspects of this initiative amp to get the public involved
as much as possible
The goal is that by the end of 2012 some tens of different institutions are
committed to co-found the community and to actively contribute to establishing
the legal frame and to forming the required action bodies
2) Moderator
Allevo perceives the Moderator as the critical member of the community since
his prestige and influence will warrant the outcome of all performed activities
The moderator must commit on long term to develop the community and to
sponsor it with its share of trust
Allevo strongly believes that the Moderator should have a global footprint be a
reputable and trustful institution
3) Legalcopyright
The legal consultant and advisor needs to provide the coherent legal frame to
cover all community activities by roles and accountability While making it easy
for the members it should be more demanding as far as contributors are
concerned (though still encouraging ISVs to actively participate) It has to draw
very precise responsibilities for the independent and institutionalized bodies
(for instance product maintenance amp development and audit) and for the
Moderators status
The quality of this legal work fully relies on the expertise and experience of the
advisor
The law governing the community has to be in harmony with the European
(either French or Anglo-Saxon) legal system and with the open source legal
regulations largely practiced in other business regions (US and APAC)
4) Tight regulation
FinTP the product meant to gather a community which uses and supports it is
all about moving values between different entities Thats critical irrespective of
the amount because failing to perform properly opens the doors to arguments
amp loss of reputation with the related tangible costs Moreover the product has
to be beyond any doubt during its entire lifecycle free of any malefic
embedded functions meaning that contamination has to be avoided by all
means
Allevo strongly believes that this requirement can be attained only by tight
regulation of the community specific approval of the initially launched version
of FinTP and of the recurring contributions
This approach can be felt strange compared to most open source communities
and can lead to little interest from IT talents making them feel banned or
restricted It remains the Moderator‟s duty to make them feel privileged if
accepted and rewarded as such However this censorship is a price to be paid
since the community and the project are about processing transactions
initiating value transfer
FinTP - Vision and Scope
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5) Marketing
The community needs to have the clear objective of spreading both
geographically and over a consistent number of industries
To achieve this goal the community should be able to actively provide open
access to relevant information (including explanations of concepts hands-on
evaluation) to non-members and to also answer their questions on FinTP and
on the community itself
The same level of information needs to be ensured for the members to whom
supplementary updates on the community events decisions available
releases patches and fixes should be made available They need to also get
focused forum discussions on specific business areas and subsequent
processes need to be distributed
These functionalities have to be hosted on the community‟s dedicated portal
This portal has to provide content dialogue space information consolidation
and broadcasting It must be a virtual showroom for FinTP It needs to host
documents and virtual meetings subscription management and product
support amp development
The community has to be able to run its own meetings enabling direct contact
between active members or their representatives
Meaningful press releases have to be regularly issued along with actively
maintaining a productive relationship with market analysts to consolidate a
clear public understanding of the community spirit and goals
6) Financing
Its all about money-money-money since at least for the first 2-3 years the
community needs to be financed
Upon reaching maturity the institutionalized bodies of the community can earn their income from collateral activities - such as organizing conferences providing education and specialized support services - either for the initial FinTP installations and customizations or for recurring services requested by the members An alternative can be trialling and certifying interested providers enabling them to perform support services for FinTP
Thus who could pump money into this project It could be one or a mix of
‐ World Bank - if governmental programs are implied and provided a proper project which convincingly demonstrates the beneficed social impact
‐ EU development funding
‐ interested wealthy members of the community
The most critical dependencies are external such as (arranged according to
their impact) availability of funds for building the community finding trustful
and skilled open source consultants (legal business community licensing)
The synthetic view of the main assumptions and dependencies is provided in
the attached file
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Maintenance amp user support 1-Jan-13 Marketing inst action
4 Activities
Initial planning amp budgeting 15-Dec-12 document
Roles allocation 15-Dec-12 document
Community inst Implementation 15-Dec-12 action
Awareness campaign 1-Jan-13 action ongoing process
Members recruiting 1-Jan-13 action ongoing process
Continued operation 1-Jan-13 action ongoing process
Service sales 1-Jan-13 action ongoing process
Future development planning 1-Jan-13 document ongoing process
5 Resource allocation
If existing institution - allocation 15-Dec-12 action
If newly formed - recruiting 15-Dec-12 action
Make FinTP available to comm 1-Jan-13 action ongoing process
Start community financing 1-Jan-13 action ongoing process
6 Financing
Initial investment 1-Jan-13 action secured by that date
First period of comm operation 31-Aug-13 action secured by that date
co
mm
un
ity
Project approach
Project approachpdf
FinTP - Vision and Scope
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8 Scope This chapter deals with the phased availability of various FinTP features again considered from application and community points of view
In the first phase (due Dec 2012) the core of FinTP application is ready including the following technical features
- financial message routing between services and monitoring of exchanges
- multi-threading capabilities
- persistent end-to-end transactions
- batching de-batching
- archiving
- tracing and logging of transactions and user events
- transient errors detection and recovery
- real time search and reports
- security access and user administration
Similarly during the first phase the main community components need to be in place
- moderator
- software development and maintenance body (Allevo also available in the first and second phase of the project)
- test amp validation body
- (software) auditor
- legal
- main contributors (Allevo falls into this position)
- platform
- marketing
In the second phase (Dec2012 - Dec2013) several operational features of FinTP will be added
- predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit instruments securities settlement reconciliations
- MTMX coexistence
- multi-BIC multi-currency
- SEPA ready certification
- TARGET2 ready
- SAGSAASAE interfaces
- duplicate detection
- liquidity reports
- competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
- accounting reconciliation
- AML (sanctions list matching)
- SaaS and cloud ready
along with resilience and start of maintenance and knowledge transfer (the last two obviously continuing in the next phases)
FinTP - Vision and Scope
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The synthetic view of the project scope is provided in the following table
Crt No
Feature Activity Phase1 31Dec12
Phase2 31Dec13
Phase3 31Dec14
Phase4 31Dec15
Fin
TP
A Operational features
1
Predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit Instruments bonds (Romanian Euroclear) reconciliations
2 MTMX coexistence
3 Multi-BIC multi-currency
4 SaaS ready cloud ready
5 SEPA ready certification
6 TARGET2 ready
7 SAGSAASAE interfaces
8 Liquidity reports
9 Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
10 Accounting reconciliation
11 AML (sanctions list matching)
12 Duplicate detection
B Technical features
1 Routing financial message between services and monitoring of data flows
2 Multi-threading capabilities
3 Persistent end-to-end transactions
4 Batching de-batching
5 Resilience (at transaction level)
6 Archiving
7 Tracing and logging of transactions and user events
8 Transient errors detection and recovery
9 Real time search and reports
10 Security access and user administration
C Other activities
1 FinTP maintenance
2 Knowledge transfer
Co
mm
un
ity
Establishing the institutionscomponents
1 Mentor
2 Software Auditor amp Provider
3 Legal service
4 Members
5 Allevo initial role
6 Platform
7 Marketing
FinTP - Vision and Scope
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9 Limitations The main limitations in the economy of the project consist of phasing several FinTP
operational features for the following year (eg debit instruments liquidity reporting
AML filtering accounting reconciliation resilience SaaS ready cloud ready etc)
At the same time for features intended to front-office usage like Remit it was not yet
decided to publish them as open source product
The synthetic view of the main limitations is provided in the following table
Crt
nrItem Limitation Exclusion Comments
1
FinTP
a
Operational features Available in 2013
b
Remit Not included in
open source
package
2
Community
a
Rules Tightly controlled The statute should
ensure the right
balance between
safety and free
association of talents
Given the significant budget allocation (at least from Allevo perspective) the strong
requirement to meet the maximum ceiling will limit the FinTP product initial preparation
and maintenance expenses
Community wise the obligation of a tight regulated statute will have to ensure the right
balance between safety (mandatory in an environment dealing with financial
transactions) and a free association of talents (typical in an open source community)
In the first period after launch (at least the first two years) of the initiative the
maintenance and support activities will be provided by Allevo (as initial contributor)
A major restriction would be to meet the budgeted development and maintenance
FinTP - Vision and Scope
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10 Appendix - Risks
Specific risks
1 Product
a Long delivery lead time This is a medium probability and impact risk however Allevo should make available the needed resources and motivate the entire team for the job
b Credibility loss if FinTP fails to further become certified on meaningful operations andor business tracks (ie SWIFT business certification tracks or similar) The single possible containment is lobbying if the application certification program rejects open source products Anyway the impact is very important and its materialization should be avoided
c Low quality of the allocated team and improper version management are highly unlikely to occur as long as the formal transfer of responsibility is smoothly made from Allevo to the corresponding body put in place by the community The real hidden risk is that this process could take too long and it thus has a very high impact
d Poor FinTP quality may result if the community fails to institutionalize proper quality assurance (QA) and verification amp validation (VampV) processes This is most expected not to happen but if it does the impact is at least medium The single path to overcome this risk consists in a professional approach to these items based on institutionalizing practice proven QA and VampV processes
e Allevo lack of expertise in the open source business This can be contained by carefully selecting trustful amp truly expert consultants Otherwise it means more money longer time spent on project and expenses without proper return
2 Service
a The software maintenance does not properly deliver as expected ie on-time and on-quality bug fixing regulation amp standards alignment and productivity amp technological improvement The key to contain this risk materialization is the community status having provisions to neatly provide maintenance and further development of the rules for FinTP as well as the applicable rules and fees for the ancillary services
b Low quality and safety of the service received by the members of the community To avoid the risk of performing the one-time amp recurring support services by under-prepared professionals the community has to rule the process of training and qualifying the companies willing to contribute in this area
c Not meeting the minimal SLA criteria The community should regulate and periodically revise the training curricula and to further audit both the teachers and the certified experts to ensure the service level agreements are met
d Under motivated service providing professionals - up to the level of not feeling the high impact of their activity The community status must provide guidance to the contributors on the minimal standards the professionals should meet
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e Constrained expert resource pool This risk could be overcome by the communitys policy to ensure at all time a balanced number of motivated experts to the communitys size Failing to do so may result in high negative impact of the community business and public perception
3 Community
a Emergence of a parallel competitive community If the optimal timing between publically disclosing FinTP and community take-off is not achieved then there are high chances that following a competitive initiative other entrepreneurs successfully launch their own similar or derived community This could be avoided by periodical reviews of the progress of both FinTP and community status and deciding whether the project needs to be put on hold or not
b Unfit reputation of the Moderator or main contributors If either the Moderator or the initial contributors are not beyond any dispute and are reputable institutes then there is certainly something rotten in Denmark and the project should be put on-hold
c No commitment from the Moderator‟s side Similarly if the Moderator does not commit to the project it means that Denmark has a serious problem to solve The project should relinquish until the matter is fixed
4 Legal
a Misuse of copyright and intellectual property (IP)The assigned working team could not be aware of the limitations and liabilities of using (entirely or partially) third party software this risk can be contained by delivering the right training providing proper working procedures carefully recording and documenting the use of open source code and carefully cross-scanning
b Injunctive relief and financial damages can be caused by not properly and continuously controlling the use of third party open source code resulting in copyright or IP infringement There are two containment measures which can be taken tighten the compliance check during the product lifecycle or apply the sanction policy as to set an example
c The competition starts a class action - this may result in delaying the project
5 Financing
a Lack of long term financing institutions Allevo should urge its consultant to identify and draw a reasonable list of financial options institutions
b Exceeding the budget given that this type of project has no precedent in Allevo and to avoid exposing to the dependency on engagement to financial institutions or to commitments beyond the existing budget a further carefully drawn project plan is needed along with its explicit approval from the board of the company
Market related risks
1 False expectations
a Expensive services Not everything is free aside the initial and maintenance free licensing the training the support and other professional services can amount to more than in general expected Allevo rates this risk as medium possible but with low impact as long as the law governing the community and its initial period of operation will consecrate fair market prices and competitive sources of contribution
FinTP - Vision and Scope
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b Hidden costs for patches updates and upgrades While of similarly weight in terms of probability and impact this should be no real concern as long as the law governing the community clearly provides for free and accountable maintenance
2 Poor image on quality
a Too many releases making FinTP hard to manage and unsafe to operate Given proper regulation of the community and the mature root of FinTP Allevo disregards the possibility of this risk to materialize However if this were to happen this is a high impact risk and by all means should be avoided
b Backward technological (in)compatibility looks to us as a low risk in all respects and within organizations applying practice proven software engineering processes and professional - accountable team this is not likely to materialize
c Support can be perceived as the highest impact risk for FinTP This can be overcome by tight regulation of the commercial and professional conditions to deliver the service (for instance only qualified organizations should be recommended to members for supporting FinTP)
d SLA and accountability for both internally or externally performed services is closely correlated to the previous risk and the community status should provide the support for growing a community of competencies and accountable professionals around FinTP Periodical auditing (by the specialized community body) of this pool of professionals will further ensure the confidence that the skills are preserved at the required level
e Code fragmentation and forking is a high impact risk with a low probability of happening in the initial period provided the knowledge transfer is done orderly and in an institutionalized manner
3 Inherent uncertainty
a Community disputes can jeopardize its cohesion the project viability and future This is a high impact possibly high probability risk and it is the definite role of the Moderator to feel prevent and while materializing mitigate any conflicting situation
b FinTP going commercial post-launch This is a huge impact possibly high occurrence probability but manageable with the right legal instruments provisioned in the community
c Loss of alignment to industry standards and regulations This risk has medium probability and medium impact given the assumption that the community is tightly regulated and the working bodies institutionalized and gathering professionals
4 Legal
Copyright infringement given Allevo experience in the open source business this risk is highly probable and has a high impact on FinTP especially if mistakes are made in the launching phase Similarly if during the product maintenance and further development phase the community fails to institutionalize proper formal software development processes (covering all FinTP lifecycle phases) based on industry practice proven model(s) Supplementary the expert code scanning audit for compliance is the single resort to preclude external software source misuse
FinTP - Vision and Scope
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5 GPL specific
a Noncompliance to the GPL license If GPL license is used the product should further distribute in compliance with this part provisions High impact and probability but manageable if proper software development processes are used and if the statute clearly defines the licensing model for FinTP
b FinTP unconformity The risk that software engineers get inspired by a chic solution which they import and emulate similarly in FinTP And this is also highly possible since les grands esprits se rencontre
6 Existing customers attitude
Anger for having paid for something which now is free The existent customers can be concerned about the future of their installed system its further development (in one word its future) and on the quality of the service (SLA including) Some recent adopters can possibly be furious for spending their money on buying licenses for a piece of software that differently packaged becomes free of charge
For the first situation the single best solution for Allevo is to ensure a smooth transition from the current status to the new solution deployed Also highly probable Allevo should provide for simultaneous (for at most one more year) maintenance of both FinTP and for qPayIntegrator
For the 2012 new qPayIntegrator adopters Allevo should transparently state the product‟s future and propose a commercially attractive migration towards FinTP when it becomes publically available (like the option for the installation migration and recurring services) The decision should clearly stay with the customer if he still buys Allevo licenses delays the implementation until FinTP is available or if he goes for a competitive solution
In other words the key to mitigate the existing customer perception is switching places and discarding if the situation proves to be uncomfortable
Bottom-line is that to avoid most of the risks the FinTP community must be a rather tightly controlled one though still opened to anyone willingly abiding to the rules
The synthetic view of the main risks their assigned probability impact and the corresponding containment approach is provided in the attached file
Risk IDRisk
CategoryRisk
Probability
(High
Medium
Low)
Severity
(High
Medium
Low)
Containment (Mitigation Action Proposed)
M1Free as in a
Free Puppy
M101
The training service amp support cost could account more than the
commercial product its replacing (application software is typically 30 of
the total cost of ownership of most projects)
Medium Low
M102 Hidden costs ie charge for patches updates and upgrades Medium Low
M2Frequent
updates
M201
Projects might be updated frequently - as often as everyday Too frequent
updates could have a negative impact on the implementation
interoperability and support
Low HighMAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M3Backwards
compatibility
M301 Less accountability Low LowMAP03 Access to prior versions of source code (additional in-house
development and support procedures might be necessary)
M4Support
related risks
M401Support could be perceived as the biggest issue with open source
software deploymentsHigh High
M402 Internal External Accountability SLAs High High
M403Code fragmentation or forking if the community fails to institutionalize
corporate like formal structureHigh High
M404Support could require greater involvement and different skills set from
operations staffMedium Medium
M5Community
immaturity Low Low
M501Could generate incompatibility of FinTP with industry standards amp
regulationsMedium Medium
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M6 Uncertainty The inherent uncertainty in every open source project
M601 Community disputes might impact project viability and future High HighMAP04 The Mentor should prevent amp mitigate any conflicts inside the
community
M602 Open source projects may not stay open in future releases High HighMAP05 The originator liabilities should be strongly enforced by the
community statute
M7 Legal risks
M701 Copyright infringement High High
M702 Can open source software deployments pass an audit
M8 GPL General Public License specific development concerns
M801Software thatrsquos derived from an existing GPL project in whole or in part
might not be released under the same licenseHigh High M08 The community should regulate the licensing model
M802
Developer contamination - developer could review an existing open source
project could see an elegant solution then implement a similar function in
closed source project
High HighMAP09 Procedurals constrains for the software developers should be
enforced
M9
Current
customers
attitude
The actual customer perception could be negative High High
M12 To prevent a negative attitude Allevo should involve the customers
in the FinTP project Allevo needs their active support for a smooth and
issues less transition
ma
rke
t re
late
d r
isk
s
co
st
rela
ted
ris
ks
MAP01 The community should regulate the applicable rules and fees for
services and maintenance
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
bu
sin
es
s a
nd
le
ga
l ri
sk
s
MAP06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S1Product
related
S101 Late delivery lead time Medium MediumMAP15 Allevo should provide proper resources (funding and human
resources)
S102 Credibility loss if fail to certify with SWIFT Medium High MAP16 Should be discussedamp agreed with SWIFT
S103 Inexperienced team or allocation below needs Low HighMAP15 Allevo should provide proper resources (funding and human
resources)
S104 Improper or non efficient version management Low High MAP16 Review the current Allevo Configuration Management System
S105Poor quality if the community fails to institutionalize proper verification and
validation practices3
M06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S106 Lack of expertise in open source projects 2 Allevo should engage thoroughly selected Open Source consultants
S2Service
related
S201
The software maintenance not properly providing for bugs fixing
regulationamp standard alignment technological improvements communities
improvement requests
High HighMAP01 The community should regulate the applicable rules and fees for
services and maintenance
S202 One-time amp recurring services might be provided by unqualified resources High HighMAP17 The community should regulate the training curricula and related
expertise certification
S203 Provided services might not meet the minimal SLA performance criteria High HighMAP17 The community should regulate the training curricula and related
expertise certification
S204 Relaxed or lack of accountability of the professionals High HighMAP18 The community should regulate the employment agreement of
the professionals
S205 Lack of qualified professionals High HighMAP19 The community should ensure a balanced number of certified
professionals with the community size
S3Community
related
S301
If after disclosing FinTP the community does not enthusiastically adopt
the solution competitors might more successfully develop a similar
strategy
Medium MediumMAP20 FinTP promotion should be convincing and realistic A well
organized marketing campaign by Allevo
S302The community mentor andor early adhering members have no
undeniable prestige or are not largely trustfulMedium Medium MAP99 Project status review Ending the project could be one option
S303 The Mentor does not strongly commit for the project Medium Medium MAP99 Project status review Ending the project could be one option
S4 Legal
S401Exposure to copyright and IP infringement due to working team unaware of
the legal consequences of using third party softwareMedium Medium
MAP21 Allevo should keep records and fully document the use of open
source code
S402Copyright or intellectual property infringement can lead to injunctive relief
and monetary damagesHigh High
MAP23 Allevo should institutionalize a tight licensing and technical
control
S403 All risks related to open source compliance High HighMAP24 Allevo should appoint as soon as possible a FinTP compliance
Officer
S5 Financial
S501 Lack of financing institutions Medium MediumMAP25 Allevo should urge consultant to provide a consistent list of
potential investors
S502 Dependency on the financing institution approval Medium Medium
S503Not thoroughly planned project overlooking one or some project cost that
need to be financedMedium Medium
Sp
ec
ific
ris
ks
tec
hn
ica
lm
ark
eti
ng
leg
al
fun
din
g
MAP26 Allevo should carefully draw a consistent and eligible project for
financing
Risks
Riskspdf
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11 Appendix - Bibliography 1 Accenture Open Source Research Geographic Findings
2 Accenture Open Source Research Industry Findings
3 Producing Open Source Software - How to Run a Successful Free Software
Project by Karl Fogel
4 Open Source Software Risks and Rewards by Gary Hein
5 A Business Case Study of Open Source Software by Carolyn A Kenwood
6 6 critical success factors for product development by Christian Wig
7 Bank 20 by Brett King
8 Managing the business risks of open innovation by Oliver Alexy and Markus
9 Product idea evaluation checklist shared by Startgass AS
10 SWIFT 2015 Strategy
11 Customers and business impact of product changes
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12 Appendix - Glossary ACH Automated Clearing House that is used to clear retail payments
between banks in a country or region
APAC Asia and Pacific
AML Anti-Money Laundering
BCampDR Business continuity amp disaster recovery
B2B Business to business
C2B Consumer to business
CET Central European Time
CMMI Capability Maturity Model Integration
CMS Configuration Management System
Coexistence The situation of multiple standards existing at the same time in the same business space Within SWIFT this refers to the coexistence between the MT and MX standards This also refers to the set of measures being taken to make the situation easier to handle by the community (publication of mapping rules translation serviceshellip)
CSM Clearing and Settlement Mechanism
CUG Closed User Group
Dictionary Part of the ISO 20022 Repository that contains all items that can be re-used during business modelling and message definition activities
EAI Enterprise Application Integration - middleware to connect applications and communication interfaces Typical EAI software includes features for mapping data between various formats enriching messages with data from other systems and orchestrating message flows
ECB European Central Bank
EMEA Europe Middle-East Africa
EPC European Payment Council
ERP Enterprise Resource Planning
EU European Union
EUCLID Connectivity to EuroClear Bank services
FIN The messaging service offered by SWIFT for the secure and reliable exchange of MT messages in store-and-forward mode By extension the syntax used to format these MTs
IP intellectual property
Interoperability Capability to easily exchange business information while using different message standards ISO 20022 promotes global use of syntax-neutral business and message components as a common denominator to achieve interoperability between standards using different syntaxes
ISO The International Organization for Standardization - an international standard-setting body composed of representatives from more than 160 national standards organizations that promulgates worldwide standards in a variety of domains aiming at facilitating cross-border exchanges of goods services and techniques
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ISO 15022 An ISO standard that describes the syntax to be used for developing securities messages used mainly to support back office related transaction flows It replaced the previous securities messaging standard ISO 7775
ISO 20022 RA Registration Authority - offers the services described in an ISO standard on behalf of and under a contractual agreement with the International Organization for Standardization
ISO 20022 Repository
Repository maintained by the ISO20022 RA which contains the financial business models message definitions and components defined in compliance with the ISO 20022 standard
ISO 20022 RMG Registration Management Group - in charge of the overall management of the ISO 20022 development and registration process in accordance with the ISO 20022 standard
ISO 20022 SEG Standards Evaluation Groups -in charge of validating candidate ISO 20022 messages within the scope of the business justification and ensuring that they address the needs of their future international community of users
ISV Independent Software Vendor
KYC Know Your Customer
MACUG Member Administered Closed User Group
Message A set of structured information exchanged between two parties involved in a financial transaction
Message component and element
A re-usable data structure used for assembling message definitions The data defined in a message component is bdquotraced‟ back to the business components and business elements In simple terms business components define the business meaning message components create data structures for messaging
MI Market Infrastructure - a system that provides services to the financial industry for trading clearing and settlement matching of financial transactions and depository functions
Middleware Software that enables data to be exchanged among different systems with standard communication components and tools for formatting mapping and processing
MT The traditional bdquotag value‟ Message Types for use on the FIN service offered by SWIFT
MX An XML message exchanged over SWIFTNet whether or not ISO 20022 compliant
OS Open source
PSP Payment service provider
QA Quality assurance
RMA Relationship Management Access
RTGS Real Time Gross Settlement System
SAA SWIFT Alliance Access
SAE SWIFT Alliance Entry
SAG SWIFT Alliance Gateway
SaaS Software as a Service
SCORE Standardized CORporate Environment
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Semantics The study of meaning usually in language The word is often used in ordinary language to denote a problem of understanding that comes down to word selection or connotation
SEPA Single Euro Payment Area
SLA Service level agreement
SME Small and Medium-sized Business(es)
SOA Service Oriented Architecture
SSB SWIFT Service Bureau
STP Straight Through Processing
SWIFT Society for Worldwide Interbank Financial Telecommunication Visit wwwswiftcom
Syntax Physical format of a message used to identify and represent the conveyed pieces of information
T2S TARGET2 Securities - an initiative of the Eurosystem It is an IT platform that aims to make settlements across national borders simpler and more cost-efficient
TARGET2 The Eurosystem-owned European Real Time Gross Settlement (RTGS) system (Trans-European Automated Real-time Gross Settlement Express Transfer System) TARGET2 is one of the largest high-value payment systems in the world
Taxonomy The classification in a hierarchical system typically organized by super type - sub type relationships also called generalization-specialization relationships or less formally parent-child relationships
TSU Trade Service Utility
TCO Total cost of ownership
Translation rules
Set of rules to be used to map the pieces of information included in a message expressed in one syntax to the equivalent message expressed in another syntax
Remit Remittances
XML eXtensible Mark-up Language - popular syntax to encode documents (or messages) electronically on the Internet XML allows communities to define their own identifiers (or tags) and format (or data type) for each component of a message
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Bureaus etc) ISV regulatory institutionsMarketing plan feasibility campaign efficiency and costs
2 MentorPreferable SWIFT
Also eligible SunGard IBM affiliation to other OS communitySWIFT decision
3 Legalcopyright Expert legal consultant and RO apprentice Cost and time shift dependent
4 Tight regulation Clear membership admission amp software contribution criteria The quality of the consultant advice
5 Marketing Actively recruiting community members Marketing plan feasibility campaign efficiency amp customer skepticism
a community portala provide content amp debate space information consolidation amp dissemination virtual
showroom subscription management support
a business analysis solution availability and maintenance by one of the
members or employed company
b press releases amp
announcementsb PR and AR b communicators availability and costs
c events c periodical conferences user focused meetings c cost dependent
6 Financing World Bank EU amp private funds Lobby amp funds availability
Item
FinTP
FinTP community
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46 The FINkers United community
The community structure comprises three main entities (as depicted in the bellow
figure)
1 The adopters (beneficiaries) consumer companies choosing to adopt the
FinTP product in compliance with the community line of business and ethical
conduct
2 The moderator the instrumental inspirational authority expected to draw both
the development vision and the guidelines of the community
3 The contributors
a institutionalized bodies eg development and maintenance test and
validation audit legal marketing
b independent contributors eg ISVs (Allevo falling under this category)
solution providers integrators or passionate developersindividuals
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5 Solution Description amp Parameters Like qPayIntegrator FinTP offers a
standard compliant processing
engine for the financial transactions
exchanged between the back-office
or ERP applications and the financial
community (banks MFIs market
infrastructures corporations)
FinTP is able to process financial
messages in both FIN and ISO20022
formats and at the same time offers
a rich set of interfaces to different
financial applications FinTP provides
compliance with various clearing and
settlement mechanisms
Consequently FinTP ensures a high
level automation of the end-to-end
financial transactions processing
51 Features
The FinTP project has two major deliverable components
1 the FinTP application itself
2 the community built around FinTP
All subsequent chapters will refer to both of these
Component code
Component description Comments
FinTP4 FinTP is a financial transactions processing engine for 3rd or 4th tier banks microfinance corporate or SMEs treasuries available as open source application Functional characteristics
1 Operational features
o Predefined flows and message formats
Includes reconciliation of confirmations with transactions
o Single and multiple funds transfer instructions securities settlement amp reconciliation (Romanian Euroclear) messages
The supported payment instruments are credit transfer direct debit debit instruments
o MTMX coexistence Based on FinTP native internal data format (ISO20022)
o Multi-BIC multi-currency
o SEPA ready (certification) Compliancy with EPC regulations for SEPA formatting and business flows (for SCT and SDD) enables bank-to-bank and bank-to-CSM settlement
4 FinTP root is Allevo equivalent product qPayIntegrator a commercially available amp practice proven (since
2005) application qPayIntegrator provides a consistent set of functionalities and it is fully aligned to both industry regulations and technology
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Component code
Component description Comments
o TARGET 2 ready Compliance with TARGET2 settlement and operations as regulated by the ECB
o SAGSAASAE SAL interfaces
Integration with SWIFTNet to enable banking business
o Liquidity reports Real time cash reports and forecasts using several criteria (currency subsidiary profit centre)
o Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
Analysis and reports of market trends based on volumes amount BIC etc along with early alerts on behaviour changes beyond the standard deviation
o Accounting reconciliation Automatic NOSTROVOSTRO accounts reconciliation intraday liquidity reports and integrated exception management
o AML (sanctions list matching)
High and low value payments filtering uses 20+ black lists and ensures their content maintainability
o Duplicate detection Detection and investigation of possible duplicates the detection window and criteria are configurable
o Remittances processing Covers banks business and operations area as well as distribution channel
o Treasury markets Automation of treasury flows (FX and money market)
o Statements Processing of SWIFT messages related to correspondent banks accounts administration
2 Technical features
o Financial message routing and monitoring
o Multi-threading capabilities
o Persistent end-to-end transactions
During each phase of the entire processing cycle permanent copies of the transaction are kept until the final completion thus avoiding any transaction duplication or loss
o Batching unpacking
o Resilience at transaction level
o Archiving
o Tracing and logging transactions and user events
o Transient errors detection and recovery
o Real-time search and reports
o Security access and user administration
o SaaS cloud ready
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Component code
Component description Comments
FINkers United - community
Since FinTP is an application handling financial transactions the product releases and the related community should be tightly regulated and controlled As the project matures these components will be further refined The following main components of the community have been identified
‐ the moderator ‐ the product development
and maintenance body ‐ the product and
community auditor body (acting as a gatekeeper of official releases) to control and maintain the change requests integer and eliminate any malware exposures
‐ the test and validation body
‐ the legal body for defining the frame for product distribution amp licensing
‐ the marketing entity responsible for creating awareness and attracting contributors and adopters
‐ the portal used as a channel for marketing support and version control
‐ individual contributors namely ISVs solution providers developers integrators who wish to use their skills and knowledge to the benefit of the community
These tools strongly depend on the available budget and widespread
organization culture It is not mandatory for these to be open source if usage of
open source tools would mean lower quality
3) Licensing
The licensing model highly depends on the results of the open source legal and
business consultancy However we assume the following frame
‐ free of charge initial and recurring maintenance license for using FinTP
‐ FinTP does not use software components enforcing liabilities for the user
‐ consumers using FinTP source code (in part or entirely) should comply to
the licensing policy of the community
‐ the version released by the development amp maintenance body is the only
official amp to be trusted version of the community ensuring product integrity
unity and stability
4) Regulatory compliance
The regulatory compliance strongly depends on the early adaptation of new amp
changed rules via the recurring maintenance and on the quality of the audits
performed by the specific bodies of the community
Thus it is ensured that ISO20022 and FIN standards TARGET2 and TARGET2
Securities SEPA or country specific regulations (as stated respectively by
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SWIFT standards EPC specification ECB or regional Central Banks
regulations that the community chooses to comply with) stay the most
important business specific anchors of FinTP
The FinTP design also offers support for flexible definition of new compliance
sources
5) Consultancy
The needed consultancy is twofold
‐ legal to ensure that FinTP does not infringe other licensing constraints
‐ open source specific to enable the right choice of the community type and of its governing law
The main constraint relies in choosing the right advisors true experts in the
open source industry amp with appropriate ethic profile - able to deliver as
promised The consultants have to be available 800 am divide 800 pm CET and
easily reachable - geo-location is of utmost importance Selection of the
consultant will basically be done on price assuming the right mix of expertise
and availability is achieved
6) Financing
While Allevo partially undertakes the financing of FinTP development the
ancillary consultancy necessary team education or acquisition of productivity
tools are far beyond the companys 2012 budget
To overcome possible delays in the project Allevo needs to sturdily act to
identify both the most appropriate commercial offer and additional necessary
financing source(s)
FinTP community
The community related items are members moderator legal tight regulation
marketing and financing For each of these items several assumptions and the
corresponding dependencies are provided in the following paragraphs
1) Members
We assume that the communitys members span several business profiles
(such as financial services institutions corporations market infrastructures
PSPs SSBs public administrations regulatory institutions and ISVs) sharing
the mutual focus on financial operations performance and improvement
By now after some tests on market acceptance there have been identified a
few supporters comprising financial services institutions and small ISVs
To ensure the success of building the community there is need for attracting
prestige influencers (market analysts consulting companies of scale - starting
with big four key industry providers - such as SWIFT other communities - ie
professional such as banking insurers capital market associations) and a
credible pool of financial institutions and corporations
To this end Allevo unrolls its own awareness campaign through direct
meetings publications blog posts and social media public presentations and
by officially launching the initiative in a conference focused on free of charge
financial transactions processing applications
Allevo further plans to use Sibos 2012 as opportunity to organize a less
traditional communication session gathering a relevant international panel to
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debate the strong and weak aspects of this initiative amp to get the public involved
as much as possible
The goal is that by the end of 2012 some tens of different institutions are
committed to co-found the community and to actively contribute to establishing
the legal frame and to forming the required action bodies
2) Moderator
Allevo perceives the Moderator as the critical member of the community since
his prestige and influence will warrant the outcome of all performed activities
The moderator must commit on long term to develop the community and to
sponsor it with its share of trust
Allevo strongly believes that the Moderator should have a global footprint be a
reputable and trustful institution
3) Legalcopyright
The legal consultant and advisor needs to provide the coherent legal frame to
cover all community activities by roles and accountability While making it easy
for the members it should be more demanding as far as contributors are
concerned (though still encouraging ISVs to actively participate) It has to draw
very precise responsibilities for the independent and institutionalized bodies
(for instance product maintenance amp development and audit) and for the
Moderators status
The quality of this legal work fully relies on the expertise and experience of the
advisor
The law governing the community has to be in harmony with the European
(either French or Anglo-Saxon) legal system and with the open source legal
regulations largely practiced in other business regions (US and APAC)
4) Tight regulation
FinTP the product meant to gather a community which uses and supports it is
all about moving values between different entities Thats critical irrespective of
the amount because failing to perform properly opens the doors to arguments
amp loss of reputation with the related tangible costs Moreover the product has
to be beyond any doubt during its entire lifecycle free of any malefic
embedded functions meaning that contamination has to be avoided by all
means
Allevo strongly believes that this requirement can be attained only by tight
regulation of the community specific approval of the initially launched version
of FinTP and of the recurring contributions
This approach can be felt strange compared to most open source communities
and can lead to little interest from IT talents making them feel banned or
restricted It remains the Moderator‟s duty to make them feel privileged if
accepted and rewarded as such However this censorship is a price to be paid
since the community and the project are about processing transactions
initiating value transfer
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5) Marketing
The community needs to have the clear objective of spreading both
geographically and over a consistent number of industries
To achieve this goal the community should be able to actively provide open
access to relevant information (including explanations of concepts hands-on
evaluation) to non-members and to also answer their questions on FinTP and
on the community itself
The same level of information needs to be ensured for the members to whom
supplementary updates on the community events decisions available
releases patches and fixes should be made available They need to also get
focused forum discussions on specific business areas and subsequent
processes need to be distributed
These functionalities have to be hosted on the community‟s dedicated portal
This portal has to provide content dialogue space information consolidation
and broadcasting It must be a virtual showroom for FinTP It needs to host
documents and virtual meetings subscription management and product
support amp development
The community has to be able to run its own meetings enabling direct contact
between active members or their representatives
Meaningful press releases have to be regularly issued along with actively
maintaining a productive relationship with market analysts to consolidate a
clear public understanding of the community spirit and goals
6) Financing
Its all about money-money-money since at least for the first 2-3 years the
community needs to be financed
Upon reaching maturity the institutionalized bodies of the community can earn their income from collateral activities - such as organizing conferences providing education and specialized support services - either for the initial FinTP installations and customizations or for recurring services requested by the members An alternative can be trialling and certifying interested providers enabling them to perform support services for FinTP
Thus who could pump money into this project It could be one or a mix of
‐ World Bank - if governmental programs are implied and provided a proper project which convincingly demonstrates the beneficed social impact
‐ EU development funding
‐ interested wealthy members of the community
The most critical dependencies are external such as (arranged according to
their impact) availability of funds for building the community finding trustful
and skilled open source consultants (legal business community licensing)
The synthetic view of the main assumptions and dependencies is provided in
the attached file
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Maintenance amp user support 1-Jan-13 Marketing inst action
4 Activities
Initial planning amp budgeting 15-Dec-12 document
Roles allocation 15-Dec-12 document
Community inst Implementation 15-Dec-12 action
Awareness campaign 1-Jan-13 action ongoing process
Members recruiting 1-Jan-13 action ongoing process
Continued operation 1-Jan-13 action ongoing process
Service sales 1-Jan-13 action ongoing process
Future development planning 1-Jan-13 document ongoing process
5 Resource allocation
If existing institution - allocation 15-Dec-12 action
If newly formed - recruiting 15-Dec-12 action
Make FinTP available to comm 1-Jan-13 action ongoing process
Start community financing 1-Jan-13 action ongoing process
6 Financing
Initial investment 1-Jan-13 action secured by that date
First period of comm operation 31-Aug-13 action secured by that date
co
mm
un
ity
Project approach
Project approachpdf
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8 Scope This chapter deals with the phased availability of various FinTP features again considered from application and community points of view
In the first phase (due Dec 2012) the core of FinTP application is ready including the following technical features
- financial message routing between services and monitoring of exchanges
- multi-threading capabilities
- persistent end-to-end transactions
- batching de-batching
- archiving
- tracing and logging of transactions and user events
- transient errors detection and recovery
- real time search and reports
- security access and user administration
Similarly during the first phase the main community components need to be in place
- moderator
- software development and maintenance body (Allevo also available in the first and second phase of the project)
- test amp validation body
- (software) auditor
- legal
- main contributors (Allevo falls into this position)
- platform
- marketing
In the second phase (Dec2012 - Dec2013) several operational features of FinTP will be added
- predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit instruments securities settlement reconciliations
- MTMX coexistence
- multi-BIC multi-currency
- SEPA ready certification
- TARGET2 ready
- SAGSAASAE interfaces
- duplicate detection
- liquidity reports
- competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
- accounting reconciliation
- AML (sanctions list matching)
- SaaS and cloud ready
along with resilience and start of maintenance and knowledge transfer (the last two obviously continuing in the next phases)
FinTP - Vision and Scope
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Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
The synthetic view of the project scope is provided in the following table
Crt No
Feature Activity Phase1 31Dec12
Phase2 31Dec13
Phase3 31Dec14
Phase4 31Dec15
Fin
TP
A Operational features
1
Predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit Instruments bonds (Romanian Euroclear) reconciliations
2 MTMX coexistence
3 Multi-BIC multi-currency
4 SaaS ready cloud ready
5 SEPA ready certification
6 TARGET2 ready
7 SAGSAASAE interfaces
8 Liquidity reports
9 Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
10 Accounting reconciliation
11 AML (sanctions list matching)
12 Duplicate detection
B Technical features
1 Routing financial message between services and monitoring of data flows
2 Multi-threading capabilities
3 Persistent end-to-end transactions
4 Batching de-batching
5 Resilience (at transaction level)
6 Archiving
7 Tracing and logging of transactions and user events
8 Transient errors detection and recovery
9 Real time search and reports
10 Security access and user administration
C Other activities
1 FinTP maintenance
2 Knowledge transfer
Co
mm
un
ity
Establishing the institutionscomponents
1 Mentor
2 Software Auditor amp Provider
3 Legal service
4 Members
5 Allevo initial role
6 Platform
7 Marketing
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 35 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
9 Limitations The main limitations in the economy of the project consist of phasing several FinTP
operational features for the following year (eg debit instruments liquidity reporting
AML filtering accounting reconciliation resilience SaaS ready cloud ready etc)
At the same time for features intended to front-office usage like Remit it was not yet
decided to publish them as open source product
The synthetic view of the main limitations is provided in the following table
Crt
nrItem Limitation Exclusion Comments
1
FinTP
a
Operational features Available in 2013
b
Remit Not included in
open source
package
2
Community
a
Rules Tightly controlled The statute should
ensure the right
balance between
safety and free
association of talents
Given the significant budget allocation (at least from Allevo perspective) the strong
requirement to meet the maximum ceiling will limit the FinTP product initial preparation
and maintenance expenses
Community wise the obligation of a tight regulated statute will have to ensure the right
balance between safety (mandatory in an environment dealing with financial
transactions) and a free association of talents (typical in an open source community)
In the first period after launch (at least the first two years) of the initiative the
maintenance and support activities will be provided by Allevo (as initial contributor)
A major restriction would be to meet the budgeted development and maintenance
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
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10 Appendix - Risks
Specific risks
1 Product
a Long delivery lead time This is a medium probability and impact risk however Allevo should make available the needed resources and motivate the entire team for the job
b Credibility loss if FinTP fails to further become certified on meaningful operations andor business tracks (ie SWIFT business certification tracks or similar) The single possible containment is lobbying if the application certification program rejects open source products Anyway the impact is very important and its materialization should be avoided
c Low quality of the allocated team and improper version management are highly unlikely to occur as long as the formal transfer of responsibility is smoothly made from Allevo to the corresponding body put in place by the community The real hidden risk is that this process could take too long and it thus has a very high impact
d Poor FinTP quality may result if the community fails to institutionalize proper quality assurance (QA) and verification amp validation (VampV) processes This is most expected not to happen but if it does the impact is at least medium The single path to overcome this risk consists in a professional approach to these items based on institutionalizing practice proven QA and VampV processes
e Allevo lack of expertise in the open source business This can be contained by carefully selecting trustful amp truly expert consultants Otherwise it means more money longer time spent on project and expenses without proper return
2 Service
a The software maintenance does not properly deliver as expected ie on-time and on-quality bug fixing regulation amp standards alignment and productivity amp technological improvement The key to contain this risk materialization is the community status having provisions to neatly provide maintenance and further development of the rules for FinTP as well as the applicable rules and fees for the ancillary services
b Low quality and safety of the service received by the members of the community To avoid the risk of performing the one-time amp recurring support services by under-prepared professionals the community has to rule the process of training and qualifying the companies willing to contribute in this area
c Not meeting the minimal SLA criteria The community should regulate and periodically revise the training curricula and to further audit both the teachers and the certified experts to ensure the service level agreements are met
d Under motivated service providing professionals - up to the level of not feeling the high impact of their activity The community status must provide guidance to the contributors on the minimal standards the professionals should meet
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
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e Constrained expert resource pool This risk could be overcome by the communitys policy to ensure at all time a balanced number of motivated experts to the communitys size Failing to do so may result in high negative impact of the community business and public perception
3 Community
a Emergence of a parallel competitive community If the optimal timing between publically disclosing FinTP and community take-off is not achieved then there are high chances that following a competitive initiative other entrepreneurs successfully launch their own similar or derived community This could be avoided by periodical reviews of the progress of both FinTP and community status and deciding whether the project needs to be put on hold or not
b Unfit reputation of the Moderator or main contributors If either the Moderator or the initial contributors are not beyond any dispute and are reputable institutes then there is certainly something rotten in Denmark and the project should be put on-hold
c No commitment from the Moderator‟s side Similarly if the Moderator does not commit to the project it means that Denmark has a serious problem to solve The project should relinquish until the matter is fixed
4 Legal
a Misuse of copyright and intellectual property (IP)The assigned working team could not be aware of the limitations and liabilities of using (entirely or partially) third party software this risk can be contained by delivering the right training providing proper working procedures carefully recording and documenting the use of open source code and carefully cross-scanning
b Injunctive relief and financial damages can be caused by not properly and continuously controlling the use of third party open source code resulting in copyright or IP infringement There are two containment measures which can be taken tighten the compliance check during the product lifecycle or apply the sanction policy as to set an example
c The competition starts a class action - this may result in delaying the project
5 Financing
a Lack of long term financing institutions Allevo should urge its consultant to identify and draw a reasonable list of financial options institutions
b Exceeding the budget given that this type of project has no precedent in Allevo and to avoid exposing to the dependency on engagement to financial institutions or to commitments beyond the existing budget a further carefully drawn project plan is needed along with its explicit approval from the board of the company
Market related risks
1 False expectations
a Expensive services Not everything is free aside the initial and maintenance free licensing the training the support and other professional services can amount to more than in general expected Allevo rates this risk as medium possible but with low impact as long as the law governing the community and its initial period of operation will consecrate fair market prices and competitive sources of contribution
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
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b Hidden costs for patches updates and upgrades While of similarly weight in terms of probability and impact this should be no real concern as long as the law governing the community clearly provides for free and accountable maintenance
2 Poor image on quality
a Too many releases making FinTP hard to manage and unsafe to operate Given proper regulation of the community and the mature root of FinTP Allevo disregards the possibility of this risk to materialize However if this were to happen this is a high impact risk and by all means should be avoided
b Backward technological (in)compatibility looks to us as a low risk in all respects and within organizations applying practice proven software engineering processes and professional - accountable team this is not likely to materialize
c Support can be perceived as the highest impact risk for FinTP This can be overcome by tight regulation of the commercial and professional conditions to deliver the service (for instance only qualified organizations should be recommended to members for supporting FinTP)
d SLA and accountability for both internally or externally performed services is closely correlated to the previous risk and the community status should provide the support for growing a community of competencies and accountable professionals around FinTP Periodical auditing (by the specialized community body) of this pool of professionals will further ensure the confidence that the skills are preserved at the required level
e Code fragmentation and forking is a high impact risk with a low probability of happening in the initial period provided the knowledge transfer is done orderly and in an institutionalized manner
3 Inherent uncertainty
a Community disputes can jeopardize its cohesion the project viability and future This is a high impact possibly high probability risk and it is the definite role of the Moderator to feel prevent and while materializing mitigate any conflicting situation
b FinTP going commercial post-launch This is a huge impact possibly high occurrence probability but manageable with the right legal instruments provisioned in the community
c Loss of alignment to industry standards and regulations This risk has medium probability and medium impact given the assumption that the community is tightly regulated and the working bodies institutionalized and gathering professionals
4 Legal
Copyright infringement given Allevo experience in the open source business this risk is highly probable and has a high impact on FinTP especially if mistakes are made in the launching phase Similarly if during the product maintenance and further development phase the community fails to institutionalize proper formal software development processes (covering all FinTP lifecycle phases) based on industry practice proven model(s) Supplementary the expert code scanning audit for compliance is the single resort to preclude external software source misuse
FinTP - Vision and Scope
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Business Information Systems (Allevo) SRL
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Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
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5 GPL specific
a Noncompliance to the GPL license If GPL license is used the product should further distribute in compliance with this part provisions High impact and probability but manageable if proper software development processes are used and if the statute clearly defines the licensing model for FinTP
b FinTP unconformity The risk that software engineers get inspired by a chic solution which they import and emulate similarly in FinTP And this is also highly possible since les grands esprits se rencontre
6 Existing customers attitude
Anger for having paid for something which now is free The existent customers can be concerned about the future of their installed system its further development (in one word its future) and on the quality of the service (SLA including) Some recent adopters can possibly be furious for spending their money on buying licenses for a piece of software that differently packaged becomes free of charge
For the first situation the single best solution for Allevo is to ensure a smooth transition from the current status to the new solution deployed Also highly probable Allevo should provide for simultaneous (for at most one more year) maintenance of both FinTP and for qPayIntegrator
For the 2012 new qPayIntegrator adopters Allevo should transparently state the product‟s future and propose a commercially attractive migration towards FinTP when it becomes publically available (like the option for the installation migration and recurring services) The decision should clearly stay with the customer if he still buys Allevo licenses delays the implementation until FinTP is available or if he goes for a competitive solution
In other words the key to mitigate the existing customer perception is switching places and discarding if the situation proves to be uncomfortable
Bottom-line is that to avoid most of the risks the FinTP community must be a rather tightly controlled one though still opened to anyone willingly abiding to the rules
The synthetic view of the main risks their assigned probability impact and the corresponding containment approach is provided in the attached file
Risk IDRisk
CategoryRisk
Probability
(High
Medium
Low)
Severity
(High
Medium
Low)
Containment (Mitigation Action Proposed)
M1Free as in a
Free Puppy
M101
The training service amp support cost could account more than the
commercial product its replacing (application software is typically 30 of
the total cost of ownership of most projects)
Medium Low
M102 Hidden costs ie charge for patches updates and upgrades Medium Low
M2Frequent
updates
M201
Projects might be updated frequently - as often as everyday Too frequent
updates could have a negative impact on the implementation
interoperability and support
Low HighMAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M3Backwards
compatibility
M301 Less accountability Low LowMAP03 Access to prior versions of source code (additional in-house
development and support procedures might be necessary)
M4Support
related risks
M401Support could be perceived as the biggest issue with open source
software deploymentsHigh High
M402 Internal External Accountability SLAs High High
M403Code fragmentation or forking if the community fails to institutionalize
corporate like formal structureHigh High
M404Support could require greater involvement and different skills set from
operations staffMedium Medium
M5Community
immaturity Low Low
M501Could generate incompatibility of FinTP with industry standards amp
regulationsMedium Medium
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M6 Uncertainty The inherent uncertainty in every open source project
M601 Community disputes might impact project viability and future High HighMAP04 The Mentor should prevent amp mitigate any conflicts inside the
community
M602 Open source projects may not stay open in future releases High HighMAP05 The originator liabilities should be strongly enforced by the
community statute
M7 Legal risks
M701 Copyright infringement High High
M702 Can open source software deployments pass an audit
M8 GPL General Public License specific development concerns
M801Software thatrsquos derived from an existing GPL project in whole or in part
might not be released under the same licenseHigh High M08 The community should regulate the licensing model
M802
Developer contamination - developer could review an existing open source
project could see an elegant solution then implement a similar function in
closed source project
High HighMAP09 Procedurals constrains for the software developers should be
enforced
M9
Current
customers
attitude
The actual customer perception could be negative High High
M12 To prevent a negative attitude Allevo should involve the customers
in the FinTP project Allevo needs their active support for a smooth and
issues less transition
ma
rke
t re
late
d r
isk
s
co
st
rela
ted
ris
ks
MAP01 The community should regulate the applicable rules and fees for
services and maintenance
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
bu
sin
es
s a
nd
le
ga
l ri
sk
s
MAP06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S1Product
related
S101 Late delivery lead time Medium MediumMAP15 Allevo should provide proper resources (funding and human
resources)
S102 Credibility loss if fail to certify with SWIFT Medium High MAP16 Should be discussedamp agreed with SWIFT
S103 Inexperienced team or allocation below needs Low HighMAP15 Allevo should provide proper resources (funding and human
resources)
S104 Improper or non efficient version management Low High MAP16 Review the current Allevo Configuration Management System
S105Poor quality if the community fails to institutionalize proper verification and
validation practices3
M06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S106 Lack of expertise in open source projects 2 Allevo should engage thoroughly selected Open Source consultants
S2Service
related
S201
The software maintenance not properly providing for bugs fixing
regulationamp standard alignment technological improvements communities
improvement requests
High HighMAP01 The community should regulate the applicable rules and fees for
services and maintenance
S202 One-time amp recurring services might be provided by unqualified resources High HighMAP17 The community should regulate the training curricula and related
expertise certification
S203 Provided services might not meet the minimal SLA performance criteria High HighMAP17 The community should regulate the training curricula and related
expertise certification
S204 Relaxed or lack of accountability of the professionals High HighMAP18 The community should regulate the employment agreement of
the professionals
S205 Lack of qualified professionals High HighMAP19 The community should ensure a balanced number of certified
professionals with the community size
S3Community
related
S301
If after disclosing FinTP the community does not enthusiastically adopt
the solution competitors might more successfully develop a similar
strategy
Medium MediumMAP20 FinTP promotion should be convincing and realistic A well
organized marketing campaign by Allevo
S302The community mentor andor early adhering members have no
undeniable prestige or are not largely trustfulMedium Medium MAP99 Project status review Ending the project could be one option
S303 The Mentor does not strongly commit for the project Medium Medium MAP99 Project status review Ending the project could be one option
S4 Legal
S401Exposure to copyright and IP infringement due to working team unaware of
the legal consequences of using third party softwareMedium Medium
MAP21 Allevo should keep records and fully document the use of open
source code
S402Copyright or intellectual property infringement can lead to injunctive relief
and monetary damagesHigh High
MAP23 Allevo should institutionalize a tight licensing and technical
control
S403 All risks related to open source compliance High HighMAP24 Allevo should appoint as soon as possible a FinTP compliance
Officer
S5 Financial
S501 Lack of financing institutions Medium MediumMAP25 Allevo should urge consultant to provide a consistent list of
potential investors
S502 Dependency on the financing institution approval Medium Medium
S503Not thoroughly planned project overlooking one or some project cost that
need to be financedMedium Medium
Sp
ec
ific
ris
ks
tec
hn
ica
lm
ark
eti
ng
leg
al
fun
din
g
MAP26 Allevo should carefully draw a consistent and eligible project for
financing
Risks
Riskspdf
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 40 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
11 Appendix - Bibliography 1 Accenture Open Source Research Geographic Findings
2 Accenture Open Source Research Industry Findings
3 Producing Open Source Software - How to Run a Successful Free Software
Project by Karl Fogel
4 Open Source Software Risks and Rewards by Gary Hein
5 A Business Case Study of Open Source Software by Carolyn A Kenwood
6 6 critical success factors for product development by Christian Wig
7 Bank 20 by Brett King
8 Managing the business risks of open innovation by Oliver Alexy and Markus
9 Product idea evaluation checklist shared by Startgass AS
10 SWIFT 2015 Strategy
11 Customers and business impact of product changes
FinTP - Vision and Scope
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Sediu social 23 Coltei St 030245 Bucharest Romania
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Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
12 Appendix - Glossary ACH Automated Clearing House that is used to clear retail payments
between banks in a country or region
APAC Asia and Pacific
AML Anti-Money Laundering
BCampDR Business continuity amp disaster recovery
B2B Business to business
C2B Consumer to business
CET Central European Time
CMMI Capability Maturity Model Integration
CMS Configuration Management System
Coexistence The situation of multiple standards existing at the same time in the same business space Within SWIFT this refers to the coexistence between the MT and MX standards This also refers to the set of measures being taken to make the situation easier to handle by the community (publication of mapping rules translation serviceshellip)
CSM Clearing and Settlement Mechanism
CUG Closed User Group
Dictionary Part of the ISO 20022 Repository that contains all items that can be re-used during business modelling and message definition activities
EAI Enterprise Application Integration - middleware to connect applications and communication interfaces Typical EAI software includes features for mapping data between various formats enriching messages with data from other systems and orchestrating message flows
ECB European Central Bank
EMEA Europe Middle-East Africa
EPC European Payment Council
ERP Enterprise Resource Planning
EU European Union
EUCLID Connectivity to EuroClear Bank services
FIN The messaging service offered by SWIFT for the secure and reliable exchange of MT messages in store-and-forward mode By extension the syntax used to format these MTs
IP intellectual property
Interoperability Capability to easily exchange business information while using different message standards ISO 20022 promotes global use of syntax-neutral business and message components as a common denominator to achieve interoperability between standards using different syntaxes
ISO The International Organization for Standardization - an international standard-setting body composed of representatives from more than 160 national standards organizations that promulgates worldwide standards in a variety of domains aiming at facilitating cross-border exchanges of goods services and techniques
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
ISO 15022 An ISO standard that describes the syntax to be used for developing securities messages used mainly to support back office related transaction flows It replaced the previous securities messaging standard ISO 7775
ISO 20022 RA Registration Authority - offers the services described in an ISO standard on behalf of and under a contractual agreement with the International Organization for Standardization
ISO 20022 Repository
Repository maintained by the ISO20022 RA which contains the financial business models message definitions and components defined in compliance with the ISO 20022 standard
ISO 20022 RMG Registration Management Group - in charge of the overall management of the ISO 20022 development and registration process in accordance with the ISO 20022 standard
ISO 20022 SEG Standards Evaluation Groups -in charge of validating candidate ISO 20022 messages within the scope of the business justification and ensuring that they address the needs of their future international community of users
ISV Independent Software Vendor
KYC Know Your Customer
MACUG Member Administered Closed User Group
Message A set of structured information exchanged between two parties involved in a financial transaction
Message component and element
A re-usable data structure used for assembling message definitions The data defined in a message component is bdquotraced‟ back to the business components and business elements In simple terms business components define the business meaning message components create data structures for messaging
MI Market Infrastructure - a system that provides services to the financial industry for trading clearing and settlement matching of financial transactions and depository functions
Middleware Software that enables data to be exchanged among different systems with standard communication components and tools for formatting mapping and processing
MT The traditional bdquotag value‟ Message Types for use on the FIN service offered by SWIFT
MX An XML message exchanged over SWIFTNet whether or not ISO 20022 compliant
OS Open source
PSP Payment service provider
QA Quality assurance
RMA Relationship Management Access
RTGS Real Time Gross Settlement System
SAA SWIFT Alliance Access
SAE SWIFT Alliance Entry
SAG SWIFT Alliance Gateway
SaaS Software as a Service
SCORE Standardized CORporate Environment
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
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Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
Semantics The study of meaning usually in language The word is often used in ordinary language to denote a problem of understanding that comes down to word selection or connotation
SEPA Single Euro Payment Area
SLA Service level agreement
SME Small and Medium-sized Business(es)
SOA Service Oriented Architecture
SSB SWIFT Service Bureau
STP Straight Through Processing
SWIFT Society for Worldwide Interbank Financial Telecommunication Visit wwwswiftcom
Syntax Physical format of a message used to identify and represent the conveyed pieces of information
T2S TARGET2 Securities - an initiative of the Eurosystem It is an IT platform that aims to make settlements across national borders simpler and more cost-efficient
TARGET2 The Eurosystem-owned European Real Time Gross Settlement (RTGS) system (Trans-European Automated Real-time Gross Settlement Express Transfer System) TARGET2 is one of the largest high-value payment systems in the world
Taxonomy The classification in a hierarchical system typically organized by super type - sub type relationships also called generalization-specialization relationships or less formally parent-child relationships
TSU Trade Service Utility
TCO Total cost of ownership
Translation rules
Set of rules to be used to map the pieces of information included in a message expressed in one syntax to the equivalent message expressed in another syntax
Remit Remittances
XML eXtensible Mark-up Language - popular syntax to encode documents (or messages) electronically on the Internet XML allows communities to define their own identifiers (or tags) and format (or data type) for each component of a message
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Bureaus etc) ISV regulatory institutionsMarketing plan feasibility campaign efficiency and costs
2 MentorPreferable SWIFT
Also eligible SunGard IBM affiliation to other OS communitySWIFT decision
3 Legalcopyright Expert legal consultant and RO apprentice Cost and time shift dependent
4 Tight regulation Clear membership admission amp software contribution criteria The quality of the consultant advice
5 Marketing Actively recruiting community members Marketing plan feasibility campaign efficiency amp customer skepticism
a community portala provide content amp debate space information consolidation amp dissemination virtual
showroom subscription management support
a business analysis solution availability and maintenance by one of the
members or employed company
b press releases amp
announcementsb PR and AR b communicators availability and costs
c events c periodical conferences user focused meetings c cost dependent
6 Financing World Bank EU amp private funds Lobby amp funds availability
Item
FinTP
FinTP community
FinTP - Vision and Scope
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5 Solution Description amp Parameters Like qPayIntegrator FinTP offers a
standard compliant processing
engine for the financial transactions
exchanged between the back-office
or ERP applications and the financial
community (banks MFIs market
infrastructures corporations)
FinTP is able to process financial
messages in both FIN and ISO20022
formats and at the same time offers
a rich set of interfaces to different
financial applications FinTP provides
compliance with various clearing and
settlement mechanisms
Consequently FinTP ensures a high
level automation of the end-to-end
financial transactions processing
51 Features
The FinTP project has two major deliverable components
1 the FinTP application itself
2 the community built around FinTP
All subsequent chapters will refer to both of these
Component code
Component description Comments
FinTP4 FinTP is a financial transactions processing engine for 3rd or 4th tier banks microfinance corporate or SMEs treasuries available as open source application Functional characteristics
1 Operational features
o Predefined flows and message formats
Includes reconciliation of confirmations with transactions
o Single and multiple funds transfer instructions securities settlement amp reconciliation (Romanian Euroclear) messages
The supported payment instruments are credit transfer direct debit debit instruments
o MTMX coexistence Based on FinTP native internal data format (ISO20022)
o Multi-BIC multi-currency
o SEPA ready (certification) Compliancy with EPC regulations for SEPA formatting and business flows (for SCT and SDD) enables bank-to-bank and bank-to-CSM settlement
4 FinTP root is Allevo equivalent product qPayIntegrator a commercially available amp practice proven (since
2005) application qPayIntegrator provides a consistent set of functionalities and it is fully aligned to both industry regulations and technology
FinTP - Vision and Scope
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Component code
Component description Comments
o TARGET 2 ready Compliance with TARGET2 settlement and operations as regulated by the ECB
o SAGSAASAE SAL interfaces
Integration with SWIFTNet to enable banking business
o Liquidity reports Real time cash reports and forecasts using several criteria (currency subsidiary profit centre)
o Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
Analysis and reports of market trends based on volumes amount BIC etc along with early alerts on behaviour changes beyond the standard deviation
o Accounting reconciliation Automatic NOSTROVOSTRO accounts reconciliation intraday liquidity reports and integrated exception management
o AML (sanctions list matching)
High and low value payments filtering uses 20+ black lists and ensures their content maintainability
o Duplicate detection Detection and investigation of possible duplicates the detection window and criteria are configurable
o Remittances processing Covers banks business and operations area as well as distribution channel
o Treasury markets Automation of treasury flows (FX and money market)
o Statements Processing of SWIFT messages related to correspondent banks accounts administration
2 Technical features
o Financial message routing and monitoring
o Multi-threading capabilities
o Persistent end-to-end transactions
During each phase of the entire processing cycle permanent copies of the transaction are kept until the final completion thus avoiding any transaction duplication or loss
o Batching unpacking
o Resilience at transaction level
o Archiving
o Tracing and logging transactions and user events
o Transient errors detection and recovery
o Real-time search and reports
o Security access and user administration
o SaaS cloud ready
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Component code
Component description Comments
FINkers United - community
Since FinTP is an application handling financial transactions the product releases and the related community should be tightly regulated and controlled As the project matures these components will be further refined The following main components of the community have been identified
‐ the moderator ‐ the product development
and maintenance body ‐ the product and
community auditor body (acting as a gatekeeper of official releases) to control and maintain the change requests integer and eliminate any malware exposures
‐ the test and validation body
‐ the legal body for defining the frame for product distribution amp licensing
‐ the marketing entity responsible for creating awareness and attracting contributors and adopters
‐ the portal used as a channel for marketing support and version control
‐ individual contributors namely ISVs solution providers developers integrators who wish to use their skills and knowledge to the benefit of the community
These tools strongly depend on the available budget and widespread
organization culture It is not mandatory for these to be open source if usage of
open source tools would mean lower quality
3) Licensing
The licensing model highly depends on the results of the open source legal and
business consultancy However we assume the following frame
‐ free of charge initial and recurring maintenance license for using FinTP
‐ FinTP does not use software components enforcing liabilities for the user
‐ consumers using FinTP source code (in part or entirely) should comply to
the licensing policy of the community
‐ the version released by the development amp maintenance body is the only
official amp to be trusted version of the community ensuring product integrity
unity and stability
4) Regulatory compliance
The regulatory compliance strongly depends on the early adaptation of new amp
changed rules via the recurring maintenance and on the quality of the audits
performed by the specific bodies of the community
Thus it is ensured that ISO20022 and FIN standards TARGET2 and TARGET2
Securities SEPA or country specific regulations (as stated respectively by
FinTP - Vision and Scope
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SWIFT standards EPC specification ECB or regional Central Banks
regulations that the community chooses to comply with) stay the most
important business specific anchors of FinTP
The FinTP design also offers support for flexible definition of new compliance
sources
5) Consultancy
The needed consultancy is twofold
‐ legal to ensure that FinTP does not infringe other licensing constraints
‐ open source specific to enable the right choice of the community type and of its governing law
The main constraint relies in choosing the right advisors true experts in the
open source industry amp with appropriate ethic profile - able to deliver as
promised The consultants have to be available 800 am divide 800 pm CET and
easily reachable - geo-location is of utmost importance Selection of the
consultant will basically be done on price assuming the right mix of expertise
and availability is achieved
6) Financing
While Allevo partially undertakes the financing of FinTP development the
ancillary consultancy necessary team education or acquisition of productivity
tools are far beyond the companys 2012 budget
To overcome possible delays in the project Allevo needs to sturdily act to
identify both the most appropriate commercial offer and additional necessary
financing source(s)
FinTP community
The community related items are members moderator legal tight regulation
marketing and financing For each of these items several assumptions and the
corresponding dependencies are provided in the following paragraphs
1) Members
We assume that the communitys members span several business profiles
(such as financial services institutions corporations market infrastructures
PSPs SSBs public administrations regulatory institutions and ISVs) sharing
the mutual focus on financial operations performance and improvement
By now after some tests on market acceptance there have been identified a
few supporters comprising financial services institutions and small ISVs
To ensure the success of building the community there is need for attracting
prestige influencers (market analysts consulting companies of scale - starting
with big four key industry providers - such as SWIFT other communities - ie
professional such as banking insurers capital market associations) and a
credible pool of financial institutions and corporations
To this end Allevo unrolls its own awareness campaign through direct
meetings publications blog posts and social media public presentations and
by officially launching the initiative in a conference focused on free of charge
financial transactions processing applications
Allevo further plans to use Sibos 2012 as opportunity to organize a less
traditional communication session gathering a relevant international panel to
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debate the strong and weak aspects of this initiative amp to get the public involved
as much as possible
The goal is that by the end of 2012 some tens of different institutions are
committed to co-found the community and to actively contribute to establishing
the legal frame and to forming the required action bodies
2) Moderator
Allevo perceives the Moderator as the critical member of the community since
his prestige and influence will warrant the outcome of all performed activities
The moderator must commit on long term to develop the community and to
sponsor it with its share of trust
Allevo strongly believes that the Moderator should have a global footprint be a
reputable and trustful institution
3) Legalcopyright
The legal consultant and advisor needs to provide the coherent legal frame to
cover all community activities by roles and accountability While making it easy
for the members it should be more demanding as far as contributors are
concerned (though still encouraging ISVs to actively participate) It has to draw
very precise responsibilities for the independent and institutionalized bodies
(for instance product maintenance amp development and audit) and for the
Moderators status
The quality of this legal work fully relies on the expertise and experience of the
advisor
The law governing the community has to be in harmony with the European
(either French or Anglo-Saxon) legal system and with the open source legal
regulations largely practiced in other business regions (US and APAC)
4) Tight regulation
FinTP the product meant to gather a community which uses and supports it is
all about moving values between different entities Thats critical irrespective of
the amount because failing to perform properly opens the doors to arguments
amp loss of reputation with the related tangible costs Moreover the product has
to be beyond any doubt during its entire lifecycle free of any malefic
embedded functions meaning that contamination has to be avoided by all
means
Allevo strongly believes that this requirement can be attained only by tight
regulation of the community specific approval of the initially launched version
of FinTP and of the recurring contributions
This approach can be felt strange compared to most open source communities
and can lead to little interest from IT talents making them feel banned or
restricted It remains the Moderator‟s duty to make them feel privileged if
accepted and rewarded as such However this censorship is a price to be paid
since the community and the project are about processing transactions
initiating value transfer
FinTP - Vision and Scope
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5) Marketing
The community needs to have the clear objective of spreading both
geographically and over a consistent number of industries
To achieve this goal the community should be able to actively provide open
access to relevant information (including explanations of concepts hands-on
evaluation) to non-members and to also answer their questions on FinTP and
on the community itself
The same level of information needs to be ensured for the members to whom
supplementary updates on the community events decisions available
releases patches and fixes should be made available They need to also get
focused forum discussions on specific business areas and subsequent
processes need to be distributed
These functionalities have to be hosted on the community‟s dedicated portal
This portal has to provide content dialogue space information consolidation
and broadcasting It must be a virtual showroom for FinTP It needs to host
documents and virtual meetings subscription management and product
support amp development
The community has to be able to run its own meetings enabling direct contact
between active members or their representatives
Meaningful press releases have to be regularly issued along with actively
maintaining a productive relationship with market analysts to consolidate a
clear public understanding of the community spirit and goals
6) Financing
Its all about money-money-money since at least for the first 2-3 years the
community needs to be financed
Upon reaching maturity the institutionalized bodies of the community can earn their income from collateral activities - such as organizing conferences providing education and specialized support services - either for the initial FinTP installations and customizations or for recurring services requested by the members An alternative can be trialling and certifying interested providers enabling them to perform support services for FinTP
Thus who could pump money into this project It could be one or a mix of
‐ World Bank - if governmental programs are implied and provided a proper project which convincingly demonstrates the beneficed social impact
‐ EU development funding
‐ interested wealthy members of the community
The most critical dependencies are external such as (arranged according to
their impact) availability of funds for building the community finding trustful
and skilled open source consultants (legal business community licensing)
The synthetic view of the main assumptions and dependencies is provided in
the attached file
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Maintenance amp user support 1-Jan-13 Marketing inst action
4 Activities
Initial planning amp budgeting 15-Dec-12 document
Roles allocation 15-Dec-12 document
Community inst Implementation 15-Dec-12 action
Awareness campaign 1-Jan-13 action ongoing process
Members recruiting 1-Jan-13 action ongoing process
Continued operation 1-Jan-13 action ongoing process
Service sales 1-Jan-13 action ongoing process
Future development planning 1-Jan-13 document ongoing process
5 Resource allocation
If existing institution - allocation 15-Dec-12 action
If newly formed - recruiting 15-Dec-12 action
Make FinTP available to comm 1-Jan-13 action ongoing process
Start community financing 1-Jan-13 action ongoing process
6 Financing
Initial investment 1-Jan-13 action secured by that date
First period of comm operation 31-Aug-13 action secured by that date
co
mm
un
ity
Project approach
Project approachpdf
FinTP - Vision and Scope
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8 Scope This chapter deals with the phased availability of various FinTP features again considered from application and community points of view
In the first phase (due Dec 2012) the core of FinTP application is ready including the following technical features
- financial message routing between services and monitoring of exchanges
- multi-threading capabilities
- persistent end-to-end transactions
- batching de-batching
- archiving
- tracing and logging of transactions and user events
- transient errors detection and recovery
- real time search and reports
- security access and user administration
Similarly during the first phase the main community components need to be in place
- moderator
- software development and maintenance body (Allevo also available in the first and second phase of the project)
- test amp validation body
- (software) auditor
- legal
- main contributors (Allevo falls into this position)
- platform
- marketing
In the second phase (Dec2012 - Dec2013) several operational features of FinTP will be added
- predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit instruments securities settlement reconciliations
- MTMX coexistence
- multi-BIC multi-currency
- SEPA ready certification
- TARGET2 ready
- SAGSAASAE interfaces
- duplicate detection
- liquidity reports
- competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
- accounting reconciliation
- AML (sanctions list matching)
- SaaS and cloud ready
along with resilience and start of maintenance and knowledge transfer (the last two obviously continuing in the next phases)
FinTP - Vision and Scope
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The synthetic view of the project scope is provided in the following table
Crt No
Feature Activity Phase1 31Dec12
Phase2 31Dec13
Phase3 31Dec14
Phase4 31Dec15
Fin
TP
A Operational features
1
Predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit Instruments bonds (Romanian Euroclear) reconciliations
2 MTMX coexistence
3 Multi-BIC multi-currency
4 SaaS ready cloud ready
5 SEPA ready certification
6 TARGET2 ready
7 SAGSAASAE interfaces
8 Liquidity reports
9 Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
10 Accounting reconciliation
11 AML (sanctions list matching)
12 Duplicate detection
B Technical features
1 Routing financial message between services and monitoring of data flows
2 Multi-threading capabilities
3 Persistent end-to-end transactions
4 Batching de-batching
5 Resilience (at transaction level)
6 Archiving
7 Tracing and logging of transactions and user events
8 Transient errors detection and recovery
9 Real time search and reports
10 Security access and user administration
C Other activities
1 FinTP maintenance
2 Knowledge transfer
Co
mm
un
ity
Establishing the institutionscomponents
1 Mentor
2 Software Auditor amp Provider
3 Legal service
4 Members
5 Allevo initial role
6 Platform
7 Marketing
FinTP - Vision and Scope
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9 Limitations The main limitations in the economy of the project consist of phasing several FinTP
operational features for the following year (eg debit instruments liquidity reporting
AML filtering accounting reconciliation resilience SaaS ready cloud ready etc)
At the same time for features intended to front-office usage like Remit it was not yet
decided to publish them as open source product
The synthetic view of the main limitations is provided in the following table
Crt
nrItem Limitation Exclusion Comments
1
FinTP
a
Operational features Available in 2013
b
Remit Not included in
open source
package
2
Community
a
Rules Tightly controlled The statute should
ensure the right
balance between
safety and free
association of talents
Given the significant budget allocation (at least from Allevo perspective) the strong
requirement to meet the maximum ceiling will limit the FinTP product initial preparation
and maintenance expenses
Community wise the obligation of a tight regulated statute will have to ensure the right
balance between safety (mandatory in an environment dealing with financial
transactions) and a free association of talents (typical in an open source community)
In the first period after launch (at least the first two years) of the initiative the
maintenance and support activities will be provided by Allevo (as initial contributor)
A major restriction would be to meet the budgeted development and maintenance
FinTP - Vision and Scope
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10 Appendix - Risks
Specific risks
1 Product
a Long delivery lead time This is a medium probability and impact risk however Allevo should make available the needed resources and motivate the entire team for the job
b Credibility loss if FinTP fails to further become certified on meaningful operations andor business tracks (ie SWIFT business certification tracks or similar) The single possible containment is lobbying if the application certification program rejects open source products Anyway the impact is very important and its materialization should be avoided
c Low quality of the allocated team and improper version management are highly unlikely to occur as long as the formal transfer of responsibility is smoothly made from Allevo to the corresponding body put in place by the community The real hidden risk is that this process could take too long and it thus has a very high impact
d Poor FinTP quality may result if the community fails to institutionalize proper quality assurance (QA) and verification amp validation (VampV) processes This is most expected not to happen but if it does the impact is at least medium The single path to overcome this risk consists in a professional approach to these items based on institutionalizing practice proven QA and VampV processes
e Allevo lack of expertise in the open source business This can be contained by carefully selecting trustful amp truly expert consultants Otherwise it means more money longer time spent on project and expenses without proper return
2 Service
a The software maintenance does not properly deliver as expected ie on-time and on-quality bug fixing regulation amp standards alignment and productivity amp technological improvement The key to contain this risk materialization is the community status having provisions to neatly provide maintenance and further development of the rules for FinTP as well as the applicable rules and fees for the ancillary services
b Low quality and safety of the service received by the members of the community To avoid the risk of performing the one-time amp recurring support services by under-prepared professionals the community has to rule the process of training and qualifying the companies willing to contribute in this area
c Not meeting the minimal SLA criteria The community should regulate and periodically revise the training curricula and to further audit both the teachers and the certified experts to ensure the service level agreements are met
d Under motivated service providing professionals - up to the level of not feeling the high impact of their activity The community status must provide guidance to the contributors on the minimal standards the professionals should meet
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e Constrained expert resource pool This risk could be overcome by the communitys policy to ensure at all time a balanced number of motivated experts to the communitys size Failing to do so may result in high negative impact of the community business and public perception
3 Community
a Emergence of a parallel competitive community If the optimal timing between publically disclosing FinTP and community take-off is not achieved then there are high chances that following a competitive initiative other entrepreneurs successfully launch their own similar or derived community This could be avoided by periodical reviews of the progress of both FinTP and community status and deciding whether the project needs to be put on hold or not
b Unfit reputation of the Moderator or main contributors If either the Moderator or the initial contributors are not beyond any dispute and are reputable institutes then there is certainly something rotten in Denmark and the project should be put on-hold
c No commitment from the Moderator‟s side Similarly if the Moderator does not commit to the project it means that Denmark has a serious problem to solve The project should relinquish until the matter is fixed
4 Legal
a Misuse of copyright and intellectual property (IP)The assigned working team could not be aware of the limitations and liabilities of using (entirely or partially) third party software this risk can be contained by delivering the right training providing proper working procedures carefully recording and documenting the use of open source code and carefully cross-scanning
b Injunctive relief and financial damages can be caused by not properly and continuously controlling the use of third party open source code resulting in copyright or IP infringement There are two containment measures which can be taken tighten the compliance check during the product lifecycle or apply the sanction policy as to set an example
c The competition starts a class action - this may result in delaying the project
5 Financing
a Lack of long term financing institutions Allevo should urge its consultant to identify and draw a reasonable list of financial options institutions
b Exceeding the budget given that this type of project has no precedent in Allevo and to avoid exposing to the dependency on engagement to financial institutions or to commitments beyond the existing budget a further carefully drawn project plan is needed along with its explicit approval from the board of the company
Market related risks
1 False expectations
a Expensive services Not everything is free aside the initial and maintenance free licensing the training the support and other professional services can amount to more than in general expected Allevo rates this risk as medium possible but with low impact as long as the law governing the community and its initial period of operation will consecrate fair market prices and competitive sources of contribution
FinTP - Vision and Scope
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b Hidden costs for patches updates and upgrades While of similarly weight in terms of probability and impact this should be no real concern as long as the law governing the community clearly provides for free and accountable maintenance
2 Poor image on quality
a Too many releases making FinTP hard to manage and unsafe to operate Given proper regulation of the community and the mature root of FinTP Allevo disregards the possibility of this risk to materialize However if this were to happen this is a high impact risk and by all means should be avoided
b Backward technological (in)compatibility looks to us as a low risk in all respects and within organizations applying practice proven software engineering processes and professional - accountable team this is not likely to materialize
c Support can be perceived as the highest impact risk for FinTP This can be overcome by tight regulation of the commercial and professional conditions to deliver the service (for instance only qualified organizations should be recommended to members for supporting FinTP)
d SLA and accountability for both internally or externally performed services is closely correlated to the previous risk and the community status should provide the support for growing a community of competencies and accountable professionals around FinTP Periodical auditing (by the specialized community body) of this pool of professionals will further ensure the confidence that the skills are preserved at the required level
e Code fragmentation and forking is a high impact risk with a low probability of happening in the initial period provided the knowledge transfer is done orderly and in an institutionalized manner
3 Inherent uncertainty
a Community disputes can jeopardize its cohesion the project viability and future This is a high impact possibly high probability risk and it is the definite role of the Moderator to feel prevent and while materializing mitigate any conflicting situation
b FinTP going commercial post-launch This is a huge impact possibly high occurrence probability but manageable with the right legal instruments provisioned in the community
c Loss of alignment to industry standards and regulations This risk has medium probability and medium impact given the assumption that the community is tightly regulated and the working bodies institutionalized and gathering professionals
4 Legal
Copyright infringement given Allevo experience in the open source business this risk is highly probable and has a high impact on FinTP especially if mistakes are made in the launching phase Similarly if during the product maintenance and further development phase the community fails to institutionalize proper formal software development processes (covering all FinTP lifecycle phases) based on industry practice proven model(s) Supplementary the expert code scanning audit for compliance is the single resort to preclude external software source misuse
FinTP - Vision and Scope
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Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
5 GPL specific
a Noncompliance to the GPL license If GPL license is used the product should further distribute in compliance with this part provisions High impact and probability but manageable if proper software development processes are used and if the statute clearly defines the licensing model for FinTP
b FinTP unconformity The risk that software engineers get inspired by a chic solution which they import and emulate similarly in FinTP And this is also highly possible since les grands esprits se rencontre
6 Existing customers attitude
Anger for having paid for something which now is free The existent customers can be concerned about the future of their installed system its further development (in one word its future) and on the quality of the service (SLA including) Some recent adopters can possibly be furious for spending their money on buying licenses for a piece of software that differently packaged becomes free of charge
For the first situation the single best solution for Allevo is to ensure a smooth transition from the current status to the new solution deployed Also highly probable Allevo should provide for simultaneous (for at most one more year) maintenance of both FinTP and for qPayIntegrator
For the 2012 new qPayIntegrator adopters Allevo should transparently state the product‟s future and propose a commercially attractive migration towards FinTP when it becomes publically available (like the option for the installation migration and recurring services) The decision should clearly stay with the customer if he still buys Allevo licenses delays the implementation until FinTP is available or if he goes for a competitive solution
In other words the key to mitigate the existing customer perception is switching places and discarding if the situation proves to be uncomfortable
Bottom-line is that to avoid most of the risks the FinTP community must be a rather tightly controlled one though still opened to anyone willingly abiding to the rules
The synthetic view of the main risks their assigned probability impact and the corresponding containment approach is provided in the attached file
Risk IDRisk
CategoryRisk
Probability
(High
Medium
Low)
Severity
(High
Medium
Low)
Containment (Mitigation Action Proposed)
M1Free as in a
Free Puppy
M101
The training service amp support cost could account more than the
commercial product its replacing (application software is typically 30 of
the total cost of ownership of most projects)
Medium Low
M102 Hidden costs ie charge for patches updates and upgrades Medium Low
M2Frequent
updates
M201
Projects might be updated frequently - as often as everyday Too frequent
updates could have a negative impact on the implementation
interoperability and support
Low HighMAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M3Backwards
compatibility
M301 Less accountability Low LowMAP03 Access to prior versions of source code (additional in-house
development and support procedures might be necessary)
M4Support
related risks
M401Support could be perceived as the biggest issue with open source
software deploymentsHigh High
M402 Internal External Accountability SLAs High High
M403Code fragmentation or forking if the community fails to institutionalize
corporate like formal structureHigh High
M404Support could require greater involvement and different skills set from
operations staffMedium Medium
M5Community
immaturity Low Low
M501Could generate incompatibility of FinTP with industry standards amp
regulationsMedium Medium
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M6 Uncertainty The inherent uncertainty in every open source project
M601 Community disputes might impact project viability and future High HighMAP04 The Mentor should prevent amp mitigate any conflicts inside the
community
M602 Open source projects may not stay open in future releases High HighMAP05 The originator liabilities should be strongly enforced by the
community statute
M7 Legal risks
M701 Copyright infringement High High
M702 Can open source software deployments pass an audit
M8 GPL General Public License specific development concerns
M801Software thatrsquos derived from an existing GPL project in whole or in part
might not be released under the same licenseHigh High M08 The community should regulate the licensing model
M802
Developer contamination - developer could review an existing open source
project could see an elegant solution then implement a similar function in
closed source project
High HighMAP09 Procedurals constrains for the software developers should be
enforced
M9
Current
customers
attitude
The actual customer perception could be negative High High
M12 To prevent a negative attitude Allevo should involve the customers
in the FinTP project Allevo needs their active support for a smooth and
issues less transition
ma
rke
t re
late
d r
isk
s
co
st
rela
ted
ris
ks
MAP01 The community should regulate the applicable rules and fees for
services and maintenance
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
bu
sin
es
s a
nd
le
ga
l ri
sk
s
MAP06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S1Product
related
S101 Late delivery lead time Medium MediumMAP15 Allevo should provide proper resources (funding and human
resources)
S102 Credibility loss if fail to certify with SWIFT Medium High MAP16 Should be discussedamp agreed with SWIFT
S103 Inexperienced team or allocation below needs Low HighMAP15 Allevo should provide proper resources (funding and human
resources)
S104 Improper or non efficient version management Low High MAP16 Review the current Allevo Configuration Management System
S105Poor quality if the community fails to institutionalize proper verification and
validation practices3
M06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S106 Lack of expertise in open source projects 2 Allevo should engage thoroughly selected Open Source consultants
S2Service
related
S201
The software maintenance not properly providing for bugs fixing
regulationamp standard alignment technological improvements communities
improvement requests
High HighMAP01 The community should regulate the applicable rules and fees for
services and maintenance
S202 One-time amp recurring services might be provided by unqualified resources High HighMAP17 The community should regulate the training curricula and related
expertise certification
S203 Provided services might not meet the minimal SLA performance criteria High HighMAP17 The community should regulate the training curricula and related
expertise certification
S204 Relaxed or lack of accountability of the professionals High HighMAP18 The community should regulate the employment agreement of
the professionals
S205 Lack of qualified professionals High HighMAP19 The community should ensure a balanced number of certified
professionals with the community size
S3Community
related
S301
If after disclosing FinTP the community does not enthusiastically adopt
the solution competitors might more successfully develop a similar
strategy
Medium MediumMAP20 FinTP promotion should be convincing and realistic A well
organized marketing campaign by Allevo
S302The community mentor andor early adhering members have no
undeniable prestige or are not largely trustfulMedium Medium MAP99 Project status review Ending the project could be one option
S303 The Mentor does not strongly commit for the project Medium Medium MAP99 Project status review Ending the project could be one option
S4 Legal
S401Exposure to copyright and IP infringement due to working team unaware of
the legal consequences of using third party softwareMedium Medium
MAP21 Allevo should keep records and fully document the use of open
source code
S402Copyright or intellectual property infringement can lead to injunctive relief
and monetary damagesHigh High
MAP23 Allevo should institutionalize a tight licensing and technical
control
S403 All risks related to open source compliance High HighMAP24 Allevo should appoint as soon as possible a FinTP compliance
Officer
S5 Financial
S501 Lack of financing institutions Medium MediumMAP25 Allevo should urge consultant to provide a consistent list of
potential investors
S502 Dependency on the financing institution approval Medium Medium
S503Not thoroughly planned project overlooking one or some project cost that
need to be financedMedium Medium
Sp
ec
ific
ris
ks
tec
hn
ica
lm
ark
eti
ng
leg
al
fun
din
g
MAP26 Allevo should carefully draw a consistent and eligible project for
financing
Risks
Riskspdf
FinTP - Vision and Scope
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Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
11 Appendix - Bibliography 1 Accenture Open Source Research Geographic Findings
2 Accenture Open Source Research Industry Findings
3 Producing Open Source Software - How to Run a Successful Free Software
Project by Karl Fogel
4 Open Source Software Risks and Rewards by Gary Hein
5 A Business Case Study of Open Source Software by Carolyn A Kenwood
6 6 critical success factors for product development by Christian Wig
7 Bank 20 by Brett King
8 Managing the business risks of open innovation by Oliver Alexy and Markus
9 Product idea evaluation checklist shared by Startgass AS
10 SWIFT 2015 Strategy
11 Customers and business impact of product changes
FinTP - Vision and Scope
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12 Appendix - Glossary ACH Automated Clearing House that is used to clear retail payments
between banks in a country or region
APAC Asia and Pacific
AML Anti-Money Laundering
BCampDR Business continuity amp disaster recovery
B2B Business to business
C2B Consumer to business
CET Central European Time
CMMI Capability Maturity Model Integration
CMS Configuration Management System
Coexistence The situation of multiple standards existing at the same time in the same business space Within SWIFT this refers to the coexistence between the MT and MX standards This also refers to the set of measures being taken to make the situation easier to handle by the community (publication of mapping rules translation serviceshellip)
CSM Clearing and Settlement Mechanism
CUG Closed User Group
Dictionary Part of the ISO 20022 Repository that contains all items that can be re-used during business modelling and message definition activities
EAI Enterprise Application Integration - middleware to connect applications and communication interfaces Typical EAI software includes features for mapping data between various formats enriching messages with data from other systems and orchestrating message flows
ECB European Central Bank
EMEA Europe Middle-East Africa
EPC European Payment Council
ERP Enterprise Resource Planning
EU European Union
EUCLID Connectivity to EuroClear Bank services
FIN The messaging service offered by SWIFT for the secure and reliable exchange of MT messages in store-and-forward mode By extension the syntax used to format these MTs
IP intellectual property
Interoperability Capability to easily exchange business information while using different message standards ISO 20022 promotes global use of syntax-neutral business and message components as a common denominator to achieve interoperability between standards using different syntaxes
ISO The International Organization for Standardization - an international standard-setting body composed of representatives from more than 160 national standards organizations that promulgates worldwide standards in a variety of domains aiming at facilitating cross-border exchanges of goods services and techniques
FinTP - Vision and Scope
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ISO 15022 An ISO standard that describes the syntax to be used for developing securities messages used mainly to support back office related transaction flows It replaced the previous securities messaging standard ISO 7775
ISO 20022 RA Registration Authority - offers the services described in an ISO standard on behalf of and under a contractual agreement with the International Organization for Standardization
ISO 20022 Repository
Repository maintained by the ISO20022 RA which contains the financial business models message definitions and components defined in compliance with the ISO 20022 standard
ISO 20022 RMG Registration Management Group - in charge of the overall management of the ISO 20022 development and registration process in accordance with the ISO 20022 standard
ISO 20022 SEG Standards Evaluation Groups -in charge of validating candidate ISO 20022 messages within the scope of the business justification and ensuring that they address the needs of their future international community of users
ISV Independent Software Vendor
KYC Know Your Customer
MACUG Member Administered Closed User Group
Message A set of structured information exchanged between two parties involved in a financial transaction
Message component and element
A re-usable data structure used for assembling message definitions The data defined in a message component is bdquotraced‟ back to the business components and business elements In simple terms business components define the business meaning message components create data structures for messaging
MI Market Infrastructure - a system that provides services to the financial industry for trading clearing and settlement matching of financial transactions and depository functions
Middleware Software that enables data to be exchanged among different systems with standard communication components and tools for formatting mapping and processing
MT The traditional bdquotag value‟ Message Types for use on the FIN service offered by SWIFT
MX An XML message exchanged over SWIFTNet whether or not ISO 20022 compliant
OS Open source
PSP Payment service provider
QA Quality assurance
RMA Relationship Management Access
RTGS Real Time Gross Settlement System
SAA SWIFT Alliance Access
SAE SWIFT Alliance Entry
SAG SWIFT Alliance Gateway
SaaS Software as a Service
SCORE Standardized CORporate Environment
FinTP - Vision and Scope
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Semantics The study of meaning usually in language The word is often used in ordinary language to denote a problem of understanding that comes down to word selection or connotation
SEPA Single Euro Payment Area
SLA Service level agreement
SME Small and Medium-sized Business(es)
SOA Service Oriented Architecture
SSB SWIFT Service Bureau
STP Straight Through Processing
SWIFT Society for Worldwide Interbank Financial Telecommunication Visit wwwswiftcom
Syntax Physical format of a message used to identify and represent the conveyed pieces of information
T2S TARGET2 Securities - an initiative of the Eurosystem It is an IT platform that aims to make settlements across national borders simpler and more cost-efficient
TARGET2 The Eurosystem-owned European Real Time Gross Settlement (RTGS) system (Trans-European Automated Real-time Gross Settlement Express Transfer System) TARGET2 is one of the largest high-value payment systems in the world
Taxonomy The classification in a hierarchical system typically organized by super type - sub type relationships also called generalization-specialization relationships or less formally parent-child relationships
TSU Trade Service Utility
TCO Total cost of ownership
Translation rules
Set of rules to be used to map the pieces of information included in a message expressed in one syntax to the equivalent message expressed in another syntax
Remit Remittances
XML eXtensible Mark-up Language - popular syntax to encode documents (or messages) electronically on the Internet XML allows communities to define their own identifiers (or tags) and format (or data type) for each component of a message
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Bureaus etc) ISV regulatory institutionsMarketing plan feasibility campaign efficiency and costs
2 MentorPreferable SWIFT
Also eligible SunGard IBM affiliation to other OS communitySWIFT decision
3 Legalcopyright Expert legal consultant and RO apprentice Cost and time shift dependent
4 Tight regulation Clear membership admission amp software contribution criteria The quality of the consultant advice
5 Marketing Actively recruiting community members Marketing plan feasibility campaign efficiency amp customer skepticism
a community portala provide content amp debate space information consolidation amp dissemination virtual
showroom subscription management support
a business analysis solution availability and maintenance by one of the
members or employed company
b press releases amp
announcementsb PR and AR b communicators availability and costs
c events c periodical conferences user focused meetings c cost dependent
6 Financing World Bank EU amp private funds Lobby amp funds availability
Item
FinTP
FinTP community
FinTP - Vision and Scope
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Component code
Component description Comments
o TARGET 2 ready Compliance with TARGET2 settlement and operations as regulated by the ECB
o SAGSAASAE SAL interfaces
Integration with SWIFTNet to enable banking business
o Liquidity reports Real time cash reports and forecasts using several criteria (currency subsidiary profit centre)
o Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
Analysis and reports of market trends based on volumes amount BIC etc along with early alerts on behaviour changes beyond the standard deviation
o Accounting reconciliation Automatic NOSTROVOSTRO accounts reconciliation intraday liquidity reports and integrated exception management
o AML (sanctions list matching)
High and low value payments filtering uses 20+ black lists and ensures their content maintainability
o Duplicate detection Detection and investigation of possible duplicates the detection window and criteria are configurable
o Remittances processing Covers banks business and operations area as well as distribution channel
o Treasury markets Automation of treasury flows (FX and money market)
o Statements Processing of SWIFT messages related to correspondent banks accounts administration
2 Technical features
o Financial message routing and monitoring
o Multi-threading capabilities
o Persistent end-to-end transactions
During each phase of the entire processing cycle permanent copies of the transaction are kept until the final completion thus avoiding any transaction duplication or loss
o Batching unpacking
o Resilience at transaction level
o Archiving
o Tracing and logging transactions and user events
o Transient errors detection and recovery
o Real-time search and reports
o Security access and user administration
o SaaS cloud ready
FinTP - Vision and Scope
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Component code
Component description Comments
FINkers United - community
Since FinTP is an application handling financial transactions the product releases and the related community should be tightly regulated and controlled As the project matures these components will be further refined The following main components of the community have been identified
‐ the moderator ‐ the product development
and maintenance body ‐ the product and
community auditor body (acting as a gatekeeper of official releases) to control and maintain the change requests integer and eliminate any malware exposures
‐ the test and validation body
‐ the legal body for defining the frame for product distribution amp licensing
‐ the marketing entity responsible for creating awareness and attracting contributors and adopters
‐ the portal used as a channel for marketing support and version control
‐ individual contributors namely ISVs solution providers developers integrators who wish to use their skills and knowledge to the benefit of the community
These tools strongly depend on the available budget and widespread
organization culture It is not mandatory for these to be open source if usage of
open source tools would mean lower quality
3) Licensing
The licensing model highly depends on the results of the open source legal and
business consultancy However we assume the following frame
‐ free of charge initial and recurring maintenance license for using FinTP
‐ FinTP does not use software components enforcing liabilities for the user
‐ consumers using FinTP source code (in part or entirely) should comply to
the licensing policy of the community
‐ the version released by the development amp maintenance body is the only
official amp to be trusted version of the community ensuring product integrity
unity and stability
4) Regulatory compliance
The regulatory compliance strongly depends on the early adaptation of new amp
changed rules via the recurring maintenance and on the quality of the audits
performed by the specific bodies of the community
Thus it is ensured that ISO20022 and FIN standards TARGET2 and TARGET2
Securities SEPA or country specific regulations (as stated respectively by
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
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Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
SWIFT standards EPC specification ECB or regional Central Banks
regulations that the community chooses to comply with) stay the most
important business specific anchors of FinTP
The FinTP design also offers support for flexible definition of new compliance
sources
5) Consultancy
The needed consultancy is twofold
‐ legal to ensure that FinTP does not infringe other licensing constraints
‐ open source specific to enable the right choice of the community type and of its governing law
The main constraint relies in choosing the right advisors true experts in the
open source industry amp with appropriate ethic profile - able to deliver as
promised The consultants have to be available 800 am divide 800 pm CET and
easily reachable - geo-location is of utmost importance Selection of the
consultant will basically be done on price assuming the right mix of expertise
and availability is achieved
6) Financing
While Allevo partially undertakes the financing of FinTP development the
ancillary consultancy necessary team education or acquisition of productivity
tools are far beyond the companys 2012 budget
To overcome possible delays in the project Allevo needs to sturdily act to
identify both the most appropriate commercial offer and additional necessary
financing source(s)
FinTP community
The community related items are members moderator legal tight regulation
marketing and financing For each of these items several assumptions and the
corresponding dependencies are provided in the following paragraphs
1) Members
We assume that the communitys members span several business profiles
(such as financial services institutions corporations market infrastructures
PSPs SSBs public administrations regulatory institutions and ISVs) sharing
the mutual focus on financial operations performance and improvement
By now after some tests on market acceptance there have been identified a
few supporters comprising financial services institutions and small ISVs
To ensure the success of building the community there is need for attracting
prestige influencers (market analysts consulting companies of scale - starting
with big four key industry providers - such as SWIFT other communities - ie
professional such as banking insurers capital market associations) and a
credible pool of financial institutions and corporations
To this end Allevo unrolls its own awareness campaign through direct
meetings publications blog posts and social media public presentations and
by officially launching the initiative in a conference focused on free of charge
financial transactions processing applications
Allevo further plans to use Sibos 2012 as opportunity to organize a less
traditional communication session gathering a relevant international panel to
FinTP - Vision and Scope
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Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
debate the strong and weak aspects of this initiative amp to get the public involved
as much as possible
The goal is that by the end of 2012 some tens of different institutions are
committed to co-found the community and to actively contribute to establishing
the legal frame and to forming the required action bodies
2) Moderator
Allevo perceives the Moderator as the critical member of the community since
his prestige and influence will warrant the outcome of all performed activities
The moderator must commit on long term to develop the community and to
sponsor it with its share of trust
Allevo strongly believes that the Moderator should have a global footprint be a
reputable and trustful institution
3) Legalcopyright
The legal consultant and advisor needs to provide the coherent legal frame to
cover all community activities by roles and accountability While making it easy
for the members it should be more demanding as far as contributors are
concerned (though still encouraging ISVs to actively participate) It has to draw
very precise responsibilities for the independent and institutionalized bodies
(for instance product maintenance amp development and audit) and for the
Moderators status
The quality of this legal work fully relies on the expertise and experience of the
advisor
The law governing the community has to be in harmony with the European
(either French or Anglo-Saxon) legal system and with the open source legal
regulations largely practiced in other business regions (US and APAC)
4) Tight regulation
FinTP the product meant to gather a community which uses and supports it is
all about moving values between different entities Thats critical irrespective of
the amount because failing to perform properly opens the doors to arguments
amp loss of reputation with the related tangible costs Moreover the product has
to be beyond any doubt during its entire lifecycle free of any malefic
embedded functions meaning that contamination has to be avoided by all
means
Allevo strongly believes that this requirement can be attained only by tight
regulation of the community specific approval of the initially launched version
of FinTP and of the recurring contributions
This approach can be felt strange compared to most open source communities
and can lead to little interest from IT talents making them feel banned or
restricted It remains the Moderator‟s duty to make them feel privileged if
accepted and rewarded as such However this censorship is a price to be paid
since the community and the project are about processing transactions
initiating value transfer
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 27 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
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Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
5) Marketing
The community needs to have the clear objective of spreading both
geographically and over a consistent number of industries
To achieve this goal the community should be able to actively provide open
access to relevant information (including explanations of concepts hands-on
evaluation) to non-members and to also answer their questions on FinTP and
on the community itself
The same level of information needs to be ensured for the members to whom
supplementary updates on the community events decisions available
releases patches and fixes should be made available They need to also get
focused forum discussions on specific business areas and subsequent
processes need to be distributed
These functionalities have to be hosted on the community‟s dedicated portal
This portal has to provide content dialogue space information consolidation
and broadcasting It must be a virtual showroom for FinTP It needs to host
documents and virtual meetings subscription management and product
support amp development
The community has to be able to run its own meetings enabling direct contact
between active members or their representatives
Meaningful press releases have to be regularly issued along with actively
maintaining a productive relationship with market analysts to consolidate a
clear public understanding of the community spirit and goals
6) Financing
Its all about money-money-money since at least for the first 2-3 years the
community needs to be financed
Upon reaching maturity the institutionalized bodies of the community can earn their income from collateral activities - such as organizing conferences providing education and specialized support services - either for the initial FinTP installations and customizations or for recurring services requested by the members An alternative can be trialling and certifying interested providers enabling them to perform support services for FinTP
Thus who could pump money into this project It could be one or a mix of
‐ World Bank - if governmental programs are implied and provided a proper project which convincingly demonstrates the beneficed social impact
‐ EU development funding
‐ interested wealthy members of the community
The most critical dependencies are external such as (arranged according to
their impact) availability of funds for building the community finding trustful
and skilled open source consultants (legal business community licensing)
The synthetic view of the main assumptions and dependencies is provided in
the attached file
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Maintenance amp user support 1-Jan-13 Marketing inst action
4 Activities
Initial planning amp budgeting 15-Dec-12 document
Roles allocation 15-Dec-12 document
Community inst Implementation 15-Dec-12 action
Awareness campaign 1-Jan-13 action ongoing process
Members recruiting 1-Jan-13 action ongoing process
Continued operation 1-Jan-13 action ongoing process
Service sales 1-Jan-13 action ongoing process
Future development planning 1-Jan-13 document ongoing process
5 Resource allocation
If existing institution - allocation 15-Dec-12 action
If newly formed - recruiting 15-Dec-12 action
Make FinTP available to comm 1-Jan-13 action ongoing process
Start community financing 1-Jan-13 action ongoing process
6 Financing
Initial investment 1-Jan-13 action secured by that date
First period of comm operation 31-Aug-13 action secured by that date
co
mm
un
ity
Project approach
Project approachpdf
FinTP - Vision and Scope
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Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
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Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
8 Scope This chapter deals with the phased availability of various FinTP features again considered from application and community points of view
In the first phase (due Dec 2012) the core of FinTP application is ready including the following technical features
- financial message routing between services and monitoring of exchanges
- multi-threading capabilities
- persistent end-to-end transactions
- batching de-batching
- archiving
- tracing and logging of transactions and user events
- transient errors detection and recovery
- real time search and reports
- security access and user administration
Similarly during the first phase the main community components need to be in place
- moderator
- software development and maintenance body (Allevo also available in the first and second phase of the project)
- test amp validation body
- (software) auditor
- legal
- main contributors (Allevo falls into this position)
- platform
- marketing
In the second phase (Dec2012 - Dec2013) several operational features of FinTP will be added
- predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit instruments securities settlement reconciliations
- MTMX coexistence
- multi-BIC multi-currency
- SEPA ready certification
- TARGET2 ready
- SAGSAASAE interfaces
- duplicate detection
- liquidity reports
- competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
- accounting reconciliation
- AML (sanctions list matching)
- SaaS and cloud ready
along with resilience and start of maintenance and knowledge transfer (the last two obviously continuing in the next phases)
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
The synthetic view of the project scope is provided in the following table
Crt No
Feature Activity Phase1 31Dec12
Phase2 31Dec13
Phase3 31Dec14
Phase4 31Dec15
Fin
TP
A Operational features
1
Predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit Instruments bonds (Romanian Euroclear) reconciliations
2 MTMX coexistence
3 Multi-BIC multi-currency
4 SaaS ready cloud ready
5 SEPA ready certification
6 TARGET2 ready
7 SAGSAASAE interfaces
8 Liquidity reports
9 Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
10 Accounting reconciliation
11 AML (sanctions list matching)
12 Duplicate detection
B Technical features
1 Routing financial message between services and monitoring of data flows
2 Multi-threading capabilities
3 Persistent end-to-end transactions
4 Batching de-batching
5 Resilience (at transaction level)
6 Archiving
7 Tracing and logging of transactions and user events
8 Transient errors detection and recovery
9 Real time search and reports
10 Security access and user administration
C Other activities
1 FinTP maintenance
2 Knowledge transfer
Co
mm
un
ity
Establishing the institutionscomponents
1 Mentor
2 Software Auditor amp Provider
3 Legal service
4 Members
5 Allevo initial role
6 Platform
7 Marketing
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
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Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
9 Limitations The main limitations in the economy of the project consist of phasing several FinTP
operational features for the following year (eg debit instruments liquidity reporting
AML filtering accounting reconciliation resilience SaaS ready cloud ready etc)
At the same time for features intended to front-office usage like Remit it was not yet
decided to publish them as open source product
The synthetic view of the main limitations is provided in the following table
Crt
nrItem Limitation Exclusion Comments
1
FinTP
a
Operational features Available in 2013
b
Remit Not included in
open source
package
2
Community
a
Rules Tightly controlled The statute should
ensure the right
balance between
safety and free
association of talents
Given the significant budget allocation (at least from Allevo perspective) the strong
requirement to meet the maximum ceiling will limit the FinTP product initial preparation
and maintenance expenses
Community wise the obligation of a tight regulated statute will have to ensure the right
balance between safety (mandatory in an environment dealing with financial
transactions) and a free association of talents (typical in an open source community)
In the first period after launch (at least the first two years) of the initiative the
maintenance and support activities will be provided by Allevo (as initial contributor)
A major restriction would be to meet the budgeted development and maintenance
FinTP - Vision and Scope
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10 Appendix - Risks
Specific risks
1 Product
a Long delivery lead time This is a medium probability and impact risk however Allevo should make available the needed resources and motivate the entire team for the job
b Credibility loss if FinTP fails to further become certified on meaningful operations andor business tracks (ie SWIFT business certification tracks or similar) The single possible containment is lobbying if the application certification program rejects open source products Anyway the impact is very important and its materialization should be avoided
c Low quality of the allocated team and improper version management are highly unlikely to occur as long as the formal transfer of responsibility is smoothly made from Allevo to the corresponding body put in place by the community The real hidden risk is that this process could take too long and it thus has a very high impact
d Poor FinTP quality may result if the community fails to institutionalize proper quality assurance (QA) and verification amp validation (VampV) processes This is most expected not to happen but if it does the impact is at least medium The single path to overcome this risk consists in a professional approach to these items based on institutionalizing practice proven QA and VampV processes
e Allevo lack of expertise in the open source business This can be contained by carefully selecting trustful amp truly expert consultants Otherwise it means more money longer time spent on project and expenses without proper return
2 Service
a The software maintenance does not properly deliver as expected ie on-time and on-quality bug fixing regulation amp standards alignment and productivity amp technological improvement The key to contain this risk materialization is the community status having provisions to neatly provide maintenance and further development of the rules for FinTP as well as the applicable rules and fees for the ancillary services
b Low quality and safety of the service received by the members of the community To avoid the risk of performing the one-time amp recurring support services by under-prepared professionals the community has to rule the process of training and qualifying the companies willing to contribute in this area
c Not meeting the minimal SLA criteria The community should regulate and periodically revise the training curricula and to further audit both the teachers and the certified experts to ensure the service level agreements are met
d Under motivated service providing professionals - up to the level of not feeling the high impact of their activity The community status must provide guidance to the contributors on the minimal standards the professionals should meet
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e Constrained expert resource pool This risk could be overcome by the communitys policy to ensure at all time a balanced number of motivated experts to the communitys size Failing to do so may result in high negative impact of the community business and public perception
3 Community
a Emergence of a parallel competitive community If the optimal timing between publically disclosing FinTP and community take-off is not achieved then there are high chances that following a competitive initiative other entrepreneurs successfully launch their own similar or derived community This could be avoided by periodical reviews of the progress of both FinTP and community status and deciding whether the project needs to be put on hold or not
b Unfit reputation of the Moderator or main contributors If either the Moderator or the initial contributors are not beyond any dispute and are reputable institutes then there is certainly something rotten in Denmark and the project should be put on-hold
c No commitment from the Moderator‟s side Similarly if the Moderator does not commit to the project it means that Denmark has a serious problem to solve The project should relinquish until the matter is fixed
4 Legal
a Misuse of copyright and intellectual property (IP)The assigned working team could not be aware of the limitations and liabilities of using (entirely or partially) third party software this risk can be contained by delivering the right training providing proper working procedures carefully recording and documenting the use of open source code and carefully cross-scanning
b Injunctive relief and financial damages can be caused by not properly and continuously controlling the use of third party open source code resulting in copyright or IP infringement There are two containment measures which can be taken tighten the compliance check during the product lifecycle or apply the sanction policy as to set an example
c The competition starts a class action - this may result in delaying the project
5 Financing
a Lack of long term financing institutions Allevo should urge its consultant to identify and draw a reasonable list of financial options institutions
b Exceeding the budget given that this type of project has no precedent in Allevo and to avoid exposing to the dependency on engagement to financial institutions or to commitments beyond the existing budget a further carefully drawn project plan is needed along with its explicit approval from the board of the company
Market related risks
1 False expectations
a Expensive services Not everything is free aside the initial and maintenance free licensing the training the support and other professional services can amount to more than in general expected Allevo rates this risk as medium possible but with low impact as long as the law governing the community and its initial period of operation will consecrate fair market prices and competitive sources of contribution
FinTP - Vision and Scope
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b Hidden costs for patches updates and upgrades While of similarly weight in terms of probability and impact this should be no real concern as long as the law governing the community clearly provides for free and accountable maintenance
2 Poor image on quality
a Too many releases making FinTP hard to manage and unsafe to operate Given proper regulation of the community and the mature root of FinTP Allevo disregards the possibility of this risk to materialize However if this were to happen this is a high impact risk and by all means should be avoided
b Backward technological (in)compatibility looks to us as a low risk in all respects and within organizations applying practice proven software engineering processes and professional - accountable team this is not likely to materialize
c Support can be perceived as the highest impact risk for FinTP This can be overcome by tight regulation of the commercial and professional conditions to deliver the service (for instance only qualified organizations should be recommended to members for supporting FinTP)
d SLA and accountability for both internally or externally performed services is closely correlated to the previous risk and the community status should provide the support for growing a community of competencies and accountable professionals around FinTP Periodical auditing (by the specialized community body) of this pool of professionals will further ensure the confidence that the skills are preserved at the required level
e Code fragmentation and forking is a high impact risk with a low probability of happening in the initial period provided the knowledge transfer is done orderly and in an institutionalized manner
3 Inherent uncertainty
a Community disputes can jeopardize its cohesion the project viability and future This is a high impact possibly high probability risk and it is the definite role of the Moderator to feel prevent and while materializing mitigate any conflicting situation
b FinTP going commercial post-launch This is a huge impact possibly high occurrence probability but manageable with the right legal instruments provisioned in the community
c Loss of alignment to industry standards and regulations This risk has medium probability and medium impact given the assumption that the community is tightly regulated and the working bodies institutionalized and gathering professionals
4 Legal
Copyright infringement given Allevo experience in the open source business this risk is highly probable and has a high impact on FinTP especially if mistakes are made in the launching phase Similarly if during the product maintenance and further development phase the community fails to institutionalize proper formal software development processes (covering all FinTP lifecycle phases) based on industry practice proven model(s) Supplementary the expert code scanning audit for compliance is the single resort to preclude external software source misuse
FinTP - Vision and Scope
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5 GPL specific
a Noncompliance to the GPL license If GPL license is used the product should further distribute in compliance with this part provisions High impact and probability but manageable if proper software development processes are used and if the statute clearly defines the licensing model for FinTP
b FinTP unconformity The risk that software engineers get inspired by a chic solution which they import and emulate similarly in FinTP And this is also highly possible since les grands esprits se rencontre
6 Existing customers attitude
Anger for having paid for something which now is free The existent customers can be concerned about the future of their installed system its further development (in one word its future) and on the quality of the service (SLA including) Some recent adopters can possibly be furious for spending their money on buying licenses for a piece of software that differently packaged becomes free of charge
For the first situation the single best solution for Allevo is to ensure a smooth transition from the current status to the new solution deployed Also highly probable Allevo should provide for simultaneous (for at most one more year) maintenance of both FinTP and for qPayIntegrator
For the 2012 new qPayIntegrator adopters Allevo should transparently state the product‟s future and propose a commercially attractive migration towards FinTP when it becomes publically available (like the option for the installation migration and recurring services) The decision should clearly stay with the customer if he still buys Allevo licenses delays the implementation until FinTP is available or if he goes for a competitive solution
In other words the key to mitigate the existing customer perception is switching places and discarding if the situation proves to be uncomfortable
Bottom-line is that to avoid most of the risks the FinTP community must be a rather tightly controlled one though still opened to anyone willingly abiding to the rules
The synthetic view of the main risks their assigned probability impact and the corresponding containment approach is provided in the attached file
Risk IDRisk
CategoryRisk
Probability
(High
Medium
Low)
Severity
(High
Medium
Low)
Containment (Mitigation Action Proposed)
M1Free as in a
Free Puppy
M101
The training service amp support cost could account more than the
commercial product its replacing (application software is typically 30 of
the total cost of ownership of most projects)
Medium Low
M102 Hidden costs ie charge for patches updates and upgrades Medium Low
M2Frequent
updates
M201
Projects might be updated frequently - as often as everyday Too frequent
updates could have a negative impact on the implementation
interoperability and support
Low HighMAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M3Backwards
compatibility
M301 Less accountability Low LowMAP03 Access to prior versions of source code (additional in-house
development and support procedures might be necessary)
M4Support
related risks
M401Support could be perceived as the biggest issue with open source
software deploymentsHigh High
M402 Internal External Accountability SLAs High High
M403Code fragmentation or forking if the community fails to institutionalize
corporate like formal structureHigh High
M404Support could require greater involvement and different skills set from
operations staffMedium Medium
M5Community
immaturity Low Low
M501Could generate incompatibility of FinTP with industry standards amp
regulationsMedium Medium
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M6 Uncertainty The inherent uncertainty in every open source project
M601 Community disputes might impact project viability and future High HighMAP04 The Mentor should prevent amp mitigate any conflicts inside the
community
M602 Open source projects may not stay open in future releases High HighMAP05 The originator liabilities should be strongly enforced by the
community statute
M7 Legal risks
M701 Copyright infringement High High
M702 Can open source software deployments pass an audit
M8 GPL General Public License specific development concerns
M801Software thatrsquos derived from an existing GPL project in whole or in part
might not be released under the same licenseHigh High M08 The community should regulate the licensing model
M802
Developer contamination - developer could review an existing open source
project could see an elegant solution then implement a similar function in
closed source project
High HighMAP09 Procedurals constrains for the software developers should be
enforced
M9
Current
customers
attitude
The actual customer perception could be negative High High
M12 To prevent a negative attitude Allevo should involve the customers
in the FinTP project Allevo needs their active support for a smooth and
issues less transition
ma
rke
t re
late
d r
isk
s
co
st
rela
ted
ris
ks
MAP01 The community should regulate the applicable rules and fees for
services and maintenance
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
bu
sin
es
s a
nd
le
ga
l ri
sk
s
MAP06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S1Product
related
S101 Late delivery lead time Medium MediumMAP15 Allevo should provide proper resources (funding and human
resources)
S102 Credibility loss if fail to certify with SWIFT Medium High MAP16 Should be discussedamp agreed with SWIFT
S103 Inexperienced team or allocation below needs Low HighMAP15 Allevo should provide proper resources (funding and human
resources)
S104 Improper or non efficient version management Low High MAP16 Review the current Allevo Configuration Management System
S105Poor quality if the community fails to institutionalize proper verification and
validation practices3
M06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S106 Lack of expertise in open source projects 2 Allevo should engage thoroughly selected Open Source consultants
S2Service
related
S201
The software maintenance not properly providing for bugs fixing
regulationamp standard alignment technological improvements communities
improvement requests
High HighMAP01 The community should regulate the applicable rules and fees for
services and maintenance
S202 One-time amp recurring services might be provided by unqualified resources High HighMAP17 The community should regulate the training curricula and related
expertise certification
S203 Provided services might not meet the minimal SLA performance criteria High HighMAP17 The community should regulate the training curricula and related
expertise certification
S204 Relaxed or lack of accountability of the professionals High HighMAP18 The community should regulate the employment agreement of
the professionals
S205 Lack of qualified professionals High HighMAP19 The community should ensure a balanced number of certified
professionals with the community size
S3Community
related
S301
If after disclosing FinTP the community does not enthusiastically adopt
the solution competitors might more successfully develop a similar
strategy
Medium MediumMAP20 FinTP promotion should be convincing and realistic A well
organized marketing campaign by Allevo
S302The community mentor andor early adhering members have no
undeniable prestige or are not largely trustfulMedium Medium MAP99 Project status review Ending the project could be one option
S303 The Mentor does not strongly commit for the project Medium Medium MAP99 Project status review Ending the project could be one option
S4 Legal
S401Exposure to copyright and IP infringement due to working team unaware of
the legal consequences of using third party softwareMedium Medium
MAP21 Allevo should keep records and fully document the use of open
source code
S402Copyright or intellectual property infringement can lead to injunctive relief
and monetary damagesHigh High
MAP23 Allevo should institutionalize a tight licensing and technical
control
S403 All risks related to open source compliance High HighMAP24 Allevo should appoint as soon as possible a FinTP compliance
Officer
S5 Financial
S501 Lack of financing institutions Medium MediumMAP25 Allevo should urge consultant to provide a consistent list of
potential investors
S502 Dependency on the financing institution approval Medium Medium
S503Not thoroughly planned project overlooking one or some project cost that
need to be financedMedium Medium
Sp
ec
ific
ris
ks
tec
hn
ica
lm
ark
eti
ng
leg
al
fun
din
g
MAP26 Allevo should carefully draw a consistent and eligible project for
financing
Risks
Riskspdf
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 40 of 43 Allevo Confidential
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Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
11 Appendix - Bibliography 1 Accenture Open Source Research Geographic Findings
2 Accenture Open Source Research Industry Findings
3 Producing Open Source Software - How to Run a Successful Free Software
Project by Karl Fogel
4 Open Source Software Risks and Rewards by Gary Hein
5 A Business Case Study of Open Source Software by Carolyn A Kenwood
6 6 critical success factors for product development by Christian Wig
7 Bank 20 by Brett King
8 Managing the business risks of open innovation by Oliver Alexy and Markus
9 Product idea evaluation checklist shared by Startgass AS
10 SWIFT 2015 Strategy
11 Customers and business impact of product changes
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Tel fax +40212554577 +40212554578 +40212554579
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Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
12 Appendix - Glossary ACH Automated Clearing House that is used to clear retail payments
between banks in a country or region
APAC Asia and Pacific
AML Anti-Money Laundering
BCampDR Business continuity amp disaster recovery
B2B Business to business
C2B Consumer to business
CET Central European Time
CMMI Capability Maturity Model Integration
CMS Configuration Management System
Coexistence The situation of multiple standards existing at the same time in the same business space Within SWIFT this refers to the coexistence between the MT and MX standards This also refers to the set of measures being taken to make the situation easier to handle by the community (publication of mapping rules translation serviceshellip)
CSM Clearing and Settlement Mechanism
CUG Closed User Group
Dictionary Part of the ISO 20022 Repository that contains all items that can be re-used during business modelling and message definition activities
EAI Enterprise Application Integration - middleware to connect applications and communication interfaces Typical EAI software includes features for mapping data between various formats enriching messages with data from other systems and orchestrating message flows
ECB European Central Bank
EMEA Europe Middle-East Africa
EPC European Payment Council
ERP Enterprise Resource Planning
EU European Union
EUCLID Connectivity to EuroClear Bank services
FIN The messaging service offered by SWIFT for the secure and reliable exchange of MT messages in store-and-forward mode By extension the syntax used to format these MTs
IP intellectual property
Interoperability Capability to easily exchange business information while using different message standards ISO 20022 promotes global use of syntax-neutral business and message components as a common denominator to achieve interoperability between standards using different syntaxes
ISO The International Organization for Standardization - an international standard-setting body composed of representatives from more than 160 national standards organizations that promulgates worldwide standards in a variety of domains aiming at facilitating cross-border exchanges of goods services and techniques
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ISO 15022 An ISO standard that describes the syntax to be used for developing securities messages used mainly to support back office related transaction flows It replaced the previous securities messaging standard ISO 7775
ISO 20022 RA Registration Authority - offers the services described in an ISO standard on behalf of and under a contractual agreement with the International Organization for Standardization
ISO 20022 Repository
Repository maintained by the ISO20022 RA which contains the financial business models message definitions and components defined in compliance with the ISO 20022 standard
ISO 20022 RMG Registration Management Group - in charge of the overall management of the ISO 20022 development and registration process in accordance with the ISO 20022 standard
ISO 20022 SEG Standards Evaluation Groups -in charge of validating candidate ISO 20022 messages within the scope of the business justification and ensuring that they address the needs of their future international community of users
ISV Independent Software Vendor
KYC Know Your Customer
MACUG Member Administered Closed User Group
Message A set of structured information exchanged between two parties involved in a financial transaction
Message component and element
A re-usable data structure used for assembling message definitions The data defined in a message component is bdquotraced‟ back to the business components and business elements In simple terms business components define the business meaning message components create data structures for messaging
MI Market Infrastructure - a system that provides services to the financial industry for trading clearing and settlement matching of financial transactions and depository functions
Middleware Software that enables data to be exchanged among different systems with standard communication components and tools for formatting mapping and processing
MT The traditional bdquotag value‟ Message Types for use on the FIN service offered by SWIFT
MX An XML message exchanged over SWIFTNet whether or not ISO 20022 compliant
OS Open source
PSP Payment service provider
QA Quality assurance
RMA Relationship Management Access
RTGS Real Time Gross Settlement System
SAA SWIFT Alliance Access
SAE SWIFT Alliance Entry
SAG SWIFT Alliance Gateway
SaaS Software as a Service
SCORE Standardized CORporate Environment
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Semantics The study of meaning usually in language The word is often used in ordinary language to denote a problem of understanding that comes down to word selection or connotation
SEPA Single Euro Payment Area
SLA Service level agreement
SME Small and Medium-sized Business(es)
SOA Service Oriented Architecture
SSB SWIFT Service Bureau
STP Straight Through Processing
SWIFT Society for Worldwide Interbank Financial Telecommunication Visit wwwswiftcom
Syntax Physical format of a message used to identify and represent the conveyed pieces of information
T2S TARGET2 Securities - an initiative of the Eurosystem It is an IT platform that aims to make settlements across national borders simpler and more cost-efficient
TARGET2 The Eurosystem-owned European Real Time Gross Settlement (RTGS) system (Trans-European Automated Real-time Gross Settlement Express Transfer System) TARGET2 is one of the largest high-value payment systems in the world
Taxonomy The classification in a hierarchical system typically organized by super type - sub type relationships also called generalization-specialization relationships or less formally parent-child relationships
TSU Trade Service Utility
TCO Total cost of ownership
Translation rules
Set of rules to be used to map the pieces of information included in a message expressed in one syntax to the equivalent message expressed in another syntax
Remit Remittances
XML eXtensible Mark-up Language - popular syntax to encode documents (or messages) electronically on the Internet XML allows communities to define their own identifiers (or tags) and format (or data type) for each component of a message
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Bureaus etc) ISV regulatory institutionsMarketing plan feasibility campaign efficiency and costs
2 MentorPreferable SWIFT
Also eligible SunGard IBM affiliation to other OS communitySWIFT decision
3 Legalcopyright Expert legal consultant and RO apprentice Cost and time shift dependent
4 Tight regulation Clear membership admission amp software contribution criteria The quality of the consultant advice
5 Marketing Actively recruiting community members Marketing plan feasibility campaign efficiency amp customer skepticism
a community portala provide content amp debate space information consolidation amp dissemination virtual
showroom subscription management support
a business analysis solution availability and maintenance by one of the
members or employed company
b press releases amp
announcementsb PR and AR b communicators availability and costs
c events c periodical conferences user focused meetings c cost dependent
6 Financing World Bank EU amp private funds Lobby amp funds availability
Item
FinTP
FinTP community
FinTP - Vision and Scope
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Component code
Component description Comments
FINkers United - community
Since FinTP is an application handling financial transactions the product releases and the related community should be tightly regulated and controlled As the project matures these components will be further refined The following main components of the community have been identified
‐ the moderator ‐ the product development
and maintenance body ‐ the product and
community auditor body (acting as a gatekeeper of official releases) to control and maintain the change requests integer and eliminate any malware exposures
‐ the test and validation body
‐ the legal body for defining the frame for product distribution amp licensing
‐ the marketing entity responsible for creating awareness and attracting contributors and adopters
‐ the portal used as a channel for marketing support and version control
‐ individual contributors namely ISVs solution providers developers integrators who wish to use their skills and knowledge to the benefit of the community
These tools strongly depend on the available budget and widespread
organization culture It is not mandatory for these to be open source if usage of
open source tools would mean lower quality
3) Licensing
The licensing model highly depends on the results of the open source legal and
business consultancy However we assume the following frame
‐ free of charge initial and recurring maintenance license for using FinTP
‐ FinTP does not use software components enforcing liabilities for the user
‐ consumers using FinTP source code (in part or entirely) should comply to
the licensing policy of the community
‐ the version released by the development amp maintenance body is the only
official amp to be trusted version of the community ensuring product integrity
unity and stability
4) Regulatory compliance
The regulatory compliance strongly depends on the early adaptation of new amp
changed rules via the recurring maintenance and on the quality of the audits
performed by the specific bodies of the community
Thus it is ensured that ISO20022 and FIN standards TARGET2 and TARGET2
Securities SEPA or country specific regulations (as stated respectively by
FinTP - Vision and Scope
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SWIFT standards EPC specification ECB or regional Central Banks
regulations that the community chooses to comply with) stay the most
important business specific anchors of FinTP
The FinTP design also offers support for flexible definition of new compliance
sources
5) Consultancy
The needed consultancy is twofold
‐ legal to ensure that FinTP does not infringe other licensing constraints
‐ open source specific to enable the right choice of the community type and of its governing law
The main constraint relies in choosing the right advisors true experts in the
open source industry amp with appropriate ethic profile - able to deliver as
promised The consultants have to be available 800 am divide 800 pm CET and
easily reachable - geo-location is of utmost importance Selection of the
consultant will basically be done on price assuming the right mix of expertise
and availability is achieved
6) Financing
While Allevo partially undertakes the financing of FinTP development the
ancillary consultancy necessary team education or acquisition of productivity
tools are far beyond the companys 2012 budget
To overcome possible delays in the project Allevo needs to sturdily act to
identify both the most appropriate commercial offer and additional necessary
financing source(s)
FinTP community
The community related items are members moderator legal tight regulation
marketing and financing For each of these items several assumptions and the
corresponding dependencies are provided in the following paragraphs
1) Members
We assume that the communitys members span several business profiles
(such as financial services institutions corporations market infrastructures
PSPs SSBs public administrations regulatory institutions and ISVs) sharing
the mutual focus on financial operations performance and improvement
By now after some tests on market acceptance there have been identified a
few supporters comprising financial services institutions and small ISVs
To ensure the success of building the community there is need for attracting
prestige influencers (market analysts consulting companies of scale - starting
with big four key industry providers - such as SWIFT other communities - ie
professional such as banking insurers capital market associations) and a
credible pool of financial institutions and corporations
To this end Allevo unrolls its own awareness campaign through direct
meetings publications blog posts and social media public presentations and
by officially launching the initiative in a conference focused on free of charge
financial transactions processing applications
Allevo further plans to use Sibos 2012 as opportunity to organize a less
traditional communication session gathering a relevant international panel to
FinTP - Vision and Scope
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debate the strong and weak aspects of this initiative amp to get the public involved
as much as possible
The goal is that by the end of 2012 some tens of different institutions are
committed to co-found the community and to actively contribute to establishing
the legal frame and to forming the required action bodies
2) Moderator
Allevo perceives the Moderator as the critical member of the community since
his prestige and influence will warrant the outcome of all performed activities
The moderator must commit on long term to develop the community and to
sponsor it with its share of trust
Allevo strongly believes that the Moderator should have a global footprint be a
reputable and trustful institution
3) Legalcopyright
The legal consultant and advisor needs to provide the coherent legal frame to
cover all community activities by roles and accountability While making it easy
for the members it should be more demanding as far as contributors are
concerned (though still encouraging ISVs to actively participate) It has to draw
very precise responsibilities for the independent and institutionalized bodies
(for instance product maintenance amp development and audit) and for the
Moderators status
The quality of this legal work fully relies on the expertise and experience of the
advisor
The law governing the community has to be in harmony with the European
(either French or Anglo-Saxon) legal system and with the open source legal
regulations largely practiced in other business regions (US and APAC)
4) Tight regulation
FinTP the product meant to gather a community which uses and supports it is
all about moving values between different entities Thats critical irrespective of
the amount because failing to perform properly opens the doors to arguments
amp loss of reputation with the related tangible costs Moreover the product has
to be beyond any doubt during its entire lifecycle free of any malefic
embedded functions meaning that contamination has to be avoided by all
means
Allevo strongly believes that this requirement can be attained only by tight
regulation of the community specific approval of the initially launched version
of FinTP and of the recurring contributions
This approach can be felt strange compared to most open source communities
and can lead to little interest from IT talents making them feel banned or
restricted It remains the Moderator‟s duty to make them feel privileged if
accepted and rewarded as such However this censorship is a price to be paid
since the community and the project are about processing transactions
initiating value transfer
FinTP - Vision and Scope
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5) Marketing
The community needs to have the clear objective of spreading both
geographically and over a consistent number of industries
To achieve this goal the community should be able to actively provide open
access to relevant information (including explanations of concepts hands-on
evaluation) to non-members and to also answer their questions on FinTP and
on the community itself
The same level of information needs to be ensured for the members to whom
supplementary updates on the community events decisions available
releases patches and fixes should be made available They need to also get
focused forum discussions on specific business areas and subsequent
processes need to be distributed
These functionalities have to be hosted on the community‟s dedicated portal
This portal has to provide content dialogue space information consolidation
and broadcasting It must be a virtual showroom for FinTP It needs to host
documents and virtual meetings subscription management and product
support amp development
The community has to be able to run its own meetings enabling direct contact
between active members or their representatives
Meaningful press releases have to be regularly issued along with actively
maintaining a productive relationship with market analysts to consolidate a
clear public understanding of the community spirit and goals
6) Financing
Its all about money-money-money since at least for the first 2-3 years the
community needs to be financed
Upon reaching maturity the institutionalized bodies of the community can earn their income from collateral activities - such as organizing conferences providing education and specialized support services - either for the initial FinTP installations and customizations or for recurring services requested by the members An alternative can be trialling and certifying interested providers enabling them to perform support services for FinTP
Thus who could pump money into this project It could be one or a mix of
‐ World Bank - if governmental programs are implied and provided a proper project which convincingly demonstrates the beneficed social impact
‐ EU development funding
‐ interested wealthy members of the community
The most critical dependencies are external such as (arranged according to
their impact) availability of funds for building the community finding trustful
and skilled open source consultants (legal business community licensing)
The synthetic view of the main assumptions and dependencies is provided in
the attached file
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Maintenance amp user support 1-Jan-13 Marketing inst action
4 Activities
Initial planning amp budgeting 15-Dec-12 document
Roles allocation 15-Dec-12 document
Community inst Implementation 15-Dec-12 action
Awareness campaign 1-Jan-13 action ongoing process
Members recruiting 1-Jan-13 action ongoing process
Continued operation 1-Jan-13 action ongoing process
Service sales 1-Jan-13 action ongoing process
Future development planning 1-Jan-13 document ongoing process
5 Resource allocation
If existing institution - allocation 15-Dec-12 action
If newly formed - recruiting 15-Dec-12 action
Make FinTP available to comm 1-Jan-13 action ongoing process
Start community financing 1-Jan-13 action ongoing process
6 Financing
Initial investment 1-Jan-13 action secured by that date
First period of comm operation 31-Aug-13 action secured by that date
co
mm
un
ity
Project approach
Project approachpdf
FinTP - Vision and Scope
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8 Scope This chapter deals with the phased availability of various FinTP features again considered from application and community points of view
In the first phase (due Dec 2012) the core of FinTP application is ready including the following technical features
- financial message routing between services and monitoring of exchanges
- multi-threading capabilities
- persistent end-to-end transactions
- batching de-batching
- archiving
- tracing and logging of transactions and user events
- transient errors detection and recovery
- real time search and reports
- security access and user administration
Similarly during the first phase the main community components need to be in place
- moderator
- software development and maintenance body (Allevo also available in the first and second phase of the project)
- test amp validation body
- (software) auditor
- legal
- main contributors (Allevo falls into this position)
- platform
- marketing
In the second phase (Dec2012 - Dec2013) several operational features of FinTP will be added
- predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit instruments securities settlement reconciliations
- MTMX coexistence
- multi-BIC multi-currency
- SEPA ready certification
- TARGET2 ready
- SAGSAASAE interfaces
- duplicate detection
- liquidity reports
- competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
- accounting reconciliation
- AML (sanctions list matching)
- SaaS and cloud ready
along with resilience and start of maintenance and knowledge transfer (the last two obviously continuing in the next phases)
FinTP - Vision and Scope
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The synthetic view of the project scope is provided in the following table
Crt No
Feature Activity Phase1 31Dec12
Phase2 31Dec13
Phase3 31Dec14
Phase4 31Dec15
Fin
TP
A Operational features
1
Predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit Instruments bonds (Romanian Euroclear) reconciliations
2 MTMX coexistence
3 Multi-BIC multi-currency
4 SaaS ready cloud ready
5 SEPA ready certification
6 TARGET2 ready
7 SAGSAASAE interfaces
8 Liquidity reports
9 Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
10 Accounting reconciliation
11 AML (sanctions list matching)
12 Duplicate detection
B Technical features
1 Routing financial message between services and monitoring of data flows
2 Multi-threading capabilities
3 Persistent end-to-end transactions
4 Batching de-batching
5 Resilience (at transaction level)
6 Archiving
7 Tracing and logging of transactions and user events
8 Transient errors detection and recovery
9 Real time search and reports
10 Security access and user administration
C Other activities
1 FinTP maintenance
2 Knowledge transfer
Co
mm
un
ity
Establishing the institutionscomponents
1 Mentor
2 Software Auditor amp Provider
3 Legal service
4 Members
5 Allevo initial role
6 Platform
7 Marketing
FinTP - Vision and Scope
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9 Limitations The main limitations in the economy of the project consist of phasing several FinTP
operational features for the following year (eg debit instruments liquidity reporting
AML filtering accounting reconciliation resilience SaaS ready cloud ready etc)
At the same time for features intended to front-office usage like Remit it was not yet
decided to publish them as open source product
The synthetic view of the main limitations is provided in the following table
Crt
nrItem Limitation Exclusion Comments
1
FinTP
a
Operational features Available in 2013
b
Remit Not included in
open source
package
2
Community
a
Rules Tightly controlled The statute should
ensure the right
balance between
safety and free
association of talents
Given the significant budget allocation (at least from Allevo perspective) the strong
requirement to meet the maximum ceiling will limit the FinTP product initial preparation
and maintenance expenses
Community wise the obligation of a tight regulated statute will have to ensure the right
balance between safety (mandatory in an environment dealing with financial
transactions) and a free association of talents (typical in an open source community)
In the first period after launch (at least the first two years) of the initiative the
maintenance and support activities will be provided by Allevo (as initial contributor)
A major restriction would be to meet the budgeted development and maintenance
FinTP - Vision and Scope
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10 Appendix - Risks
Specific risks
1 Product
a Long delivery lead time This is a medium probability and impact risk however Allevo should make available the needed resources and motivate the entire team for the job
b Credibility loss if FinTP fails to further become certified on meaningful operations andor business tracks (ie SWIFT business certification tracks or similar) The single possible containment is lobbying if the application certification program rejects open source products Anyway the impact is very important and its materialization should be avoided
c Low quality of the allocated team and improper version management are highly unlikely to occur as long as the formal transfer of responsibility is smoothly made from Allevo to the corresponding body put in place by the community The real hidden risk is that this process could take too long and it thus has a very high impact
d Poor FinTP quality may result if the community fails to institutionalize proper quality assurance (QA) and verification amp validation (VampV) processes This is most expected not to happen but if it does the impact is at least medium The single path to overcome this risk consists in a professional approach to these items based on institutionalizing practice proven QA and VampV processes
e Allevo lack of expertise in the open source business This can be contained by carefully selecting trustful amp truly expert consultants Otherwise it means more money longer time spent on project and expenses without proper return
2 Service
a The software maintenance does not properly deliver as expected ie on-time and on-quality bug fixing regulation amp standards alignment and productivity amp technological improvement The key to contain this risk materialization is the community status having provisions to neatly provide maintenance and further development of the rules for FinTP as well as the applicable rules and fees for the ancillary services
b Low quality and safety of the service received by the members of the community To avoid the risk of performing the one-time amp recurring support services by under-prepared professionals the community has to rule the process of training and qualifying the companies willing to contribute in this area
c Not meeting the minimal SLA criteria The community should regulate and periodically revise the training curricula and to further audit both the teachers and the certified experts to ensure the service level agreements are met
d Under motivated service providing professionals - up to the level of not feeling the high impact of their activity The community status must provide guidance to the contributors on the minimal standards the professionals should meet
FinTP - Vision and Scope
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e Constrained expert resource pool This risk could be overcome by the communitys policy to ensure at all time a balanced number of motivated experts to the communitys size Failing to do so may result in high negative impact of the community business and public perception
3 Community
a Emergence of a parallel competitive community If the optimal timing between publically disclosing FinTP and community take-off is not achieved then there are high chances that following a competitive initiative other entrepreneurs successfully launch their own similar or derived community This could be avoided by periodical reviews of the progress of both FinTP and community status and deciding whether the project needs to be put on hold or not
b Unfit reputation of the Moderator or main contributors If either the Moderator or the initial contributors are not beyond any dispute and are reputable institutes then there is certainly something rotten in Denmark and the project should be put on-hold
c No commitment from the Moderator‟s side Similarly if the Moderator does not commit to the project it means that Denmark has a serious problem to solve The project should relinquish until the matter is fixed
4 Legal
a Misuse of copyright and intellectual property (IP)The assigned working team could not be aware of the limitations and liabilities of using (entirely or partially) third party software this risk can be contained by delivering the right training providing proper working procedures carefully recording and documenting the use of open source code and carefully cross-scanning
b Injunctive relief and financial damages can be caused by not properly and continuously controlling the use of third party open source code resulting in copyright or IP infringement There are two containment measures which can be taken tighten the compliance check during the product lifecycle or apply the sanction policy as to set an example
c The competition starts a class action - this may result in delaying the project
5 Financing
a Lack of long term financing institutions Allevo should urge its consultant to identify and draw a reasonable list of financial options institutions
b Exceeding the budget given that this type of project has no precedent in Allevo and to avoid exposing to the dependency on engagement to financial institutions or to commitments beyond the existing budget a further carefully drawn project plan is needed along with its explicit approval from the board of the company
Market related risks
1 False expectations
a Expensive services Not everything is free aside the initial and maintenance free licensing the training the support and other professional services can amount to more than in general expected Allevo rates this risk as medium possible but with low impact as long as the law governing the community and its initial period of operation will consecrate fair market prices and competitive sources of contribution
FinTP - Vision and Scope
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b Hidden costs for patches updates and upgrades While of similarly weight in terms of probability and impact this should be no real concern as long as the law governing the community clearly provides for free and accountable maintenance
2 Poor image on quality
a Too many releases making FinTP hard to manage and unsafe to operate Given proper regulation of the community and the mature root of FinTP Allevo disregards the possibility of this risk to materialize However if this were to happen this is a high impact risk and by all means should be avoided
b Backward technological (in)compatibility looks to us as a low risk in all respects and within organizations applying practice proven software engineering processes and professional - accountable team this is not likely to materialize
c Support can be perceived as the highest impact risk for FinTP This can be overcome by tight regulation of the commercial and professional conditions to deliver the service (for instance only qualified organizations should be recommended to members for supporting FinTP)
d SLA and accountability for both internally or externally performed services is closely correlated to the previous risk and the community status should provide the support for growing a community of competencies and accountable professionals around FinTP Periodical auditing (by the specialized community body) of this pool of professionals will further ensure the confidence that the skills are preserved at the required level
e Code fragmentation and forking is a high impact risk with a low probability of happening in the initial period provided the knowledge transfer is done orderly and in an institutionalized manner
3 Inherent uncertainty
a Community disputes can jeopardize its cohesion the project viability and future This is a high impact possibly high probability risk and it is the definite role of the Moderator to feel prevent and while materializing mitigate any conflicting situation
b FinTP going commercial post-launch This is a huge impact possibly high occurrence probability but manageable with the right legal instruments provisioned in the community
c Loss of alignment to industry standards and regulations This risk has medium probability and medium impact given the assumption that the community is tightly regulated and the working bodies institutionalized and gathering professionals
4 Legal
Copyright infringement given Allevo experience in the open source business this risk is highly probable and has a high impact on FinTP especially if mistakes are made in the launching phase Similarly if during the product maintenance and further development phase the community fails to institutionalize proper formal software development processes (covering all FinTP lifecycle phases) based on industry practice proven model(s) Supplementary the expert code scanning audit for compliance is the single resort to preclude external software source misuse
FinTP - Vision and Scope
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5 GPL specific
a Noncompliance to the GPL license If GPL license is used the product should further distribute in compliance with this part provisions High impact and probability but manageable if proper software development processes are used and if the statute clearly defines the licensing model for FinTP
b FinTP unconformity The risk that software engineers get inspired by a chic solution which they import and emulate similarly in FinTP And this is also highly possible since les grands esprits se rencontre
6 Existing customers attitude
Anger for having paid for something which now is free The existent customers can be concerned about the future of their installed system its further development (in one word its future) and on the quality of the service (SLA including) Some recent adopters can possibly be furious for spending their money on buying licenses for a piece of software that differently packaged becomes free of charge
For the first situation the single best solution for Allevo is to ensure a smooth transition from the current status to the new solution deployed Also highly probable Allevo should provide for simultaneous (for at most one more year) maintenance of both FinTP and for qPayIntegrator
For the 2012 new qPayIntegrator adopters Allevo should transparently state the product‟s future and propose a commercially attractive migration towards FinTP when it becomes publically available (like the option for the installation migration and recurring services) The decision should clearly stay with the customer if he still buys Allevo licenses delays the implementation until FinTP is available or if he goes for a competitive solution
In other words the key to mitigate the existing customer perception is switching places and discarding if the situation proves to be uncomfortable
Bottom-line is that to avoid most of the risks the FinTP community must be a rather tightly controlled one though still opened to anyone willingly abiding to the rules
The synthetic view of the main risks their assigned probability impact and the corresponding containment approach is provided in the attached file
Risk IDRisk
CategoryRisk
Probability
(High
Medium
Low)
Severity
(High
Medium
Low)
Containment (Mitigation Action Proposed)
M1Free as in a
Free Puppy
M101
The training service amp support cost could account more than the
commercial product its replacing (application software is typically 30 of
the total cost of ownership of most projects)
Medium Low
M102 Hidden costs ie charge for patches updates and upgrades Medium Low
M2Frequent
updates
M201
Projects might be updated frequently - as often as everyday Too frequent
updates could have a negative impact on the implementation
interoperability and support
Low HighMAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M3Backwards
compatibility
M301 Less accountability Low LowMAP03 Access to prior versions of source code (additional in-house
development and support procedures might be necessary)
M4Support
related risks
M401Support could be perceived as the biggest issue with open source
software deploymentsHigh High
M402 Internal External Accountability SLAs High High
M403Code fragmentation or forking if the community fails to institutionalize
corporate like formal structureHigh High
M404Support could require greater involvement and different skills set from
operations staffMedium Medium
M5Community
immaturity Low Low
M501Could generate incompatibility of FinTP with industry standards amp
regulationsMedium Medium
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M6 Uncertainty The inherent uncertainty in every open source project
M601 Community disputes might impact project viability and future High HighMAP04 The Mentor should prevent amp mitigate any conflicts inside the
community
M602 Open source projects may not stay open in future releases High HighMAP05 The originator liabilities should be strongly enforced by the
community statute
M7 Legal risks
M701 Copyright infringement High High
M702 Can open source software deployments pass an audit
M8 GPL General Public License specific development concerns
M801Software thatrsquos derived from an existing GPL project in whole or in part
might not be released under the same licenseHigh High M08 The community should regulate the licensing model
M802
Developer contamination - developer could review an existing open source
project could see an elegant solution then implement a similar function in
closed source project
High HighMAP09 Procedurals constrains for the software developers should be
enforced
M9
Current
customers
attitude
The actual customer perception could be negative High High
M12 To prevent a negative attitude Allevo should involve the customers
in the FinTP project Allevo needs their active support for a smooth and
issues less transition
ma
rke
t re
late
d r
isk
s
co
st
rela
ted
ris
ks
MAP01 The community should regulate the applicable rules and fees for
services and maintenance
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
bu
sin
es
s a
nd
le
ga
l ri
sk
s
MAP06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S1Product
related
S101 Late delivery lead time Medium MediumMAP15 Allevo should provide proper resources (funding and human
resources)
S102 Credibility loss if fail to certify with SWIFT Medium High MAP16 Should be discussedamp agreed with SWIFT
S103 Inexperienced team or allocation below needs Low HighMAP15 Allevo should provide proper resources (funding and human
resources)
S104 Improper or non efficient version management Low High MAP16 Review the current Allevo Configuration Management System
S105Poor quality if the community fails to institutionalize proper verification and
validation practices3
M06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S106 Lack of expertise in open source projects 2 Allevo should engage thoroughly selected Open Source consultants
S2Service
related
S201
The software maintenance not properly providing for bugs fixing
regulationamp standard alignment technological improvements communities
improvement requests
High HighMAP01 The community should regulate the applicable rules and fees for
services and maintenance
S202 One-time amp recurring services might be provided by unqualified resources High HighMAP17 The community should regulate the training curricula and related
expertise certification
S203 Provided services might not meet the minimal SLA performance criteria High HighMAP17 The community should regulate the training curricula and related
expertise certification
S204 Relaxed or lack of accountability of the professionals High HighMAP18 The community should regulate the employment agreement of
the professionals
S205 Lack of qualified professionals High HighMAP19 The community should ensure a balanced number of certified
professionals with the community size
S3Community
related
S301
If after disclosing FinTP the community does not enthusiastically adopt
the solution competitors might more successfully develop a similar
strategy
Medium MediumMAP20 FinTP promotion should be convincing and realistic A well
organized marketing campaign by Allevo
S302The community mentor andor early adhering members have no
undeniable prestige or are not largely trustfulMedium Medium MAP99 Project status review Ending the project could be one option
S303 The Mentor does not strongly commit for the project Medium Medium MAP99 Project status review Ending the project could be one option
S4 Legal
S401Exposure to copyright and IP infringement due to working team unaware of
the legal consequences of using third party softwareMedium Medium
MAP21 Allevo should keep records and fully document the use of open
source code
S402Copyright or intellectual property infringement can lead to injunctive relief
and monetary damagesHigh High
MAP23 Allevo should institutionalize a tight licensing and technical
control
S403 All risks related to open source compliance High HighMAP24 Allevo should appoint as soon as possible a FinTP compliance
Officer
S5 Financial
S501 Lack of financing institutions Medium MediumMAP25 Allevo should urge consultant to provide a consistent list of
potential investors
S502 Dependency on the financing institution approval Medium Medium
S503Not thoroughly planned project overlooking one or some project cost that
need to be financedMedium Medium
Sp
ec
ific
ris
ks
tec
hn
ica
lm
ark
eti
ng
leg
al
fun
din
g
MAP26 Allevo should carefully draw a consistent and eligible project for
financing
Risks
Riskspdf
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
11 Appendix - Bibliography 1 Accenture Open Source Research Geographic Findings
2 Accenture Open Source Research Industry Findings
3 Producing Open Source Software - How to Run a Successful Free Software
Project by Karl Fogel
4 Open Source Software Risks and Rewards by Gary Hein
5 A Business Case Study of Open Source Software by Carolyn A Kenwood
6 6 critical success factors for product development by Christian Wig
7 Bank 20 by Brett King
8 Managing the business risks of open innovation by Oliver Alexy and Markus
9 Product idea evaluation checklist shared by Startgass AS
10 SWIFT 2015 Strategy
11 Customers and business impact of product changes
FinTP - Vision and Scope
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12 Appendix - Glossary ACH Automated Clearing House that is used to clear retail payments
between banks in a country or region
APAC Asia and Pacific
AML Anti-Money Laundering
BCampDR Business continuity amp disaster recovery
B2B Business to business
C2B Consumer to business
CET Central European Time
CMMI Capability Maturity Model Integration
CMS Configuration Management System
Coexistence The situation of multiple standards existing at the same time in the same business space Within SWIFT this refers to the coexistence between the MT and MX standards This also refers to the set of measures being taken to make the situation easier to handle by the community (publication of mapping rules translation serviceshellip)
CSM Clearing and Settlement Mechanism
CUG Closed User Group
Dictionary Part of the ISO 20022 Repository that contains all items that can be re-used during business modelling and message definition activities
EAI Enterprise Application Integration - middleware to connect applications and communication interfaces Typical EAI software includes features for mapping data between various formats enriching messages with data from other systems and orchestrating message flows
ECB European Central Bank
EMEA Europe Middle-East Africa
EPC European Payment Council
ERP Enterprise Resource Planning
EU European Union
EUCLID Connectivity to EuroClear Bank services
FIN The messaging service offered by SWIFT for the secure and reliable exchange of MT messages in store-and-forward mode By extension the syntax used to format these MTs
IP intellectual property
Interoperability Capability to easily exchange business information while using different message standards ISO 20022 promotes global use of syntax-neutral business and message components as a common denominator to achieve interoperability between standards using different syntaxes
ISO The International Organization for Standardization - an international standard-setting body composed of representatives from more than 160 national standards organizations that promulgates worldwide standards in a variety of domains aiming at facilitating cross-border exchanges of goods services and techniques
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wwwallevoro
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ISO 15022 An ISO standard that describes the syntax to be used for developing securities messages used mainly to support back office related transaction flows It replaced the previous securities messaging standard ISO 7775
ISO 20022 RA Registration Authority - offers the services described in an ISO standard on behalf of and under a contractual agreement with the International Organization for Standardization
ISO 20022 Repository
Repository maintained by the ISO20022 RA which contains the financial business models message definitions and components defined in compliance with the ISO 20022 standard
ISO 20022 RMG Registration Management Group - in charge of the overall management of the ISO 20022 development and registration process in accordance with the ISO 20022 standard
ISO 20022 SEG Standards Evaluation Groups -in charge of validating candidate ISO 20022 messages within the scope of the business justification and ensuring that they address the needs of their future international community of users
ISV Independent Software Vendor
KYC Know Your Customer
MACUG Member Administered Closed User Group
Message A set of structured information exchanged between two parties involved in a financial transaction
Message component and element
A re-usable data structure used for assembling message definitions The data defined in a message component is bdquotraced‟ back to the business components and business elements In simple terms business components define the business meaning message components create data structures for messaging
MI Market Infrastructure - a system that provides services to the financial industry for trading clearing and settlement matching of financial transactions and depository functions
Middleware Software that enables data to be exchanged among different systems with standard communication components and tools for formatting mapping and processing
MT The traditional bdquotag value‟ Message Types for use on the FIN service offered by SWIFT
MX An XML message exchanged over SWIFTNet whether or not ISO 20022 compliant
OS Open source
PSP Payment service provider
QA Quality assurance
RMA Relationship Management Access
RTGS Real Time Gross Settlement System
SAA SWIFT Alliance Access
SAE SWIFT Alliance Entry
SAG SWIFT Alliance Gateway
SaaS Software as a Service
SCORE Standardized CORporate Environment
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Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
Semantics The study of meaning usually in language The word is often used in ordinary language to denote a problem of understanding that comes down to word selection or connotation
SEPA Single Euro Payment Area
SLA Service level agreement
SME Small and Medium-sized Business(es)
SOA Service Oriented Architecture
SSB SWIFT Service Bureau
STP Straight Through Processing
SWIFT Society for Worldwide Interbank Financial Telecommunication Visit wwwswiftcom
Syntax Physical format of a message used to identify and represent the conveyed pieces of information
T2S TARGET2 Securities - an initiative of the Eurosystem It is an IT platform that aims to make settlements across national borders simpler and more cost-efficient
TARGET2 The Eurosystem-owned European Real Time Gross Settlement (RTGS) system (Trans-European Automated Real-time Gross Settlement Express Transfer System) TARGET2 is one of the largest high-value payment systems in the world
Taxonomy The classification in a hierarchical system typically organized by super type - sub type relationships also called generalization-specialization relationships or less formally parent-child relationships
TSU Trade Service Utility
TCO Total cost of ownership
Translation rules
Set of rules to be used to map the pieces of information included in a message expressed in one syntax to the equivalent message expressed in another syntax
Remit Remittances
XML eXtensible Mark-up Language - popular syntax to encode documents (or messages) electronically on the Internet XML allows communities to define their own identifiers (or tags) and format (or data type) for each component of a message
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
These tools strongly depend on the available budget and widespread
organization culture It is not mandatory for these to be open source if usage of
open source tools would mean lower quality
3) Licensing
The licensing model highly depends on the results of the open source legal and
business consultancy However we assume the following frame
‐ free of charge initial and recurring maintenance license for using FinTP
‐ FinTP does not use software components enforcing liabilities for the user
‐ consumers using FinTP source code (in part or entirely) should comply to
the licensing policy of the community
‐ the version released by the development amp maintenance body is the only
official amp to be trusted version of the community ensuring product integrity
unity and stability
4) Regulatory compliance
The regulatory compliance strongly depends on the early adaptation of new amp
changed rules via the recurring maintenance and on the quality of the audits
performed by the specific bodies of the community
Thus it is ensured that ISO20022 and FIN standards TARGET2 and TARGET2
Securities SEPA or country specific regulations (as stated respectively by
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
SWIFT standards EPC specification ECB or regional Central Banks
regulations that the community chooses to comply with) stay the most
important business specific anchors of FinTP
The FinTP design also offers support for flexible definition of new compliance
sources
5) Consultancy
The needed consultancy is twofold
‐ legal to ensure that FinTP does not infringe other licensing constraints
‐ open source specific to enable the right choice of the community type and of its governing law
The main constraint relies in choosing the right advisors true experts in the
open source industry amp with appropriate ethic profile - able to deliver as
promised The consultants have to be available 800 am divide 800 pm CET and
easily reachable - geo-location is of utmost importance Selection of the
consultant will basically be done on price assuming the right mix of expertise
and availability is achieved
6) Financing
While Allevo partially undertakes the financing of FinTP development the
ancillary consultancy necessary team education or acquisition of productivity
tools are far beyond the companys 2012 budget
To overcome possible delays in the project Allevo needs to sturdily act to
identify both the most appropriate commercial offer and additional necessary
financing source(s)
FinTP community
The community related items are members moderator legal tight regulation
marketing and financing For each of these items several assumptions and the
corresponding dependencies are provided in the following paragraphs
1) Members
We assume that the communitys members span several business profiles
(such as financial services institutions corporations market infrastructures
PSPs SSBs public administrations regulatory institutions and ISVs) sharing
the mutual focus on financial operations performance and improvement
By now after some tests on market acceptance there have been identified a
few supporters comprising financial services institutions and small ISVs
To ensure the success of building the community there is need for attracting
prestige influencers (market analysts consulting companies of scale - starting
with big four key industry providers - such as SWIFT other communities - ie
professional such as banking insurers capital market associations) and a
credible pool of financial institutions and corporations
To this end Allevo unrolls its own awareness campaign through direct
meetings publications blog posts and social media public presentations and
by officially launching the initiative in a conference focused on free of charge
financial transactions processing applications
Allevo further plans to use Sibos 2012 as opportunity to organize a less
traditional communication session gathering a relevant international panel to
FinTP - Vision and Scope
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debate the strong and weak aspects of this initiative amp to get the public involved
as much as possible
The goal is that by the end of 2012 some tens of different institutions are
committed to co-found the community and to actively contribute to establishing
the legal frame and to forming the required action bodies
2) Moderator
Allevo perceives the Moderator as the critical member of the community since
his prestige and influence will warrant the outcome of all performed activities
The moderator must commit on long term to develop the community and to
sponsor it with its share of trust
Allevo strongly believes that the Moderator should have a global footprint be a
reputable and trustful institution
3) Legalcopyright
The legal consultant and advisor needs to provide the coherent legal frame to
cover all community activities by roles and accountability While making it easy
for the members it should be more demanding as far as contributors are
concerned (though still encouraging ISVs to actively participate) It has to draw
very precise responsibilities for the independent and institutionalized bodies
(for instance product maintenance amp development and audit) and for the
Moderators status
The quality of this legal work fully relies on the expertise and experience of the
advisor
The law governing the community has to be in harmony with the European
(either French or Anglo-Saxon) legal system and with the open source legal
regulations largely practiced in other business regions (US and APAC)
4) Tight regulation
FinTP the product meant to gather a community which uses and supports it is
all about moving values between different entities Thats critical irrespective of
the amount because failing to perform properly opens the doors to arguments
amp loss of reputation with the related tangible costs Moreover the product has
to be beyond any doubt during its entire lifecycle free of any malefic
embedded functions meaning that contamination has to be avoided by all
means
Allevo strongly believes that this requirement can be attained only by tight
regulation of the community specific approval of the initially launched version
of FinTP and of the recurring contributions
This approach can be felt strange compared to most open source communities
and can lead to little interest from IT talents making them feel banned or
restricted It remains the Moderator‟s duty to make them feel privileged if
accepted and rewarded as such However this censorship is a price to be paid
since the community and the project are about processing transactions
initiating value transfer
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 27 of 43 Allevo Confidential
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Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
5) Marketing
The community needs to have the clear objective of spreading both
geographically and over a consistent number of industries
To achieve this goal the community should be able to actively provide open
access to relevant information (including explanations of concepts hands-on
evaluation) to non-members and to also answer their questions on FinTP and
on the community itself
The same level of information needs to be ensured for the members to whom
supplementary updates on the community events decisions available
releases patches and fixes should be made available They need to also get
focused forum discussions on specific business areas and subsequent
processes need to be distributed
These functionalities have to be hosted on the community‟s dedicated portal
This portal has to provide content dialogue space information consolidation
and broadcasting It must be a virtual showroom for FinTP It needs to host
documents and virtual meetings subscription management and product
support amp development
The community has to be able to run its own meetings enabling direct contact
between active members or their representatives
Meaningful press releases have to be regularly issued along with actively
maintaining a productive relationship with market analysts to consolidate a
clear public understanding of the community spirit and goals
6) Financing
Its all about money-money-money since at least for the first 2-3 years the
community needs to be financed
Upon reaching maturity the institutionalized bodies of the community can earn their income from collateral activities - such as organizing conferences providing education and specialized support services - either for the initial FinTP installations and customizations or for recurring services requested by the members An alternative can be trialling and certifying interested providers enabling them to perform support services for FinTP
Thus who could pump money into this project It could be one or a mix of
‐ World Bank - if governmental programs are implied and provided a proper project which convincingly demonstrates the beneficed social impact
‐ EU development funding
‐ interested wealthy members of the community
The most critical dependencies are external such as (arranged according to
their impact) availability of funds for building the community finding trustful
and skilled open source consultants (legal business community licensing)
The synthetic view of the main assumptions and dependencies is provided in
the attached file
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Maintenance amp user support 1-Jan-13 Marketing inst action
4 Activities
Initial planning amp budgeting 15-Dec-12 document
Roles allocation 15-Dec-12 document
Community inst Implementation 15-Dec-12 action
Awareness campaign 1-Jan-13 action ongoing process
Members recruiting 1-Jan-13 action ongoing process
Continued operation 1-Jan-13 action ongoing process
Service sales 1-Jan-13 action ongoing process
Future development planning 1-Jan-13 document ongoing process
5 Resource allocation
If existing institution - allocation 15-Dec-12 action
If newly formed - recruiting 15-Dec-12 action
Make FinTP available to comm 1-Jan-13 action ongoing process
Start community financing 1-Jan-13 action ongoing process
6 Financing
Initial investment 1-Jan-13 action secured by that date
First period of comm operation 31-Aug-13 action secured by that date
co
mm
un
ity
Project approach
Project approachpdf
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
8 Scope This chapter deals with the phased availability of various FinTP features again considered from application and community points of view
In the first phase (due Dec 2012) the core of FinTP application is ready including the following technical features
- financial message routing between services and monitoring of exchanges
- multi-threading capabilities
- persistent end-to-end transactions
- batching de-batching
- archiving
- tracing and logging of transactions and user events
- transient errors detection and recovery
- real time search and reports
- security access and user administration
Similarly during the first phase the main community components need to be in place
- moderator
- software development and maintenance body (Allevo also available in the first and second phase of the project)
- test amp validation body
- (software) auditor
- legal
- main contributors (Allevo falls into this position)
- platform
- marketing
In the second phase (Dec2012 - Dec2013) several operational features of FinTP will be added
- predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit instruments securities settlement reconciliations
- MTMX coexistence
- multi-BIC multi-currency
- SEPA ready certification
- TARGET2 ready
- SAGSAASAE interfaces
- duplicate detection
- liquidity reports
- competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
- accounting reconciliation
- AML (sanctions list matching)
- SaaS and cloud ready
along with resilience and start of maintenance and knowledge transfer (the last two obviously continuing in the next phases)
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 34 of 43 Allevo Confidential
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Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
The synthetic view of the project scope is provided in the following table
Crt No
Feature Activity Phase1 31Dec12
Phase2 31Dec13
Phase3 31Dec14
Phase4 31Dec15
Fin
TP
A Operational features
1
Predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit Instruments bonds (Romanian Euroclear) reconciliations
2 MTMX coexistence
3 Multi-BIC multi-currency
4 SaaS ready cloud ready
5 SEPA ready certification
6 TARGET2 ready
7 SAGSAASAE interfaces
8 Liquidity reports
9 Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
10 Accounting reconciliation
11 AML (sanctions list matching)
12 Duplicate detection
B Technical features
1 Routing financial message between services and monitoring of data flows
2 Multi-threading capabilities
3 Persistent end-to-end transactions
4 Batching de-batching
5 Resilience (at transaction level)
6 Archiving
7 Tracing and logging of transactions and user events
8 Transient errors detection and recovery
9 Real time search and reports
10 Security access and user administration
C Other activities
1 FinTP maintenance
2 Knowledge transfer
Co
mm
un
ity
Establishing the institutionscomponents
1 Mentor
2 Software Auditor amp Provider
3 Legal service
4 Members
5 Allevo initial role
6 Platform
7 Marketing
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 35 of 43 Allevo Confidential
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Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
9 Limitations The main limitations in the economy of the project consist of phasing several FinTP
operational features for the following year (eg debit instruments liquidity reporting
AML filtering accounting reconciliation resilience SaaS ready cloud ready etc)
At the same time for features intended to front-office usage like Remit it was not yet
decided to publish them as open source product
The synthetic view of the main limitations is provided in the following table
Crt
nrItem Limitation Exclusion Comments
1
FinTP
a
Operational features Available in 2013
b
Remit Not included in
open source
package
2
Community
a
Rules Tightly controlled The statute should
ensure the right
balance between
safety and free
association of talents
Given the significant budget allocation (at least from Allevo perspective) the strong
requirement to meet the maximum ceiling will limit the FinTP product initial preparation
and maintenance expenses
Community wise the obligation of a tight regulated statute will have to ensure the right
balance between safety (mandatory in an environment dealing with financial
transactions) and a free association of talents (typical in an open source community)
In the first period after launch (at least the first two years) of the initiative the
maintenance and support activities will be provided by Allevo (as initial contributor)
A major restriction would be to meet the budgeted development and maintenance
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10 Appendix - Risks
Specific risks
1 Product
a Long delivery lead time This is a medium probability and impact risk however Allevo should make available the needed resources and motivate the entire team for the job
b Credibility loss if FinTP fails to further become certified on meaningful operations andor business tracks (ie SWIFT business certification tracks or similar) The single possible containment is lobbying if the application certification program rejects open source products Anyway the impact is very important and its materialization should be avoided
c Low quality of the allocated team and improper version management are highly unlikely to occur as long as the formal transfer of responsibility is smoothly made from Allevo to the corresponding body put in place by the community The real hidden risk is that this process could take too long and it thus has a very high impact
d Poor FinTP quality may result if the community fails to institutionalize proper quality assurance (QA) and verification amp validation (VampV) processes This is most expected not to happen but if it does the impact is at least medium The single path to overcome this risk consists in a professional approach to these items based on institutionalizing practice proven QA and VampV processes
e Allevo lack of expertise in the open source business This can be contained by carefully selecting trustful amp truly expert consultants Otherwise it means more money longer time spent on project and expenses without proper return
2 Service
a The software maintenance does not properly deliver as expected ie on-time and on-quality bug fixing regulation amp standards alignment and productivity amp technological improvement The key to contain this risk materialization is the community status having provisions to neatly provide maintenance and further development of the rules for FinTP as well as the applicable rules and fees for the ancillary services
b Low quality and safety of the service received by the members of the community To avoid the risk of performing the one-time amp recurring support services by under-prepared professionals the community has to rule the process of training and qualifying the companies willing to contribute in this area
c Not meeting the minimal SLA criteria The community should regulate and periodically revise the training curricula and to further audit both the teachers and the certified experts to ensure the service level agreements are met
d Under motivated service providing professionals - up to the level of not feeling the high impact of their activity The community status must provide guidance to the contributors on the minimal standards the professionals should meet
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e Constrained expert resource pool This risk could be overcome by the communitys policy to ensure at all time a balanced number of motivated experts to the communitys size Failing to do so may result in high negative impact of the community business and public perception
3 Community
a Emergence of a parallel competitive community If the optimal timing between publically disclosing FinTP and community take-off is not achieved then there are high chances that following a competitive initiative other entrepreneurs successfully launch their own similar or derived community This could be avoided by periodical reviews of the progress of both FinTP and community status and deciding whether the project needs to be put on hold or not
b Unfit reputation of the Moderator or main contributors If either the Moderator or the initial contributors are not beyond any dispute and are reputable institutes then there is certainly something rotten in Denmark and the project should be put on-hold
c No commitment from the Moderator‟s side Similarly if the Moderator does not commit to the project it means that Denmark has a serious problem to solve The project should relinquish until the matter is fixed
4 Legal
a Misuse of copyright and intellectual property (IP)The assigned working team could not be aware of the limitations and liabilities of using (entirely or partially) third party software this risk can be contained by delivering the right training providing proper working procedures carefully recording and documenting the use of open source code and carefully cross-scanning
b Injunctive relief and financial damages can be caused by not properly and continuously controlling the use of third party open source code resulting in copyright or IP infringement There are two containment measures which can be taken tighten the compliance check during the product lifecycle or apply the sanction policy as to set an example
c The competition starts a class action - this may result in delaying the project
5 Financing
a Lack of long term financing institutions Allevo should urge its consultant to identify and draw a reasonable list of financial options institutions
b Exceeding the budget given that this type of project has no precedent in Allevo and to avoid exposing to the dependency on engagement to financial institutions or to commitments beyond the existing budget a further carefully drawn project plan is needed along with its explicit approval from the board of the company
Market related risks
1 False expectations
a Expensive services Not everything is free aside the initial and maintenance free licensing the training the support and other professional services can amount to more than in general expected Allevo rates this risk as medium possible but with low impact as long as the law governing the community and its initial period of operation will consecrate fair market prices and competitive sources of contribution
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b Hidden costs for patches updates and upgrades While of similarly weight in terms of probability and impact this should be no real concern as long as the law governing the community clearly provides for free and accountable maintenance
2 Poor image on quality
a Too many releases making FinTP hard to manage and unsafe to operate Given proper regulation of the community and the mature root of FinTP Allevo disregards the possibility of this risk to materialize However if this were to happen this is a high impact risk and by all means should be avoided
b Backward technological (in)compatibility looks to us as a low risk in all respects and within organizations applying practice proven software engineering processes and professional - accountable team this is not likely to materialize
c Support can be perceived as the highest impact risk for FinTP This can be overcome by tight regulation of the commercial and professional conditions to deliver the service (for instance only qualified organizations should be recommended to members for supporting FinTP)
d SLA and accountability for both internally or externally performed services is closely correlated to the previous risk and the community status should provide the support for growing a community of competencies and accountable professionals around FinTP Periodical auditing (by the specialized community body) of this pool of professionals will further ensure the confidence that the skills are preserved at the required level
e Code fragmentation and forking is a high impact risk with a low probability of happening in the initial period provided the knowledge transfer is done orderly and in an institutionalized manner
3 Inherent uncertainty
a Community disputes can jeopardize its cohesion the project viability and future This is a high impact possibly high probability risk and it is the definite role of the Moderator to feel prevent and while materializing mitigate any conflicting situation
b FinTP going commercial post-launch This is a huge impact possibly high occurrence probability but manageable with the right legal instruments provisioned in the community
c Loss of alignment to industry standards and regulations This risk has medium probability and medium impact given the assumption that the community is tightly regulated and the working bodies institutionalized and gathering professionals
4 Legal
Copyright infringement given Allevo experience in the open source business this risk is highly probable and has a high impact on FinTP especially if mistakes are made in the launching phase Similarly if during the product maintenance and further development phase the community fails to institutionalize proper formal software development processes (covering all FinTP lifecycle phases) based on industry practice proven model(s) Supplementary the expert code scanning audit for compliance is the single resort to preclude external software source misuse
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5 GPL specific
a Noncompliance to the GPL license If GPL license is used the product should further distribute in compliance with this part provisions High impact and probability but manageable if proper software development processes are used and if the statute clearly defines the licensing model for FinTP
b FinTP unconformity The risk that software engineers get inspired by a chic solution which they import and emulate similarly in FinTP And this is also highly possible since les grands esprits se rencontre
6 Existing customers attitude
Anger for having paid for something which now is free The existent customers can be concerned about the future of their installed system its further development (in one word its future) and on the quality of the service (SLA including) Some recent adopters can possibly be furious for spending their money on buying licenses for a piece of software that differently packaged becomes free of charge
For the first situation the single best solution for Allevo is to ensure a smooth transition from the current status to the new solution deployed Also highly probable Allevo should provide for simultaneous (for at most one more year) maintenance of both FinTP and for qPayIntegrator
For the 2012 new qPayIntegrator adopters Allevo should transparently state the product‟s future and propose a commercially attractive migration towards FinTP when it becomes publically available (like the option for the installation migration and recurring services) The decision should clearly stay with the customer if he still buys Allevo licenses delays the implementation until FinTP is available or if he goes for a competitive solution
In other words the key to mitigate the existing customer perception is switching places and discarding if the situation proves to be uncomfortable
Bottom-line is that to avoid most of the risks the FinTP community must be a rather tightly controlled one though still opened to anyone willingly abiding to the rules
The synthetic view of the main risks their assigned probability impact and the corresponding containment approach is provided in the attached file
Risk IDRisk
CategoryRisk
Probability
(High
Medium
Low)
Severity
(High
Medium
Low)
Containment (Mitigation Action Proposed)
M1Free as in a
Free Puppy
M101
The training service amp support cost could account more than the
commercial product its replacing (application software is typically 30 of
the total cost of ownership of most projects)
Medium Low
M102 Hidden costs ie charge for patches updates and upgrades Medium Low
M2Frequent
updates
M201
Projects might be updated frequently - as often as everyday Too frequent
updates could have a negative impact on the implementation
interoperability and support
Low HighMAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M3Backwards
compatibility
M301 Less accountability Low LowMAP03 Access to prior versions of source code (additional in-house
development and support procedures might be necessary)
M4Support
related risks
M401Support could be perceived as the biggest issue with open source
software deploymentsHigh High
M402 Internal External Accountability SLAs High High
M403Code fragmentation or forking if the community fails to institutionalize
corporate like formal structureHigh High
M404Support could require greater involvement and different skills set from
operations staffMedium Medium
M5Community
immaturity Low Low
M501Could generate incompatibility of FinTP with industry standards amp
regulationsMedium Medium
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M6 Uncertainty The inherent uncertainty in every open source project
M601 Community disputes might impact project viability and future High HighMAP04 The Mentor should prevent amp mitigate any conflicts inside the
community
M602 Open source projects may not stay open in future releases High HighMAP05 The originator liabilities should be strongly enforced by the
community statute
M7 Legal risks
M701 Copyright infringement High High
M702 Can open source software deployments pass an audit
M8 GPL General Public License specific development concerns
M801Software thatrsquos derived from an existing GPL project in whole or in part
might not be released under the same licenseHigh High M08 The community should regulate the licensing model
M802
Developer contamination - developer could review an existing open source
project could see an elegant solution then implement a similar function in
closed source project
High HighMAP09 Procedurals constrains for the software developers should be
enforced
M9
Current
customers
attitude
The actual customer perception could be negative High High
M12 To prevent a negative attitude Allevo should involve the customers
in the FinTP project Allevo needs their active support for a smooth and
issues less transition
ma
rke
t re
late
d r
isk
s
co
st
rela
ted
ris
ks
MAP01 The community should regulate the applicable rules and fees for
services and maintenance
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
bu
sin
es
s a
nd
le
ga
l ri
sk
s
MAP06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S1Product
related
S101 Late delivery lead time Medium MediumMAP15 Allevo should provide proper resources (funding and human
resources)
S102 Credibility loss if fail to certify with SWIFT Medium High MAP16 Should be discussedamp agreed with SWIFT
S103 Inexperienced team or allocation below needs Low HighMAP15 Allevo should provide proper resources (funding and human
resources)
S104 Improper or non efficient version management Low High MAP16 Review the current Allevo Configuration Management System
S105Poor quality if the community fails to institutionalize proper verification and
validation practices3
M06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S106 Lack of expertise in open source projects 2 Allevo should engage thoroughly selected Open Source consultants
S2Service
related
S201
The software maintenance not properly providing for bugs fixing
regulationamp standard alignment technological improvements communities
improvement requests
High HighMAP01 The community should regulate the applicable rules and fees for
services and maintenance
S202 One-time amp recurring services might be provided by unqualified resources High HighMAP17 The community should regulate the training curricula and related
expertise certification
S203 Provided services might not meet the minimal SLA performance criteria High HighMAP17 The community should regulate the training curricula and related
expertise certification
S204 Relaxed or lack of accountability of the professionals High HighMAP18 The community should regulate the employment agreement of
the professionals
S205 Lack of qualified professionals High HighMAP19 The community should ensure a balanced number of certified
professionals with the community size
S3Community
related
S301
If after disclosing FinTP the community does not enthusiastically adopt
the solution competitors might more successfully develop a similar
strategy
Medium MediumMAP20 FinTP promotion should be convincing and realistic A well
organized marketing campaign by Allevo
S302The community mentor andor early adhering members have no
undeniable prestige or are not largely trustfulMedium Medium MAP99 Project status review Ending the project could be one option
S303 The Mentor does not strongly commit for the project Medium Medium MAP99 Project status review Ending the project could be one option
S4 Legal
S401Exposure to copyright and IP infringement due to working team unaware of
the legal consequences of using third party softwareMedium Medium
MAP21 Allevo should keep records and fully document the use of open
source code
S402Copyright or intellectual property infringement can lead to injunctive relief
and monetary damagesHigh High
MAP23 Allevo should institutionalize a tight licensing and technical
control
S403 All risks related to open source compliance High HighMAP24 Allevo should appoint as soon as possible a FinTP compliance
Officer
S5 Financial
S501 Lack of financing institutions Medium MediumMAP25 Allevo should urge consultant to provide a consistent list of
potential investors
S502 Dependency on the financing institution approval Medium Medium
S503Not thoroughly planned project overlooking one or some project cost that
need to be financedMedium Medium
Sp
ec
ific
ris
ks
tec
hn
ica
lm
ark
eti
ng
leg
al
fun
din
g
MAP26 Allevo should carefully draw a consistent and eligible project for
financing
Risks
Riskspdf
FinTP - Vision and Scope
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11 Appendix - Bibliography 1 Accenture Open Source Research Geographic Findings
2 Accenture Open Source Research Industry Findings
3 Producing Open Source Software - How to Run a Successful Free Software
Project by Karl Fogel
4 Open Source Software Risks and Rewards by Gary Hein
5 A Business Case Study of Open Source Software by Carolyn A Kenwood
6 6 critical success factors for product development by Christian Wig
7 Bank 20 by Brett King
8 Managing the business risks of open innovation by Oliver Alexy and Markus
9 Product idea evaluation checklist shared by Startgass AS
10 SWIFT 2015 Strategy
11 Customers and business impact of product changes
FinTP - Vision and Scope
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12 Appendix - Glossary ACH Automated Clearing House that is used to clear retail payments
between banks in a country or region
APAC Asia and Pacific
AML Anti-Money Laundering
BCampDR Business continuity amp disaster recovery
B2B Business to business
C2B Consumer to business
CET Central European Time
CMMI Capability Maturity Model Integration
CMS Configuration Management System
Coexistence The situation of multiple standards existing at the same time in the same business space Within SWIFT this refers to the coexistence between the MT and MX standards This also refers to the set of measures being taken to make the situation easier to handle by the community (publication of mapping rules translation serviceshellip)
CSM Clearing and Settlement Mechanism
CUG Closed User Group
Dictionary Part of the ISO 20022 Repository that contains all items that can be re-used during business modelling and message definition activities
EAI Enterprise Application Integration - middleware to connect applications and communication interfaces Typical EAI software includes features for mapping data between various formats enriching messages with data from other systems and orchestrating message flows
ECB European Central Bank
EMEA Europe Middle-East Africa
EPC European Payment Council
ERP Enterprise Resource Planning
EU European Union
EUCLID Connectivity to EuroClear Bank services
FIN The messaging service offered by SWIFT for the secure and reliable exchange of MT messages in store-and-forward mode By extension the syntax used to format these MTs
IP intellectual property
Interoperability Capability to easily exchange business information while using different message standards ISO 20022 promotes global use of syntax-neutral business and message components as a common denominator to achieve interoperability between standards using different syntaxes
ISO The International Organization for Standardization - an international standard-setting body composed of representatives from more than 160 national standards organizations that promulgates worldwide standards in a variety of domains aiming at facilitating cross-border exchanges of goods services and techniques
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ISO 15022 An ISO standard that describes the syntax to be used for developing securities messages used mainly to support back office related transaction flows It replaced the previous securities messaging standard ISO 7775
ISO 20022 RA Registration Authority - offers the services described in an ISO standard on behalf of and under a contractual agreement with the International Organization for Standardization
ISO 20022 Repository
Repository maintained by the ISO20022 RA which contains the financial business models message definitions and components defined in compliance with the ISO 20022 standard
ISO 20022 RMG Registration Management Group - in charge of the overall management of the ISO 20022 development and registration process in accordance with the ISO 20022 standard
ISO 20022 SEG Standards Evaluation Groups -in charge of validating candidate ISO 20022 messages within the scope of the business justification and ensuring that they address the needs of their future international community of users
ISV Independent Software Vendor
KYC Know Your Customer
MACUG Member Administered Closed User Group
Message A set of structured information exchanged between two parties involved in a financial transaction
Message component and element
A re-usable data structure used for assembling message definitions The data defined in a message component is bdquotraced‟ back to the business components and business elements In simple terms business components define the business meaning message components create data structures for messaging
MI Market Infrastructure - a system that provides services to the financial industry for trading clearing and settlement matching of financial transactions and depository functions
Middleware Software that enables data to be exchanged among different systems with standard communication components and tools for formatting mapping and processing
MT The traditional bdquotag value‟ Message Types for use on the FIN service offered by SWIFT
MX An XML message exchanged over SWIFTNet whether or not ISO 20022 compliant
OS Open source
PSP Payment service provider
QA Quality assurance
RMA Relationship Management Access
RTGS Real Time Gross Settlement System
SAA SWIFT Alliance Access
SAE SWIFT Alliance Entry
SAG SWIFT Alliance Gateway
SaaS Software as a Service
SCORE Standardized CORporate Environment
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Semantics The study of meaning usually in language The word is often used in ordinary language to denote a problem of understanding that comes down to word selection or connotation
SEPA Single Euro Payment Area
SLA Service level agreement
SME Small and Medium-sized Business(es)
SOA Service Oriented Architecture
SSB SWIFT Service Bureau
STP Straight Through Processing
SWIFT Society for Worldwide Interbank Financial Telecommunication Visit wwwswiftcom
Syntax Physical format of a message used to identify and represent the conveyed pieces of information
T2S TARGET2 Securities - an initiative of the Eurosystem It is an IT platform that aims to make settlements across national borders simpler and more cost-efficient
TARGET2 The Eurosystem-owned European Real Time Gross Settlement (RTGS) system (Trans-European Automated Real-time Gross Settlement Express Transfer System) TARGET2 is one of the largest high-value payment systems in the world
Taxonomy The classification in a hierarchical system typically organized by super type - sub type relationships also called generalization-specialization relationships or less formally parent-child relationships
TSU Trade Service Utility
TCO Total cost of ownership
Translation rules
Set of rules to be used to map the pieces of information included in a message expressed in one syntax to the equivalent message expressed in another syntax
Remit Remittances
XML eXtensible Mark-up Language - popular syntax to encode documents (or messages) electronically on the Internet XML allows communities to define their own identifiers (or tags) and format (or data type) for each component of a message
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Bureaus etc) ISV regulatory institutionsMarketing plan feasibility campaign efficiency and costs
2 MentorPreferable SWIFT
Also eligible SunGard IBM affiliation to other OS communitySWIFT decision
3 Legalcopyright Expert legal consultant and RO apprentice Cost and time shift dependent
4 Tight regulation Clear membership admission amp software contribution criteria The quality of the consultant advice
5 Marketing Actively recruiting community members Marketing plan feasibility campaign efficiency amp customer skepticism
a community portala provide content amp debate space information consolidation amp dissemination virtual
showroom subscription management support
a business analysis solution availability and maintenance by one of the
members or employed company
b press releases amp
announcementsb PR and AR b communicators availability and costs
c events c periodical conferences user focused meetings c cost dependent
6 Financing World Bank EU amp private funds Lobby amp funds availability
Item
FinTP
FinTP community
FinTP - Vision and Scope
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SWIFT standards EPC specification ECB or regional Central Banks
regulations that the community chooses to comply with) stay the most
important business specific anchors of FinTP
The FinTP design also offers support for flexible definition of new compliance
sources
5) Consultancy
The needed consultancy is twofold
‐ legal to ensure that FinTP does not infringe other licensing constraints
‐ open source specific to enable the right choice of the community type and of its governing law
The main constraint relies in choosing the right advisors true experts in the
open source industry amp with appropriate ethic profile - able to deliver as
promised The consultants have to be available 800 am divide 800 pm CET and
easily reachable - geo-location is of utmost importance Selection of the
consultant will basically be done on price assuming the right mix of expertise
and availability is achieved
6) Financing
While Allevo partially undertakes the financing of FinTP development the
ancillary consultancy necessary team education or acquisition of productivity
tools are far beyond the companys 2012 budget
To overcome possible delays in the project Allevo needs to sturdily act to
identify both the most appropriate commercial offer and additional necessary
financing source(s)
FinTP community
The community related items are members moderator legal tight regulation
marketing and financing For each of these items several assumptions and the
corresponding dependencies are provided in the following paragraphs
1) Members
We assume that the communitys members span several business profiles
(such as financial services institutions corporations market infrastructures
PSPs SSBs public administrations regulatory institutions and ISVs) sharing
the mutual focus on financial operations performance and improvement
By now after some tests on market acceptance there have been identified a
few supporters comprising financial services institutions and small ISVs
To ensure the success of building the community there is need for attracting
prestige influencers (market analysts consulting companies of scale - starting
with big four key industry providers - such as SWIFT other communities - ie
professional such as banking insurers capital market associations) and a
credible pool of financial institutions and corporations
To this end Allevo unrolls its own awareness campaign through direct
meetings publications blog posts and social media public presentations and
by officially launching the initiative in a conference focused on free of charge
financial transactions processing applications
Allevo further plans to use Sibos 2012 as opportunity to organize a less
traditional communication session gathering a relevant international panel to
FinTP - Vision and Scope
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debate the strong and weak aspects of this initiative amp to get the public involved
as much as possible
The goal is that by the end of 2012 some tens of different institutions are
committed to co-found the community and to actively contribute to establishing
the legal frame and to forming the required action bodies
2) Moderator
Allevo perceives the Moderator as the critical member of the community since
his prestige and influence will warrant the outcome of all performed activities
The moderator must commit on long term to develop the community and to
sponsor it with its share of trust
Allevo strongly believes that the Moderator should have a global footprint be a
reputable and trustful institution
3) Legalcopyright
The legal consultant and advisor needs to provide the coherent legal frame to
cover all community activities by roles and accountability While making it easy
for the members it should be more demanding as far as contributors are
concerned (though still encouraging ISVs to actively participate) It has to draw
very precise responsibilities for the independent and institutionalized bodies
(for instance product maintenance amp development and audit) and for the
Moderators status
The quality of this legal work fully relies on the expertise and experience of the
advisor
The law governing the community has to be in harmony with the European
(either French or Anglo-Saxon) legal system and with the open source legal
regulations largely practiced in other business regions (US and APAC)
4) Tight regulation
FinTP the product meant to gather a community which uses and supports it is
all about moving values between different entities Thats critical irrespective of
the amount because failing to perform properly opens the doors to arguments
amp loss of reputation with the related tangible costs Moreover the product has
to be beyond any doubt during its entire lifecycle free of any malefic
embedded functions meaning that contamination has to be avoided by all
means
Allevo strongly believes that this requirement can be attained only by tight
regulation of the community specific approval of the initially launched version
of FinTP and of the recurring contributions
This approach can be felt strange compared to most open source communities
and can lead to little interest from IT talents making them feel banned or
restricted It remains the Moderator‟s duty to make them feel privileged if
accepted and rewarded as such However this censorship is a price to be paid
since the community and the project are about processing transactions
initiating value transfer
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
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5) Marketing
The community needs to have the clear objective of spreading both
geographically and over a consistent number of industries
To achieve this goal the community should be able to actively provide open
access to relevant information (including explanations of concepts hands-on
evaluation) to non-members and to also answer their questions on FinTP and
on the community itself
The same level of information needs to be ensured for the members to whom
supplementary updates on the community events decisions available
releases patches and fixes should be made available They need to also get
focused forum discussions on specific business areas and subsequent
processes need to be distributed
These functionalities have to be hosted on the community‟s dedicated portal
This portal has to provide content dialogue space information consolidation
and broadcasting It must be a virtual showroom for FinTP It needs to host
documents and virtual meetings subscription management and product
support amp development
The community has to be able to run its own meetings enabling direct contact
between active members or their representatives
Meaningful press releases have to be regularly issued along with actively
maintaining a productive relationship with market analysts to consolidate a
clear public understanding of the community spirit and goals
6) Financing
Its all about money-money-money since at least for the first 2-3 years the
community needs to be financed
Upon reaching maturity the institutionalized bodies of the community can earn their income from collateral activities - such as organizing conferences providing education and specialized support services - either for the initial FinTP installations and customizations or for recurring services requested by the members An alternative can be trialling and certifying interested providers enabling them to perform support services for FinTP
Thus who could pump money into this project It could be one or a mix of
‐ World Bank - if governmental programs are implied and provided a proper project which convincingly demonstrates the beneficed social impact
‐ EU development funding
‐ interested wealthy members of the community
The most critical dependencies are external such as (arranged according to
their impact) availability of funds for building the community finding trustful
and skilled open source consultants (legal business community licensing)
The synthetic view of the main assumptions and dependencies is provided in
the attached file
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Maintenance amp user support 1-Jan-13 Marketing inst action
4 Activities
Initial planning amp budgeting 15-Dec-12 document
Roles allocation 15-Dec-12 document
Community inst Implementation 15-Dec-12 action
Awareness campaign 1-Jan-13 action ongoing process
Members recruiting 1-Jan-13 action ongoing process
Continued operation 1-Jan-13 action ongoing process
Service sales 1-Jan-13 action ongoing process
Future development planning 1-Jan-13 document ongoing process
5 Resource allocation
If existing institution - allocation 15-Dec-12 action
If newly formed - recruiting 15-Dec-12 action
Make FinTP available to comm 1-Jan-13 action ongoing process
Start community financing 1-Jan-13 action ongoing process
6 Financing
Initial investment 1-Jan-13 action secured by that date
First period of comm operation 31-Aug-13 action secured by that date
co
mm
un
ity
Project approach
Project approachpdf
FinTP - Vision and Scope
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Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
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8 Scope This chapter deals with the phased availability of various FinTP features again considered from application and community points of view
In the first phase (due Dec 2012) the core of FinTP application is ready including the following technical features
- financial message routing between services and monitoring of exchanges
- multi-threading capabilities
- persistent end-to-end transactions
- batching de-batching
- archiving
- tracing and logging of transactions and user events
- transient errors detection and recovery
- real time search and reports
- security access and user administration
Similarly during the first phase the main community components need to be in place
- moderator
- software development and maintenance body (Allevo also available in the first and second phase of the project)
- test amp validation body
- (software) auditor
- legal
- main contributors (Allevo falls into this position)
- platform
- marketing
In the second phase (Dec2012 - Dec2013) several operational features of FinTP will be added
- predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit instruments securities settlement reconciliations
- MTMX coexistence
- multi-BIC multi-currency
- SEPA ready certification
- TARGET2 ready
- SAGSAASAE interfaces
- duplicate detection
- liquidity reports
- competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
- accounting reconciliation
- AML (sanctions list matching)
- SaaS and cloud ready
along with resilience and start of maintenance and knowledge transfer (the last two obviously continuing in the next phases)
FinTP - Vision and Scope
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Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
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The synthetic view of the project scope is provided in the following table
Crt No
Feature Activity Phase1 31Dec12
Phase2 31Dec13
Phase3 31Dec14
Phase4 31Dec15
Fin
TP
A Operational features
1
Predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit Instruments bonds (Romanian Euroclear) reconciliations
2 MTMX coexistence
3 Multi-BIC multi-currency
4 SaaS ready cloud ready
5 SEPA ready certification
6 TARGET2 ready
7 SAGSAASAE interfaces
8 Liquidity reports
9 Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
10 Accounting reconciliation
11 AML (sanctions list matching)
12 Duplicate detection
B Technical features
1 Routing financial message between services and monitoring of data flows
2 Multi-threading capabilities
3 Persistent end-to-end transactions
4 Batching de-batching
5 Resilience (at transaction level)
6 Archiving
7 Tracing and logging of transactions and user events
8 Transient errors detection and recovery
9 Real time search and reports
10 Security access and user administration
C Other activities
1 FinTP maintenance
2 Knowledge transfer
Co
mm
un
ity
Establishing the institutionscomponents
1 Mentor
2 Software Auditor amp Provider
3 Legal service
4 Members
5 Allevo initial role
6 Platform
7 Marketing
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
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9 Limitations The main limitations in the economy of the project consist of phasing several FinTP
operational features for the following year (eg debit instruments liquidity reporting
AML filtering accounting reconciliation resilience SaaS ready cloud ready etc)
At the same time for features intended to front-office usage like Remit it was not yet
decided to publish them as open source product
The synthetic view of the main limitations is provided in the following table
Crt
nrItem Limitation Exclusion Comments
1
FinTP
a
Operational features Available in 2013
b
Remit Not included in
open source
package
2
Community
a
Rules Tightly controlled The statute should
ensure the right
balance between
safety and free
association of talents
Given the significant budget allocation (at least from Allevo perspective) the strong
requirement to meet the maximum ceiling will limit the FinTP product initial preparation
and maintenance expenses
Community wise the obligation of a tight regulated statute will have to ensure the right
balance between safety (mandatory in an environment dealing with financial
transactions) and a free association of talents (typical in an open source community)
In the first period after launch (at least the first two years) of the initiative the
maintenance and support activities will be provided by Allevo (as initial contributor)
A major restriction would be to meet the budgeted development and maintenance
FinTP - Vision and Scope
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10 Appendix - Risks
Specific risks
1 Product
a Long delivery lead time This is a medium probability and impact risk however Allevo should make available the needed resources and motivate the entire team for the job
b Credibility loss if FinTP fails to further become certified on meaningful operations andor business tracks (ie SWIFT business certification tracks or similar) The single possible containment is lobbying if the application certification program rejects open source products Anyway the impact is very important and its materialization should be avoided
c Low quality of the allocated team and improper version management are highly unlikely to occur as long as the formal transfer of responsibility is smoothly made from Allevo to the corresponding body put in place by the community The real hidden risk is that this process could take too long and it thus has a very high impact
d Poor FinTP quality may result if the community fails to institutionalize proper quality assurance (QA) and verification amp validation (VampV) processes This is most expected not to happen but if it does the impact is at least medium The single path to overcome this risk consists in a professional approach to these items based on institutionalizing practice proven QA and VampV processes
e Allevo lack of expertise in the open source business This can be contained by carefully selecting trustful amp truly expert consultants Otherwise it means more money longer time spent on project and expenses without proper return
2 Service
a The software maintenance does not properly deliver as expected ie on-time and on-quality bug fixing regulation amp standards alignment and productivity amp technological improvement The key to contain this risk materialization is the community status having provisions to neatly provide maintenance and further development of the rules for FinTP as well as the applicable rules and fees for the ancillary services
b Low quality and safety of the service received by the members of the community To avoid the risk of performing the one-time amp recurring support services by under-prepared professionals the community has to rule the process of training and qualifying the companies willing to contribute in this area
c Not meeting the minimal SLA criteria The community should regulate and periodically revise the training curricula and to further audit both the teachers and the certified experts to ensure the service level agreements are met
d Under motivated service providing professionals - up to the level of not feeling the high impact of their activity The community status must provide guidance to the contributors on the minimal standards the professionals should meet
FinTP - Vision and Scope
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e Constrained expert resource pool This risk could be overcome by the communitys policy to ensure at all time a balanced number of motivated experts to the communitys size Failing to do so may result in high negative impact of the community business and public perception
3 Community
a Emergence of a parallel competitive community If the optimal timing between publically disclosing FinTP and community take-off is not achieved then there are high chances that following a competitive initiative other entrepreneurs successfully launch their own similar or derived community This could be avoided by periodical reviews of the progress of both FinTP and community status and deciding whether the project needs to be put on hold or not
b Unfit reputation of the Moderator or main contributors If either the Moderator or the initial contributors are not beyond any dispute and are reputable institutes then there is certainly something rotten in Denmark and the project should be put on-hold
c No commitment from the Moderator‟s side Similarly if the Moderator does not commit to the project it means that Denmark has a serious problem to solve The project should relinquish until the matter is fixed
4 Legal
a Misuse of copyright and intellectual property (IP)The assigned working team could not be aware of the limitations and liabilities of using (entirely or partially) third party software this risk can be contained by delivering the right training providing proper working procedures carefully recording and documenting the use of open source code and carefully cross-scanning
b Injunctive relief and financial damages can be caused by not properly and continuously controlling the use of third party open source code resulting in copyright or IP infringement There are two containment measures which can be taken tighten the compliance check during the product lifecycle or apply the sanction policy as to set an example
c The competition starts a class action - this may result in delaying the project
5 Financing
a Lack of long term financing institutions Allevo should urge its consultant to identify and draw a reasonable list of financial options institutions
b Exceeding the budget given that this type of project has no precedent in Allevo and to avoid exposing to the dependency on engagement to financial institutions or to commitments beyond the existing budget a further carefully drawn project plan is needed along with its explicit approval from the board of the company
Market related risks
1 False expectations
a Expensive services Not everything is free aside the initial and maintenance free licensing the training the support and other professional services can amount to more than in general expected Allevo rates this risk as medium possible but with low impact as long as the law governing the community and its initial period of operation will consecrate fair market prices and competitive sources of contribution
FinTP - Vision and Scope
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b Hidden costs for patches updates and upgrades While of similarly weight in terms of probability and impact this should be no real concern as long as the law governing the community clearly provides for free and accountable maintenance
2 Poor image on quality
a Too many releases making FinTP hard to manage and unsafe to operate Given proper regulation of the community and the mature root of FinTP Allevo disregards the possibility of this risk to materialize However if this were to happen this is a high impact risk and by all means should be avoided
b Backward technological (in)compatibility looks to us as a low risk in all respects and within organizations applying practice proven software engineering processes and professional - accountable team this is not likely to materialize
c Support can be perceived as the highest impact risk for FinTP This can be overcome by tight regulation of the commercial and professional conditions to deliver the service (for instance only qualified organizations should be recommended to members for supporting FinTP)
d SLA and accountability for both internally or externally performed services is closely correlated to the previous risk and the community status should provide the support for growing a community of competencies and accountable professionals around FinTP Periodical auditing (by the specialized community body) of this pool of professionals will further ensure the confidence that the skills are preserved at the required level
e Code fragmentation and forking is a high impact risk with a low probability of happening in the initial period provided the knowledge transfer is done orderly and in an institutionalized manner
3 Inherent uncertainty
a Community disputes can jeopardize its cohesion the project viability and future This is a high impact possibly high probability risk and it is the definite role of the Moderator to feel prevent and while materializing mitigate any conflicting situation
b FinTP going commercial post-launch This is a huge impact possibly high occurrence probability but manageable with the right legal instruments provisioned in the community
c Loss of alignment to industry standards and regulations This risk has medium probability and medium impact given the assumption that the community is tightly regulated and the working bodies institutionalized and gathering professionals
4 Legal
Copyright infringement given Allevo experience in the open source business this risk is highly probable and has a high impact on FinTP especially if mistakes are made in the launching phase Similarly if during the product maintenance and further development phase the community fails to institutionalize proper formal software development processes (covering all FinTP lifecycle phases) based on industry practice proven model(s) Supplementary the expert code scanning audit for compliance is the single resort to preclude external software source misuse
FinTP - Vision and Scope
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5 GPL specific
a Noncompliance to the GPL license If GPL license is used the product should further distribute in compliance with this part provisions High impact and probability but manageable if proper software development processes are used and if the statute clearly defines the licensing model for FinTP
b FinTP unconformity The risk that software engineers get inspired by a chic solution which they import and emulate similarly in FinTP And this is also highly possible since les grands esprits se rencontre
6 Existing customers attitude
Anger for having paid for something which now is free The existent customers can be concerned about the future of their installed system its further development (in one word its future) and on the quality of the service (SLA including) Some recent adopters can possibly be furious for spending their money on buying licenses for a piece of software that differently packaged becomes free of charge
For the first situation the single best solution for Allevo is to ensure a smooth transition from the current status to the new solution deployed Also highly probable Allevo should provide for simultaneous (for at most one more year) maintenance of both FinTP and for qPayIntegrator
For the 2012 new qPayIntegrator adopters Allevo should transparently state the product‟s future and propose a commercially attractive migration towards FinTP when it becomes publically available (like the option for the installation migration and recurring services) The decision should clearly stay with the customer if he still buys Allevo licenses delays the implementation until FinTP is available or if he goes for a competitive solution
In other words the key to mitigate the existing customer perception is switching places and discarding if the situation proves to be uncomfortable
Bottom-line is that to avoid most of the risks the FinTP community must be a rather tightly controlled one though still opened to anyone willingly abiding to the rules
The synthetic view of the main risks their assigned probability impact and the corresponding containment approach is provided in the attached file
Risk IDRisk
CategoryRisk
Probability
(High
Medium
Low)
Severity
(High
Medium
Low)
Containment (Mitigation Action Proposed)
M1Free as in a
Free Puppy
M101
The training service amp support cost could account more than the
commercial product its replacing (application software is typically 30 of
the total cost of ownership of most projects)
Medium Low
M102 Hidden costs ie charge for patches updates and upgrades Medium Low
M2Frequent
updates
M201
Projects might be updated frequently - as often as everyday Too frequent
updates could have a negative impact on the implementation
interoperability and support
Low HighMAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M3Backwards
compatibility
M301 Less accountability Low LowMAP03 Access to prior versions of source code (additional in-house
development and support procedures might be necessary)
M4Support
related risks
M401Support could be perceived as the biggest issue with open source
software deploymentsHigh High
M402 Internal External Accountability SLAs High High
M403Code fragmentation or forking if the community fails to institutionalize
corporate like formal structureHigh High
M404Support could require greater involvement and different skills set from
operations staffMedium Medium
M5Community
immaturity Low Low
M501Could generate incompatibility of FinTP with industry standards amp
regulationsMedium Medium
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M6 Uncertainty The inherent uncertainty in every open source project
M601 Community disputes might impact project viability and future High HighMAP04 The Mentor should prevent amp mitigate any conflicts inside the
community
M602 Open source projects may not stay open in future releases High HighMAP05 The originator liabilities should be strongly enforced by the
community statute
M7 Legal risks
M701 Copyright infringement High High
M702 Can open source software deployments pass an audit
M8 GPL General Public License specific development concerns
M801Software thatrsquos derived from an existing GPL project in whole or in part
might not be released under the same licenseHigh High M08 The community should regulate the licensing model
M802
Developer contamination - developer could review an existing open source
project could see an elegant solution then implement a similar function in
closed source project
High HighMAP09 Procedurals constrains for the software developers should be
enforced
M9
Current
customers
attitude
The actual customer perception could be negative High High
M12 To prevent a negative attitude Allevo should involve the customers
in the FinTP project Allevo needs their active support for a smooth and
issues less transition
ma
rke
t re
late
d r
isk
s
co
st
rela
ted
ris
ks
MAP01 The community should regulate the applicable rules and fees for
services and maintenance
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
bu
sin
es
s a
nd
le
ga
l ri
sk
s
MAP06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S1Product
related
S101 Late delivery lead time Medium MediumMAP15 Allevo should provide proper resources (funding and human
resources)
S102 Credibility loss if fail to certify with SWIFT Medium High MAP16 Should be discussedamp agreed with SWIFT
S103 Inexperienced team or allocation below needs Low HighMAP15 Allevo should provide proper resources (funding and human
resources)
S104 Improper or non efficient version management Low High MAP16 Review the current Allevo Configuration Management System
S105Poor quality if the community fails to institutionalize proper verification and
validation practices3
M06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S106 Lack of expertise in open source projects 2 Allevo should engage thoroughly selected Open Source consultants
S2Service
related
S201
The software maintenance not properly providing for bugs fixing
regulationamp standard alignment technological improvements communities
improvement requests
High HighMAP01 The community should regulate the applicable rules and fees for
services and maintenance
S202 One-time amp recurring services might be provided by unqualified resources High HighMAP17 The community should regulate the training curricula and related
expertise certification
S203 Provided services might not meet the minimal SLA performance criteria High HighMAP17 The community should regulate the training curricula and related
expertise certification
S204 Relaxed or lack of accountability of the professionals High HighMAP18 The community should regulate the employment agreement of
the professionals
S205 Lack of qualified professionals High HighMAP19 The community should ensure a balanced number of certified
professionals with the community size
S3Community
related
S301
If after disclosing FinTP the community does not enthusiastically adopt
the solution competitors might more successfully develop a similar
strategy
Medium MediumMAP20 FinTP promotion should be convincing and realistic A well
organized marketing campaign by Allevo
S302The community mentor andor early adhering members have no
undeniable prestige or are not largely trustfulMedium Medium MAP99 Project status review Ending the project could be one option
S303 The Mentor does not strongly commit for the project Medium Medium MAP99 Project status review Ending the project could be one option
S4 Legal
S401Exposure to copyright and IP infringement due to working team unaware of
the legal consequences of using third party softwareMedium Medium
MAP21 Allevo should keep records and fully document the use of open
source code
S402Copyright or intellectual property infringement can lead to injunctive relief
and monetary damagesHigh High
MAP23 Allevo should institutionalize a tight licensing and technical
control
S403 All risks related to open source compliance High HighMAP24 Allevo should appoint as soon as possible a FinTP compliance
Officer
S5 Financial
S501 Lack of financing institutions Medium MediumMAP25 Allevo should urge consultant to provide a consistent list of
potential investors
S502 Dependency on the financing institution approval Medium Medium
S503Not thoroughly planned project overlooking one or some project cost that
need to be financedMedium Medium
Sp
ec
ific
ris
ks
tec
hn
ica
lm
ark
eti
ng
leg
al
fun
din
g
MAP26 Allevo should carefully draw a consistent and eligible project for
financing
Risks
Riskspdf
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 40 of 43 Allevo Confidential
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wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
11 Appendix - Bibliography 1 Accenture Open Source Research Geographic Findings
2 Accenture Open Source Research Industry Findings
3 Producing Open Source Software - How to Run a Successful Free Software
Project by Karl Fogel
4 Open Source Software Risks and Rewards by Gary Hein
5 A Business Case Study of Open Source Software by Carolyn A Kenwood
6 6 critical success factors for product development by Christian Wig
7 Bank 20 by Brett King
8 Managing the business risks of open innovation by Oliver Alexy and Markus
9 Product idea evaluation checklist shared by Startgass AS
10 SWIFT 2015 Strategy
11 Customers and business impact of product changes
FinTP - Vision and Scope
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Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
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12 Appendix - Glossary ACH Automated Clearing House that is used to clear retail payments
between banks in a country or region
APAC Asia and Pacific
AML Anti-Money Laundering
BCampDR Business continuity amp disaster recovery
B2B Business to business
C2B Consumer to business
CET Central European Time
CMMI Capability Maturity Model Integration
CMS Configuration Management System
Coexistence The situation of multiple standards existing at the same time in the same business space Within SWIFT this refers to the coexistence between the MT and MX standards This also refers to the set of measures being taken to make the situation easier to handle by the community (publication of mapping rules translation serviceshellip)
CSM Clearing and Settlement Mechanism
CUG Closed User Group
Dictionary Part of the ISO 20022 Repository that contains all items that can be re-used during business modelling and message definition activities
EAI Enterprise Application Integration - middleware to connect applications and communication interfaces Typical EAI software includes features for mapping data between various formats enriching messages with data from other systems and orchestrating message flows
ECB European Central Bank
EMEA Europe Middle-East Africa
EPC European Payment Council
ERP Enterprise Resource Planning
EU European Union
EUCLID Connectivity to EuroClear Bank services
FIN The messaging service offered by SWIFT for the secure and reliable exchange of MT messages in store-and-forward mode By extension the syntax used to format these MTs
IP intellectual property
Interoperability Capability to easily exchange business information while using different message standards ISO 20022 promotes global use of syntax-neutral business and message components as a common denominator to achieve interoperability between standards using different syntaxes
ISO The International Organization for Standardization - an international standard-setting body composed of representatives from more than 160 national standards organizations that promulgates worldwide standards in a variety of domains aiming at facilitating cross-border exchanges of goods services and techniques
FinTP - Vision and Scope
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ISO 15022 An ISO standard that describes the syntax to be used for developing securities messages used mainly to support back office related transaction flows It replaced the previous securities messaging standard ISO 7775
ISO 20022 RA Registration Authority - offers the services described in an ISO standard on behalf of and under a contractual agreement with the International Organization for Standardization
ISO 20022 Repository
Repository maintained by the ISO20022 RA which contains the financial business models message definitions and components defined in compliance with the ISO 20022 standard
ISO 20022 RMG Registration Management Group - in charge of the overall management of the ISO 20022 development and registration process in accordance with the ISO 20022 standard
ISO 20022 SEG Standards Evaluation Groups -in charge of validating candidate ISO 20022 messages within the scope of the business justification and ensuring that they address the needs of their future international community of users
ISV Independent Software Vendor
KYC Know Your Customer
MACUG Member Administered Closed User Group
Message A set of structured information exchanged between two parties involved in a financial transaction
Message component and element
A re-usable data structure used for assembling message definitions The data defined in a message component is bdquotraced‟ back to the business components and business elements In simple terms business components define the business meaning message components create data structures for messaging
MI Market Infrastructure - a system that provides services to the financial industry for trading clearing and settlement matching of financial transactions and depository functions
Middleware Software that enables data to be exchanged among different systems with standard communication components and tools for formatting mapping and processing
MT The traditional bdquotag value‟ Message Types for use on the FIN service offered by SWIFT
MX An XML message exchanged over SWIFTNet whether or not ISO 20022 compliant
OS Open source
PSP Payment service provider
QA Quality assurance
RMA Relationship Management Access
RTGS Real Time Gross Settlement System
SAA SWIFT Alliance Access
SAE SWIFT Alliance Entry
SAG SWIFT Alliance Gateway
SaaS Software as a Service
SCORE Standardized CORporate Environment
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Semantics The study of meaning usually in language The word is often used in ordinary language to denote a problem of understanding that comes down to word selection or connotation
SEPA Single Euro Payment Area
SLA Service level agreement
SME Small and Medium-sized Business(es)
SOA Service Oriented Architecture
SSB SWIFT Service Bureau
STP Straight Through Processing
SWIFT Society for Worldwide Interbank Financial Telecommunication Visit wwwswiftcom
Syntax Physical format of a message used to identify and represent the conveyed pieces of information
T2S TARGET2 Securities - an initiative of the Eurosystem It is an IT platform that aims to make settlements across national borders simpler and more cost-efficient
TARGET2 The Eurosystem-owned European Real Time Gross Settlement (RTGS) system (Trans-European Automated Real-time Gross Settlement Express Transfer System) TARGET2 is one of the largest high-value payment systems in the world
Taxonomy The classification in a hierarchical system typically organized by super type - sub type relationships also called generalization-specialization relationships or less formally parent-child relationships
TSU Trade Service Utility
TCO Total cost of ownership
Translation rules
Set of rules to be used to map the pieces of information included in a message expressed in one syntax to the equivalent message expressed in another syntax
Remit Remittances
XML eXtensible Mark-up Language - popular syntax to encode documents (or messages) electronically on the Internet XML allows communities to define their own identifiers (or tags) and format (or data type) for each component of a message
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Bureaus etc) ISV regulatory institutionsMarketing plan feasibility campaign efficiency and costs
2 MentorPreferable SWIFT
Also eligible SunGard IBM affiliation to other OS communitySWIFT decision
3 Legalcopyright Expert legal consultant and RO apprentice Cost and time shift dependent
4 Tight regulation Clear membership admission amp software contribution criteria The quality of the consultant advice
5 Marketing Actively recruiting community members Marketing plan feasibility campaign efficiency amp customer skepticism
a community portala provide content amp debate space information consolidation amp dissemination virtual
showroom subscription management support
a business analysis solution availability and maintenance by one of the
members or employed company
b press releases amp
announcementsb PR and AR b communicators availability and costs
c events c periodical conferences user focused meetings c cost dependent
6 Financing World Bank EU amp private funds Lobby amp funds availability
Item
FinTP
FinTP community
FinTP - Vision and Scope
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debate the strong and weak aspects of this initiative amp to get the public involved
as much as possible
The goal is that by the end of 2012 some tens of different institutions are
committed to co-found the community and to actively contribute to establishing
the legal frame and to forming the required action bodies
2) Moderator
Allevo perceives the Moderator as the critical member of the community since
his prestige and influence will warrant the outcome of all performed activities
The moderator must commit on long term to develop the community and to
sponsor it with its share of trust
Allevo strongly believes that the Moderator should have a global footprint be a
reputable and trustful institution
3) Legalcopyright
The legal consultant and advisor needs to provide the coherent legal frame to
cover all community activities by roles and accountability While making it easy
for the members it should be more demanding as far as contributors are
concerned (though still encouraging ISVs to actively participate) It has to draw
very precise responsibilities for the independent and institutionalized bodies
(for instance product maintenance amp development and audit) and for the
Moderators status
The quality of this legal work fully relies on the expertise and experience of the
advisor
The law governing the community has to be in harmony with the European
(either French or Anglo-Saxon) legal system and with the open source legal
regulations largely practiced in other business regions (US and APAC)
4) Tight regulation
FinTP the product meant to gather a community which uses and supports it is
all about moving values between different entities Thats critical irrespective of
the amount because failing to perform properly opens the doors to arguments
amp loss of reputation with the related tangible costs Moreover the product has
to be beyond any doubt during its entire lifecycle free of any malefic
embedded functions meaning that contamination has to be avoided by all
means
Allevo strongly believes that this requirement can be attained only by tight
regulation of the community specific approval of the initially launched version
of FinTP and of the recurring contributions
This approach can be felt strange compared to most open source communities
and can lead to little interest from IT talents making them feel banned or
restricted It remains the Moderator‟s duty to make them feel privileged if
accepted and rewarded as such However this censorship is a price to be paid
since the community and the project are about processing transactions
initiating value transfer
FinTP - Vision and Scope
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5) Marketing
The community needs to have the clear objective of spreading both
geographically and over a consistent number of industries
To achieve this goal the community should be able to actively provide open
access to relevant information (including explanations of concepts hands-on
evaluation) to non-members and to also answer their questions on FinTP and
on the community itself
The same level of information needs to be ensured for the members to whom
supplementary updates on the community events decisions available
releases patches and fixes should be made available They need to also get
focused forum discussions on specific business areas and subsequent
processes need to be distributed
These functionalities have to be hosted on the community‟s dedicated portal
This portal has to provide content dialogue space information consolidation
and broadcasting It must be a virtual showroom for FinTP It needs to host
documents and virtual meetings subscription management and product
support amp development
The community has to be able to run its own meetings enabling direct contact
between active members or their representatives
Meaningful press releases have to be regularly issued along with actively
maintaining a productive relationship with market analysts to consolidate a
clear public understanding of the community spirit and goals
6) Financing
Its all about money-money-money since at least for the first 2-3 years the
community needs to be financed
Upon reaching maturity the institutionalized bodies of the community can earn their income from collateral activities - such as organizing conferences providing education and specialized support services - either for the initial FinTP installations and customizations or for recurring services requested by the members An alternative can be trialling and certifying interested providers enabling them to perform support services for FinTP
Thus who could pump money into this project It could be one or a mix of
‐ World Bank - if governmental programs are implied and provided a proper project which convincingly demonstrates the beneficed social impact
‐ EU development funding
‐ interested wealthy members of the community
The most critical dependencies are external such as (arranged according to
their impact) availability of funds for building the community finding trustful
and skilled open source consultants (legal business community licensing)
The synthetic view of the main assumptions and dependencies is provided in
the attached file
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Maintenance amp user support 1-Jan-13 Marketing inst action
4 Activities
Initial planning amp budgeting 15-Dec-12 document
Roles allocation 15-Dec-12 document
Community inst Implementation 15-Dec-12 action
Awareness campaign 1-Jan-13 action ongoing process
Members recruiting 1-Jan-13 action ongoing process
Continued operation 1-Jan-13 action ongoing process
Service sales 1-Jan-13 action ongoing process
Future development planning 1-Jan-13 document ongoing process
5 Resource allocation
If existing institution - allocation 15-Dec-12 action
If newly formed - recruiting 15-Dec-12 action
Make FinTP available to comm 1-Jan-13 action ongoing process
Start community financing 1-Jan-13 action ongoing process
6 Financing
Initial investment 1-Jan-13 action secured by that date
First period of comm operation 31-Aug-13 action secured by that date
co
mm
un
ity
Project approach
Project approachpdf
FinTP - Vision and Scope
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8 Scope This chapter deals with the phased availability of various FinTP features again considered from application and community points of view
In the first phase (due Dec 2012) the core of FinTP application is ready including the following technical features
- financial message routing between services and monitoring of exchanges
- multi-threading capabilities
- persistent end-to-end transactions
- batching de-batching
- archiving
- tracing and logging of transactions and user events
- transient errors detection and recovery
- real time search and reports
- security access and user administration
Similarly during the first phase the main community components need to be in place
- moderator
- software development and maintenance body (Allevo also available in the first and second phase of the project)
- test amp validation body
- (software) auditor
- legal
- main contributors (Allevo falls into this position)
- platform
- marketing
In the second phase (Dec2012 - Dec2013) several operational features of FinTP will be added
- predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit instruments securities settlement reconciliations
- MTMX coexistence
- multi-BIC multi-currency
- SEPA ready certification
- TARGET2 ready
- SAGSAASAE interfaces
- duplicate detection
- liquidity reports
- competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
- accounting reconciliation
- AML (sanctions list matching)
- SaaS and cloud ready
along with resilience and start of maintenance and knowledge transfer (the last two obviously continuing in the next phases)
FinTP - Vision and Scope
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The synthetic view of the project scope is provided in the following table
Crt No
Feature Activity Phase1 31Dec12
Phase2 31Dec13
Phase3 31Dec14
Phase4 31Dec15
Fin
TP
A Operational features
1
Predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit Instruments bonds (Romanian Euroclear) reconciliations
2 MTMX coexistence
3 Multi-BIC multi-currency
4 SaaS ready cloud ready
5 SEPA ready certification
6 TARGET2 ready
7 SAGSAASAE interfaces
8 Liquidity reports
9 Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
10 Accounting reconciliation
11 AML (sanctions list matching)
12 Duplicate detection
B Technical features
1 Routing financial message between services and monitoring of data flows
2 Multi-threading capabilities
3 Persistent end-to-end transactions
4 Batching de-batching
5 Resilience (at transaction level)
6 Archiving
7 Tracing and logging of transactions and user events
8 Transient errors detection and recovery
9 Real time search and reports
10 Security access and user administration
C Other activities
1 FinTP maintenance
2 Knowledge transfer
Co
mm
un
ity
Establishing the institutionscomponents
1 Mentor
2 Software Auditor amp Provider
3 Legal service
4 Members
5 Allevo initial role
6 Platform
7 Marketing
FinTP - Vision and Scope
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9 Limitations The main limitations in the economy of the project consist of phasing several FinTP
operational features for the following year (eg debit instruments liquidity reporting
AML filtering accounting reconciliation resilience SaaS ready cloud ready etc)
At the same time for features intended to front-office usage like Remit it was not yet
decided to publish them as open source product
The synthetic view of the main limitations is provided in the following table
Crt
nrItem Limitation Exclusion Comments
1
FinTP
a
Operational features Available in 2013
b
Remit Not included in
open source
package
2
Community
a
Rules Tightly controlled The statute should
ensure the right
balance between
safety and free
association of talents
Given the significant budget allocation (at least from Allevo perspective) the strong
requirement to meet the maximum ceiling will limit the FinTP product initial preparation
and maintenance expenses
Community wise the obligation of a tight regulated statute will have to ensure the right
balance between safety (mandatory in an environment dealing with financial
transactions) and a free association of talents (typical in an open source community)
In the first period after launch (at least the first two years) of the initiative the
maintenance and support activities will be provided by Allevo (as initial contributor)
A major restriction would be to meet the budgeted development and maintenance
FinTP - Vision and Scope
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10 Appendix - Risks
Specific risks
1 Product
a Long delivery lead time This is a medium probability and impact risk however Allevo should make available the needed resources and motivate the entire team for the job
b Credibility loss if FinTP fails to further become certified on meaningful operations andor business tracks (ie SWIFT business certification tracks or similar) The single possible containment is lobbying if the application certification program rejects open source products Anyway the impact is very important and its materialization should be avoided
c Low quality of the allocated team and improper version management are highly unlikely to occur as long as the formal transfer of responsibility is smoothly made from Allevo to the corresponding body put in place by the community The real hidden risk is that this process could take too long and it thus has a very high impact
d Poor FinTP quality may result if the community fails to institutionalize proper quality assurance (QA) and verification amp validation (VampV) processes This is most expected not to happen but if it does the impact is at least medium The single path to overcome this risk consists in a professional approach to these items based on institutionalizing practice proven QA and VampV processes
e Allevo lack of expertise in the open source business This can be contained by carefully selecting trustful amp truly expert consultants Otherwise it means more money longer time spent on project and expenses without proper return
2 Service
a The software maintenance does not properly deliver as expected ie on-time and on-quality bug fixing regulation amp standards alignment and productivity amp technological improvement The key to contain this risk materialization is the community status having provisions to neatly provide maintenance and further development of the rules for FinTP as well as the applicable rules and fees for the ancillary services
b Low quality and safety of the service received by the members of the community To avoid the risk of performing the one-time amp recurring support services by under-prepared professionals the community has to rule the process of training and qualifying the companies willing to contribute in this area
c Not meeting the minimal SLA criteria The community should regulate and periodically revise the training curricula and to further audit both the teachers and the certified experts to ensure the service level agreements are met
d Under motivated service providing professionals - up to the level of not feeling the high impact of their activity The community status must provide guidance to the contributors on the minimal standards the professionals should meet
FinTP - Vision and Scope
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e Constrained expert resource pool This risk could be overcome by the communitys policy to ensure at all time a balanced number of motivated experts to the communitys size Failing to do so may result in high negative impact of the community business and public perception
3 Community
a Emergence of a parallel competitive community If the optimal timing between publically disclosing FinTP and community take-off is not achieved then there are high chances that following a competitive initiative other entrepreneurs successfully launch their own similar or derived community This could be avoided by periodical reviews of the progress of both FinTP and community status and deciding whether the project needs to be put on hold or not
b Unfit reputation of the Moderator or main contributors If either the Moderator or the initial contributors are not beyond any dispute and are reputable institutes then there is certainly something rotten in Denmark and the project should be put on-hold
c No commitment from the Moderator‟s side Similarly if the Moderator does not commit to the project it means that Denmark has a serious problem to solve The project should relinquish until the matter is fixed
4 Legal
a Misuse of copyright and intellectual property (IP)The assigned working team could not be aware of the limitations and liabilities of using (entirely or partially) third party software this risk can be contained by delivering the right training providing proper working procedures carefully recording and documenting the use of open source code and carefully cross-scanning
b Injunctive relief and financial damages can be caused by not properly and continuously controlling the use of third party open source code resulting in copyright or IP infringement There are two containment measures which can be taken tighten the compliance check during the product lifecycle or apply the sanction policy as to set an example
c The competition starts a class action - this may result in delaying the project
5 Financing
a Lack of long term financing institutions Allevo should urge its consultant to identify and draw a reasonable list of financial options institutions
b Exceeding the budget given that this type of project has no precedent in Allevo and to avoid exposing to the dependency on engagement to financial institutions or to commitments beyond the existing budget a further carefully drawn project plan is needed along with its explicit approval from the board of the company
Market related risks
1 False expectations
a Expensive services Not everything is free aside the initial and maintenance free licensing the training the support and other professional services can amount to more than in general expected Allevo rates this risk as medium possible but with low impact as long as the law governing the community and its initial period of operation will consecrate fair market prices and competitive sources of contribution
FinTP - Vision and Scope
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b Hidden costs for patches updates and upgrades While of similarly weight in terms of probability and impact this should be no real concern as long as the law governing the community clearly provides for free and accountable maintenance
2 Poor image on quality
a Too many releases making FinTP hard to manage and unsafe to operate Given proper regulation of the community and the mature root of FinTP Allevo disregards the possibility of this risk to materialize However if this were to happen this is a high impact risk and by all means should be avoided
b Backward technological (in)compatibility looks to us as a low risk in all respects and within organizations applying practice proven software engineering processes and professional - accountable team this is not likely to materialize
c Support can be perceived as the highest impact risk for FinTP This can be overcome by tight regulation of the commercial and professional conditions to deliver the service (for instance only qualified organizations should be recommended to members for supporting FinTP)
d SLA and accountability for both internally or externally performed services is closely correlated to the previous risk and the community status should provide the support for growing a community of competencies and accountable professionals around FinTP Periodical auditing (by the specialized community body) of this pool of professionals will further ensure the confidence that the skills are preserved at the required level
e Code fragmentation and forking is a high impact risk with a low probability of happening in the initial period provided the knowledge transfer is done orderly and in an institutionalized manner
3 Inherent uncertainty
a Community disputes can jeopardize its cohesion the project viability and future This is a high impact possibly high probability risk and it is the definite role of the Moderator to feel prevent and while materializing mitigate any conflicting situation
b FinTP going commercial post-launch This is a huge impact possibly high occurrence probability but manageable with the right legal instruments provisioned in the community
c Loss of alignment to industry standards and regulations This risk has medium probability and medium impact given the assumption that the community is tightly regulated and the working bodies institutionalized and gathering professionals
4 Legal
Copyright infringement given Allevo experience in the open source business this risk is highly probable and has a high impact on FinTP especially if mistakes are made in the launching phase Similarly if during the product maintenance and further development phase the community fails to institutionalize proper formal software development processes (covering all FinTP lifecycle phases) based on industry practice proven model(s) Supplementary the expert code scanning audit for compliance is the single resort to preclude external software source misuse
FinTP - Vision and Scope
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5 GPL specific
a Noncompliance to the GPL license If GPL license is used the product should further distribute in compliance with this part provisions High impact and probability but manageable if proper software development processes are used and if the statute clearly defines the licensing model for FinTP
b FinTP unconformity The risk that software engineers get inspired by a chic solution which they import and emulate similarly in FinTP And this is also highly possible since les grands esprits se rencontre
6 Existing customers attitude
Anger for having paid for something which now is free The existent customers can be concerned about the future of their installed system its further development (in one word its future) and on the quality of the service (SLA including) Some recent adopters can possibly be furious for spending their money on buying licenses for a piece of software that differently packaged becomes free of charge
For the first situation the single best solution for Allevo is to ensure a smooth transition from the current status to the new solution deployed Also highly probable Allevo should provide for simultaneous (for at most one more year) maintenance of both FinTP and for qPayIntegrator
For the 2012 new qPayIntegrator adopters Allevo should transparently state the product‟s future and propose a commercially attractive migration towards FinTP when it becomes publically available (like the option for the installation migration and recurring services) The decision should clearly stay with the customer if he still buys Allevo licenses delays the implementation until FinTP is available or if he goes for a competitive solution
In other words the key to mitigate the existing customer perception is switching places and discarding if the situation proves to be uncomfortable
Bottom-line is that to avoid most of the risks the FinTP community must be a rather tightly controlled one though still opened to anyone willingly abiding to the rules
The synthetic view of the main risks their assigned probability impact and the corresponding containment approach is provided in the attached file
Risk IDRisk
CategoryRisk
Probability
(High
Medium
Low)
Severity
(High
Medium
Low)
Containment (Mitigation Action Proposed)
M1Free as in a
Free Puppy
M101
The training service amp support cost could account more than the
commercial product its replacing (application software is typically 30 of
the total cost of ownership of most projects)
Medium Low
M102 Hidden costs ie charge for patches updates and upgrades Medium Low
M2Frequent
updates
M201
Projects might be updated frequently - as often as everyday Too frequent
updates could have a negative impact on the implementation
interoperability and support
Low HighMAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M3Backwards
compatibility
M301 Less accountability Low LowMAP03 Access to prior versions of source code (additional in-house
development and support procedures might be necessary)
M4Support
related risks
M401Support could be perceived as the biggest issue with open source
software deploymentsHigh High
M402 Internal External Accountability SLAs High High
M403Code fragmentation or forking if the community fails to institutionalize
corporate like formal structureHigh High
M404Support could require greater involvement and different skills set from
operations staffMedium Medium
M5Community
immaturity Low Low
M501Could generate incompatibility of FinTP with industry standards amp
regulationsMedium Medium
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M6 Uncertainty The inherent uncertainty in every open source project
M601 Community disputes might impact project viability and future High HighMAP04 The Mentor should prevent amp mitigate any conflicts inside the
community
M602 Open source projects may not stay open in future releases High HighMAP05 The originator liabilities should be strongly enforced by the
community statute
M7 Legal risks
M701 Copyright infringement High High
M702 Can open source software deployments pass an audit
M8 GPL General Public License specific development concerns
M801Software thatrsquos derived from an existing GPL project in whole or in part
might not be released under the same licenseHigh High M08 The community should regulate the licensing model
M802
Developer contamination - developer could review an existing open source
project could see an elegant solution then implement a similar function in
closed source project
High HighMAP09 Procedurals constrains for the software developers should be
enforced
M9
Current
customers
attitude
The actual customer perception could be negative High High
M12 To prevent a negative attitude Allevo should involve the customers
in the FinTP project Allevo needs their active support for a smooth and
issues less transition
ma
rke
t re
late
d r
isk
s
co
st
rela
ted
ris
ks
MAP01 The community should regulate the applicable rules and fees for
services and maintenance
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
bu
sin
es
s a
nd
le
ga
l ri
sk
s
MAP06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S1Product
related
S101 Late delivery lead time Medium MediumMAP15 Allevo should provide proper resources (funding and human
resources)
S102 Credibility loss if fail to certify with SWIFT Medium High MAP16 Should be discussedamp agreed with SWIFT
S103 Inexperienced team or allocation below needs Low HighMAP15 Allevo should provide proper resources (funding and human
resources)
S104 Improper or non efficient version management Low High MAP16 Review the current Allevo Configuration Management System
S105Poor quality if the community fails to institutionalize proper verification and
validation practices3
M06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S106 Lack of expertise in open source projects 2 Allevo should engage thoroughly selected Open Source consultants
S2Service
related
S201
The software maintenance not properly providing for bugs fixing
regulationamp standard alignment technological improvements communities
improvement requests
High HighMAP01 The community should regulate the applicable rules and fees for
services and maintenance
S202 One-time amp recurring services might be provided by unqualified resources High HighMAP17 The community should regulate the training curricula and related
expertise certification
S203 Provided services might not meet the minimal SLA performance criteria High HighMAP17 The community should regulate the training curricula and related
expertise certification
S204 Relaxed or lack of accountability of the professionals High HighMAP18 The community should regulate the employment agreement of
the professionals
S205 Lack of qualified professionals High HighMAP19 The community should ensure a balanced number of certified
professionals with the community size
S3Community
related
S301
If after disclosing FinTP the community does not enthusiastically adopt
the solution competitors might more successfully develop a similar
strategy
Medium MediumMAP20 FinTP promotion should be convincing and realistic A well
organized marketing campaign by Allevo
S302The community mentor andor early adhering members have no
undeniable prestige or are not largely trustfulMedium Medium MAP99 Project status review Ending the project could be one option
S303 The Mentor does not strongly commit for the project Medium Medium MAP99 Project status review Ending the project could be one option
S4 Legal
S401Exposure to copyright and IP infringement due to working team unaware of
the legal consequences of using third party softwareMedium Medium
MAP21 Allevo should keep records and fully document the use of open
source code
S402Copyright or intellectual property infringement can lead to injunctive relief
and monetary damagesHigh High
MAP23 Allevo should institutionalize a tight licensing and technical
control
S403 All risks related to open source compliance High HighMAP24 Allevo should appoint as soon as possible a FinTP compliance
Officer
S5 Financial
S501 Lack of financing institutions Medium MediumMAP25 Allevo should urge consultant to provide a consistent list of
potential investors
S502 Dependency on the financing institution approval Medium Medium
S503Not thoroughly planned project overlooking one or some project cost that
need to be financedMedium Medium
Sp
ec
ific
ris
ks
tec
hn
ica
lm
ark
eti
ng
leg
al
fun
din
g
MAP26 Allevo should carefully draw a consistent and eligible project for
financing
Risks
Riskspdf
FinTP - Vision and Scope
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wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
11 Appendix - Bibliography 1 Accenture Open Source Research Geographic Findings
2 Accenture Open Source Research Industry Findings
3 Producing Open Source Software - How to Run a Successful Free Software
Project by Karl Fogel
4 Open Source Software Risks and Rewards by Gary Hein
5 A Business Case Study of Open Source Software by Carolyn A Kenwood
6 6 critical success factors for product development by Christian Wig
7 Bank 20 by Brett King
8 Managing the business risks of open innovation by Oliver Alexy and Markus
9 Product idea evaluation checklist shared by Startgass AS
10 SWIFT 2015 Strategy
11 Customers and business impact of product changes
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
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12 Appendix - Glossary ACH Automated Clearing House that is used to clear retail payments
between banks in a country or region
APAC Asia and Pacific
AML Anti-Money Laundering
BCampDR Business continuity amp disaster recovery
B2B Business to business
C2B Consumer to business
CET Central European Time
CMMI Capability Maturity Model Integration
CMS Configuration Management System
Coexistence The situation of multiple standards existing at the same time in the same business space Within SWIFT this refers to the coexistence between the MT and MX standards This also refers to the set of measures being taken to make the situation easier to handle by the community (publication of mapping rules translation serviceshellip)
CSM Clearing and Settlement Mechanism
CUG Closed User Group
Dictionary Part of the ISO 20022 Repository that contains all items that can be re-used during business modelling and message definition activities
EAI Enterprise Application Integration - middleware to connect applications and communication interfaces Typical EAI software includes features for mapping data between various formats enriching messages with data from other systems and orchestrating message flows
ECB European Central Bank
EMEA Europe Middle-East Africa
EPC European Payment Council
ERP Enterprise Resource Planning
EU European Union
EUCLID Connectivity to EuroClear Bank services
FIN The messaging service offered by SWIFT for the secure and reliable exchange of MT messages in store-and-forward mode By extension the syntax used to format these MTs
IP intellectual property
Interoperability Capability to easily exchange business information while using different message standards ISO 20022 promotes global use of syntax-neutral business and message components as a common denominator to achieve interoperability between standards using different syntaxes
ISO The International Organization for Standardization - an international standard-setting body composed of representatives from more than 160 national standards organizations that promulgates worldwide standards in a variety of domains aiming at facilitating cross-border exchanges of goods services and techniques
FinTP - Vision and Scope
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wwwallevoro
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ISO 15022 An ISO standard that describes the syntax to be used for developing securities messages used mainly to support back office related transaction flows It replaced the previous securities messaging standard ISO 7775
ISO 20022 RA Registration Authority - offers the services described in an ISO standard on behalf of and under a contractual agreement with the International Organization for Standardization
ISO 20022 Repository
Repository maintained by the ISO20022 RA which contains the financial business models message definitions and components defined in compliance with the ISO 20022 standard
ISO 20022 RMG Registration Management Group - in charge of the overall management of the ISO 20022 development and registration process in accordance with the ISO 20022 standard
ISO 20022 SEG Standards Evaluation Groups -in charge of validating candidate ISO 20022 messages within the scope of the business justification and ensuring that they address the needs of their future international community of users
ISV Independent Software Vendor
KYC Know Your Customer
MACUG Member Administered Closed User Group
Message A set of structured information exchanged between two parties involved in a financial transaction
Message component and element
A re-usable data structure used for assembling message definitions The data defined in a message component is bdquotraced‟ back to the business components and business elements In simple terms business components define the business meaning message components create data structures for messaging
MI Market Infrastructure - a system that provides services to the financial industry for trading clearing and settlement matching of financial transactions and depository functions
Middleware Software that enables data to be exchanged among different systems with standard communication components and tools for formatting mapping and processing
MT The traditional bdquotag value‟ Message Types for use on the FIN service offered by SWIFT
MX An XML message exchanged over SWIFTNet whether or not ISO 20022 compliant
OS Open source
PSP Payment service provider
QA Quality assurance
RMA Relationship Management Access
RTGS Real Time Gross Settlement System
SAA SWIFT Alliance Access
SAE SWIFT Alliance Entry
SAG SWIFT Alliance Gateway
SaaS Software as a Service
SCORE Standardized CORporate Environment
FinTP - Vision and Scope
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Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
Semantics The study of meaning usually in language The word is often used in ordinary language to denote a problem of understanding that comes down to word selection or connotation
SEPA Single Euro Payment Area
SLA Service level agreement
SME Small and Medium-sized Business(es)
SOA Service Oriented Architecture
SSB SWIFT Service Bureau
STP Straight Through Processing
SWIFT Society for Worldwide Interbank Financial Telecommunication Visit wwwswiftcom
Syntax Physical format of a message used to identify and represent the conveyed pieces of information
T2S TARGET2 Securities - an initiative of the Eurosystem It is an IT platform that aims to make settlements across national borders simpler and more cost-efficient
TARGET2 The Eurosystem-owned European Real Time Gross Settlement (RTGS) system (Trans-European Automated Real-time Gross Settlement Express Transfer System) TARGET2 is one of the largest high-value payment systems in the world
Taxonomy The classification in a hierarchical system typically organized by super type - sub type relationships also called generalization-specialization relationships or less formally parent-child relationships
TSU Trade Service Utility
TCO Total cost of ownership
Translation rules
Set of rules to be used to map the pieces of information included in a message expressed in one syntax to the equivalent message expressed in another syntax
Remit Remittances
XML eXtensible Mark-up Language - popular syntax to encode documents (or messages) electronically on the Internet XML allows communities to define their own identifiers (or tags) and format (or data type) for each component of a message
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Bureaus etc) ISV regulatory institutionsMarketing plan feasibility campaign efficiency and costs
2 MentorPreferable SWIFT
Also eligible SunGard IBM affiliation to other OS communitySWIFT decision
3 Legalcopyright Expert legal consultant and RO apprentice Cost and time shift dependent
4 Tight regulation Clear membership admission amp software contribution criteria The quality of the consultant advice
5 Marketing Actively recruiting community members Marketing plan feasibility campaign efficiency amp customer skepticism
a community portala provide content amp debate space information consolidation amp dissemination virtual
showroom subscription management support
a business analysis solution availability and maintenance by one of the
members or employed company
b press releases amp
announcementsb PR and AR b communicators availability and costs
c events c periodical conferences user focused meetings c cost dependent
6 Financing World Bank EU amp private funds Lobby amp funds availability
Item
FinTP
FinTP community
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
5) Marketing
The community needs to have the clear objective of spreading both
geographically and over a consistent number of industries
To achieve this goal the community should be able to actively provide open
access to relevant information (including explanations of concepts hands-on
evaluation) to non-members and to also answer their questions on FinTP and
on the community itself
The same level of information needs to be ensured for the members to whom
supplementary updates on the community events decisions available
releases patches and fixes should be made available They need to also get
focused forum discussions on specific business areas and subsequent
processes need to be distributed
These functionalities have to be hosted on the community‟s dedicated portal
This portal has to provide content dialogue space information consolidation
and broadcasting It must be a virtual showroom for FinTP It needs to host
documents and virtual meetings subscription management and product
support amp development
The community has to be able to run its own meetings enabling direct contact
between active members or their representatives
Meaningful press releases have to be regularly issued along with actively
maintaining a productive relationship with market analysts to consolidate a
clear public understanding of the community spirit and goals
6) Financing
Its all about money-money-money since at least for the first 2-3 years the
community needs to be financed
Upon reaching maturity the institutionalized bodies of the community can earn their income from collateral activities - such as organizing conferences providing education and specialized support services - either for the initial FinTP installations and customizations or for recurring services requested by the members An alternative can be trialling and certifying interested providers enabling them to perform support services for FinTP
Thus who could pump money into this project It could be one or a mix of
‐ World Bank - if governmental programs are implied and provided a proper project which convincingly demonstrates the beneficed social impact
‐ EU development funding
‐ interested wealthy members of the community
The most critical dependencies are external such as (arranged according to
their impact) availability of funds for building the community finding trustful
and skilled open source consultants (legal business community licensing)
The synthetic view of the main assumptions and dependencies is provided in
the attached file
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Maintenance amp user support 1-Jan-13 Marketing inst action
4 Activities
Initial planning amp budgeting 15-Dec-12 document
Roles allocation 15-Dec-12 document
Community inst Implementation 15-Dec-12 action
Awareness campaign 1-Jan-13 action ongoing process
Members recruiting 1-Jan-13 action ongoing process
Continued operation 1-Jan-13 action ongoing process
Service sales 1-Jan-13 action ongoing process
Future development planning 1-Jan-13 document ongoing process
5 Resource allocation
If existing institution - allocation 15-Dec-12 action
If newly formed - recruiting 15-Dec-12 action
Make FinTP available to comm 1-Jan-13 action ongoing process
Start community financing 1-Jan-13 action ongoing process
6 Financing
Initial investment 1-Jan-13 action secured by that date
First period of comm operation 31-Aug-13 action secured by that date
co
mm
un
ity
Project approach
Project approachpdf
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 33 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
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Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
8 Scope This chapter deals with the phased availability of various FinTP features again considered from application and community points of view
In the first phase (due Dec 2012) the core of FinTP application is ready including the following technical features
- financial message routing between services and monitoring of exchanges
- multi-threading capabilities
- persistent end-to-end transactions
- batching de-batching
- archiving
- tracing and logging of transactions and user events
- transient errors detection and recovery
- real time search and reports
- security access and user administration
Similarly during the first phase the main community components need to be in place
- moderator
- software development and maintenance body (Allevo also available in the first and second phase of the project)
- test amp validation body
- (software) auditor
- legal
- main contributors (Allevo falls into this position)
- platform
- marketing
In the second phase (Dec2012 - Dec2013) several operational features of FinTP will be added
- predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit instruments securities settlement reconciliations
- MTMX coexistence
- multi-BIC multi-currency
- SEPA ready certification
- TARGET2 ready
- SAGSAASAE interfaces
- duplicate detection
- liquidity reports
- competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
- accounting reconciliation
- AML (sanctions list matching)
- SaaS and cloud ready
along with resilience and start of maintenance and knowledge transfer (the last two obviously continuing in the next phases)
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 34 of 43 Allevo Confidential
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Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
The synthetic view of the project scope is provided in the following table
Crt No
Feature Activity Phase1 31Dec12
Phase2 31Dec13
Phase3 31Dec14
Phase4 31Dec15
Fin
TP
A Operational features
1
Predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit Instruments bonds (Romanian Euroclear) reconciliations
2 MTMX coexistence
3 Multi-BIC multi-currency
4 SaaS ready cloud ready
5 SEPA ready certification
6 TARGET2 ready
7 SAGSAASAE interfaces
8 Liquidity reports
9 Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
10 Accounting reconciliation
11 AML (sanctions list matching)
12 Duplicate detection
B Technical features
1 Routing financial message between services and monitoring of data flows
2 Multi-threading capabilities
3 Persistent end-to-end transactions
4 Batching de-batching
5 Resilience (at transaction level)
6 Archiving
7 Tracing and logging of transactions and user events
8 Transient errors detection and recovery
9 Real time search and reports
10 Security access and user administration
C Other activities
1 FinTP maintenance
2 Knowledge transfer
Co
mm
un
ity
Establishing the institutionscomponents
1 Mentor
2 Software Auditor amp Provider
3 Legal service
4 Members
5 Allevo initial role
6 Platform
7 Marketing
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 35 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
9 Limitations The main limitations in the economy of the project consist of phasing several FinTP
operational features for the following year (eg debit instruments liquidity reporting
AML filtering accounting reconciliation resilience SaaS ready cloud ready etc)
At the same time for features intended to front-office usage like Remit it was not yet
decided to publish them as open source product
The synthetic view of the main limitations is provided in the following table
Crt
nrItem Limitation Exclusion Comments
1
FinTP
a
Operational features Available in 2013
b
Remit Not included in
open source
package
2
Community
a
Rules Tightly controlled The statute should
ensure the right
balance between
safety and free
association of talents
Given the significant budget allocation (at least from Allevo perspective) the strong
requirement to meet the maximum ceiling will limit the FinTP product initial preparation
and maintenance expenses
Community wise the obligation of a tight regulated statute will have to ensure the right
balance between safety (mandatory in an environment dealing with financial
transactions) and a free association of talents (typical in an open source community)
In the first period after launch (at least the first two years) of the initiative the
maintenance and support activities will be provided by Allevo (as initial contributor)
A major restriction would be to meet the budgeted development and maintenance
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 36 of 43 Allevo Confidential
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Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
10 Appendix - Risks
Specific risks
1 Product
a Long delivery lead time This is a medium probability and impact risk however Allevo should make available the needed resources and motivate the entire team for the job
b Credibility loss if FinTP fails to further become certified on meaningful operations andor business tracks (ie SWIFT business certification tracks or similar) The single possible containment is lobbying if the application certification program rejects open source products Anyway the impact is very important and its materialization should be avoided
c Low quality of the allocated team and improper version management are highly unlikely to occur as long as the formal transfer of responsibility is smoothly made from Allevo to the corresponding body put in place by the community The real hidden risk is that this process could take too long and it thus has a very high impact
d Poor FinTP quality may result if the community fails to institutionalize proper quality assurance (QA) and verification amp validation (VampV) processes This is most expected not to happen but if it does the impact is at least medium The single path to overcome this risk consists in a professional approach to these items based on institutionalizing practice proven QA and VampV processes
e Allevo lack of expertise in the open source business This can be contained by carefully selecting trustful amp truly expert consultants Otherwise it means more money longer time spent on project and expenses without proper return
2 Service
a The software maintenance does not properly deliver as expected ie on-time and on-quality bug fixing regulation amp standards alignment and productivity amp technological improvement The key to contain this risk materialization is the community status having provisions to neatly provide maintenance and further development of the rules for FinTP as well as the applicable rules and fees for the ancillary services
b Low quality and safety of the service received by the members of the community To avoid the risk of performing the one-time amp recurring support services by under-prepared professionals the community has to rule the process of training and qualifying the companies willing to contribute in this area
c Not meeting the minimal SLA criteria The community should regulate and periodically revise the training curricula and to further audit both the teachers and the certified experts to ensure the service level agreements are met
d Under motivated service providing professionals - up to the level of not feeling the high impact of their activity The community status must provide guidance to the contributors on the minimal standards the professionals should meet
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
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e Constrained expert resource pool This risk could be overcome by the communitys policy to ensure at all time a balanced number of motivated experts to the communitys size Failing to do so may result in high negative impact of the community business and public perception
3 Community
a Emergence of a parallel competitive community If the optimal timing between publically disclosing FinTP and community take-off is not achieved then there are high chances that following a competitive initiative other entrepreneurs successfully launch their own similar or derived community This could be avoided by periodical reviews of the progress of both FinTP and community status and deciding whether the project needs to be put on hold or not
b Unfit reputation of the Moderator or main contributors If either the Moderator or the initial contributors are not beyond any dispute and are reputable institutes then there is certainly something rotten in Denmark and the project should be put on-hold
c No commitment from the Moderator‟s side Similarly if the Moderator does not commit to the project it means that Denmark has a serious problem to solve The project should relinquish until the matter is fixed
4 Legal
a Misuse of copyright and intellectual property (IP)The assigned working team could not be aware of the limitations and liabilities of using (entirely or partially) third party software this risk can be contained by delivering the right training providing proper working procedures carefully recording and documenting the use of open source code and carefully cross-scanning
b Injunctive relief and financial damages can be caused by not properly and continuously controlling the use of third party open source code resulting in copyright or IP infringement There are two containment measures which can be taken tighten the compliance check during the product lifecycle or apply the sanction policy as to set an example
c The competition starts a class action - this may result in delaying the project
5 Financing
a Lack of long term financing institutions Allevo should urge its consultant to identify and draw a reasonable list of financial options institutions
b Exceeding the budget given that this type of project has no precedent in Allevo and to avoid exposing to the dependency on engagement to financial institutions or to commitments beyond the existing budget a further carefully drawn project plan is needed along with its explicit approval from the board of the company
Market related risks
1 False expectations
a Expensive services Not everything is free aside the initial and maintenance free licensing the training the support and other professional services can amount to more than in general expected Allevo rates this risk as medium possible but with low impact as long as the law governing the community and its initial period of operation will consecrate fair market prices and competitive sources of contribution
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b Hidden costs for patches updates and upgrades While of similarly weight in terms of probability and impact this should be no real concern as long as the law governing the community clearly provides for free and accountable maintenance
2 Poor image on quality
a Too many releases making FinTP hard to manage and unsafe to operate Given proper regulation of the community and the mature root of FinTP Allevo disregards the possibility of this risk to materialize However if this were to happen this is a high impact risk and by all means should be avoided
b Backward technological (in)compatibility looks to us as a low risk in all respects and within organizations applying practice proven software engineering processes and professional - accountable team this is not likely to materialize
c Support can be perceived as the highest impact risk for FinTP This can be overcome by tight regulation of the commercial and professional conditions to deliver the service (for instance only qualified organizations should be recommended to members for supporting FinTP)
d SLA and accountability for both internally or externally performed services is closely correlated to the previous risk and the community status should provide the support for growing a community of competencies and accountable professionals around FinTP Periodical auditing (by the specialized community body) of this pool of professionals will further ensure the confidence that the skills are preserved at the required level
e Code fragmentation and forking is a high impact risk with a low probability of happening in the initial period provided the knowledge transfer is done orderly and in an institutionalized manner
3 Inherent uncertainty
a Community disputes can jeopardize its cohesion the project viability and future This is a high impact possibly high probability risk and it is the definite role of the Moderator to feel prevent and while materializing mitigate any conflicting situation
b FinTP going commercial post-launch This is a huge impact possibly high occurrence probability but manageable with the right legal instruments provisioned in the community
c Loss of alignment to industry standards and regulations This risk has medium probability and medium impact given the assumption that the community is tightly regulated and the working bodies institutionalized and gathering professionals
4 Legal
Copyright infringement given Allevo experience in the open source business this risk is highly probable and has a high impact on FinTP especially if mistakes are made in the launching phase Similarly if during the product maintenance and further development phase the community fails to institutionalize proper formal software development processes (covering all FinTP lifecycle phases) based on industry practice proven model(s) Supplementary the expert code scanning audit for compliance is the single resort to preclude external software source misuse
FinTP - Vision and Scope
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5 GPL specific
a Noncompliance to the GPL license If GPL license is used the product should further distribute in compliance with this part provisions High impact and probability but manageable if proper software development processes are used and if the statute clearly defines the licensing model for FinTP
b FinTP unconformity The risk that software engineers get inspired by a chic solution which they import and emulate similarly in FinTP And this is also highly possible since les grands esprits se rencontre
6 Existing customers attitude
Anger for having paid for something which now is free The existent customers can be concerned about the future of their installed system its further development (in one word its future) and on the quality of the service (SLA including) Some recent adopters can possibly be furious for spending their money on buying licenses for a piece of software that differently packaged becomes free of charge
For the first situation the single best solution for Allevo is to ensure a smooth transition from the current status to the new solution deployed Also highly probable Allevo should provide for simultaneous (for at most one more year) maintenance of both FinTP and for qPayIntegrator
For the 2012 new qPayIntegrator adopters Allevo should transparently state the product‟s future and propose a commercially attractive migration towards FinTP when it becomes publically available (like the option for the installation migration and recurring services) The decision should clearly stay with the customer if he still buys Allevo licenses delays the implementation until FinTP is available or if he goes for a competitive solution
In other words the key to mitigate the existing customer perception is switching places and discarding if the situation proves to be uncomfortable
Bottom-line is that to avoid most of the risks the FinTP community must be a rather tightly controlled one though still opened to anyone willingly abiding to the rules
The synthetic view of the main risks their assigned probability impact and the corresponding containment approach is provided in the attached file
Risk IDRisk
CategoryRisk
Probability
(High
Medium
Low)
Severity
(High
Medium
Low)
Containment (Mitigation Action Proposed)
M1Free as in a
Free Puppy
M101
The training service amp support cost could account more than the
commercial product its replacing (application software is typically 30 of
the total cost of ownership of most projects)
Medium Low
M102 Hidden costs ie charge for patches updates and upgrades Medium Low
M2Frequent
updates
M201
Projects might be updated frequently - as often as everyday Too frequent
updates could have a negative impact on the implementation
interoperability and support
Low HighMAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M3Backwards
compatibility
M301 Less accountability Low LowMAP03 Access to prior versions of source code (additional in-house
development and support procedures might be necessary)
M4Support
related risks
M401Support could be perceived as the biggest issue with open source
software deploymentsHigh High
M402 Internal External Accountability SLAs High High
M403Code fragmentation or forking if the community fails to institutionalize
corporate like formal structureHigh High
M404Support could require greater involvement and different skills set from
operations staffMedium Medium
M5Community
immaturity Low Low
M501Could generate incompatibility of FinTP with industry standards amp
regulationsMedium Medium
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M6 Uncertainty The inherent uncertainty in every open source project
M601 Community disputes might impact project viability and future High HighMAP04 The Mentor should prevent amp mitigate any conflicts inside the
community
M602 Open source projects may not stay open in future releases High HighMAP05 The originator liabilities should be strongly enforced by the
community statute
M7 Legal risks
M701 Copyright infringement High High
M702 Can open source software deployments pass an audit
M8 GPL General Public License specific development concerns
M801Software thatrsquos derived from an existing GPL project in whole or in part
might not be released under the same licenseHigh High M08 The community should regulate the licensing model
M802
Developer contamination - developer could review an existing open source
project could see an elegant solution then implement a similar function in
closed source project
High HighMAP09 Procedurals constrains for the software developers should be
enforced
M9
Current
customers
attitude
The actual customer perception could be negative High High
M12 To prevent a negative attitude Allevo should involve the customers
in the FinTP project Allevo needs their active support for a smooth and
issues less transition
ma
rke
t re
late
d r
isk
s
co
st
rela
ted
ris
ks
MAP01 The community should regulate the applicable rules and fees for
services and maintenance
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
bu
sin
es
s a
nd
le
ga
l ri
sk
s
MAP06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S1Product
related
S101 Late delivery lead time Medium MediumMAP15 Allevo should provide proper resources (funding and human
resources)
S102 Credibility loss if fail to certify with SWIFT Medium High MAP16 Should be discussedamp agreed with SWIFT
S103 Inexperienced team or allocation below needs Low HighMAP15 Allevo should provide proper resources (funding and human
resources)
S104 Improper or non efficient version management Low High MAP16 Review the current Allevo Configuration Management System
S105Poor quality if the community fails to institutionalize proper verification and
validation practices3
M06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S106 Lack of expertise in open source projects 2 Allevo should engage thoroughly selected Open Source consultants
S2Service
related
S201
The software maintenance not properly providing for bugs fixing
regulationamp standard alignment technological improvements communities
improvement requests
High HighMAP01 The community should regulate the applicable rules and fees for
services and maintenance
S202 One-time amp recurring services might be provided by unqualified resources High HighMAP17 The community should regulate the training curricula and related
expertise certification
S203 Provided services might not meet the minimal SLA performance criteria High HighMAP17 The community should regulate the training curricula and related
expertise certification
S204 Relaxed or lack of accountability of the professionals High HighMAP18 The community should regulate the employment agreement of
the professionals
S205 Lack of qualified professionals High HighMAP19 The community should ensure a balanced number of certified
professionals with the community size
S3Community
related
S301
If after disclosing FinTP the community does not enthusiastically adopt
the solution competitors might more successfully develop a similar
strategy
Medium MediumMAP20 FinTP promotion should be convincing and realistic A well
organized marketing campaign by Allevo
S302The community mentor andor early adhering members have no
undeniable prestige or are not largely trustfulMedium Medium MAP99 Project status review Ending the project could be one option
S303 The Mentor does not strongly commit for the project Medium Medium MAP99 Project status review Ending the project could be one option
S4 Legal
S401Exposure to copyright and IP infringement due to working team unaware of
the legal consequences of using third party softwareMedium Medium
MAP21 Allevo should keep records and fully document the use of open
source code
S402Copyright or intellectual property infringement can lead to injunctive relief
and monetary damagesHigh High
MAP23 Allevo should institutionalize a tight licensing and technical
control
S403 All risks related to open source compliance High HighMAP24 Allevo should appoint as soon as possible a FinTP compliance
Officer
S5 Financial
S501 Lack of financing institutions Medium MediumMAP25 Allevo should urge consultant to provide a consistent list of
potential investors
S502 Dependency on the financing institution approval Medium Medium
S503Not thoroughly planned project overlooking one or some project cost that
need to be financedMedium Medium
Sp
ec
ific
ris
ks
tec
hn
ica
lm
ark
eti
ng
leg
al
fun
din
g
MAP26 Allevo should carefully draw a consistent and eligible project for
financing
Risks
Riskspdf
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 40 of 43 Allevo Confidential
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wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
11 Appendix - Bibliography 1 Accenture Open Source Research Geographic Findings
2 Accenture Open Source Research Industry Findings
3 Producing Open Source Software - How to Run a Successful Free Software
Project by Karl Fogel
4 Open Source Software Risks and Rewards by Gary Hein
5 A Business Case Study of Open Source Software by Carolyn A Kenwood
6 6 critical success factors for product development by Christian Wig
7 Bank 20 by Brett King
8 Managing the business risks of open innovation by Oliver Alexy and Markus
9 Product idea evaluation checklist shared by Startgass AS
10 SWIFT 2015 Strategy
11 Customers and business impact of product changes
FinTP - Vision and Scope
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12 Appendix - Glossary ACH Automated Clearing House that is used to clear retail payments
between banks in a country or region
APAC Asia and Pacific
AML Anti-Money Laundering
BCampDR Business continuity amp disaster recovery
B2B Business to business
C2B Consumer to business
CET Central European Time
CMMI Capability Maturity Model Integration
CMS Configuration Management System
Coexistence The situation of multiple standards existing at the same time in the same business space Within SWIFT this refers to the coexistence between the MT and MX standards This also refers to the set of measures being taken to make the situation easier to handle by the community (publication of mapping rules translation serviceshellip)
CSM Clearing and Settlement Mechanism
CUG Closed User Group
Dictionary Part of the ISO 20022 Repository that contains all items that can be re-used during business modelling and message definition activities
EAI Enterprise Application Integration - middleware to connect applications and communication interfaces Typical EAI software includes features for mapping data between various formats enriching messages with data from other systems and orchestrating message flows
ECB European Central Bank
EMEA Europe Middle-East Africa
EPC European Payment Council
ERP Enterprise Resource Planning
EU European Union
EUCLID Connectivity to EuroClear Bank services
FIN The messaging service offered by SWIFT for the secure and reliable exchange of MT messages in store-and-forward mode By extension the syntax used to format these MTs
IP intellectual property
Interoperability Capability to easily exchange business information while using different message standards ISO 20022 promotes global use of syntax-neutral business and message components as a common denominator to achieve interoperability between standards using different syntaxes
ISO The International Organization for Standardization - an international standard-setting body composed of representatives from more than 160 national standards organizations that promulgates worldwide standards in a variety of domains aiming at facilitating cross-border exchanges of goods services and techniques
FinTP - Vision and Scope
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wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
ISO 15022 An ISO standard that describes the syntax to be used for developing securities messages used mainly to support back office related transaction flows It replaced the previous securities messaging standard ISO 7775
ISO 20022 RA Registration Authority - offers the services described in an ISO standard on behalf of and under a contractual agreement with the International Organization for Standardization
ISO 20022 Repository
Repository maintained by the ISO20022 RA which contains the financial business models message definitions and components defined in compliance with the ISO 20022 standard
ISO 20022 RMG Registration Management Group - in charge of the overall management of the ISO 20022 development and registration process in accordance with the ISO 20022 standard
ISO 20022 SEG Standards Evaluation Groups -in charge of validating candidate ISO 20022 messages within the scope of the business justification and ensuring that they address the needs of their future international community of users
ISV Independent Software Vendor
KYC Know Your Customer
MACUG Member Administered Closed User Group
Message A set of structured information exchanged between two parties involved in a financial transaction
Message component and element
A re-usable data structure used for assembling message definitions The data defined in a message component is bdquotraced‟ back to the business components and business elements In simple terms business components define the business meaning message components create data structures for messaging
MI Market Infrastructure - a system that provides services to the financial industry for trading clearing and settlement matching of financial transactions and depository functions
Middleware Software that enables data to be exchanged among different systems with standard communication components and tools for formatting mapping and processing
MT The traditional bdquotag value‟ Message Types for use on the FIN service offered by SWIFT
MX An XML message exchanged over SWIFTNet whether or not ISO 20022 compliant
OS Open source
PSP Payment service provider
QA Quality assurance
RMA Relationship Management Access
RTGS Real Time Gross Settlement System
SAA SWIFT Alliance Access
SAE SWIFT Alliance Entry
SAG SWIFT Alliance Gateway
SaaS Software as a Service
SCORE Standardized CORporate Environment
FinTP - Vision and Scope
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Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
Semantics The study of meaning usually in language The word is often used in ordinary language to denote a problem of understanding that comes down to word selection or connotation
SEPA Single Euro Payment Area
SLA Service level agreement
SME Small and Medium-sized Business(es)
SOA Service Oriented Architecture
SSB SWIFT Service Bureau
STP Straight Through Processing
SWIFT Society for Worldwide Interbank Financial Telecommunication Visit wwwswiftcom
Syntax Physical format of a message used to identify and represent the conveyed pieces of information
T2S TARGET2 Securities - an initiative of the Eurosystem It is an IT platform that aims to make settlements across national borders simpler and more cost-efficient
TARGET2 The Eurosystem-owned European Real Time Gross Settlement (RTGS) system (Trans-European Automated Real-time Gross Settlement Express Transfer System) TARGET2 is one of the largest high-value payment systems in the world
Taxonomy The classification in a hierarchical system typically organized by super type - sub type relationships also called generalization-specialization relationships or less formally parent-child relationships
TSU Trade Service Utility
TCO Total cost of ownership
Translation rules
Set of rules to be used to map the pieces of information included in a message expressed in one syntax to the equivalent message expressed in another syntax
Remit Remittances
XML eXtensible Mark-up Language - popular syntax to encode documents (or messages) electronically on the Internet XML allows communities to define their own identifiers (or tags) and format (or data type) for each component of a message
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Maintenance amp user support 1-Jan-13 Marketing inst action
4 Activities
Initial planning amp budgeting 15-Dec-12 document
Roles allocation 15-Dec-12 document
Community inst Implementation 15-Dec-12 action
Awareness campaign 1-Jan-13 action ongoing process
Members recruiting 1-Jan-13 action ongoing process
Continued operation 1-Jan-13 action ongoing process
Service sales 1-Jan-13 action ongoing process
Future development planning 1-Jan-13 document ongoing process
5 Resource allocation
If existing institution - allocation 15-Dec-12 action
If newly formed - recruiting 15-Dec-12 action
Make FinTP available to comm 1-Jan-13 action ongoing process
Start community financing 1-Jan-13 action ongoing process
6 Financing
Initial investment 1-Jan-13 action secured by that date
First period of comm operation 31-Aug-13 action secured by that date
co
mm
un
ity
Project approach
Project approachpdf
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
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8 Scope This chapter deals with the phased availability of various FinTP features again considered from application and community points of view
In the first phase (due Dec 2012) the core of FinTP application is ready including the following technical features
- financial message routing between services and monitoring of exchanges
- multi-threading capabilities
- persistent end-to-end transactions
- batching de-batching
- archiving
- tracing and logging of transactions and user events
- transient errors detection and recovery
- real time search and reports
- security access and user administration
Similarly during the first phase the main community components need to be in place
- moderator
- software development and maintenance body (Allevo also available in the first and second phase of the project)
- test amp validation body
- (software) auditor
- legal
- main contributors (Allevo falls into this position)
- platform
- marketing
In the second phase (Dec2012 - Dec2013) several operational features of FinTP will be added
- predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit instruments securities settlement reconciliations
- MTMX coexistence
- multi-BIC multi-currency
- SEPA ready certification
- TARGET2 ready
- SAGSAASAE interfaces
- duplicate detection
- liquidity reports
- competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
- accounting reconciliation
- AML (sanctions list matching)
- SaaS and cloud ready
along with resilience and start of maintenance and knowledge transfer (the last two obviously continuing in the next phases)
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
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Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
The synthetic view of the project scope is provided in the following table
Crt No
Feature Activity Phase1 31Dec12
Phase2 31Dec13
Phase3 31Dec14
Phase4 31Dec15
Fin
TP
A Operational features
1
Predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit Instruments bonds (Romanian Euroclear) reconciliations
2 MTMX coexistence
3 Multi-BIC multi-currency
4 SaaS ready cloud ready
5 SEPA ready certification
6 TARGET2 ready
7 SAGSAASAE interfaces
8 Liquidity reports
9 Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
10 Accounting reconciliation
11 AML (sanctions list matching)
12 Duplicate detection
B Technical features
1 Routing financial message between services and monitoring of data flows
2 Multi-threading capabilities
3 Persistent end-to-end transactions
4 Batching de-batching
5 Resilience (at transaction level)
6 Archiving
7 Tracing and logging of transactions and user events
8 Transient errors detection and recovery
9 Real time search and reports
10 Security access and user administration
C Other activities
1 FinTP maintenance
2 Knowledge transfer
Co
mm
un
ity
Establishing the institutionscomponents
1 Mentor
2 Software Auditor amp Provider
3 Legal service
4 Members
5 Allevo initial role
6 Platform
7 Marketing
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 35 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
9 Limitations The main limitations in the economy of the project consist of phasing several FinTP
operational features for the following year (eg debit instruments liquidity reporting
AML filtering accounting reconciliation resilience SaaS ready cloud ready etc)
At the same time for features intended to front-office usage like Remit it was not yet
decided to publish them as open source product
The synthetic view of the main limitations is provided in the following table
Crt
nrItem Limitation Exclusion Comments
1
FinTP
a
Operational features Available in 2013
b
Remit Not included in
open source
package
2
Community
a
Rules Tightly controlled The statute should
ensure the right
balance between
safety and free
association of talents
Given the significant budget allocation (at least from Allevo perspective) the strong
requirement to meet the maximum ceiling will limit the FinTP product initial preparation
and maintenance expenses
Community wise the obligation of a tight regulated statute will have to ensure the right
balance between safety (mandatory in an environment dealing with financial
transactions) and a free association of talents (typical in an open source community)
In the first period after launch (at least the first two years) of the initiative the
maintenance and support activities will be provided by Allevo (as initial contributor)
A major restriction would be to meet the budgeted development and maintenance
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 36 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
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Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
10 Appendix - Risks
Specific risks
1 Product
a Long delivery lead time This is a medium probability and impact risk however Allevo should make available the needed resources and motivate the entire team for the job
b Credibility loss if FinTP fails to further become certified on meaningful operations andor business tracks (ie SWIFT business certification tracks or similar) The single possible containment is lobbying if the application certification program rejects open source products Anyway the impact is very important and its materialization should be avoided
c Low quality of the allocated team and improper version management are highly unlikely to occur as long as the formal transfer of responsibility is smoothly made from Allevo to the corresponding body put in place by the community The real hidden risk is that this process could take too long and it thus has a very high impact
d Poor FinTP quality may result if the community fails to institutionalize proper quality assurance (QA) and verification amp validation (VampV) processes This is most expected not to happen but if it does the impact is at least medium The single path to overcome this risk consists in a professional approach to these items based on institutionalizing practice proven QA and VampV processes
e Allevo lack of expertise in the open source business This can be contained by carefully selecting trustful amp truly expert consultants Otherwise it means more money longer time spent on project and expenses without proper return
2 Service
a The software maintenance does not properly deliver as expected ie on-time and on-quality bug fixing regulation amp standards alignment and productivity amp technological improvement The key to contain this risk materialization is the community status having provisions to neatly provide maintenance and further development of the rules for FinTP as well as the applicable rules and fees for the ancillary services
b Low quality and safety of the service received by the members of the community To avoid the risk of performing the one-time amp recurring support services by under-prepared professionals the community has to rule the process of training and qualifying the companies willing to contribute in this area
c Not meeting the minimal SLA criteria The community should regulate and periodically revise the training curricula and to further audit both the teachers and the certified experts to ensure the service level agreements are met
d Under motivated service providing professionals - up to the level of not feeling the high impact of their activity The community status must provide guidance to the contributors on the minimal standards the professionals should meet
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e Constrained expert resource pool This risk could be overcome by the communitys policy to ensure at all time a balanced number of motivated experts to the communitys size Failing to do so may result in high negative impact of the community business and public perception
3 Community
a Emergence of a parallel competitive community If the optimal timing between publically disclosing FinTP and community take-off is not achieved then there are high chances that following a competitive initiative other entrepreneurs successfully launch their own similar or derived community This could be avoided by periodical reviews of the progress of both FinTP and community status and deciding whether the project needs to be put on hold or not
b Unfit reputation of the Moderator or main contributors If either the Moderator or the initial contributors are not beyond any dispute and are reputable institutes then there is certainly something rotten in Denmark and the project should be put on-hold
c No commitment from the Moderator‟s side Similarly if the Moderator does not commit to the project it means that Denmark has a serious problem to solve The project should relinquish until the matter is fixed
4 Legal
a Misuse of copyright and intellectual property (IP)The assigned working team could not be aware of the limitations and liabilities of using (entirely or partially) third party software this risk can be contained by delivering the right training providing proper working procedures carefully recording and documenting the use of open source code and carefully cross-scanning
b Injunctive relief and financial damages can be caused by not properly and continuously controlling the use of third party open source code resulting in copyright or IP infringement There are two containment measures which can be taken tighten the compliance check during the product lifecycle or apply the sanction policy as to set an example
c The competition starts a class action - this may result in delaying the project
5 Financing
a Lack of long term financing institutions Allevo should urge its consultant to identify and draw a reasonable list of financial options institutions
b Exceeding the budget given that this type of project has no precedent in Allevo and to avoid exposing to the dependency on engagement to financial institutions or to commitments beyond the existing budget a further carefully drawn project plan is needed along with its explicit approval from the board of the company
Market related risks
1 False expectations
a Expensive services Not everything is free aside the initial and maintenance free licensing the training the support and other professional services can amount to more than in general expected Allevo rates this risk as medium possible but with low impact as long as the law governing the community and its initial period of operation will consecrate fair market prices and competitive sources of contribution
FinTP - Vision and Scope
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b Hidden costs for patches updates and upgrades While of similarly weight in terms of probability and impact this should be no real concern as long as the law governing the community clearly provides for free and accountable maintenance
2 Poor image on quality
a Too many releases making FinTP hard to manage and unsafe to operate Given proper regulation of the community and the mature root of FinTP Allevo disregards the possibility of this risk to materialize However if this were to happen this is a high impact risk and by all means should be avoided
b Backward technological (in)compatibility looks to us as a low risk in all respects and within organizations applying practice proven software engineering processes and professional - accountable team this is not likely to materialize
c Support can be perceived as the highest impact risk for FinTP This can be overcome by tight regulation of the commercial and professional conditions to deliver the service (for instance only qualified organizations should be recommended to members for supporting FinTP)
d SLA and accountability for both internally or externally performed services is closely correlated to the previous risk and the community status should provide the support for growing a community of competencies and accountable professionals around FinTP Periodical auditing (by the specialized community body) of this pool of professionals will further ensure the confidence that the skills are preserved at the required level
e Code fragmentation and forking is a high impact risk with a low probability of happening in the initial period provided the knowledge transfer is done orderly and in an institutionalized manner
3 Inherent uncertainty
a Community disputes can jeopardize its cohesion the project viability and future This is a high impact possibly high probability risk and it is the definite role of the Moderator to feel prevent and while materializing mitigate any conflicting situation
b FinTP going commercial post-launch This is a huge impact possibly high occurrence probability but manageable with the right legal instruments provisioned in the community
c Loss of alignment to industry standards and regulations This risk has medium probability and medium impact given the assumption that the community is tightly regulated and the working bodies institutionalized and gathering professionals
4 Legal
Copyright infringement given Allevo experience in the open source business this risk is highly probable and has a high impact on FinTP especially if mistakes are made in the launching phase Similarly if during the product maintenance and further development phase the community fails to institutionalize proper formal software development processes (covering all FinTP lifecycle phases) based on industry practice proven model(s) Supplementary the expert code scanning audit for compliance is the single resort to preclude external software source misuse
FinTP - Vision and Scope
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5 GPL specific
a Noncompliance to the GPL license If GPL license is used the product should further distribute in compliance with this part provisions High impact and probability but manageable if proper software development processes are used and if the statute clearly defines the licensing model for FinTP
b FinTP unconformity The risk that software engineers get inspired by a chic solution which they import and emulate similarly in FinTP And this is also highly possible since les grands esprits se rencontre
6 Existing customers attitude
Anger for having paid for something which now is free The existent customers can be concerned about the future of their installed system its further development (in one word its future) and on the quality of the service (SLA including) Some recent adopters can possibly be furious for spending their money on buying licenses for a piece of software that differently packaged becomes free of charge
For the first situation the single best solution for Allevo is to ensure a smooth transition from the current status to the new solution deployed Also highly probable Allevo should provide for simultaneous (for at most one more year) maintenance of both FinTP and for qPayIntegrator
For the 2012 new qPayIntegrator adopters Allevo should transparently state the product‟s future and propose a commercially attractive migration towards FinTP when it becomes publically available (like the option for the installation migration and recurring services) The decision should clearly stay with the customer if he still buys Allevo licenses delays the implementation until FinTP is available or if he goes for a competitive solution
In other words the key to mitigate the existing customer perception is switching places and discarding if the situation proves to be uncomfortable
Bottom-line is that to avoid most of the risks the FinTP community must be a rather tightly controlled one though still opened to anyone willingly abiding to the rules
The synthetic view of the main risks their assigned probability impact and the corresponding containment approach is provided in the attached file
Risk IDRisk
CategoryRisk
Probability
(High
Medium
Low)
Severity
(High
Medium
Low)
Containment (Mitigation Action Proposed)
M1Free as in a
Free Puppy
M101
The training service amp support cost could account more than the
commercial product its replacing (application software is typically 30 of
the total cost of ownership of most projects)
Medium Low
M102 Hidden costs ie charge for patches updates and upgrades Medium Low
M2Frequent
updates
M201
Projects might be updated frequently - as often as everyday Too frequent
updates could have a negative impact on the implementation
interoperability and support
Low HighMAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M3Backwards
compatibility
M301 Less accountability Low LowMAP03 Access to prior versions of source code (additional in-house
development and support procedures might be necessary)
M4Support
related risks
M401Support could be perceived as the biggest issue with open source
software deploymentsHigh High
M402 Internal External Accountability SLAs High High
M403Code fragmentation or forking if the community fails to institutionalize
corporate like formal structureHigh High
M404Support could require greater involvement and different skills set from
operations staffMedium Medium
M5Community
immaturity Low Low
M501Could generate incompatibility of FinTP with industry standards amp
regulationsMedium Medium
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M6 Uncertainty The inherent uncertainty in every open source project
M601 Community disputes might impact project viability and future High HighMAP04 The Mentor should prevent amp mitigate any conflicts inside the
community
M602 Open source projects may not stay open in future releases High HighMAP05 The originator liabilities should be strongly enforced by the
community statute
M7 Legal risks
M701 Copyright infringement High High
M702 Can open source software deployments pass an audit
M8 GPL General Public License specific development concerns
M801Software thatrsquos derived from an existing GPL project in whole or in part
might not be released under the same licenseHigh High M08 The community should regulate the licensing model
M802
Developer contamination - developer could review an existing open source
project could see an elegant solution then implement a similar function in
closed source project
High HighMAP09 Procedurals constrains for the software developers should be
enforced
M9
Current
customers
attitude
The actual customer perception could be negative High High
M12 To prevent a negative attitude Allevo should involve the customers
in the FinTP project Allevo needs their active support for a smooth and
issues less transition
ma
rke
t re
late
d r
isk
s
co
st
rela
ted
ris
ks
MAP01 The community should regulate the applicable rules and fees for
services and maintenance
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
bu
sin
es
s a
nd
le
ga
l ri
sk
s
MAP06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S1Product
related
S101 Late delivery lead time Medium MediumMAP15 Allevo should provide proper resources (funding and human
resources)
S102 Credibility loss if fail to certify with SWIFT Medium High MAP16 Should be discussedamp agreed with SWIFT
S103 Inexperienced team or allocation below needs Low HighMAP15 Allevo should provide proper resources (funding and human
resources)
S104 Improper or non efficient version management Low High MAP16 Review the current Allevo Configuration Management System
S105Poor quality if the community fails to institutionalize proper verification and
validation practices3
M06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S106 Lack of expertise in open source projects 2 Allevo should engage thoroughly selected Open Source consultants
S2Service
related
S201
The software maintenance not properly providing for bugs fixing
regulationamp standard alignment technological improvements communities
improvement requests
High HighMAP01 The community should regulate the applicable rules and fees for
services and maintenance
S202 One-time amp recurring services might be provided by unqualified resources High HighMAP17 The community should regulate the training curricula and related
expertise certification
S203 Provided services might not meet the minimal SLA performance criteria High HighMAP17 The community should regulate the training curricula and related
expertise certification
S204 Relaxed or lack of accountability of the professionals High HighMAP18 The community should regulate the employment agreement of
the professionals
S205 Lack of qualified professionals High HighMAP19 The community should ensure a balanced number of certified
professionals with the community size
S3Community
related
S301
If after disclosing FinTP the community does not enthusiastically adopt
the solution competitors might more successfully develop a similar
strategy
Medium MediumMAP20 FinTP promotion should be convincing and realistic A well
organized marketing campaign by Allevo
S302The community mentor andor early adhering members have no
undeniable prestige or are not largely trustfulMedium Medium MAP99 Project status review Ending the project could be one option
S303 The Mentor does not strongly commit for the project Medium Medium MAP99 Project status review Ending the project could be one option
S4 Legal
S401Exposure to copyright and IP infringement due to working team unaware of
the legal consequences of using third party softwareMedium Medium
MAP21 Allevo should keep records and fully document the use of open
source code
S402Copyright or intellectual property infringement can lead to injunctive relief
and monetary damagesHigh High
MAP23 Allevo should institutionalize a tight licensing and technical
control
S403 All risks related to open source compliance High HighMAP24 Allevo should appoint as soon as possible a FinTP compliance
Officer
S5 Financial
S501 Lack of financing institutions Medium MediumMAP25 Allevo should urge consultant to provide a consistent list of
potential investors
S502 Dependency on the financing institution approval Medium Medium
S503Not thoroughly planned project overlooking one or some project cost that
need to be financedMedium Medium
Sp
ec
ific
ris
ks
tec
hn
ica
lm
ark
eti
ng
leg
al
fun
din
g
MAP26 Allevo should carefully draw a consistent and eligible project for
financing
Risks
Riskspdf
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 40 of 43 Allevo Confidential
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wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
11 Appendix - Bibliography 1 Accenture Open Source Research Geographic Findings
2 Accenture Open Source Research Industry Findings
3 Producing Open Source Software - How to Run a Successful Free Software
Project by Karl Fogel
4 Open Source Software Risks and Rewards by Gary Hein
5 A Business Case Study of Open Source Software by Carolyn A Kenwood
6 6 critical success factors for product development by Christian Wig
7 Bank 20 by Brett King
8 Managing the business risks of open innovation by Oliver Alexy and Markus
9 Product idea evaluation checklist shared by Startgass AS
10 SWIFT 2015 Strategy
11 Customers and business impact of product changes
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
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12 Appendix - Glossary ACH Automated Clearing House that is used to clear retail payments
between banks in a country or region
APAC Asia and Pacific
AML Anti-Money Laundering
BCampDR Business continuity amp disaster recovery
B2B Business to business
C2B Consumer to business
CET Central European Time
CMMI Capability Maturity Model Integration
CMS Configuration Management System
Coexistence The situation of multiple standards existing at the same time in the same business space Within SWIFT this refers to the coexistence between the MT and MX standards This also refers to the set of measures being taken to make the situation easier to handle by the community (publication of mapping rules translation serviceshellip)
CSM Clearing and Settlement Mechanism
CUG Closed User Group
Dictionary Part of the ISO 20022 Repository that contains all items that can be re-used during business modelling and message definition activities
EAI Enterprise Application Integration - middleware to connect applications and communication interfaces Typical EAI software includes features for mapping data between various formats enriching messages with data from other systems and orchestrating message flows
ECB European Central Bank
EMEA Europe Middle-East Africa
EPC European Payment Council
ERP Enterprise Resource Planning
EU European Union
EUCLID Connectivity to EuroClear Bank services
FIN The messaging service offered by SWIFT for the secure and reliable exchange of MT messages in store-and-forward mode By extension the syntax used to format these MTs
IP intellectual property
Interoperability Capability to easily exchange business information while using different message standards ISO 20022 promotes global use of syntax-neutral business and message components as a common denominator to achieve interoperability between standards using different syntaxes
ISO The International Organization for Standardization - an international standard-setting body composed of representatives from more than 160 national standards organizations that promulgates worldwide standards in a variety of domains aiming at facilitating cross-border exchanges of goods services and techniques
FinTP - Vision and Scope
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wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
ISO 15022 An ISO standard that describes the syntax to be used for developing securities messages used mainly to support back office related transaction flows It replaced the previous securities messaging standard ISO 7775
ISO 20022 RA Registration Authority - offers the services described in an ISO standard on behalf of and under a contractual agreement with the International Organization for Standardization
ISO 20022 Repository
Repository maintained by the ISO20022 RA which contains the financial business models message definitions and components defined in compliance with the ISO 20022 standard
ISO 20022 RMG Registration Management Group - in charge of the overall management of the ISO 20022 development and registration process in accordance with the ISO 20022 standard
ISO 20022 SEG Standards Evaluation Groups -in charge of validating candidate ISO 20022 messages within the scope of the business justification and ensuring that they address the needs of their future international community of users
ISV Independent Software Vendor
KYC Know Your Customer
MACUG Member Administered Closed User Group
Message A set of structured information exchanged between two parties involved in a financial transaction
Message component and element
A re-usable data structure used for assembling message definitions The data defined in a message component is bdquotraced‟ back to the business components and business elements In simple terms business components define the business meaning message components create data structures for messaging
MI Market Infrastructure - a system that provides services to the financial industry for trading clearing and settlement matching of financial transactions and depository functions
Middleware Software that enables data to be exchanged among different systems with standard communication components and tools for formatting mapping and processing
MT The traditional bdquotag value‟ Message Types for use on the FIN service offered by SWIFT
MX An XML message exchanged over SWIFTNet whether or not ISO 20022 compliant
OS Open source
PSP Payment service provider
QA Quality assurance
RMA Relationship Management Access
RTGS Real Time Gross Settlement System
SAA SWIFT Alliance Access
SAE SWIFT Alliance Entry
SAG SWIFT Alliance Gateway
SaaS Software as a Service
SCORE Standardized CORporate Environment
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Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
Semantics The study of meaning usually in language The word is often used in ordinary language to denote a problem of understanding that comes down to word selection or connotation
SEPA Single Euro Payment Area
SLA Service level agreement
SME Small and Medium-sized Business(es)
SOA Service Oriented Architecture
SSB SWIFT Service Bureau
STP Straight Through Processing
SWIFT Society for Worldwide Interbank Financial Telecommunication Visit wwwswiftcom
Syntax Physical format of a message used to identify and represent the conveyed pieces of information
T2S TARGET2 Securities - an initiative of the Eurosystem It is an IT platform that aims to make settlements across national borders simpler and more cost-efficient
TARGET2 The Eurosystem-owned European Real Time Gross Settlement (RTGS) system (Trans-European Automated Real-time Gross Settlement Express Transfer System) TARGET2 is one of the largest high-value payment systems in the world
Taxonomy The classification in a hierarchical system typically organized by super type - sub type relationships also called generalization-specialization relationships or less formally parent-child relationships
TSU Trade Service Utility
TCO Total cost of ownership
Translation rules
Set of rules to be used to map the pieces of information included in a message expressed in one syntax to the equivalent message expressed in another syntax
Remit Remittances
XML eXtensible Mark-up Language - popular syntax to encode documents (or messages) electronically on the Internet XML allows communities to define their own identifiers (or tags) and format (or data type) for each component of a message
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Maintenance amp user support 1-Jan-13 Marketing inst action
4 Activities
Initial planning amp budgeting 15-Dec-12 document
Roles allocation 15-Dec-12 document
Community inst Implementation 15-Dec-12 action
Awareness campaign 1-Jan-13 action ongoing process
Members recruiting 1-Jan-13 action ongoing process
Continued operation 1-Jan-13 action ongoing process
Service sales 1-Jan-13 action ongoing process
Future development planning 1-Jan-13 document ongoing process
5 Resource allocation
If existing institution - allocation 15-Dec-12 action
If newly formed - recruiting 15-Dec-12 action
Make FinTP available to comm 1-Jan-13 action ongoing process
Start community financing 1-Jan-13 action ongoing process
6 Financing
Initial investment 1-Jan-13 action secured by that date
First period of comm operation 31-Aug-13 action secured by that date
co
mm
un
ity
Project approach
Project approachpdf
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
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8 Scope This chapter deals with the phased availability of various FinTP features again considered from application and community points of view
In the first phase (due Dec 2012) the core of FinTP application is ready including the following technical features
- financial message routing between services and monitoring of exchanges
- multi-threading capabilities
- persistent end-to-end transactions
- batching de-batching
- archiving
- tracing and logging of transactions and user events
- transient errors detection and recovery
- real time search and reports
- security access and user administration
Similarly during the first phase the main community components need to be in place
- moderator
- software development and maintenance body (Allevo also available in the first and second phase of the project)
- test amp validation body
- (software) auditor
- legal
- main contributors (Allevo falls into this position)
- platform
- marketing
In the second phase (Dec2012 - Dec2013) several operational features of FinTP will be added
- predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit instruments securities settlement reconciliations
- MTMX coexistence
- multi-BIC multi-currency
- SEPA ready certification
- TARGET2 ready
- SAGSAASAE interfaces
- duplicate detection
- liquidity reports
- competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
- accounting reconciliation
- AML (sanctions list matching)
- SaaS and cloud ready
along with resilience and start of maintenance and knowledge transfer (the last two obviously continuing in the next phases)
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
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Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
The synthetic view of the project scope is provided in the following table
Crt No
Feature Activity Phase1 31Dec12
Phase2 31Dec13
Phase3 31Dec14
Phase4 31Dec15
Fin
TP
A Operational features
1
Predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit Instruments bonds (Romanian Euroclear) reconciliations
2 MTMX coexistence
3 Multi-BIC multi-currency
4 SaaS ready cloud ready
5 SEPA ready certification
6 TARGET2 ready
7 SAGSAASAE interfaces
8 Liquidity reports
9 Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
10 Accounting reconciliation
11 AML (sanctions list matching)
12 Duplicate detection
B Technical features
1 Routing financial message between services and monitoring of data flows
2 Multi-threading capabilities
3 Persistent end-to-end transactions
4 Batching de-batching
5 Resilience (at transaction level)
6 Archiving
7 Tracing and logging of transactions and user events
8 Transient errors detection and recovery
9 Real time search and reports
10 Security access and user administration
C Other activities
1 FinTP maintenance
2 Knowledge transfer
Co
mm
un
ity
Establishing the institutionscomponents
1 Mentor
2 Software Auditor amp Provider
3 Legal service
4 Members
5 Allevo initial role
6 Platform
7 Marketing
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 35 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
9 Limitations The main limitations in the economy of the project consist of phasing several FinTP
operational features for the following year (eg debit instruments liquidity reporting
AML filtering accounting reconciliation resilience SaaS ready cloud ready etc)
At the same time for features intended to front-office usage like Remit it was not yet
decided to publish them as open source product
The synthetic view of the main limitations is provided in the following table
Crt
nrItem Limitation Exclusion Comments
1
FinTP
a
Operational features Available in 2013
b
Remit Not included in
open source
package
2
Community
a
Rules Tightly controlled The statute should
ensure the right
balance between
safety and free
association of talents
Given the significant budget allocation (at least from Allevo perspective) the strong
requirement to meet the maximum ceiling will limit the FinTP product initial preparation
and maintenance expenses
Community wise the obligation of a tight regulated statute will have to ensure the right
balance between safety (mandatory in an environment dealing with financial
transactions) and a free association of talents (typical in an open source community)
In the first period after launch (at least the first two years) of the initiative the
maintenance and support activities will be provided by Allevo (as initial contributor)
A major restriction would be to meet the budgeted development and maintenance
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 36 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
10 Appendix - Risks
Specific risks
1 Product
a Long delivery lead time This is a medium probability and impact risk however Allevo should make available the needed resources and motivate the entire team for the job
b Credibility loss if FinTP fails to further become certified on meaningful operations andor business tracks (ie SWIFT business certification tracks or similar) The single possible containment is lobbying if the application certification program rejects open source products Anyway the impact is very important and its materialization should be avoided
c Low quality of the allocated team and improper version management are highly unlikely to occur as long as the formal transfer of responsibility is smoothly made from Allevo to the corresponding body put in place by the community The real hidden risk is that this process could take too long and it thus has a very high impact
d Poor FinTP quality may result if the community fails to institutionalize proper quality assurance (QA) and verification amp validation (VampV) processes This is most expected not to happen but if it does the impact is at least medium The single path to overcome this risk consists in a professional approach to these items based on institutionalizing practice proven QA and VampV processes
e Allevo lack of expertise in the open source business This can be contained by carefully selecting trustful amp truly expert consultants Otherwise it means more money longer time spent on project and expenses without proper return
2 Service
a The software maintenance does not properly deliver as expected ie on-time and on-quality bug fixing regulation amp standards alignment and productivity amp technological improvement The key to contain this risk materialization is the community status having provisions to neatly provide maintenance and further development of the rules for FinTP as well as the applicable rules and fees for the ancillary services
b Low quality and safety of the service received by the members of the community To avoid the risk of performing the one-time amp recurring support services by under-prepared professionals the community has to rule the process of training and qualifying the companies willing to contribute in this area
c Not meeting the minimal SLA criteria The community should regulate and periodically revise the training curricula and to further audit both the teachers and the certified experts to ensure the service level agreements are met
d Under motivated service providing professionals - up to the level of not feeling the high impact of their activity The community status must provide guidance to the contributors on the minimal standards the professionals should meet
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e Constrained expert resource pool This risk could be overcome by the communitys policy to ensure at all time a balanced number of motivated experts to the communitys size Failing to do so may result in high negative impact of the community business and public perception
3 Community
a Emergence of a parallel competitive community If the optimal timing between publically disclosing FinTP and community take-off is not achieved then there are high chances that following a competitive initiative other entrepreneurs successfully launch their own similar or derived community This could be avoided by periodical reviews of the progress of both FinTP and community status and deciding whether the project needs to be put on hold or not
b Unfit reputation of the Moderator or main contributors If either the Moderator or the initial contributors are not beyond any dispute and are reputable institutes then there is certainly something rotten in Denmark and the project should be put on-hold
c No commitment from the Moderator‟s side Similarly if the Moderator does not commit to the project it means that Denmark has a serious problem to solve The project should relinquish until the matter is fixed
4 Legal
a Misuse of copyright and intellectual property (IP)The assigned working team could not be aware of the limitations and liabilities of using (entirely or partially) third party software this risk can be contained by delivering the right training providing proper working procedures carefully recording and documenting the use of open source code and carefully cross-scanning
b Injunctive relief and financial damages can be caused by not properly and continuously controlling the use of third party open source code resulting in copyright or IP infringement There are two containment measures which can be taken tighten the compliance check during the product lifecycle or apply the sanction policy as to set an example
c The competition starts a class action - this may result in delaying the project
5 Financing
a Lack of long term financing institutions Allevo should urge its consultant to identify and draw a reasonable list of financial options institutions
b Exceeding the budget given that this type of project has no precedent in Allevo and to avoid exposing to the dependency on engagement to financial institutions or to commitments beyond the existing budget a further carefully drawn project plan is needed along with its explicit approval from the board of the company
Market related risks
1 False expectations
a Expensive services Not everything is free aside the initial and maintenance free licensing the training the support and other professional services can amount to more than in general expected Allevo rates this risk as medium possible but with low impact as long as the law governing the community and its initial period of operation will consecrate fair market prices and competitive sources of contribution
FinTP - Vision and Scope
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b Hidden costs for patches updates and upgrades While of similarly weight in terms of probability and impact this should be no real concern as long as the law governing the community clearly provides for free and accountable maintenance
2 Poor image on quality
a Too many releases making FinTP hard to manage and unsafe to operate Given proper regulation of the community and the mature root of FinTP Allevo disregards the possibility of this risk to materialize However if this were to happen this is a high impact risk and by all means should be avoided
b Backward technological (in)compatibility looks to us as a low risk in all respects and within organizations applying practice proven software engineering processes and professional - accountable team this is not likely to materialize
c Support can be perceived as the highest impact risk for FinTP This can be overcome by tight regulation of the commercial and professional conditions to deliver the service (for instance only qualified organizations should be recommended to members for supporting FinTP)
d SLA and accountability for both internally or externally performed services is closely correlated to the previous risk and the community status should provide the support for growing a community of competencies and accountable professionals around FinTP Periodical auditing (by the specialized community body) of this pool of professionals will further ensure the confidence that the skills are preserved at the required level
e Code fragmentation and forking is a high impact risk with a low probability of happening in the initial period provided the knowledge transfer is done orderly and in an institutionalized manner
3 Inherent uncertainty
a Community disputes can jeopardize its cohesion the project viability and future This is a high impact possibly high probability risk and it is the definite role of the Moderator to feel prevent and while materializing mitigate any conflicting situation
b FinTP going commercial post-launch This is a huge impact possibly high occurrence probability but manageable with the right legal instruments provisioned in the community
c Loss of alignment to industry standards and regulations This risk has medium probability and medium impact given the assumption that the community is tightly regulated and the working bodies institutionalized and gathering professionals
4 Legal
Copyright infringement given Allevo experience in the open source business this risk is highly probable and has a high impact on FinTP especially if mistakes are made in the launching phase Similarly if during the product maintenance and further development phase the community fails to institutionalize proper formal software development processes (covering all FinTP lifecycle phases) based on industry practice proven model(s) Supplementary the expert code scanning audit for compliance is the single resort to preclude external software source misuse
FinTP - Vision and Scope
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5 GPL specific
a Noncompliance to the GPL license If GPL license is used the product should further distribute in compliance with this part provisions High impact and probability but manageable if proper software development processes are used and if the statute clearly defines the licensing model for FinTP
b FinTP unconformity The risk that software engineers get inspired by a chic solution which they import and emulate similarly in FinTP And this is also highly possible since les grands esprits se rencontre
6 Existing customers attitude
Anger for having paid for something which now is free The existent customers can be concerned about the future of their installed system its further development (in one word its future) and on the quality of the service (SLA including) Some recent adopters can possibly be furious for spending their money on buying licenses for a piece of software that differently packaged becomes free of charge
For the first situation the single best solution for Allevo is to ensure a smooth transition from the current status to the new solution deployed Also highly probable Allevo should provide for simultaneous (for at most one more year) maintenance of both FinTP and for qPayIntegrator
For the 2012 new qPayIntegrator adopters Allevo should transparently state the product‟s future and propose a commercially attractive migration towards FinTP when it becomes publically available (like the option for the installation migration and recurring services) The decision should clearly stay with the customer if he still buys Allevo licenses delays the implementation until FinTP is available or if he goes for a competitive solution
In other words the key to mitigate the existing customer perception is switching places and discarding if the situation proves to be uncomfortable
Bottom-line is that to avoid most of the risks the FinTP community must be a rather tightly controlled one though still opened to anyone willingly abiding to the rules
The synthetic view of the main risks their assigned probability impact and the corresponding containment approach is provided in the attached file
Risk IDRisk
CategoryRisk
Probability
(High
Medium
Low)
Severity
(High
Medium
Low)
Containment (Mitigation Action Proposed)
M1Free as in a
Free Puppy
M101
The training service amp support cost could account more than the
commercial product its replacing (application software is typically 30 of
the total cost of ownership of most projects)
Medium Low
M102 Hidden costs ie charge for patches updates and upgrades Medium Low
M2Frequent
updates
M201
Projects might be updated frequently - as often as everyday Too frequent
updates could have a negative impact on the implementation
interoperability and support
Low HighMAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M3Backwards
compatibility
M301 Less accountability Low LowMAP03 Access to prior versions of source code (additional in-house
development and support procedures might be necessary)
M4Support
related risks
M401Support could be perceived as the biggest issue with open source
software deploymentsHigh High
M402 Internal External Accountability SLAs High High
M403Code fragmentation or forking if the community fails to institutionalize
corporate like formal structureHigh High
M404Support could require greater involvement and different skills set from
operations staffMedium Medium
M5Community
immaturity Low Low
M501Could generate incompatibility of FinTP with industry standards amp
regulationsMedium Medium
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M6 Uncertainty The inherent uncertainty in every open source project
M601 Community disputes might impact project viability and future High HighMAP04 The Mentor should prevent amp mitigate any conflicts inside the
community
M602 Open source projects may not stay open in future releases High HighMAP05 The originator liabilities should be strongly enforced by the
community statute
M7 Legal risks
M701 Copyright infringement High High
M702 Can open source software deployments pass an audit
M8 GPL General Public License specific development concerns
M801Software thatrsquos derived from an existing GPL project in whole or in part
might not be released under the same licenseHigh High M08 The community should regulate the licensing model
M802
Developer contamination - developer could review an existing open source
project could see an elegant solution then implement a similar function in
closed source project
High HighMAP09 Procedurals constrains for the software developers should be
enforced
M9
Current
customers
attitude
The actual customer perception could be negative High High
M12 To prevent a negative attitude Allevo should involve the customers
in the FinTP project Allevo needs their active support for a smooth and
issues less transition
ma
rke
t re
late
d r
isk
s
co
st
rela
ted
ris
ks
MAP01 The community should regulate the applicable rules and fees for
services and maintenance
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
bu
sin
es
s a
nd
le
ga
l ri
sk
s
MAP06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S1Product
related
S101 Late delivery lead time Medium MediumMAP15 Allevo should provide proper resources (funding and human
resources)
S102 Credibility loss if fail to certify with SWIFT Medium High MAP16 Should be discussedamp agreed with SWIFT
S103 Inexperienced team or allocation below needs Low HighMAP15 Allevo should provide proper resources (funding and human
resources)
S104 Improper or non efficient version management Low High MAP16 Review the current Allevo Configuration Management System
S105Poor quality if the community fails to institutionalize proper verification and
validation practices3
M06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S106 Lack of expertise in open source projects 2 Allevo should engage thoroughly selected Open Source consultants
S2Service
related
S201
The software maintenance not properly providing for bugs fixing
regulationamp standard alignment technological improvements communities
improvement requests
High HighMAP01 The community should regulate the applicable rules and fees for
services and maintenance
S202 One-time amp recurring services might be provided by unqualified resources High HighMAP17 The community should regulate the training curricula and related
expertise certification
S203 Provided services might not meet the minimal SLA performance criteria High HighMAP17 The community should regulate the training curricula and related
expertise certification
S204 Relaxed or lack of accountability of the professionals High HighMAP18 The community should regulate the employment agreement of
the professionals
S205 Lack of qualified professionals High HighMAP19 The community should ensure a balanced number of certified
professionals with the community size
S3Community
related
S301
If after disclosing FinTP the community does not enthusiastically adopt
the solution competitors might more successfully develop a similar
strategy
Medium MediumMAP20 FinTP promotion should be convincing and realistic A well
organized marketing campaign by Allevo
S302The community mentor andor early adhering members have no
undeniable prestige or are not largely trustfulMedium Medium MAP99 Project status review Ending the project could be one option
S303 The Mentor does not strongly commit for the project Medium Medium MAP99 Project status review Ending the project could be one option
S4 Legal
S401Exposure to copyright and IP infringement due to working team unaware of
the legal consequences of using third party softwareMedium Medium
MAP21 Allevo should keep records and fully document the use of open
source code
S402Copyright or intellectual property infringement can lead to injunctive relief
and monetary damagesHigh High
MAP23 Allevo should institutionalize a tight licensing and technical
control
S403 All risks related to open source compliance High HighMAP24 Allevo should appoint as soon as possible a FinTP compliance
Officer
S5 Financial
S501 Lack of financing institutions Medium MediumMAP25 Allevo should urge consultant to provide a consistent list of
potential investors
S502 Dependency on the financing institution approval Medium Medium
S503Not thoroughly planned project overlooking one or some project cost that
need to be financedMedium Medium
Sp
ec
ific
ris
ks
tec
hn
ica
lm
ark
eti
ng
leg
al
fun
din
g
MAP26 Allevo should carefully draw a consistent and eligible project for
financing
Risks
Riskspdf
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 40 of 43 Allevo Confidential
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wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
11 Appendix - Bibliography 1 Accenture Open Source Research Geographic Findings
2 Accenture Open Source Research Industry Findings
3 Producing Open Source Software - How to Run a Successful Free Software
Project by Karl Fogel
4 Open Source Software Risks and Rewards by Gary Hein
5 A Business Case Study of Open Source Software by Carolyn A Kenwood
6 6 critical success factors for product development by Christian Wig
7 Bank 20 by Brett King
8 Managing the business risks of open innovation by Oliver Alexy and Markus
9 Product idea evaluation checklist shared by Startgass AS
10 SWIFT 2015 Strategy
11 Customers and business impact of product changes
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
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12 Appendix - Glossary ACH Automated Clearing House that is used to clear retail payments
between banks in a country or region
APAC Asia and Pacific
AML Anti-Money Laundering
BCampDR Business continuity amp disaster recovery
B2B Business to business
C2B Consumer to business
CET Central European Time
CMMI Capability Maturity Model Integration
CMS Configuration Management System
Coexistence The situation of multiple standards existing at the same time in the same business space Within SWIFT this refers to the coexistence between the MT and MX standards This also refers to the set of measures being taken to make the situation easier to handle by the community (publication of mapping rules translation serviceshellip)
CSM Clearing and Settlement Mechanism
CUG Closed User Group
Dictionary Part of the ISO 20022 Repository that contains all items that can be re-used during business modelling and message definition activities
EAI Enterprise Application Integration - middleware to connect applications and communication interfaces Typical EAI software includes features for mapping data between various formats enriching messages with data from other systems and orchestrating message flows
ECB European Central Bank
EMEA Europe Middle-East Africa
EPC European Payment Council
ERP Enterprise Resource Planning
EU European Union
EUCLID Connectivity to EuroClear Bank services
FIN The messaging service offered by SWIFT for the secure and reliable exchange of MT messages in store-and-forward mode By extension the syntax used to format these MTs
IP intellectual property
Interoperability Capability to easily exchange business information while using different message standards ISO 20022 promotes global use of syntax-neutral business and message components as a common denominator to achieve interoperability between standards using different syntaxes
ISO The International Organization for Standardization - an international standard-setting body composed of representatives from more than 160 national standards organizations that promulgates worldwide standards in a variety of domains aiming at facilitating cross-border exchanges of goods services and techniques
FinTP - Vision and Scope
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wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
ISO 15022 An ISO standard that describes the syntax to be used for developing securities messages used mainly to support back office related transaction flows It replaced the previous securities messaging standard ISO 7775
ISO 20022 RA Registration Authority - offers the services described in an ISO standard on behalf of and under a contractual agreement with the International Organization for Standardization
ISO 20022 Repository
Repository maintained by the ISO20022 RA which contains the financial business models message definitions and components defined in compliance with the ISO 20022 standard
ISO 20022 RMG Registration Management Group - in charge of the overall management of the ISO 20022 development and registration process in accordance with the ISO 20022 standard
ISO 20022 SEG Standards Evaluation Groups -in charge of validating candidate ISO 20022 messages within the scope of the business justification and ensuring that they address the needs of their future international community of users
ISV Independent Software Vendor
KYC Know Your Customer
MACUG Member Administered Closed User Group
Message A set of structured information exchanged between two parties involved in a financial transaction
Message component and element
A re-usable data structure used for assembling message definitions The data defined in a message component is bdquotraced‟ back to the business components and business elements In simple terms business components define the business meaning message components create data structures for messaging
MI Market Infrastructure - a system that provides services to the financial industry for trading clearing and settlement matching of financial transactions and depository functions
Middleware Software that enables data to be exchanged among different systems with standard communication components and tools for formatting mapping and processing
MT The traditional bdquotag value‟ Message Types for use on the FIN service offered by SWIFT
MX An XML message exchanged over SWIFTNet whether or not ISO 20022 compliant
OS Open source
PSP Payment service provider
QA Quality assurance
RMA Relationship Management Access
RTGS Real Time Gross Settlement System
SAA SWIFT Alliance Access
SAE SWIFT Alliance Entry
SAG SWIFT Alliance Gateway
SaaS Software as a Service
SCORE Standardized CORporate Environment
FinTP - Vision and Scope
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Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
Semantics The study of meaning usually in language The word is often used in ordinary language to denote a problem of understanding that comes down to word selection or connotation
SEPA Single Euro Payment Area
SLA Service level agreement
SME Small and Medium-sized Business(es)
SOA Service Oriented Architecture
SSB SWIFT Service Bureau
STP Straight Through Processing
SWIFT Society for Worldwide Interbank Financial Telecommunication Visit wwwswiftcom
Syntax Physical format of a message used to identify and represent the conveyed pieces of information
T2S TARGET2 Securities - an initiative of the Eurosystem It is an IT platform that aims to make settlements across national borders simpler and more cost-efficient
TARGET2 The Eurosystem-owned European Real Time Gross Settlement (RTGS) system (Trans-European Automated Real-time Gross Settlement Express Transfer System) TARGET2 is one of the largest high-value payment systems in the world
Taxonomy The classification in a hierarchical system typically organized by super type - sub type relationships also called generalization-specialization relationships or less formally parent-child relationships
TSU Trade Service Utility
TCO Total cost of ownership
Translation rules
Set of rules to be used to map the pieces of information included in a message expressed in one syntax to the equivalent message expressed in another syntax
Remit Remittances
XML eXtensible Mark-up Language - popular syntax to encode documents (or messages) electronically on the Internet XML allows communities to define their own identifiers (or tags) and format (or data type) for each component of a message
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Maintenance amp user support 1-Jan-13 Marketing inst action
4 Activities
Initial planning amp budgeting 15-Dec-12 document
Roles allocation 15-Dec-12 document
Community inst Implementation 15-Dec-12 action
Awareness campaign 1-Jan-13 action ongoing process
Members recruiting 1-Jan-13 action ongoing process
Continued operation 1-Jan-13 action ongoing process
Service sales 1-Jan-13 action ongoing process
Future development planning 1-Jan-13 document ongoing process
5 Resource allocation
If existing institution - allocation 15-Dec-12 action
If newly formed - recruiting 15-Dec-12 action
Make FinTP available to comm 1-Jan-13 action ongoing process
Start community financing 1-Jan-13 action ongoing process
6 Financing
Initial investment 1-Jan-13 action secured by that date
First period of comm operation 31-Aug-13 action secured by that date
co
mm
un
ity
Project approach
Project approachpdf
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
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8 Scope This chapter deals with the phased availability of various FinTP features again considered from application and community points of view
In the first phase (due Dec 2012) the core of FinTP application is ready including the following technical features
- financial message routing between services and monitoring of exchanges
- multi-threading capabilities
- persistent end-to-end transactions
- batching de-batching
- archiving
- tracing and logging of transactions and user events
- transient errors detection and recovery
- real time search and reports
- security access and user administration
Similarly during the first phase the main community components need to be in place
- moderator
- software development and maintenance body (Allevo also available in the first and second phase of the project)
- test amp validation body
- (software) auditor
- legal
- main contributors (Allevo falls into this position)
- platform
- marketing
In the second phase (Dec2012 - Dec2013) several operational features of FinTP will be added
- predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit instruments securities settlement reconciliations
- MTMX coexistence
- multi-BIC multi-currency
- SEPA ready certification
- TARGET2 ready
- SAGSAASAE interfaces
- duplicate detection
- liquidity reports
- competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
- accounting reconciliation
- AML (sanctions list matching)
- SaaS and cloud ready
along with resilience and start of maintenance and knowledge transfer (the last two obviously continuing in the next phases)
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
The synthetic view of the project scope is provided in the following table
Crt No
Feature Activity Phase1 31Dec12
Phase2 31Dec13
Phase3 31Dec14
Phase4 31Dec15
Fin
TP
A Operational features
1
Predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit Instruments bonds (Romanian Euroclear) reconciliations
2 MTMX coexistence
3 Multi-BIC multi-currency
4 SaaS ready cloud ready
5 SEPA ready certification
6 TARGET2 ready
7 SAGSAASAE interfaces
8 Liquidity reports
9 Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
10 Accounting reconciliation
11 AML (sanctions list matching)
12 Duplicate detection
B Technical features
1 Routing financial message between services and monitoring of data flows
2 Multi-threading capabilities
3 Persistent end-to-end transactions
4 Batching de-batching
5 Resilience (at transaction level)
6 Archiving
7 Tracing and logging of transactions and user events
8 Transient errors detection and recovery
9 Real time search and reports
10 Security access and user administration
C Other activities
1 FinTP maintenance
2 Knowledge transfer
Co
mm
un
ity
Establishing the institutionscomponents
1 Mentor
2 Software Auditor amp Provider
3 Legal service
4 Members
5 Allevo initial role
6 Platform
7 Marketing
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 35 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
9 Limitations The main limitations in the economy of the project consist of phasing several FinTP
operational features for the following year (eg debit instruments liquidity reporting
AML filtering accounting reconciliation resilience SaaS ready cloud ready etc)
At the same time for features intended to front-office usage like Remit it was not yet
decided to publish them as open source product
The synthetic view of the main limitations is provided in the following table
Crt
nrItem Limitation Exclusion Comments
1
FinTP
a
Operational features Available in 2013
b
Remit Not included in
open source
package
2
Community
a
Rules Tightly controlled The statute should
ensure the right
balance between
safety and free
association of talents
Given the significant budget allocation (at least from Allevo perspective) the strong
requirement to meet the maximum ceiling will limit the FinTP product initial preparation
and maintenance expenses
Community wise the obligation of a tight regulated statute will have to ensure the right
balance between safety (mandatory in an environment dealing with financial
transactions) and a free association of talents (typical in an open source community)
In the first period after launch (at least the first two years) of the initiative the
maintenance and support activities will be provided by Allevo (as initial contributor)
A major restriction would be to meet the budgeted development and maintenance
FinTP - Vision and Scope
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10 Appendix - Risks
Specific risks
1 Product
a Long delivery lead time This is a medium probability and impact risk however Allevo should make available the needed resources and motivate the entire team for the job
b Credibility loss if FinTP fails to further become certified on meaningful operations andor business tracks (ie SWIFT business certification tracks or similar) The single possible containment is lobbying if the application certification program rejects open source products Anyway the impact is very important and its materialization should be avoided
c Low quality of the allocated team and improper version management are highly unlikely to occur as long as the formal transfer of responsibility is smoothly made from Allevo to the corresponding body put in place by the community The real hidden risk is that this process could take too long and it thus has a very high impact
d Poor FinTP quality may result if the community fails to institutionalize proper quality assurance (QA) and verification amp validation (VampV) processes This is most expected not to happen but if it does the impact is at least medium The single path to overcome this risk consists in a professional approach to these items based on institutionalizing practice proven QA and VampV processes
e Allevo lack of expertise in the open source business This can be contained by carefully selecting trustful amp truly expert consultants Otherwise it means more money longer time spent on project and expenses without proper return
2 Service
a The software maintenance does not properly deliver as expected ie on-time and on-quality bug fixing regulation amp standards alignment and productivity amp technological improvement The key to contain this risk materialization is the community status having provisions to neatly provide maintenance and further development of the rules for FinTP as well as the applicable rules and fees for the ancillary services
b Low quality and safety of the service received by the members of the community To avoid the risk of performing the one-time amp recurring support services by under-prepared professionals the community has to rule the process of training and qualifying the companies willing to contribute in this area
c Not meeting the minimal SLA criteria The community should regulate and periodically revise the training curricula and to further audit both the teachers and the certified experts to ensure the service level agreements are met
d Under motivated service providing professionals - up to the level of not feeling the high impact of their activity The community status must provide guidance to the contributors on the minimal standards the professionals should meet
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e Constrained expert resource pool This risk could be overcome by the communitys policy to ensure at all time a balanced number of motivated experts to the communitys size Failing to do so may result in high negative impact of the community business and public perception
3 Community
a Emergence of a parallel competitive community If the optimal timing between publically disclosing FinTP and community take-off is not achieved then there are high chances that following a competitive initiative other entrepreneurs successfully launch their own similar or derived community This could be avoided by periodical reviews of the progress of both FinTP and community status and deciding whether the project needs to be put on hold or not
b Unfit reputation of the Moderator or main contributors If either the Moderator or the initial contributors are not beyond any dispute and are reputable institutes then there is certainly something rotten in Denmark and the project should be put on-hold
c No commitment from the Moderator‟s side Similarly if the Moderator does not commit to the project it means that Denmark has a serious problem to solve The project should relinquish until the matter is fixed
4 Legal
a Misuse of copyright and intellectual property (IP)The assigned working team could not be aware of the limitations and liabilities of using (entirely or partially) third party software this risk can be contained by delivering the right training providing proper working procedures carefully recording and documenting the use of open source code and carefully cross-scanning
b Injunctive relief and financial damages can be caused by not properly and continuously controlling the use of third party open source code resulting in copyright or IP infringement There are two containment measures which can be taken tighten the compliance check during the product lifecycle or apply the sanction policy as to set an example
c The competition starts a class action - this may result in delaying the project
5 Financing
a Lack of long term financing institutions Allevo should urge its consultant to identify and draw a reasonable list of financial options institutions
b Exceeding the budget given that this type of project has no precedent in Allevo and to avoid exposing to the dependency on engagement to financial institutions or to commitments beyond the existing budget a further carefully drawn project plan is needed along with its explicit approval from the board of the company
Market related risks
1 False expectations
a Expensive services Not everything is free aside the initial and maintenance free licensing the training the support and other professional services can amount to more than in general expected Allevo rates this risk as medium possible but with low impact as long as the law governing the community and its initial period of operation will consecrate fair market prices and competitive sources of contribution
FinTP - Vision and Scope
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b Hidden costs for patches updates and upgrades While of similarly weight in terms of probability and impact this should be no real concern as long as the law governing the community clearly provides for free and accountable maintenance
2 Poor image on quality
a Too many releases making FinTP hard to manage and unsafe to operate Given proper regulation of the community and the mature root of FinTP Allevo disregards the possibility of this risk to materialize However if this were to happen this is a high impact risk and by all means should be avoided
b Backward technological (in)compatibility looks to us as a low risk in all respects and within organizations applying practice proven software engineering processes and professional - accountable team this is not likely to materialize
c Support can be perceived as the highest impact risk for FinTP This can be overcome by tight regulation of the commercial and professional conditions to deliver the service (for instance only qualified organizations should be recommended to members for supporting FinTP)
d SLA and accountability for both internally or externally performed services is closely correlated to the previous risk and the community status should provide the support for growing a community of competencies and accountable professionals around FinTP Periodical auditing (by the specialized community body) of this pool of professionals will further ensure the confidence that the skills are preserved at the required level
e Code fragmentation and forking is a high impact risk with a low probability of happening in the initial period provided the knowledge transfer is done orderly and in an institutionalized manner
3 Inherent uncertainty
a Community disputes can jeopardize its cohesion the project viability and future This is a high impact possibly high probability risk and it is the definite role of the Moderator to feel prevent and while materializing mitigate any conflicting situation
b FinTP going commercial post-launch This is a huge impact possibly high occurrence probability but manageable with the right legal instruments provisioned in the community
c Loss of alignment to industry standards and regulations This risk has medium probability and medium impact given the assumption that the community is tightly regulated and the working bodies institutionalized and gathering professionals
4 Legal
Copyright infringement given Allevo experience in the open source business this risk is highly probable and has a high impact on FinTP especially if mistakes are made in the launching phase Similarly if during the product maintenance and further development phase the community fails to institutionalize proper formal software development processes (covering all FinTP lifecycle phases) based on industry practice proven model(s) Supplementary the expert code scanning audit for compliance is the single resort to preclude external software source misuse
FinTP - Vision and Scope
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5 GPL specific
a Noncompliance to the GPL license If GPL license is used the product should further distribute in compliance with this part provisions High impact and probability but manageable if proper software development processes are used and if the statute clearly defines the licensing model for FinTP
b FinTP unconformity The risk that software engineers get inspired by a chic solution which they import and emulate similarly in FinTP And this is also highly possible since les grands esprits se rencontre
6 Existing customers attitude
Anger for having paid for something which now is free The existent customers can be concerned about the future of their installed system its further development (in one word its future) and on the quality of the service (SLA including) Some recent adopters can possibly be furious for spending their money on buying licenses for a piece of software that differently packaged becomes free of charge
For the first situation the single best solution for Allevo is to ensure a smooth transition from the current status to the new solution deployed Also highly probable Allevo should provide for simultaneous (for at most one more year) maintenance of both FinTP and for qPayIntegrator
For the 2012 new qPayIntegrator adopters Allevo should transparently state the product‟s future and propose a commercially attractive migration towards FinTP when it becomes publically available (like the option for the installation migration and recurring services) The decision should clearly stay with the customer if he still buys Allevo licenses delays the implementation until FinTP is available or if he goes for a competitive solution
In other words the key to mitigate the existing customer perception is switching places and discarding if the situation proves to be uncomfortable
Bottom-line is that to avoid most of the risks the FinTP community must be a rather tightly controlled one though still opened to anyone willingly abiding to the rules
The synthetic view of the main risks their assigned probability impact and the corresponding containment approach is provided in the attached file
Risk IDRisk
CategoryRisk
Probability
(High
Medium
Low)
Severity
(High
Medium
Low)
Containment (Mitigation Action Proposed)
M1Free as in a
Free Puppy
M101
The training service amp support cost could account more than the
commercial product its replacing (application software is typically 30 of
the total cost of ownership of most projects)
Medium Low
M102 Hidden costs ie charge for patches updates and upgrades Medium Low
M2Frequent
updates
M201
Projects might be updated frequently - as often as everyday Too frequent
updates could have a negative impact on the implementation
interoperability and support
Low HighMAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M3Backwards
compatibility
M301 Less accountability Low LowMAP03 Access to prior versions of source code (additional in-house
development and support procedures might be necessary)
M4Support
related risks
M401Support could be perceived as the biggest issue with open source
software deploymentsHigh High
M402 Internal External Accountability SLAs High High
M403Code fragmentation or forking if the community fails to institutionalize
corporate like formal structureHigh High
M404Support could require greater involvement and different skills set from
operations staffMedium Medium
M5Community
immaturity Low Low
M501Could generate incompatibility of FinTP with industry standards amp
regulationsMedium Medium
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M6 Uncertainty The inherent uncertainty in every open source project
M601 Community disputes might impact project viability and future High HighMAP04 The Mentor should prevent amp mitigate any conflicts inside the
community
M602 Open source projects may not stay open in future releases High HighMAP05 The originator liabilities should be strongly enforced by the
community statute
M7 Legal risks
M701 Copyright infringement High High
M702 Can open source software deployments pass an audit
M8 GPL General Public License specific development concerns
M801Software thatrsquos derived from an existing GPL project in whole or in part
might not be released under the same licenseHigh High M08 The community should regulate the licensing model
M802
Developer contamination - developer could review an existing open source
project could see an elegant solution then implement a similar function in
closed source project
High HighMAP09 Procedurals constrains for the software developers should be
enforced
M9
Current
customers
attitude
The actual customer perception could be negative High High
M12 To prevent a negative attitude Allevo should involve the customers
in the FinTP project Allevo needs their active support for a smooth and
issues less transition
ma
rke
t re
late
d r
isk
s
co
st
rela
ted
ris
ks
MAP01 The community should regulate the applicable rules and fees for
services and maintenance
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
bu
sin
es
s a
nd
le
ga
l ri
sk
s
MAP06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S1Product
related
S101 Late delivery lead time Medium MediumMAP15 Allevo should provide proper resources (funding and human
resources)
S102 Credibility loss if fail to certify with SWIFT Medium High MAP16 Should be discussedamp agreed with SWIFT
S103 Inexperienced team or allocation below needs Low HighMAP15 Allevo should provide proper resources (funding and human
resources)
S104 Improper or non efficient version management Low High MAP16 Review the current Allevo Configuration Management System
S105Poor quality if the community fails to institutionalize proper verification and
validation practices3
M06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S106 Lack of expertise in open source projects 2 Allevo should engage thoroughly selected Open Source consultants
S2Service
related
S201
The software maintenance not properly providing for bugs fixing
regulationamp standard alignment technological improvements communities
improvement requests
High HighMAP01 The community should regulate the applicable rules and fees for
services and maintenance
S202 One-time amp recurring services might be provided by unqualified resources High HighMAP17 The community should regulate the training curricula and related
expertise certification
S203 Provided services might not meet the minimal SLA performance criteria High HighMAP17 The community should regulate the training curricula and related
expertise certification
S204 Relaxed or lack of accountability of the professionals High HighMAP18 The community should regulate the employment agreement of
the professionals
S205 Lack of qualified professionals High HighMAP19 The community should ensure a balanced number of certified
professionals with the community size
S3Community
related
S301
If after disclosing FinTP the community does not enthusiastically adopt
the solution competitors might more successfully develop a similar
strategy
Medium MediumMAP20 FinTP promotion should be convincing and realistic A well
organized marketing campaign by Allevo
S302The community mentor andor early adhering members have no
undeniable prestige or are not largely trustfulMedium Medium MAP99 Project status review Ending the project could be one option
S303 The Mentor does not strongly commit for the project Medium Medium MAP99 Project status review Ending the project could be one option
S4 Legal
S401Exposure to copyright and IP infringement due to working team unaware of
the legal consequences of using third party softwareMedium Medium
MAP21 Allevo should keep records and fully document the use of open
source code
S402Copyright or intellectual property infringement can lead to injunctive relief
and monetary damagesHigh High
MAP23 Allevo should institutionalize a tight licensing and technical
control
S403 All risks related to open source compliance High HighMAP24 Allevo should appoint as soon as possible a FinTP compliance
Officer
S5 Financial
S501 Lack of financing institutions Medium MediumMAP25 Allevo should urge consultant to provide a consistent list of
potential investors
S502 Dependency on the financing institution approval Medium Medium
S503Not thoroughly planned project overlooking one or some project cost that
need to be financedMedium Medium
Sp
ec
ific
ris
ks
tec
hn
ica
lm
ark
eti
ng
leg
al
fun
din
g
MAP26 Allevo should carefully draw a consistent and eligible project for
financing
Risks
Riskspdf
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 40 of 43 Allevo Confidential
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wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
11 Appendix - Bibliography 1 Accenture Open Source Research Geographic Findings
2 Accenture Open Source Research Industry Findings
3 Producing Open Source Software - How to Run a Successful Free Software
Project by Karl Fogel
4 Open Source Software Risks and Rewards by Gary Hein
5 A Business Case Study of Open Source Software by Carolyn A Kenwood
6 6 critical success factors for product development by Christian Wig
7 Bank 20 by Brett King
8 Managing the business risks of open innovation by Oliver Alexy and Markus
9 Product idea evaluation checklist shared by Startgass AS
10 SWIFT 2015 Strategy
11 Customers and business impact of product changes
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
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12 Appendix - Glossary ACH Automated Clearing House that is used to clear retail payments
between banks in a country or region
APAC Asia and Pacific
AML Anti-Money Laundering
BCampDR Business continuity amp disaster recovery
B2B Business to business
C2B Consumer to business
CET Central European Time
CMMI Capability Maturity Model Integration
CMS Configuration Management System
Coexistence The situation of multiple standards existing at the same time in the same business space Within SWIFT this refers to the coexistence between the MT and MX standards This also refers to the set of measures being taken to make the situation easier to handle by the community (publication of mapping rules translation serviceshellip)
CSM Clearing and Settlement Mechanism
CUG Closed User Group
Dictionary Part of the ISO 20022 Repository that contains all items that can be re-used during business modelling and message definition activities
EAI Enterprise Application Integration - middleware to connect applications and communication interfaces Typical EAI software includes features for mapping data between various formats enriching messages with data from other systems and orchestrating message flows
ECB European Central Bank
EMEA Europe Middle-East Africa
EPC European Payment Council
ERP Enterprise Resource Planning
EU European Union
EUCLID Connectivity to EuroClear Bank services
FIN The messaging service offered by SWIFT for the secure and reliable exchange of MT messages in store-and-forward mode By extension the syntax used to format these MTs
IP intellectual property
Interoperability Capability to easily exchange business information while using different message standards ISO 20022 promotes global use of syntax-neutral business and message components as a common denominator to achieve interoperability between standards using different syntaxes
ISO The International Organization for Standardization - an international standard-setting body composed of representatives from more than 160 national standards organizations that promulgates worldwide standards in a variety of domains aiming at facilitating cross-border exchanges of goods services and techniques
FinTP - Vision and Scope
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ISO 15022 An ISO standard that describes the syntax to be used for developing securities messages used mainly to support back office related transaction flows It replaced the previous securities messaging standard ISO 7775
ISO 20022 RA Registration Authority - offers the services described in an ISO standard on behalf of and under a contractual agreement with the International Organization for Standardization
ISO 20022 Repository
Repository maintained by the ISO20022 RA which contains the financial business models message definitions and components defined in compliance with the ISO 20022 standard
ISO 20022 RMG Registration Management Group - in charge of the overall management of the ISO 20022 development and registration process in accordance with the ISO 20022 standard
ISO 20022 SEG Standards Evaluation Groups -in charge of validating candidate ISO 20022 messages within the scope of the business justification and ensuring that they address the needs of their future international community of users
ISV Independent Software Vendor
KYC Know Your Customer
MACUG Member Administered Closed User Group
Message A set of structured information exchanged between two parties involved in a financial transaction
Message component and element
A re-usable data structure used for assembling message definitions The data defined in a message component is bdquotraced‟ back to the business components and business elements In simple terms business components define the business meaning message components create data structures for messaging
MI Market Infrastructure - a system that provides services to the financial industry for trading clearing and settlement matching of financial transactions and depository functions
Middleware Software that enables data to be exchanged among different systems with standard communication components and tools for formatting mapping and processing
MT The traditional bdquotag value‟ Message Types for use on the FIN service offered by SWIFT
MX An XML message exchanged over SWIFTNet whether or not ISO 20022 compliant
OS Open source
PSP Payment service provider
QA Quality assurance
RMA Relationship Management Access
RTGS Real Time Gross Settlement System
SAA SWIFT Alliance Access
SAE SWIFT Alliance Entry
SAG SWIFT Alliance Gateway
SaaS Software as a Service
SCORE Standardized CORporate Environment
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Semantics The study of meaning usually in language The word is often used in ordinary language to denote a problem of understanding that comes down to word selection or connotation
SEPA Single Euro Payment Area
SLA Service level agreement
SME Small and Medium-sized Business(es)
SOA Service Oriented Architecture
SSB SWIFT Service Bureau
STP Straight Through Processing
SWIFT Society for Worldwide Interbank Financial Telecommunication Visit wwwswiftcom
Syntax Physical format of a message used to identify and represent the conveyed pieces of information
T2S TARGET2 Securities - an initiative of the Eurosystem It is an IT platform that aims to make settlements across national borders simpler and more cost-efficient
TARGET2 The Eurosystem-owned European Real Time Gross Settlement (RTGS) system (Trans-European Automated Real-time Gross Settlement Express Transfer System) TARGET2 is one of the largest high-value payment systems in the world
Taxonomy The classification in a hierarchical system typically organized by super type - sub type relationships also called generalization-specialization relationships or less formally parent-child relationships
TSU Trade Service Utility
TCO Total cost of ownership
Translation rules
Set of rules to be used to map the pieces of information included in a message expressed in one syntax to the equivalent message expressed in another syntax
Remit Remittances
XML eXtensible Mark-up Language - popular syntax to encode documents (or messages) electronically on the Internet XML allows communities to define their own identifiers (or tags) and format (or data type) for each component of a message
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Maintenance amp user support 1-Jan-13 Marketing inst action
4 Activities
Initial planning amp budgeting 15-Dec-12 document
Roles allocation 15-Dec-12 document
Community inst Implementation 15-Dec-12 action
Awareness campaign 1-Jan-13 action ongoing process
Members recruiting 1-Jan-13 action ongoing process
Continued operation 1-Jan-13 action ongoing process
Service sales 1-Jan-13 action ongoing process
Future development planning 1-Jan-13 document ongoing process
5 Resource allocation
If existing institution - allocation 15-Dec-12 action
If newly formed - recruiting 15-Dec-12 action
Make FinTP available to comm 1-Jan-13 action ongoing process
Start community financing 1-Jan-13 action ongoing process
6 Financing
Initial investment 1-Jan-13 action secured by that date
First period of comm operation 31-Aug-13 action secured by that date
co
mm
un
ity
Project approach
Project approachpdf
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
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8 Scope This chapter deals with the phased availability of various FinTP features again considered from application and community points of view
In the first phase (due Dec 2012) the core of FinTP application is ready including the following technical features
- financial message routing between services and monitoring of exchanges
- multi-threading capabilities
- persistent end-to-end transactions
- batching de-batching
- archiving
- tracing and logging of transactions and user events
- transient errors detection and recovery
- real time search and reports
- security access and user administration
Similarly during the first phase the main community components need to be in place
- moderator
- software development and maintenance body (Allevo also available in the first and second phase of the project)
- test amp validation body
- (software) auditor
- legal
- main contributors (Allevo falls into this position)
- platform
- marketing
In the second phase (Dec2012 - Dec2013) several operational features of FinTP will be added
- predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit instruments securities settlement reconciliations
- MTMX coexistence
- multi-BIC multi-currency
- SEPA ready certification
- TARGET2 ready
- SAGSAASAE interfaces
- duplicate detection
- liquidity reports
- competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
- accounting reconciliation
- AML (sanctions list matching)
- SaaS and cloud ready
along with resilience and start of maintenance and knowledge transfer (the last two obviously continuing in the next phases)
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
The synthetic view of the project scope is provided in the following table
Crt No
Feature Activity Phase1 31Dec12
Phase2 31Dec13
Phase3 31Dec14
Phase4 31Dec15
Fin
TP
A Operational features
1
Predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit Instruments bonds (Romanian Euroclear) reconciliations
2 MTMX coexistence
3 Multi-BIC multi-currency
4 SaaS ready cloud ready
5 SEPA ready certification
6 TARGET2 ready
7 SAGSAASAE interfaces
8 Liquidity reports
9 Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
10 Accounting reconciliation
11 AML (sanctions list matching)
12 Duplicate detection
B Technical features
1 Routing financial message between services and monitoring of data flows
2 Multi-threading capabilities
3 Persistent end-to-end transactions
4 Batching de-batching
5 Resilience (at transaction level)
6 Archiving
7 Tracing and logging of transactions and user events
8 Transient errors detection and recovery
9 Real time search and reports
10 Security access and user administration
C Other activities
1 FinTP maintenance
2 Knowledge transfer
Co
mm
un
ity
Establishing the institutionscomponents
1 Mentor
2 Software Auditor amp Provider
3 Legal service
4 Members
5 Allevo initial role
6 Platform
7 Marketing
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 35 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
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9 Limitations The main limitations in the economy of the project consist of phasing several FinTP
operational features for the following year (eg debit instruments liquidity reporting
AML filtering accounting reconciliation resilience SaaS ready cloud ready etc)
At the same time for features intended to front-office usage like Remit it was not yet
decided to publish them as open source product
The synthetic view of the main limitations is provided in the following table
Crt
nrItem Limitation Exclusion Comments
1
FinTP
a
Operational features Available in 2013
b
Remit Not included in
open source
package
2
Community
a
Rules Tightly controlled The statute should
ensure the right
balance between
safety and free
association of talents
Given the significant budget allocation (at least from Allevo perspective) the strong
requirement to meet the maximum ceiling will limit the FinTP product initial preparation
and maintenance expenses
Community wise the obligation of a tight regulated statute will have to ensure the right
balance between safety (mandatory in an environment dealing with financial
transactions) and a free association of talents (typical in an open source community)
In the first period after launch (at least the first two years) of the initiative the
maintenance and support activities will be provided by Allevo (as initial contributor)
A major restriction would be to meet the budgeted development and maintenance
FinTP - Vision and Scope
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10 Appendix - Risks
Specific risks
1 Product
a Long delivery lead time This is a medium probability and impact risk however Allevo should make available the needed resources and motivate the entire team for the job
b Credibility loss if FinTP fails to further become certified on meaningful operations andor business tracks (ie SWIFT business certification tracks or similar) The single possible containment is lobbying if the application certification program rejects open source products Anyway the impact is very important and its materialization should be avoided
c Low quality of the allocated team and improper version management are highly unlikely to occur as long as the formal transfer of responsibility is smoothly made from Allevo to the corresponding body put in place by the community The real hidden risk is that this process could take too long and it thus has a very high impact
d Poor FinTP quality may result if the community fails to institutionalize proper quality assurance (QA) and verification amp validation (VampV) processes This is most expected not to happen but if it does the impact is at least medium The single path to overcome this risk consists in a professional approach to these items based on institutionalizing practice proven QA and VampV processes
e Allevo lack of expertise in the open source business This can be contained by carefully selecting trustful amp truly expert consultants Otherwise it means more money longer time spent on project and expenses without proper return
2 Service
a The software maintenance does not properly deliver as expected ie on-time and on-quality bug fixing regulation amp standards alignment and productivity amp technological improvement The key to contain this risk materialization is the community status having provisions to neatly provide maintenance and further development of the rules for FinTP as well as the applicable rules and fees for the ancillary services
b Low quality and safety of the service received by the members of the community To avoid the risk of performing the one-time amp recurring support services by under-prepared professionals the community has to rule the process of training and qualifying the companies willing to contribute in this area
c Not meeting the minimal SLA criteria The community should regulate and periodically revise the training curricula and to further audit both the teachers and the certified experts to ensure the service level agreements are met
d Under motivated service providing professionals - up to the level of not feeling the high impact of their activity The community status must provide guidance to the contributors on the minimal standards the professionals should meet
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e Constrained expert resource pool This risk could be overcome by the communitys policy to ensure at all time a balanced number of motivated experts to the communitys size Failing to do so may result in high negative impact of the community business and public perception
3 Community
a Emergence of a parallel competitive community If the optimal timing between publically disclosing FinTP and community take-off is not achieved then there are high chances that following a competitive initiative other entrepreneurs successfully launch their own similar or derived community This could be avoided by periodical reviews of the progress of both FinTP and community status and deciding whether the project needs to be put on hold or not
b Unfit reputation of the Moderator or main contributors If either the Moderator or the initial contributors are not beyond any dispute and are reputable institutes then there is certainly something rotten in Denmark and the project should be put on-hold
c No commitment from the Moderator‟s side Similarly if the Moderator does not commit to the project it means that Denmark has a serious problem to solve The project should relinquish until the matter is fixed
4 Legal
a Misuse of copyright and intellectual property (IP)The assigned working team could not be aware of the limitations and liabilities of using (entirely or partially) third party software this risk can be contained by delivering the right training providing proper working procedures carefully recording and documenting the use of open source code and carefully cross-scanning
b Injunctive relief and financial damages can be caused by not properly and continuously controlling the use of third party open source code resulting in copyright or IP infringement There are two containment measures which can be taken tighten the compliance check during the product lifecycle or apply the sanction policy as to set an example
c The competition starts a class action - this may result in delaying the project
5 Financing
a Lack of long term financing institutions Allevo should urge its consultant to identify and draw a reasonable list of financial options institutions
b Exceeding the budget given that this type of project has no precedent in Allevo and to avoid exposing to the dependency on engagement to financial institutions or to commitments beyond the existing budget a further carefully drawn project plan is needed along with its explicit approval from the board of the company
Market related risks
1 False expectations
a Expensive services Not everything is free aside the initial and maintenance free licensing the training the support and other professional services can amount to more than in general expected Allevo rates this risk as medium possible but with low impact as long as the law governing the community and its initial period of operation will consecrate fair market prices and competitive sources of contribution
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b Hidden costs for patches updates and upgrades While of similarly weight in terms of probability and impact this should be no real concern as long as the law governing the community clearly provides for free and accountable maintenance
2 Poor image on quality
a Too many releases making FinTP hard to manage and unsafe to operate Given proper regulation of the community and the mature root of FinTP Allevo disregards the possibility of this risk to materialize However if this were to happen this is a high impact risk and by all means should be avoided
b Backward technological (in)compatibility looks to us as a low risk in all respects and within organizations applying practice proven software engineering processes and professional - accountable team this is not likely to materialize
c Support can be perceived as the highest impact risk for FinTP This can be overcome by tight regulation of the commercial and professional conditions to deliver the service (for instance only qualified organizations should be recommended to members for supporting FinTP)
d SLA and accountability for both internally or externally performed services is closely correlated to the previous risk and the community status should provide the support for growing a community of competencies and accountable professionals around FinTP Periodical auditing (by the specialized community body) of this pool of professionals will further ensure the confidence that the skills are preserved at the required level
e Code fragmentation and forking is a high impact risk with a low probability of happening in the initial period provided the knowledge transfer is done orderly and in an institutionalized manner
3 Inherent uncertainty
a Community disputes can jeopardize its cohesion the project viability and future This is a high impact possibly high probability risk and it is the definite role of the Moderator to feel prevent and while materializing mitigate any conflicting situation
b FinTP going commercial post-launch This is a huge impact possibly high occurrence probability but manageable with the right legal instruments provisioned in the community
c Loss of alignment to industry standards and regulations This risk has medium probability and medium impact given the assumption that the community is tightly regulated and the working bodies institutionalized and gathering professionals
4 Legal
Copyright infringement given Allevo experience in the open source business this risk is highly probable and has a high impact on FinTP especially if mistakes are made in the launching phase Similarly if during the product maintenance and further development phase the community fails to institutionalize proper formal software development processes (covering all FinTP lifecycle phases) based on industry practice proven model(s) Supplementary the expert code scanning audit for compliance is the single resort to preclude external software source misuse
FinTP - Vision and Scope
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5 GPL specific
a Noncompliance to the GPL license If GPL license is used the product should further distribute in compliance with this part provisions High impact and probability but manageable if proper software development processes are used and if the statute clearly defines the licensing model for FinTP
b FinTP unconformity The risk that software engineers get inspired by a chic solution which they import and emulate similarly in FinTP And this is also highly possible since les grands esprits se rencontre
6 Existing customers attitude
Anger for having paid for something which now is free The existent customers can be concerned about the future of their installed system its further development (in one word its future) and on the quality of the service (SLA including) Some recent adopters can possibly be furious for spending their money on buying licenses for a piece of software that differently packaged becomes free of charge
For the first situation the single best solution for Allevo is to ensure a smooth transition from the current status to the new solution deployed Also highly probable Allevo should provide for simultaneous (for at most one more year) maintenance of both FinTP and for qPayIntegrator
For the 2012 new qPayIntegrator adopters Allevo should transparently state the product‟s future and propose a commercially attractive migration towards FinTP when it becomes publically available (like the option for the installation migration and recurring services) The decision should clearly stay with the customer if he still buys Allevo licenses delays the implementation until FinTP is available or if he goes for a competitive solution
In other words the key to mitigate the existing customer perception is switching places and discarding if the situation proves to be uncomfortable
Bottom-line is that to avoid most of the risks the FinTP community must be a rather tightly controlled one though still opened to anyone willingly abiding to the rules
The synthetic view of the main risks their assigned probability impact and the corresponding containment approach is provided in the attached file
Risk IDRisk
CategoryRisk
Probability
(High
Medium
Low)
Severity
(High
Medium
Low)
Containment (Mitigation Action Proposed)
M1Free as in a
Free Puppy
M101
The training service amp support cost could account more than the
commercial product its replacing (application software is typically 30 of
the total cost of ownership of most projects)
Medium Low
M102 Hidden costs ie charge for patches updates and upgrades Medium Low
M2Frequent
updates
M201
Projects might be updated frequently - as often as everyday Too frequent
updates could have a negative impact on the implementation
interoperability and support
Low HighMAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M3Backwards
compatibility
M301 Less accountability Low LowMAP03 Access to prior versions of source code (additional in-house
development and support procedures might be necessary)
M4Support
related risks
M401Support could be perceived as the biggest issue with open source
software deploymentsHigh High
M402 Internal External Accountability SLAs High High
M403Code fragmentation or forking if the community fails to institutionalize
corporate like formal structureHigh High
M404Support could require greater involvement and different skills set from
operations staffMedium Medium
M5Community
immaturity Low Low
M501Could generate incompatibility of FinTP with industry standards amp
regulationsMedium Medium
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M6 Uncertainty The inherent uncertainty in every open source project
M601 Community disputes might impact project viability and future High HighMAP04 The Mentor should prevent amp mitigate any conflicts inside the
community
M602 Open source projects may not stay open in future releases High HighMAP05 The originator liabilities should be strongly enforced by the
community statute
M7 Legal risks
M701 Copyright infringement High High
M702 Can open source software deployments pass an audit
M8 GPL General Public License specific development concerns
M801Software thatrsquos derived from an existing GPL project in whole or in part
might not be released under the same licenseHigh High M08 The community should regulate the licensing model
M802
Developer contamination - developer could review an existing open source
project could see an elegant solution then implement a similar function in
closed source project
High HighMAP09 Procedurals constrains for the software developers should be
enforced
M9
Current
customers
attitude
The actual customer perception could be negative High High
M12 To prevent a negative attitude Allevo should involve the customers
in the FinTP project Allevo needs their active support for a smooth and
issues less transition
ma
rke
t re
late
d r
isk
s
co
st
rela
ted
ris
ks
MAP01 The community should regulate the applicable rules and fees for
services and maintenance
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
bu
sin
es
s a
nd
le
ga
l ri
sk
s
MAP06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S1Product
related
S101 Late delivery lead time Medium MediumMAP15 Allevo should provide proper resources (funding and human
resources)
S102 Credibility loss if fail to certify with SWIFT Medium High MAP16 Should be discussedamp agreed with SWIFT
S103 Inexperienced team or allocation below needs Low HighMAP15 Allevo should provide proper resources (funding and human
resources)
S104 Improper or non efficient version management Low High MAP16 Review the current Allevo Configuration Management System
S105Poor quality if the community fails to institutionalize proper verification and
validation practices3
M06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S106 Lack of expertise in open source projects 2 Allevo should engage thoroughly selected Open Source consultants
S2Service
related
S201
The software maintenance not properly providing for bugs fixing
regulationamp standard alignment technological improvements communities
improvement requests
High HighMAP01 The community should regulate the applicable rules and fees for
services and maintenance
S202 One-time amp recurring services might be provided by unqualified resources High HighMAP17 The community should regulate the training curricula and related
expertise certification
S203 Provided services might not meet the minimal SLA performance criteria High HighMAP17 The community should regulate the training curricula and related
expertise certification
S204 Relaxed or lack of accountability of the professionals High HighMAP18 The community should regulate the employment agreement of
the professionals
S205 Lack of qualified professionals High HighMAP19 The community should ensure a balanced number of certified
professionals with the community size
S3Community
related
S301
If after disclosing FinTP the community does not enthusiastically adopt
the solution competitors might more successfully develop a similar
strategy
Medium MediumMAP20 FinTP promotion should be convincing and realistic A well
organized marketing campaign by Allevo
S302The community mentor andor early adhering members have no
undeniable prestige or are not largely trustfulMedium Medium MAP99 Project status review Ending the project could be one option
S303 The Mentor does not strongly commit for the project Medium Medium MAP99 Project status review Ending the project could be one option
S4 Legal
S401Exposure to copyright and IP infringement due to working team unaware of
the legal consequences of using third party softwareMedium Medium
MAP21 Allevo should keep records and fully document the use of open
source code
S402Copyright or intellectual property infringement can lead to injunctive relief
and monetary damagesHigh High
MAP23 Allevo should institutionalize a tight licensing and technical
control
S403 All risks related to open source compliance High HighMAP24 Allevo should appoint as soon as possible a FinTP compliance
Officer
S5 Financial
S501 Lack of financing institutions Medium MediumMAP25 Allevo should urge consultant to provide a consistent list of
potential investors
S502 Dependency on the financing institution approval Medium Medium
S503Not thoroughly planned project overlooking one or some project cost that
need to be financedMedium Medium
Sp
ec
ific
ris
ks
tec
hn
ica
lm
ark
eti
ng
leg
al
fun
din
g
MAP26 Allevo should carefully draw a consistent and eligible project for
financing
Risks
Riskspdf
FinTP - Vision and Scope
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11 Appendix - Bibliography 1 Accenture Open Source Research Geographic Findings
2 Accenture Open Source Research Industry Findings
3 Producing Open Source Software - How to Run a Successful Free Software
Project by Karl Fogel
4 Open Source Software Risks and Rewards by Gary Hein
5 A Business Case Study of Open Source Software by Carolyn A Kenwood
6 6 critical success factors for product development by Christian Wig
7 Bank 20 by Brett King
8 Managing the business risks of open innovation by Oliver Alexy and Markus
9 Product idea evaluation checklist shared by Startgass AS
10 SWIFT 2015 Strategy
11 Customers and business impact of product changes
FinTP - Vision and Scope
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12 Appendix - Glossary ACH Automated Clearing House that is used to clear retail payments
between banks in a country or region
APAC Asia and Pacific
AML Anti-Money Laundering
BCampDR Business continuity amp disaster recovery
B2B Business to business
C2B Consumer to business
CET Central European Time
CMMI Capability Maturity Model Integration
CMS Configuration Management System
Coexistence The situation of multiple standards existing at the same time in the same business space Within SWIFT this refers to the coexistence between the MT and MX standards This also refers to the set of measures being taken to make the situation easier to handle by the community (publication of mapping rules translation serviceshellip)
CSM Clearing and Settlement Mechanism
CUG Closed User Group
Dictionary Part of the ISO 20022 Repository that contains all items that can be re-used during business modelling and message definition activities
EAI Enterprise Application Integration - middleware to connect applications and communication interfaces Typical EAI software includes features for mapping data between various formats enriching messages with data from other systems and orchestrating message flows
ECB European Central Bank
EMEA Europe Middle-East Africa
EPC European Payment Council
ERP Enterprise Resource Planning
EU European Union
EUCLID Connectivity to EuroClear Bank services
FIN The messaging service offered by SWIFT for the secure and reliable exchange of MT messages in store-and-forward mode By extension the syntax used to format these MTs
IP intellectual property
Interoperability Capability to easily exchange business information while using different message standards ISO 20022 promotes global use of syntax-neutral business and message components as a common denominator to achieve interoperability between standards using different syntaxes
ISO The International Organization for Standardization - an international standard-setting body composed of representatives from more than 160 national standards organizations that promulgates worldwide standards in a variety of domains aiming at facilitating cross-border exchanges of goods services and techniques
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ISO 15022 An ISO standard that describes the syntax to be used for developing securities messages used mainly to support back office related transaction flows It replaced the previous securities messaging standard ISO 7775
ISO 20022 RA Registration Authority - offers the services described in an ISO standard on behalf of and under a contractual agreement with the International Organization for Standardization
ISO 20022 Repository
Repository maintained by the ISO20022 RA which contains the financial business models message definitions and components defined in compliance with the ISO 20022 standard
ISO 20022 RMG Registration Management Group - in charge of the overall management of the ISO 20022 development and registration process in accordance with the ISO 20022 standard
ISO 20022 SEG Standards Evaluation Groups -in charge of validating candidate ISO 20022 messages within the scope of the business justification and ensuring that they address the needs of their future international community of users
ISV Independent Software Vendor
KYC Know Your Customer
MACUG Member Administered Closed User Group
Message A set of structured information exchanged between two parties involved in a financial transaction
Message component and element
A re-usable data structure used for assembling message definitions The data defined in a message component is bdquotraced‟ back to the business components and business elements In simple terms business components define the business meaning message components create data structures for messaging
MI Market Infrastructure - a system that provides services to the financial industry for trading clearing and settlement matching of financial transactions and depository functions
Middleware Software that enables data to be exchanged among different systems with standard communication components and tools for formatting mapping and processing
MT The traditional bdquotag value‟ Message Types for use on the FIN service offered by SWIFT
MX An XML message exchanged over SWIFTNet whether or not ISO 20022 compliant
OS Open source
PSP Payment service provider
QA Quality assurance
RMA Relationship Management Access
RTGS Real Time Gross Settlement System
SAA SWIFT Alliance Access
SAE SWIFT Alliance Entry
SAG SWIFT Alliance Gateway
SaaS Software as a Service
SCORE Standardized CORporate Environment
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Semantics The study of meaning usually in language The word is often used in ordinary language to denote a problem of understanding that comes down to word selection or connotation
SEPA Single Euro Payment Area
SLA Service level agreement
SME Small and Medium-sized Business(es)
SOA Service Oriented Architecture
SSB SWIFT Service Bureau
STP Straight Through Processing
SWIFT Society for Worldwide Interbank Financial Telecommunication Visit wwwswiftcom
Syntax Physical format of a message used to identify and represent the conveyed pieces of information
T2S TARGET2 Securities - an initiative of the Eurosystem It is an IT platform that aims to make settlements across national borders simpler and more cost-efficient
TARGET2 The Eurosystem-owned European Real Time Gross Settlement (RTGS) system (Trans-European Automated Real-time Gross Settlement Express Transfer System) TARGET2 is one of the largest high-value payment systems in the world
Taxonomy The classification in a hierarchical system typically organized by super type - sub type relationships also called generalization-specialization relationships or less formally parent-child relationships
TSU Trade Service Utility
TCO Total cost of ownership
Translation rules
Set of rules to be used to map the pieces of information included in a message expressed in one syntax to the equivalent message expressed in another syntax
Remit Remittances
XML eXtensible Mark-up Language - popular syntax to encode documents (or messages) electronically on the Internet XML allows communities to define their own identifiers (or tags) and format (or data type) for each component of a message
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Maintenance amp user support 1-Jan-13 Marketing inst action
4 Activities
Initial planning amp budgeting 15-Dec-12 document
Roles allocation 15-Dec-12 document
Community inst Implementation 15-Dec-12 action
Awareness campaign 1-Jan-13 action ongoing process
Members recruiting 1-Jan-13 action ongoing process
Continued operation 1-Jan-13 action ongoing process
Service sales 1-Jan-13 action ongoing process
Future development planning 1-Jan-13 document ongoing process
5 Resource allocation
If existing institution - allocation 15-Dec-12 action
If newly formed - recruiting 15-Dec-12 action
Make FinTP available to comm 1-Jan-13 action ongoing process
Start community financing 1-Jan-13 action ongoing process
6 Financing
Initial investment 1-Jan-13 action secured by that date
First period of comm operation 31-Aug-13 action secured by that date
co
mm
un
ity
Project approach
Project approachpdf
FinTP - Vision and Scope
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8 Scope This chapter deals with the phased availability of various FinTP features again considered from application and community points of view
In the first phase (due Dec 2012) the core of FinTP application is ready including the following technical features
- financial message routing between services and monitoring of exchanges
- multi-threading capabilities
- persistent end-to-end transactions
- batching de-batching
- archiving
- tracing and logging of transactions and user events
- transient errors detection and recovery
- real time search and reports
- security access and user administration
Similarly during the first phase the main community components need to be in place
- moderator
- software development and maintenance body (Allevo also available in the first and second phase of the project)
- test amp validation body
- (software) auditor
- legal
- main contributors (Allevo falls into this position)
- platform
- marketing
In the second phase (Dec2012 - Dec2013) several operational features of FinTP will be added
- predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit instruments securities settlement reconciliations
- MTMX coexistence
- multi-BIC multi-currency
- SEPA ready certification
- TARGET2 ready
- SAGSAASAE interfaces
- duplicate detection
- liquidity reports
- competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
- accounting reconciliation
- AML (sanctions list matching)
- SaaS and cloud ready
along with resilience and start of maintenance and knowledge transfer (the last two obviously continuing in the next phases)
FinTP - Vision and Scope
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The synthetic view of the project scope is provided in the following table
Crt No
Feature Activity Phase1 31Dec12
Phase2 31Dec13
Phase3 31Dec14
Phase4 31Dec15
Fin
TP
A Operational features
1
Predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit Instruments bonds (Romanian Euroclear) reconciliations
2 MTMX coexistence
3 Multi-BIC multi-currency
4 SaaS ready cloud ready
5 SEPA ready certification
6 TARGET2 ready
7 SAGSAASAE interfaces
8 Liquidity reports
9 Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
10 Accounting reconciliation
11 AML (sanctions list matching)
12 Duplicate detection
B Technical features
1 Routing financial message between services and monitoring of data flows
2 Multi-threading capabilities
3 Persistent end-to-end transactions
4 Batching de-batching
5 Resilience (at transaction level)
6 Archiving
7 Tracing and logging of transactions and user events
8 Transient errors detection and recovery
9 Real time search and reports
10 Security access and user administration
C Other activities
1 FinTP maintenance
2 Knowledge transfer
Co
mm
un
ity
Establishing the institutionscomponents
1 Mentor
2 Software Auditor amp Provider
3 Legal service
4 Members
5 Allevo initial role
6 Platform
7 Marketing
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
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9 Limitations The main limitations in the economy of the project consist of phasing several FinTP
operational features for the following year (eg debit instruments liquidity reporting
AML filtering accounting reconciliation resilience SaaS ready cloud ready etc)
At the same time for features intended to front-office usage like Remit it was not yet
decided to publish them as open source product
The synthetic view of the main limitations is provided in the following table
Crt
nrItem Limitation Exclusion Comments
1
FinTP
a
Operational features Available in 2013
b
Remit Not included in
open source
package
2
Community
a
Rules Tightly controlled The statute should
ensure the right
balance between
safety and free
association of talents
Given the significant budget allocation (at least from Allevo perspective) the strong
requirement to meet the maximum ceiling will limit the FinTP product initial preparation
and maintenance expenses
Community wise the obligation of a tight regulated statute will have to ensure the right
balance between safety (mandatory in an environment dealing with financial
transactions) and a free association of talents (typical in an open source community)
In the first period after launch (at least the first two years) of the initiative the
maintenance and support activities will be provided by Allevo (as initial contributor)
A major restriction would be to meet the budgeted development and maintenance
FinTP - Vision and Scope
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10 Appendix - Risks
Specific risks
1 Product
a Long delivery lead time This is a medium probability and impact risk however Allevo should make available the needed resources and motivate the entire team for the job
b Credibility loss if FinTP fails to further become certified on meaningful operations andor business tracks (ie SWIFT business certification tracks or similar) The single possible containment is lobbying if the application certification program rejects open source products Anyway the impact is very important and its materialization should be avoided
c Low quality of the allocated team and improper version management are highly unlikely to occur as long as the formal transfer of responsibility is smoothly made from Allevo to the corresponding body put in place by the community The real hidden risk is that this process could take too long and it thus has a very high impact
d Poor FinTP quality may result if the community fails to institutionalize proper quality assurance (QA) and verification amp validation (VampV) processes This is most expected not to happen but if it does the impact is at least medium The single path to overcome this risk consists in a professional approach to these items based on institutionalizing practice proven QA and VampV processes
e Allevo lack of expertise in the open source business This can be contained by carefully selecting trustful amp truly expert consultants Otherwise it means more money longer time spent on project and expenses without proper return
2 Service
a The software maintenance does not properly deliver as expected ie on-time and on-quality bug fixing regulation amp standards alignment and productivity amp technological improvement The key to contain this risk materialization is the community status having provisions to neatly provide maintenance and further development of the rules for FinTP as well as the applicable rules and fees for the ancillary services
b Low quality and safety of the service received by the members of the community To avoid the risk of performing the one-time amp recurring support services by under-prepared professionals the community has to rule the process of training and qualifying the companies willing to contribute in this area
c Not meeting the minimal SLA criteria The community should regulate and periodically revise the training curricula and to further audit both the teachers and the certified experts to ensure the service level agreements are met
d Under motivated service providing professionals - up to the level of not feeling the high impact of their activity The community status must provide guidance to the contributors on the minimal standards the professionals should meet
FinTP - Vision and Scope
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e Constrained expert resource pool This risk could be overcome by the communitys policy to ensure at all time a balanced number of motivated experts to the communitys size Failing to do so may result in high negative impact of the community business and public perception
3 Community
a Emergence of a parallel competitive community If the optimal timing between publically disclosing FinTP and community take-off is not achieved then there are high chances that following a competitive initiative other entrepreneurs successfully launch their own similar or derived community This could be avoided by periodical reviews of the progress of both FinTP and community status and deciding whether the project needs to be put on hold or not
b Unfit reputation of the Moderator or main contributors If either the Moderator or the initial contributors are not beyond any dispute and are reputable institutes then there is certainly something rotten in Denmark and the project should be put on-hold
c No commitment from the Moderator‟s side Similarly if the Moderator does not commit to the project it means that Denmark has a serious problem to solve The project should relinquish until the matter is fixed
4 Legal
a Misuse of copyright and intellectual property (IP)The assigned working team could not be aware of the limitations and liabilities of using (entirely or partially) third party software this risk can be contained by delivering the right training providing proper working procedures carefully recording and documenting the use of open source code and carefully cross-scanning
b Injunctive relief and financial damages can be caused by not properly and continuously controlling the use of third party open source code resulting in copyright or IP infringement There are two containment measures which can be taken tighten the compliance check during the product lifecycle or apply the sanction policy as to set an example
c The competition starts a class action - this may result in delaying the project
5 Financing
a Lack of long term financing institutions Allevo should urge its consultant to identify and draw a reasonable list of financial options institutions
b Exceeding the budget given that this type of project has no precedent in Allevo and to avoid exposing to the dependency on engagement to financial institutions or to commitments beyond the existing budget a further carefully drawn project plan is needed along with its explicit approval from the board of the company
Market related risks
1 False expectations
a Expensive services Not everything is free aside the initial and maintenance free licensing the training the support and other professional services can amount to more than in general expected Allevo rates this risk as medium possible but with low impact as long as the law governing the community and its initial period of operation will consecrate fair market prices and competitive sources of contribution
FinTP - Vision and Scope
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b Hidden costs for patches updates and upgrades While of similarly weight in terms of probability and impact this should be no real concern as long as the law governing the community clearly provides for free and accountable maintenance
2 Poor image on quality
a Too many releases making FinTP hard to manage and unsafe to operate Given proper regulation of the community and the mature root of FinTP Allevo disregards the possibility of this risk to materialize However if this were to happen this is a high impact risk and by all means should be avoided
b Backward technological (in)compatibility looks to us as a low risk in all respects and within organizations applying practice proven software engineering processes and professional - accountable team this is not likely to materialize
c Support can be perceived as the highest impact risk for FinTP This can be overcome by tight regulation of the commercial and professional conditions to deliver the service (for instance only qualified organizations should be recommended to members for supporting FinTP)
d SLA and accountability for both internally or externally performed services is closely correlated to the previous risk and the community status should provide the support for growing a community of competencies and accountable professionals around FinTP Periodical auditing (by the specialized community body) of this pool of professionals will further ensure the confidence that the skills are preserved at the required level
e Code fragmentation and forking is a high impact risk with a low probability of happening in the initial period provided the knowledge transfer is done orderly and in an institutionalized manner
3 Inherent uncertainty
a Community disputes can jeopardize its cohesion the project viability and future This is a high impact possibly high probability risk and it is the definite role of the Moderator to feel prevent and while materializing mitigate any conflicting situation
b FinTP going commercial post-launch This is a huge impact possibly high occurrence probability but manageable with the right legal instruments provisioned in the community
c Loss of alignment to industry standards and regulations This risk has medium probability and medium impact given the assumption that the community is tightly regulated and the working bodies institutionalized and gathering professionals
4 Legal
Copyright infringement given Allevo experience in the open source business this risk is highly probable and has a high impact on FinTP especially if mistakes are made in the launching phase Similarly if during the product maintenance and further development phase the community fails to institutionalize proper formal software development processes (covering all FinTP lifecycle phases) based on industry practice proven model(s) Supplementary the expert code scanning audit for compliance is the single resort to preclude external software source misuse
FinTP - Vision and Scope
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5 GPL specific
a Noncompliance to the GPL license If GPL license is used the product should further distribute in compliance with this part provisions High impact and probability but manageable if proper software development processes are used and if the statute clearly defines the licensing model for FinTP
b FinTP unconformity The risk that software engineers get inspired by a chic solution which they import and emulate similarly in FinTP And this is also highly possible since les grands esprits se rencontre
6 Existing customers attitude
Anger for having paid for something which now is free The existent customers can be concerned about the future of their installed system its further development (in one word its future) and on the quality of the service (SLA including) Some recent adopters can possibly be furious for spending their money on buying licenses for a piece of software that differently packaged becomes free of charge
For the first situation the single best solution for Allevo is to ensure a smooth transition from the current status to the new solution deployed Also highly probable Allevo should provide for simultaneous (for at most one more year) maintenance of both FinTP and for qPayIntegrator
For the 2012 new qPayIntegrator adopters Allevo should transparently state the product‟s future and propose a commercially attractive migration towards FinTP when it becomes publically available (like the option for the installation migration and recurring services) The decision should clearly stay with the customer if he still buys Allevo licenses delays the implementation until FinTP is available or if he goes for a competitive solution
In other words the key to mitigate the existing customer perception is switching places and discarding if the situation proves to be uncomfortable
Bottom-line is that to avoid most of the risks the FinTP community must be a rather tightly controlled one though still opened to anyone willingly abiding to the rules
The synthetic view of the main risks their assigned probability impact and the corresponding containment approach is provided in the attached file
Risk IDRisk
CategoryRisk
Probability
(High
Medium
Low)
Severity
(High
Medium
Low)
Containment (Mitigation Action Proposed)
M1Free as in a
Free Puppy
M101
The training service amp support cost could account more than the
commercial product its replacing (application software is typically 30 of
the total cost of ownership of most projects)
Medium Low
M102 Hidden costs ie charge for patches updates and upgrades Medium Low
M2Frequent
updates
M201
Projects might be updated frequently - as often as everyday Too frequent
updates could have a negative impact on the implementation
interoperability and support
Low HighMAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M3Backwards
compatibility
M301 Less accountability Low LowMAP03 Access to prior versions of source code (additional in-house
development and support procedures might be necessary)
M4Support
related risks
M401Support could be perceived as the biggest issue with open source
software deploymentsHigh High
M402 Internal External Accountability SLAs High High
M403Code fragmentation or forking if the community fails to institutionalize
corporate like formal structureHigh High
M404Support could require greater involvement and different skills set from
operations staffMedium Medium
M5Community
immaturity Low Low
M501Could generate incompatibility of FinTP with industry standards amp
regulationsMedium Medium
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M6 Uncertainty The inherent uncertainty in every open source project
M601 Community disputes might impact project viability and future High HighMAP04 The Mentor should prevent amp mitigate any conflicts inside the
community
M602 Open source projects may not stay open in future releases High HighMAP05 The originator liabilities should be strongly enforced by the
community statute
M7 Legal risks
M701 Copyright infringement High High
M702 Can open source software deployments pass an audit
M8 GPL General Public License specific development concerns
M801Software thatrsquos derived from an existing GPL project in whole or in part
might not be released under the same licenseHigh High M08 The community should regulate the licensing model
M802
Developer contamination - developer could review an existing open source
project could see an elegant solution then implement a similar function in
closed source project
High HighMAP09 Procedurals constrains for the software developers should be
enforced
M9
Current
customers
attitude
The actual customer perception could be negative High High
M12 To prevent a negative attitude Allevo should involve the customers
in the FinTP project Allevo needs their active support for a smooth and
issues less transition
ma
rke
t re
late
d r
isk
s
co
st
rela
ted
ris
ks
MAP01 The community should regulate the applicable rules and fees for
services and maintenance
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
bu
sin
es
s a
nd
le
ga
l ri
sk
s
MAP06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S1Product
related
S101 Late delivery lead time Medium MediumMAP15 Allevo should provide proper resources (funding and human
resources)
S102 Credibility loss if fail to certify with SWIFT Medium High MAP16 Should be discussedamp agreed with SWIFT
S103 Inexperienced team or allocation below needs Low HighMAP15 Allevo should provide proper resources (funding and human
resources)
S104 Improper or non efficient version management Low High MAP16 Review the current Allevo Configuration Management System
S105Poor quality if the community fails to institutionalize proper verification and
validation practices3
M06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S106 Lack of expertise in open source projects 2 Allevo should engage thoroughly selected Open Source consultants
S2Service
related
S201
The software maintenance not properly providing for bugs fixing
regulationamp standard alignment technological improvements communities
improvement requests
High HighMAP01 The community should regulate the applicable rules and fees for
services and maintenance
S202 One-time amp recurring services might be provided by unqualified resources High HighMAP17 The community should regulate the training curricula and related
expertise certification
S203 Provided services might not meet the minimal SLA performance criteria High HighMAP17 The community should regulate the training curricula and related
expertise certification
S204 Relaxed or lack of accountability of the professionals High HighMAP18 The community should regulate the employment agreement of
the professionals
S205 Lack of qualified professionals High HighMAP19 The community should ensure a balanced number of certified
professionals with the community size
S3Community
related
S301
If after disclosing FinTP the community does not enthusiastically adopt
the solution competitors might more successfully develop a similar
strategy
Medium MediumMAP20 FinTP promotion should be convincing and realistic A well
organized marketing campaign by Allevo
S302The community mentor andor early adhering members have no
undeniable prestige or are not largely trustfulMedium Medium MAP99 Project status review Ending the project could be one option
S303 The Mentor does not strongly commit for the project Medium Medium MAP99 Project status review Ending the project could be one option
S4 Legal
S401Exposure to copyright and IP infringement due to working team unaware of
the legal consequences of using third party softwareMedium Medium
MAP21 Allevo should keep records and fully document the use of open
source code
S402Copyright or intellectual property infringement can lead to injunctive relief
and monetary damagesHigh High
MAP23 Allevo should institutionalize a tight licensing and technical
control
S403 All risks related to open source compliance High HighMAP24 Allevo should appoint as soon as possible a FinTP compliance
Officer
S5 Financial
S501 Lack of financing institutions Medium MediumMAP25 Allevo should urge consultant to provide a consistent list of
potential investors
S502 Dependency on the financing institution approval Medium Medium
S503Not thoroughly planned project overlooking one or some project cost that
need to be financedMedium Medium
Sp
ec
ific
ris
ks
tec
hn
ica
lm
ark
eti
ng
leg
al
fun
din
g
MAP26 Allevo should carefully draw a consistent and eligible project for
financing
Risks
Riskspdf
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 40 of 43 Allevo Confidential
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Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
11 Appendix - Bibliography 1 Accenture Open Source Research Geographic Findings
2 Accenture Open Source Research Industry Findings
3 Producing Open Source Software - How to Run a Successful Free Software
Project by Karl Fogel
4 Open Source Software Risks and Rewards by Gary Hein
5 A Business Case Study of Open Source Software by Carolyn A Kenwood
6 6 critical success factors for product development by Christian Wig
7 Bank 20 by Brett King
8 Managing the business risks of open innovation by Oliver Alexy and Markus
9 Product idea evaluation checklist shared by Startgass AS
10 SWIFT 2015 Strategy
11 Customers and business impact of product changes
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
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Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
12 Appendix - Glossary ACH Automated Clearing House that is used to clear retail payments
between banks in a country or region
APAC Asia and Pacific
AML Anti-Money Laundering
BCampDR Business continuity amp disaster recovery
B2B Business to business
C2B Consumer to business
CET Central European Time
CMMI Capability Maturity Model Integration
CMS Configuration Management System
Coexistence The situation of multiple standards existing at the same time in the same business space Within SWIFT this refers to the coexistence between the MT and MX standards This also refers to the set of measures being taken to make the situation easier to handle by the community (publication of mapping rules translation serviceshellip)
CSM Clearing and Settlement Mechanism
CUG Closed User Group
Dictionary Part of the ISO 20022 Repository that contains all items that can be re-used during business modelling and message definition activities
EAI Enterprise Application Integration - middleware to connect applications and communication interfaces Typical EAI software includes features for mapping data between various formats enriching messages with data from other systems and orchestrating message flows
ECB European Central Bank
EMEA Europe Middle-East Africa
EPC European Payment Council
ERP Enterprise Resource Planning
EU European Union
EUCLID Connectivity to EuroClear Bank services
FIN The messaging service offered by SWIFT for the secure and reliable exchange of MT messages in store-and-forward mode By extension the syntax used to format these MTs
IP intellectual property
Interoperability Capability to easily exchange business information while using different message standards ISO 20022 promotes global use of syntax-neutral business and message components as a common denominator to achieve interoperability between standards using different syntaxes
ISO The International Organization for Standardization - an international standard-setting body composed of representatives from more than 160 national standards organizations that promulgates worldwide standards in a variety of domains aiming at facilitating cross-border exchanges of goods services and techniques
FinTP - Vision and Scope
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wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
ISO 15022 An ISO standard that describes the syntax to be used for developing securities messages used mainly to support back office related transaction flows It replaced the previous securities messaging standard ISO 7775
ISO 20022 RA Registration Authority - offers the services described in an ISO standard on behalf of and under a contractual agreement with the International Organization for Standardization
ISO 20022 Repository
Repository maintained by the ISO20022 RA which contains the financial business models message definitions and components defined in compliance with the ISO 20022 standard
ISO 20022 RMG Registration Management Group - in charge of the overall management of the ISO 20022 development and registration process in accordance with the ISO 20022 standard
ISO 20022 SEG Standards Evaluation Groups -in charge of validating candidate ISO 20022 messages within the scope of the business justification and ensuring that they address the needs of their future international community of users
ISV Independent Software Vendor
KYC Know Your Customer
MACUG Member Administered Closed User Group
Message A set of structured information exchanged between two parties involved in a financial transaction
Message component and element
A re-usable data structure used for assembling message definitions The data defined in a message component is bdquotraced‟ back to the business components and business elements In simple terms business components define the business meaning message components create data structures for messaging
MI Market Infrastructure - a system that provides services to the financial industry for trading clearing and settlement matching of financial transactions and depository functions
Middleware Software that enables data to be exchanged among different systems with standard communication components and tools for formatting mapping and processing
MT The traditional bdquotag value‟ Message Types for use on the FIN service offered by SWIFT
MX An XML message exchanged over SWIFTNet whether or not ISO 20022 compliant
OS Open source
PSP Payment service provider
QA Quality assurance
RMA Relationship Management Access
RTGS Real Time Gross Settlement System
SAA SWIFT Alliance Access
SAE SWIFT Alliance Entry
SAG SWIFT Alliance Gateway
SaaS Software as a Service
SCORE Standardized CORporate Environment
FinTP - Vision and Scope
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Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
Semantics The study of meaning usually in language The word is often used in ordinary language to denote a problem of understanding that comes down to word selection or connotation
SEPA Single Euro Payment Area
SLA Service level agreement
SME Small and Medium-sized Business(es)
SOA Service Oriented Architecture
SSB SWIFT Service Bureau
STP Straight Through Processing
SWIFT Society for Worldwide Interbank Financial Telecommunication Visit wwwswiftcom
Syntax Physical format of a message used to identify and represent the conveyed pieces of information
T2S TARGET2 Securities - an initiative of the Eurosystem It is an IT platform that aims to make settlements across national borders simpler and more cost-efficient
TARGET2 The Eurosystem-owned European Real Time Gross Settlement (RTGS) system (Trans-European Automated Real-time Gross Settlement Express Transfer System) TARGET2 is one of the largest high-value payment systems in the world
Taxonomy The classification in a hierarchical system typically organized by super type - sub type relationships also called generalization-specialization relationships or less formally parent-child relationships
TSU Trade Service Utility
TCO Total cost of ownership
Translation rules
Set of rules to be used to map the pieces of information included in a message expressed in one syntax to the equivalent message expressed in another syntax
Remit Remittances
XML eXtensible Mark-up Language - popular syntax to encode documents (or messages) electronically on the Internet XML allows communities to define their own identifiers (or tags) and format (or data type) for each component of a message
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Maintenance amp user support 1-Jan-13 Marketing inst action
4 Activities
Initial planning amp budgeting 15-Dec-12 document
Roles allocation 15-Dec-12 document
Community inst Implementation 15-Dec-12 action
Awareness campaign 1-Jan-13 action ongoing process
Members recruiting 1-Jan-13 action ongoing process
Continued operation 1-Jan-13 action ongoing process
Service sales 1-Jan-13 action ongoing process
Future development planning 1-Jan-13 document ongoing process
5 Resource allocation
If existing institution - allocation 15-Dec-12 action
If newly formed - recruiting 15-Dec-12 action
Make FinTP available to comm 1-Jan-13 action ongoing process
Start community financing 1-Jan-13 action ongoing process
6 Financing
Initial investment 1-Jan-13 action secured by that date
First period of comm operation 31-Aug-13 action secured by that date
co
mm
un
ity
Project approach
Project approachpdf
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
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8 Scope This chapter deals with the phased availability of various FinTP features again considered from application and community points of view
In the first phase (due Dec 2012) the core of FinTP application is ready including the following technical features
- financial message routing between services and monitoring of exchanges
- multi-threading capabilities
- persistent end-to-end transactions
- batching de-batching
- archiving
- tracing and logging of transactions and user events
- transient errors detection and recovery
- real time search and reports
- security access and user administration
Similarly during the first phase the main community components need to be in place
- moderator
- software development and maintenance body (Allevo also available in the first and second phase of the project)
- test amp validation body
- (software) auditor
- legal
- main contributors (Allevo falls into this position)
- platform
- marketing
In the second phase (Dec2012 - Dec2013) several operational features of FinTP will be added
- predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit instruments securities settlement reconciliations
- MTMX coexistence
- multi-BIC multi-currency
- SEPA ready certification
- TARGET2 ready
- SAGSAASAE interfaces
- duplicate detection
- liquidity reports
- competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
- accounting reconciliation
- AML (sanctions list matching)
- SaaS and cloud ready
along with resilience and start of maintenance and knowledge transfer (the last two obviously continuing in the next phases)
FinTP - Vision and Scope
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Business Information Systems (Allevo) SRL
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Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
The synthetic view of the project scope is provided in the following table
Crt No
Feature Activity Phase1 31Dec12
Phase2 31Dec13
Phase3 31Dec14
Phase4 31Dec15
Fin
TP
A Operational features
1
Predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit Instruments bonds (Romanian Euroclear) reconciliations
2 MTMX coexistence
3 Multi-BIC multi-currency
4 SaaS ready cloud ready
5 SEPA ready certification
6 TARGET2 ready
7 SAGSAASAE interfaces
8 Liquidity reports
9 Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
10 Accounting reconciliation
11 AML (sanctions list matching)
12 Duplicate detection
B Technical features
1 Routing financial message between services and monitoring of data flows
2 Multi-threading capabilities
3 Persistent end-to-end transactions
4 Batching de-batching
5 Resilience (at transaction level)
6 Archiving
7 Tracing and logging of transactions and user events
8 Transient errors detection and recovery
9 Real time search and reports
10 Security access and user administration
C Other activities
1 FinTP maintenance
2 Knowledge transfer
Co
mm
un
ity
Establishing the institutionscomponents
1 Mentor
2 Software Auditor amp Provider
3 Legal service
4 Members
5 Allevo initial role
6 Platform
7 Marketing
FinTP - Vision and Scope
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Business Information Systems (Allevo) SRL
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Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
9 Limitations The main limitations in the economy of the project consist of phasing several FinTP
operational features for the following year (eg debit instruments liquidity reporting
AML filtering accounting reconciliation resilience SaaS ready cloud ready etc)
At the same time for features intended to front-office usage like Remit it was not yet
decided to publish them as open source product
The synthetic view of the main limitations is provided in the following table
Crt
nrItem Limitation Exclusion Comments
1
FinTP
a
Operational features Available in 2013
b
Remit Not included in
open source
package
2
Community
a
Rules Tightly controlled The statute should
ensure the right
balance between
safety and free
association of talents
Given the significant budget allocation (at least from Allevo perspective) the strong
requirement to meet the maximum ceiling will limit the FinTP product initial preparation
and maintenance expenses
Community wise the obligation of a tight regulated statute will have to ensure the right
balance between safety (mandatory in an environment dealing with financial
transactions) and a free association of talents (typical in an open source community)
In the first period after launch (at least the first two years) of the initiative the
maintenance and support activities will be provided by Allevo (as initial contributor)
A major restriction would be to meet the budgeted development and maintenance
FinTP - Vision and Scope
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10 Appendix - Risks
Specific risks
1 Product
a Long delivery lead time This is a medium probability and impact risk however Allevo should make available the needed resources and motivate the entire team for the job
b Credibility loss if FinTP fails to further become certified on meaningful operations andor business tracks (ie SWIFT business certification tracks or similar) The single possible containment is lobbying if the application certification program rejects open source products Anyway the impact is very important and its materialization should be avoided
c Low quality of the allocated team and improper version management are highly unlikely to occur as long as the formal transfer of responsibility is smoothly made from Allevo to the corresponding body put in place by the community The real hidden risk is that this process could take too long and it thus has a very high impact
d Poor FinTP quality may result if the community fails to institutionalize proper quality assurance (QA) and verification amp validation (VampV) processes This is most expected not to happen but if it does the impact is at least medium The single path to overcome this risk consists in a professional approach to these items based on institutionalizing practice proven QA and VampV processes
e Allevo lack of expertise in the open source business This can be contained by carefully selecting trustful amp truly expert consultants Otherwise it means more money longer time spent on project and expenses without proper return
2 Service
a The software maintenance does not properly deliver as expected ie on-time and on-quality bug fixing regulation amp standards alignment and productivity amp technological improvement The key to contain this risk materialization is the community status having provisions to neatly provide maintenance and further development of the rules for FinTP as well as the applicable rules and fees for the ancillary services
b Low quality and safety of the service received by the members of the community To avoid the risk of performing the one-time amp recurring support services by under-prepared professionals the community has to rule the process of training and qualifying the companies willing to contribute in this area
c Not meeting the minimal SLA criteria The community should regulate and periodically revise the training curricula and to further audit both the teachers and the certified experts to ensure the service level agreements are met
d Under motivated service providing professionals - up to the level of not feeling the high impact of their activity The community status must provide guidance to the contributors on the minimal standards the professionals should meet
FinTP - Vision and Scope
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e Constrained expert resource pool This risk could be overcome by the communitys policy to ensure at all time a balanced number of motivated experts to the communitys size Failing to do so may result in high negative impact of the community business and public perception
3 Community
a Emergence of a parallel competitive community If the optimal timing between publically disclosing FinTP and community take-off is not achieved then there are high chances that following a competitive initiative other entrepreneurs successfully launch their own similar or derived community This could be avoided by periodical reviews of the progress of both FinTP and community status and deciding whether the project needs to be put on hold or not
b Unfit reputation of the Moderator or main contributors If either the Moderator or the initial contributors are not beyond any dispute and are reputable institutes then there is certainly something rotten in Denmark and the project should be put on-hold
c No commitment from the Moderator‟s side Similarly if the Moderator does not commit to the project it means that Denmark has a serious problem to solve The project should relinquish until the matter is fixed
4 Legal
a Misuse of copyright and intellectual property (IP)The assigned working team could not be aware of the limitations and liabilities of using (entirely or partially) third party software this risk can be contained by delivering the right training providing proper working procedures carefully recording and documenting the use of open source code and carefully cross-scanning
b Injunctive relief and financial damages can be caused by not properly and continuously controlling the use of third party open source code resulting in copyright or IP infringement There are two containment measures which can be taken tighten the compliance check during the product lifecycle or apply the sanction policy as to set an example
c The competition starts a class action - this may result in delaying the project
5 Financing
a Lack of long term financing institutions Allevo should urge its consultant to identify and draw a reasonable list of financial options institutions
b Exceeding the budget given that this type of project has no precedent in Allevo and to avoid exposing to the dependency on engagement to financial institutions or to commitments beyond the existing budget a further carefully drawn project plan is needed along with its explicit approval from the board of the company
Market related risks
1 False expectations
a Expensive services Not everything is free aside the initial and maintenance free licensing the training the support and other professional services can amount to more than in general expected Allevo rates this risk as medium possible but with low impact as long as the law governing the community and its initial period of operation will consecrate fair market prices and competitive sources of contribution
FinTP - Vision and Scope
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b Hidden costs for patches updates and upgrades While of similarly weight in terms of probability and impact this should be no real concern as long as the law governing the community clearly provides for free and accountable maintenance
2 Poor image on quality
a Too many releases making FinTP hard to manage and unsafe to operate Given proper regulation of the community and the mature root of FinTP Allevo disregards the possibility of this risk to materialize However if this were to happen this is a high impact risk and by all means should be avoided
b Backward technological (in)compatibility looks to us as a low risk in all respects and within organizations applying practice proven software engineering processes and professional - accountable team this is not likely to materialize
c Support can be perceived as the highest impact risk for FinTP This can be overcome by tight regulation of the commercial and professional conditions to deliver the service (for instance only qualified organizations should be recommended to members for supporting FinTP)
d SLA and accountability for both internally or externally performed services is closely correlated to the previous risk and the community status should provide the support for growing a community of competencies and accountable professionals around FinTP Periodical auditing (by the specialized community body) of this pool of professionals will further ensure the confidence that the skills are preserved at the required level
e Code fragmentation and forking is a high impact risk with a low probability of happening in the initial period provided the knowledge transfer is done orderly and in an institutionalized manner
3 Inherent uncertainty
a Community disputes can jeopardize its cohesion the project viability and future This is a high impact possibly high probability risk and it is the definite role of the Moderator to feel prevent and while materializing mitigate any conflicting situation
b FinTP going commercial post-launch This is a huge impact possibly high occurrence probability but manageable with the right legal instruments provisioned in the community
c Loss of alignment to industry standards and regulations This risk has medium probability and medium impact given the assumption that the community is tightly regulated and the working bodies institutionalized and gathering professionals
4 Legal
Copyright infringement given Allevo experience in the open source business this risk is highly probable and has a high impact on FinTP especially if mistakes are made in the launching phase Similarly if during the product maintenance and further development phase the community fails to institutionalize proper formal software development processes (covering all FinTP lifecycle phases) based on industry practice proven model(s) Supplementary the expert code scanning audit for compliance is the single resort to preclude external software source misuse
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
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5 GPL specific
a Noncompliance to the GPL license If GPL license is used the product should further distribute in compliance with this part provisions High impact and probability but manageable if proper software development processes are used and if the statute clearly defines the licensing model for FinTP
b FinTP unconformity The risk that software engineers get inspired by a chic solution which they import and emulate similarly in FinTP And this is also highly possible since les grands esprits se rencontre
6 Existing customers attitude
Anger for having paid for something which now is free The existent customers can be concerned about the future of their installed system its further development (in one word its future) and on the quality of the service (SLA including) Some recent adopters can possibly be furious for spending their money on buying licenses for a piece of software that differently packaged becomes free of charge
For the first situation the single best solution for Allevo is to ensure a smooth transition from the current status to the new solution deployed Also highly probable Allevo should provide for simultaneous (for at most one more year) maintenance of both FinTP and for qPayIntegrator
For the 2012 new qPayIntegrator adopters Allevo should transparently state the product‟s future and propose a commercially attractive migration towards FinTP when it becomes publically available (like the option for the installation migration and recurring services) The decision should clearly stay with the customer if he still buys Allevo licenses delays the implementation until FinTP is available or if he goes for a competitive solution
In other words the key to mitigate the existing customer perception is switching places and discarding if the situation proves to be uncomfortable
Bottom-line is that to avoid most of the risks the FinTP community must be a rather tightly controlled one though still opened to anyone willingly abiding to the rules
The synthetic view of the main risks their assigned probability impact and the corresponding containment approach is provided in the attached file
Risk IDRisk
CategoryRisk
Probability
(High
Medium
Low)
Severity
(High
Medium
Low)
Containment (Mitigation Action Proposed)
M1Free as in a
Free Puppy
M101
The training service amp support cost could account more than the
commercial product its replacing (application software is typically 30 of
the total cost of ownership of most projects)
Medium Low
M102 Hidden costs ie charge for patches updates and upgrades Medium Low
M2Frequent
updates
M201
Projects might be updated frequently - as often as everyday Too frequent
updates could have a negative impact on the implementation
interoperability and support
Low HighMAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M3Backwards
compatibility
M301 Less accountability Low LowMAP03 Access to prior versions of source code (additional in-house
development and support procedures might be necessary)
M4Support
related risks
M401Support could be perceived as the biggest issue with open source
software deploymentsHigh High
M402 Internal External Accountability SLAs High High
M403Code fragmentation or forking if the community fails to institutionalize
corporate like formal structureHigh High
M404Support could require greater involvement and different skills set from
operations staffMedium Medium
M5Community
immaturity Low Low
M501Could generate incompatibility of FinTP with industry standards amp
regulationsMedium Medium
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M6 Uncertainty The inherent uncertainty in every open source project
M601 Community disputes might impact project viability and future High HighMAP04 The Mentor should prevent amp mitigate any conflicts inside the
community
M602 Open source projects may not stay open in future releases High HighMAP05 The originator liabilities should be strongly enforced by the
community statute
M7 Legal risks
M701 Copyright infringement High High
M702 Can open source software deployments pass an audit
M8 GPL General Public License specific development concerns
M801Software thatrsquos derived from an existing GPL project in whole or in part
might not be released under the same licenseHigh High M08 The community should regulate the licensing model
M802
Developer contamination - developer could review an existing open source
project could see an elegant solution then implement a similar function in
closed source project
High HighMAP09 Procedurals constrains for the software developers should be
enforced
M9
Current
customers
attitude
The actual customer perception could be negative High High
M12 To prevent a negative attitude Allevo should involve the customers
in the FinTP project Allevo needs their active support for a smooth and
issues less transition
ma
rke
t re
late
d r
isk
s
co
st
rela
ted
ris
ks
MAP01 The community should regulate the applicable rules and fees for
services and maintenance
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
bu
sin
es
s a
nd
le
ga
l ri
sk
s
MAP06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S1Product
related
S101 Late delivery lead time Medium MediumMAP15 Allevo should provide proper resources (funding and human
resources)
S102 Credibility loss if fail to certify with SWIFT Medium High MAP16 Should be discussedamp agreed with SWIFT
S103 Inexperienced team or allocation below needs Low HighMAP15 Allevo should provide proper resources (funding and human
resources)
S104 Improper or non efficient version management Low High MAP16 Review the current Allevo Configuration Management System
S105Poor quality if the community fails to institutionalize proper verification and
validation practices3
M06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S106 Lack of expertise in open source projects 2 Allevo should engage thoroughly selected Open Source consultants
S2Service
related
S201
The software maintenance not properly providing for bugs fixing
regulationamp standard alignment technological improvements communities
improvement requests
High HighMAP01 The community should regulate the applicable rules and fees for
services and maintenance
S202 One-time amp recurring services might be provided by unqualified resources High HighMAP17 The community should regulate the training curricula and related
expertise certification
S203 Provided services might not meet the minimal SLA performance criteria High HighMAP17 The community should regulate the training curricula and related
expertise certification
S204 Relaxed or lack of accountability of the professionals High HighMAP18 The community should regulate the employment agreement of
the professionals
S205 Lack of qualified professionals High HighMAP19 The community should ensure a balanced number of certified
professionals with the community size
S3Community
related
S301
If after disclosing FinTP the community does not enthusiastically adopt
the solution competitors might more successfully develop a similar
strategy
Medium MediumMAP20 FinTP promotion should be convincing and realistic A well
organized marketing campaign by Allevo
S302The community mentor andor early adhering members have no
undeniable prestige or are not largely trustfulMedium Medium MAP99 Project status review Ending the project could be one option
S303 The Mentor does not strongly commit for the project Medium Medium MAP99 Project status review Ending the project could be one option
S4 Legal
S401Exposure to copyright and IP infringement due to working team unaware of
the legal consequences of using third party softwareMedium Medium
MAP21 Allevo should keep records and fully document the use of open
source code
S402Copyright or intellectual property infringement can lead to injunctive relief
and monetary damagesHigh High
MAP23 Allevo should institutionalize a tight licensing and technical
control
S403 All risks related to open source compliance High HighMAP24 Allevo should appoint as soon as possible a FinTP compliance
Officer
S5 Financial
S501 Lack of financing institutions Medium MediumMAP25 Allevo should urge consultant to provide a consistent list of
potential investors
S502 Dependency on the financing institution approval Medium Medium
S503Not thoroughly planned project overlooking one or some project cost that
need to be financedMedium Medium
Sp
ec
ific
ris
ks
tec
hn
ica
lm
ark
eti
ng
leg
al
fun
din
g
MAP26 Allevo should carefully draw a consistent and eligible project for
financing
Risks
Riskspdf
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 40 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
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Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
11 Appendix - Bibliography 1 Accenture Open Source Research Geographic Findings
2 Accenture Open Source Research Industry Findings
3 Producing Open Source Software - How to Run a Successful Free Software
Project by Karl Fogel
4 Open Source Software Risks and Rewards by Gary Hein
5 A Business Case Study of Open Source Software by Carolyn A Kenwood
6 6 critical success factors for product development by Christian Wig
7 Bank 20 by Brett King
8 Managing the business risks of open innovation by Oliver Alexy and Markus
9 Product idea evaluation checklist shared by Startgass AS
10 SWIFT 2015 Strategy
11 Customers and business impact of product changes
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
12 Appendix - Glossary ACH Automated Clearing House that is used to clear retail payments
between banks in a country or region
APAC Asia and Pacific
AML Anti-Money Laundering
BCampDR Business continuity amp disaster recovery
B2B Business to business
C2B Consumer to business
CET Central European Time
CMMI Capability Maturity Model Integration
CMS Configuration Management System
Coexistence The situation of multiple standards existing at the same time in the same business space Within SWIFT this refers to the coexistence between the MT and MX standards This also refers to the set of measures being taken to make the situation easier to handle by the community (publication of mapping rules translation serviceshellip)
CSM Clearing and Settlement Mechanism
CUG Closed User Group
Dictionary Part of the ISO 20022 Repository that contains all items that can be re-used during business modelling and message definition activities
EAI Enterprise Application Integration - middleware to connect applications and communication interfaces Typical EAI software includes features for mapping data between various formats enriching messages with data from other systems and orchestrating message flows
ECB European Central Bank
EMEA Europe Middle-East Africa
EPC European Payment Council
ERP Enterprise Resource Planning
EU European Union
EUCLID Connectivity to EuroClear Bank services
FIN The messaging service offered by SWIFT for the secure and reliable exchange of MT messages in store-and-forward mode By extension the syntax used to format these MTs
IP intellectual property
Interoperability Capability to easily exchange business information while using different message standards ISO 20022 promotes global use of syntax-neutral business and message components as a common denominator to achieve interoperability between standards using different syntaxes
ISO The International Organization for Standardization - an international standard-setting body composed of representatives from more than 160 national standards organizations that promulgates worldwide standards in a variety of domains aiming at facilitating cross-border exchanges of goods services and techniques
FinTP - Vision and Scope
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wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
ISO 15022 An ISO standard that describes the syntax to be used for developing securities messages used mainly to support back office related transaction flows It replaced the previous securities messaging standard ISO 7775
ISO 20022 RA Registration Authority - offers the services described in an ISO standard on behalf of and under a contractual agreement with the International Organization for Standardization
ISO 20022 Repository
Repository maintained by the ISO20022 RA which contains the financial business models message definitions and components defined in compliance with the ISO 20022 standard
ISO 20022 RMG Registration Management Group - in charge of the overall management of the ISO 20022 development and registration process in accordance with the ISO 20022 standard
ISO 20022 SEG Standards Evaluation Groups -in charge of validating candidate ISO 20022 messages within the scope of the business justification and ensuring that they address the needs of their future international community of users
ISV Independent Software Vendor
KYC Know Your Customer
MACUG Member Administered Closed User Group
Message A set of structured information exchanged between two parties involved in a financial transaction
Message component and element
A re-usable data structure used for assembling message definitions The data defined in a message component is bdquotraced‟ back to the business components and business elements In simple terms business components define the business meaning message components create data structures for messaging
MI Market Infrastructure - a system that provides services to the financial industry for trading clearing and settlement matching of financial transactions and depository functions
Middleware Software that enables data to be exchanged among different systems with standard communication components and tools for formatting mapping and processing
MT The traditional bdquotag value‟ Message Types for use on the FIN service offered by SWIFT
MX An XML message exchanged over SWIFTNet whether or not ISO 20022 compliant
OS Open source
PSP Payment service provider
QA Quality assurance
RMA Relationship Management Access
RTGS Real Time Gross Settlement System
SAA SWIFT Alliance Access
SAE SWIFT Alliance Entry
SAG SWIFT Alliance Gateway
SaaS Software as a Service
SCORE Standardized CORporate Environment
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Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
Semantics The study of meaning usually in language The word is often used in ordinary language to denote a problem of understanding that comes down to word selection or connotation
SEPA Single Euro Payment Area
SLA Service level agreement
SME Small and Medium-sized Business(es)
SOA Service Oriented Architecture
SSB SWIFT Service Bureau
STP Straight Through Processing
SWIFT Society for Worldwide Interbank Financial Telecommunication Visit wwwswiftcom
Syntax Physical format of a message used to identify and represent the conveyed pieces of information
T2S TARGET2 Securities - an initiative of the Eurosystem It is an IT platform that aims to make settlements across national borders simpler and more cost-efficient
TARGET2 The Eurosystem-owned European Real Time Gross Settlement (RTGS) system (Trans-European Automated Real-time Gross Settlement Express Transfer System) TARGET2 is one of the largest high-value payment systems in the world
Taxonomy The classification in a hierarchical system typically organized by super type - sub type relationships also called generalization-specialization relationships or less formally parent-child relationships
TSU Trade Service Utility
TCO Total cost of ownership
Translation rules
Set of rules to be used to map the pieces of information included in a message expressed in one syntax to the equivalent message expressed in another syntax
Remit Remittances
XML eXtensible Mark-up Language - popular syntax to encode documents (or messages) electronically on the Internet XML allows communities to define their own identifiers (or tags) and format (or data type) for each component of a message
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Maintenance amp user support 1-Jan-13 Marketing inst action
4 Activities
Initial planning amp budgeting 15-Dec-12 document
Roles allocation 15-Dec-12 document
Community inst Implementation 15-Dec-12 action
Awareness campaign 1-Jan-13 action ongoing process
Members recruiting 1-Jan-13 action ongoing process
Continued operation 1-Jan-13 action ongoing process
Service sales 1-Jan-13 action ongoing process
Future development planning 1-Jan-13 document ongoing process
5 Resource allocation
If existing institution - allocation 15-Dec-12 action
If newly formed - recruiting 15-Dec-12 action
Make FinTP available to comm 1-Jan-13 action ongoing process
Start community financing 1-Jan-13 action ongoing process
6 Financing
Initial investment 1-Jan-13 action secured by that date
First period of comm operation 31-Aug-13 action secured by that date
co
mm
un
ity
Project approach
Project approachpdf
FinTP - Vision and Scope
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Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
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8 Scope This chapter deals with the phased availability of various FinTP features again considered from application and community points of view
In the first phase (due Dec 2012) the core of FinTP application is ready including the following technical features
- financial message routing between services and monitoring of exchanges
- multi-threading capabilities
- persistent end-to-end transactions
- batching de-batching
- archiving
- tracing and logging of transactions and user events
- transient errors detection and recovery
- real time search and reports
- security access and user administration
Similarly during the first phase the main community components need to be in place
- moderator
- software development and maintenance body (Allevo also available in the first and second phase of the project)
- test amp validation body
- (software) auditor
- legal
- main contributors (Allevo falls into this position)
- platform
- marketing
In the second phase (Dec2012 - Dec2013) several operational features of FinTP will be added
- predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit instruments securities settlement reconciliations
- MTMX coexistence
- multi-BIC multi-currency
- SEPA ready certification
- TARGET2 ready
- SAGSAASAE interfaces
- duplicate detection
- liquidity reports
- competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
- accounting reconciliation
- AML (sanctions list matching)
- SaaS and cloud ready
along with resilience and start of maintenance and knowledge transfer (the last two obviously continuing in the next phases)
FinTP - Vision and Scope
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Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
The synthetic view of the project scope is provided in the following table
Crt No
Feature Activity Phase1 31Dec12
Phase2 31Dec13
Phase3 31Dec14
Phase4 31Dec15
Fin
TP
A Operational features
1
Predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit Instruments bonds (Romanian Euroclear) reconciliations
2 MTMX coexistence
3 Multi-BIC multi-currency
4 SaaS ready cloud ready
5 SEPA ready certification
6 TARGET2 ready
7 SAGSAASAE interfaces
8 Liquidity reports
9 Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
10 Accounting reconciliation
11 AML (sanctions list matching)
12 Duplicate detection
B Technical features
1 Routing financial message between services and monitoring of data flows
2 Multi-threading capabilities
3 Persistent end-to-end transactions
4 Batching de-batching
5 Resilience (at transaction level)
6 Archiving
7 Tracing and logging of transactions and user events
8 Transient errors detection and recovery
9 Real time search and reports
10 Security access and user administration
C Other activities
1 FinTP maintenance
2 Knowledge transfer
Co
mm
un
ity
Establishing the institutionscomponents
1 Mentor
2 Software Auditor amp Provider
3 Legal service
4 Members
5 Allevo initial role
6 Platform
7 Marketing
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 35 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
9 Limitations The main limitations in the economy of the project consist of phasing several FinTP
operational features for the following year (eg debit instruments liquidity reporting
AML filtering accounting reconciliation resilience SaaS ready cloud ready etc)
At the same time for features intended to front-office usage like Remit it was not yet
decided to publish them as open source product
The synthetic view of the main limitations is provided in the following table
Crt
nrItem Limitation Exclusion Comments
1
FinTP
a
Operational features Available in 2013
b
Remit Not included in
open source
package
2
Community
a
Rules Tightly controlled The statute should
ensure the right
balance between
safety and free
association of talents
Given the significant budget allocation (at least from Allevo perspective) the strong
requirement to meet the maximum ceiling will limit the FinTP product initial preparation
and maintenance expenses
Community wise the obligation of a tight regulated statute will have to ensure the right
balance between safety (mandatory in an environment dealing with financial
transactions) and a free association of talents (typical in an open source community)
In the first period after launch (at least the first two years) of the initiative the
maintenance and support activities will be provided by Allevo (as initial contributor)
A major restriction would be to meet the budgeted development and maintenance
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
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Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
10 Appendix - Risks
Specific risks
1 Product
a Long delivery lead time This is a medium probability and impact risk however Allevo should make available the needed resources and motivate the entire team for the job
b Credibility loss if FinTP fails to further become certified on meaningful operations andor business tracks (ie SWIFT business certification tracks or similar) The single possible containment is lobbying if the application certification program rejects open source products Anyway the impact is very important and its materialization should be avoided
c Low quality of the allocated team and improper version management are highly unlikely to occur as long as the formal transfer of responsibility is smoothly made from Allevo to the corresponding body put in place by the community The real hidden risk is that this process could take too long and it thus has a very high impact
d Poor FinTP quality may result if the community fails to institutionalize proper quality assurance (QA) and verification amp validation (VampV) processes This is most expected not to happen but if it does the impact is at least medium The single path to overcome this risk consists in a professional approach to these items based on institutionalizing practice proven QA and VampV processes
e Allevo lack of expertise in the open source business This can be contained by carefully selecting trustful amp truly expert consultants Otherwise it means more money longer time spent on project and expenses without proper return
2 Service
a The software maintenance does not properly deliver as expected ie on-time and on-quality bug fixing regulation amp standards alignment and productivity amp technological improvement The key to contain this risk materialization is the community status having provisions to neatly provide maintenance and further development of the rules for FinTP as well as the applicable rules and fees for the ancillary services
b Low quality and safety of the service received by the members of the community To avoid the risk of performing the one-time amp recurring support services by under-prepared professionals the community has to rule the process of training and qualifying the companies willing to contribute in this area
c Not meeting the minimal SLA criteria The community should regulate and periodically revise the training curricula and to further audit both the teachers and the certified experts to ensure the service level agreements are met
d Under motivated service providing professionals - up to the level of not feeling the high impact of their activity The community status must provide guidance to the contributors on the minimal standards the professionals should meet
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
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e Constrained expert resource pool This risk could be overcome by the communitys policy to ensure at all time a balanced number of motivated experts to the communitys size Failing to do so may result in high negative impact of the community business and public perception
3 Community
a Emergence of a parallel competitive community If the optimal timing between publically disclosing FinTP and community take-off is not achieved then there are high chances that following a competitive initiative other entrepreneurs successfully launch their own similar or derived community This could be avoided by periodical reviews of the progress of both FinTP and community status and deciding whether the project needs to be put on hold or not
b Unfit reputation of the Moderator or main contributors If either the Moderator or the initial contributors are not beyond any dispute and are reputable institutes then there is certainly something rotten in Denmark and the project should be put on-hold
c No commitment from the Moderator‟s side Similarly if the Moderator does not commit to the project it means that Denmark has a serious problem to solve The project should relinquish until the matter is fixed
4 Legal
a Misuse of copyright and intellectual property (IP)The assigned working team could not be aware of the limitations and liabilities of using (entirely or partially) third party software this risk can be contained by delivering the right training providing proper working procedures carefully recording and documenting the use of open source code and carefully cross-scanning
b Injunctive relief and financial damages can be caused by not properly and continuously controlling the use of third party open source code resulting in copyright or IP infringement There are two containment measures which can be taken tighten the compliance check during the product lifecycle or apply the sanction policy as to set an example
c The competition starts a class action - this may result in delaying the project
5 Financing
a Lack of long term financing institutions Allevo should urge its consultant to identify and draw a reasonable list of financial options institutions
b Exceeding the budget given that this type of project has no precedent in Allevo and to avoid exposing to the dependency on engagement to financial institutions or to commitments beyond the existing budget a further carefully drawn project plan is needed along with its explicit approval from the board of the company
Market related risks
1 False expectations
a Expensive services Not everything is free aside the initial and maintenance free licensing the training the support and other professional services can amount to more than in general expected Allevo rates this risk as medium possible but with low impact as long as the law governing the community and its initial period of operation will consecrate fair market prices and competitive sources of contribution
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
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b Hidden costs for patches updates and upgrades While of similarly weight in terms of probability and impact this should be no real concern as long as the law governing the community clearly provides for free and accountable maintenance
2 Poor image on quality
a Too many releases making FinTP hard to manage and unsafe to operate Given proper regulation of the community and the mature root of FinTP Allevo disregards the possibility of this risk to materialize However if this were to happen this is a high impact risk and by all means should be avoided
b Backward technological (in)compatibility looks to us as a low risk in all respects and within organizations applying practice proven software engineering processes and professional - accountable team this is not likely to materialize
c Support can be perceived as the highest impact risk for FinTP This can be overcome by tight regulation of the commercial and professional conditions to deliver the service (for instance only qualified organizations should be recommended to members for supporting FinTP)
d SLA and accountability for both internally or externally performed services is closely correlated to the previous risk and the community status should provide the support for growing a community of competencies and accountable professionals around FinTP Periodical auditing (by the specialized community body) of this pool of professionals will further ensure the confidence that the skills are preserved at the required level
e Code fragmentation and forking is a high impact risk with a low probability of happening in the initial period provided the knowledge transfer is done orderly and in an institutionalized manner
3 Inherent uncertainty
a Community disputes can jeopardize its cohesion the project viability and future This is a high impact possibly high probability risk and it is the definite role of the Moderator to feel prevent and while materializing mitigate any conflicting situation
b FinTP going commercial post-launch This is a huge impact possibly high occurrence probability but manageable with the right legal instruments provisioned in the community
c Loss of alignment to industry standards and regulations This risk has medium probability and medium impact given the assumption that the community is tightly regulated and the working bodies institutionalized and gathering professionals
4 Legal
Copyright infringement given Allevo experience in the open source business this risk is highly probable and has a high impact on FinTP especially if mistakes are made in the launching phase Similarly if during the product maintenance and further development phase the community fails to institutionalize proper formal software development processes (covering all FinTP lifecycle phases) based on industry practice proven model(s) Supplementary the expert code scanning audit for compliance is the single resort to preclude external software source misuse
FinTP - Vision and Scope
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Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
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5 GPL specific
a Noncompliance to the GPL license If GPL license is used the product should further distribute in compliance with this part provisions High impact and probability but manageable if proper software development processes are used and if the statute clearly defines the licensing model for FinTP
b FinTP unconformity The risk that software engineers get inspired by a chic solution which they import and emulate similarly in FinTP And this is also highly possible since les grands esprits se rencontre
6 Existing customers attitude
Anger for having paid for something which now is free The existent customers can be concerned about the future of their installed system its further development (in one word its future) and on the quality of the service (SLA including) Some recent adopters can possibly be furious for spending their money on buying licenses for a piece of software that differently packaged becomes free of charge
For the first situation the single best solution for Allevo is to ensure a smooth transition from the current status to the new solution deployed Also highly probable Allevo should provide for simultaneous (for at most one more year) maintenance of both FinTP and for qPayIntegrator
For the 2012 new qPayIntegrator adopters Allevo should transparently state the product‟s future and propose a commercially attractive migration towards FinTP when it becomes publically available (like the option for the installation migration and recurring services) The decision should clearly stay with the customer if he still buys Allevo licenses delays the implementation until FinTP is available or if he goes for a competitive solution
In other words the key to mitigate the existing customer perception is switching places and discarding if the situation proves to be uncomfortable
Bottom-line is that to avoid most of the risks the FinTP community must be a rather tightly controlled one though still opened to anyone willingly abiding to the rules
The synthetic view of the main risks their assigned probability impact and the corresponding containment approach is provided in the attached file
Risk IDRisk
CategoryRisk
Probability
(High
Medium
Low)
Severity
(High
Medium
Low)
Containment (Mitigation Action Proposed)
M1Free as in a
Free Puppy
M101
The training service amp support cost could account more than the
commercial product its replacing (application software is typically 30 of
the total cost of ownership of most projects)
Medium Low
M102 Hidden costs ie charge for patches updates and upgrades Medium Low
M2Frequent
updates
M201
Projects might be updated frequently - as often as everyday Too frequent
updates could have a negative impact on the implementation
interoperability and support
Low HighMAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M3Backwards
compatibility
M301 Less accountability Low LowMAP03 Access to prior versions of source code (additional in-house
development and support procedures might be necessary)
M4Support
related risks
M401Support could be perceived as the biggest issue with open source
software deploymentsHigh High
M402 Internal External Accountability SLAs High High
M403Code fragmentation or forking if the community fails to institutionalize
corporate like formal structureHigh High
M404Support could require greater involvement and different skills set from
operations staffMedium Medium
M5Community
immaturity Low Low
M501Could generate incompatibility of FinTP with industry standards amp
regulationsMedium Medium
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M6 Uncertainty The inherent uncertainty in every open source project
M601 Community disputes might impact project viability and future High HighMAP04 The Mentor should prevent amp mitigate any conflicts inside the
community
M602 Open source projects may not stay open in future releases High HighMAP05 The originator liabilities should be strongly enforced by the
community statute
M7 Legal risks
M701 Copyright infringement High High
M702 Can open source software deployments pass an audit
M8 GPL General Public License specific development concerns
M801Software thatrsquos derived from an existing GPL project in whole or in part
might not be released under the same licenseHigh High M08 The community should regulate the licensing model
M802
Developer contamination - developer could review an existing open source
project could see an elegant solution then implement a similar function in
closed source project
High HighMAP09 Procedurals constrains for the software developers should be
enforced
M9
Current
customers
attitude
The actual customer perception could be negative High High
M12 To prevent a negative attitude Allevo should involve the customers
in the FinTP project Allevo needs their active support for a smooth and
issues less transition
ma
rke
t re
late
d r
isk
s
co
st
rela
ted
ris
ks
MAP01 The community should regulate the applicable rules and fees for
services and maintenance
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
bu
sin
es
s a
nd
le
ga
l ri
sk
s
MAP06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S1Product
related
S101 Late delivery lead time Medium MediumMAP15 Allevo should provide proper resources (funding and human
resources)
S102 Credibility loss if fail to certify with SWIFT Medium High MAP16 Should be discussedamp agreed with SWIFT
S103 Inexperienced team or allocation below needs Low HighMAP15 Allevo should provide proper resources (funding and human
resources)
S104 Improper or non efficient version management Low High MAP16 Review the current Allevo Configuration Management System
S105Poor quality if the community fails to institutionalize proper verification and
validation practices3
M06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S106 Lack of expertise in open source projects 2 Allevo should engage thoroughly selected Open Source consultants
S2Service
related
S201
The software maintenance not properly providing for bugs fixing
regulationamp standard alignment technological improvements communities
improvement requests
High HighMAP01 The community should regulate the applicable rules and fees for
services and maintenance
S202 One-time amp recurring services might be provided by unqualified resources High HighMAP17 The community should regulate the training curricula and related
expertise certification
S203 Provided services might not meet the minimal SLA performance criteria High HighMAP17 The community should regulate the training curricula and related
expertise certification
S204 Relaxed or lack of accountability of the professionals High HighMAP18 The community should regulate the employment agreement of
the professionals
S205 Lack of qualified professionals High HighMAP19 The community should ensure a balanced number of certified
professionals with the community size
S3Community
related
S301
If after disclosing FinTP the community does not enthusiastically adopt
the solution competitors might more successfully develop a similar
strategy
Medium MediumMAP20 FinTP promotion should be convincing and realistic A well
organized marketing campaign by Allevo
S302The community mentor andor early adhering members have no
undeniable prestige or are not largely trustfulMedium Medium MAP99 Project status review Ending the project could be one option
S303 The Mentor does not strongly commit for the project Medium Medium MAP99 Project status review Ending the project could be one option
S4 Legal
S401Exposure to copyright and IP infringement due to working team unaware of
the legal consequences of using third party softwareMedium Medium
MAP21 Allevo should keep records and fully document the use of open
source code
S402Copyright or intellectual property infringement can lead to injunctive relief
and monetary damagesHigh High
MAP23 Allevo should institutionalize a tight licensing and technical
control
S403 All risks related to open source compliance High HighMAP24 Allevo should appoint as soon as possible a FinTP compliance
Officer
S5 Financial
S501 Lack of financing institutions Medium MediumMAP25 Allevo should urge consultant to provide a consistent list of
potential investors
S502 Dependency on the financing institution approval Medium Medium
S503Not thoroughly planned project overlooking one or some project cost that
need to be financedMedium Medium
Sp
ec
ific
ris
ks
tec
hn
ica
lm
ark
eti
ng
leg
al
fun
din
g
MAP26 Allevo should carefully draw a consistent and eligible project for
financing
Risks
Riskspdf
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 40 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
11 Appendix - Bibliography 1 Accenture Open Source Research Geographic Findings
2 Accenture Open Source Research Industry Findings
3 Producing Open Source Software - How to Run a Successful Free Software
Project by Karl Fogel
4 Open Source Software Risks and Rewards by Gary Hein
5 A Business Case Study of Open Source Software by Carolyn A Kenwood
6 6 critical success factors for product development by Christian Wig
7 Bank 20 by Brett King
8 Managing the business risks of open innovation by Oliver Alexy and Markus
9 Product idea evaluation checklist shared by Startgass AS
10 SWIFT 2015 Strategy
11 Customers and business impact of product changes
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 41 of 43 Allevo Confidential
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Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
12 Appendix - Glossary ACH Automated Clearing House that is used to clear retail payments
between banks in a country or region
APAC Asia and Pacific
AML Anti-Money Laundering
BCampDR Business continuity amp disaster recovery
B2B Business to business
C2B Consumer to business
CET Central European Time
CMMI Capability Maturity Model Integration
CMS Configuration Management System
Coexistence The situation of multiple standards existing at the same time in the same business space Within SWIFT this refers to the coexistence between the MT and MX standards This also refers to the set of measures being taken to make the situation easier to handle by the community (publication of mapping rules translation serviceshellip)
CSM Clearing and Settlement Mechanism
CUG Closed User Group
Dictionary Part of the ISO 20022 Repository that contains all items that can be re-used during business modelling and message definition activities
EAI Enterprise Application Integration - middleware to connect applications and communication interfaces Typical EAI software includes features for mapping data between various formats enriching messages with data from other systems and orchestrating message flows
ECB European Central Bank
EMEA Europe Middle-East Africa
EPC European Payment Council
ERP Enterprise Resource Planning
EU European Union
EUCLID Connectivity to EuroClear Bank services
FIN The messaging service offered by SWIFT for the secure and reliable exchange of MT messages in store-and-forward mode By extension the syntax used to format these MTs
IP intellectual property
Interoperability Capability to easily exchange business information while using different message standards ISO 20022 promotes global use of syntax-neutral business and message components as a common denominator to achieve interoperability between standards using different syntaxes
ISO The International Organization for Standardization - an international standard-setting body composed of representatives from more than 160 national standards organizations that promulgates worldwide standards in a variety of domains aiming at facilitating cross-border exchanges of goods services and techniques
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
ISO 15022 An ISO standard that describes the syntax to be used for developing securities messages used mainly to support back office related transaction flows It replaced the previous securities messaging standard ISO 7775
ISO 20022 RA Registration Authority - offers the services described in an ISO standard on behalf of and under a contractual agreement with the International Organization for Standardization
ISO 20022 Repository
Repository maintained by the ISO20022 RA which contains the financial business models message definitions and components defined in compliance with the ISO 20022 standard
ISO 20022 RMG Registration Management Group - in charge of the overall management of the ISO 20022 development and registration process in accordance with the ISO 20022 standard
ISO 20022 SEG Standards Evaluation Groups -in charge of validating candidate ISO 20022 messages within the scope of the business justification and ensuring that they address the needs of their future international community of users
ISV Independent Software Vendor
KYC Know Your Customer
MACUG Member Administered Closed User Group
Message A set of structured information exchanged between two parties involved in a financial transaction
Message component and element
A re-usable data structure used for assembling message definitions The data defined in a message component is bdquotraced‟ back to the business components and business elements In simple terms business components define the business meaning message components create data structures for messaging
MI Market Infrastructure - a system that provides services to the financial industry for trading clearing and settlement matching of financial transactions and depository functions
Middleware Software that enables data to be exchanged among different systems with standard communication components and tools for formatting mapping and processing
MT The traditional bdquotag value‟ Message Types for use on the FIN service offered by SWIFT
MX An XML message exchanged over SWIFTNet whether or not ISO 20022 compliant
OS Open source
PSP Payment service provider
QA Quality assurance
RMA Relationship Management Access
RTGS Real Time Gross Settlement System
SAA SWIFT Alliance Access
SAE SWIFT Alliance Entry
SAG SWIFT Alliance Gateway
SaaS Software as a Service
SCORE Standardized CORporate Environment
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
Semantics The study of meaning usually in language The word is often used in ordinary language to denote a problem of understanding that comes down to word selection or connotation
SEPA Single Euro Payment Area
SLA Service level agreement
SME Small and Medium-sized Business(es)
SOA Service Oriented Architecture
SSB SWIFT Service Bureau
STP Straight Through Processing
SWIFT Society for Worldwide Interbank Financial Telecommunication Visit wwwswiftcom
Syntax Physical format of a message used to identify and represent the conveyed pieces of information
T2S TARGET2 Securities - an initiative of the Eurosystem It is an IT platform that aims to make settlements across national borders simpler and more cost-efficient
TARGET2 The Eurosystem-owned European Real Time Gross Settlement (RTGS) system (Trans-European Automated Real-time Gross Settlement Express Transfer System) TARGET2 is one of the largest high-value payment systems in the world
Taxonomy The classification in a hierarchical system typically organized by super type - sub type relationships also called generalization-specialization relationships or less formally parent-child relationships
TSU Trade Service Utility
TCO Total cost of ownership
Translation rules
Set of rules to be used to map the pieces of information included in a message expressed in one syntax to the equivalent message expressed in another syntax
Remit Remittances
XML eXtensible Mark-up Language - popular syntax to encode documents (or messages) electronically on the Internet XML allows communities to define their own identifiers (or tags) and format (or data type) for each component of a message
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Maintenance amp user support 1-Jan-13 Marketing inst action
4 Activities
Initial planning amp budgeting 15-Dec-12 document
Roles allocation 15-Dec-12 document
Community inst Implementation 15-Dec-12 action
Awareness campaign 1-Jan-13 action ongoing process
Members recruiting 1-Jan-13 action ongoing process
Continued operation 1-Jan-13 action ongoing process
Service sales 1-Jan-13 action ongoing process
Future development planning 1-Jan-13 document ongoing process
5 Resource allocation
If existing institution - allocation 15-Dec-12 action
If newly formed - recruiting 15-Dec-12 action
Make FinTP available to comm 1-Jan-13 action ongoing process
Start community financing 1-Jan-13 action ongoing process
6 Financing
Initial investment 1-Jan-13 action secured by that date
First period of comm operation 31-Aug-13 action secured by that date
co
mm
un
ity
Project approach
Project approachpdf
FinTP - Vision and Scope
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Business Information Systems (Allevo) SRL
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Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
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Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
8 Scope This chapter deals with the phased availability of various FinTP features again considered from application and community points of view
In the first phase (due Dec 2012) the core of FinTP application is ready including the following technical features
- financial message routing between services and monitoring of exchanges
- multi-threading capabilities
- persistent end-to-end transactions
- batching de-batching
- archiving
- tracing and logging of transactions and user events
- transient errors detection and recovery
- real time search and reports
- security access and user administration
Similarly during the first phase the main community components need to be in place
- moderator
- software development and maintenance body (Allevo also available in the first and second phase of the project)
- test amp validation body
- (software) auditor
- legal
- main contributors (Allevo falls into this position)
- platform
- marketing
In the second phase (Dec2012 - Dec2013) several operational features of FinTP will be added
- predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit instruments securities settlement reconciliations
- MTMX coexistence
- multi-BIC multi-currency
- SEPA ready certification
- TARGET2 ready
- SAGSAASAE interfaces
- duplicate detection
- liquidity reports
- competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
- accounting reconciliation
- AML (sanctions list matching)
- SaaS and cloud ready
along with resilience and start of maintenance and knowledge transfer (the last two obviously continuing in the next phases)
FinTP - Vision and Scope
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Business Information Systems (Allevo) SRL
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Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
The synthetic view of the project scope is provided in the following table
Crt No
Feature Activity Phase1 31Dec12
Phase2 31Dec13
Phase3 31Dec14
Phase4 31Dec15
Fin
TP
A Operational features
1
Predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit Instruments bonds (Romanian Euroclear) reconciliations
2 MTMX coexistence
3 Multi-BIC multi-currency
4 SaaS ready cloud ready
5 SEPA ready certification
6 TARGET2 ready
7 SAGSAASAE interfaces
8 Liquidity reports
9 Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
10 Accounting reconciliation
11 AML (sanctions list matching)
12 Duplicate detection
B Technical features
1 Routing financial message between services and monitoring of data flows
2 Multi-threading capabilities
3 Persistent end-to-end transactions
4 Batching de-batching
5 Resilience (at transaction level)
6 Archiving
7 Tracing and logging of transactions and user events
8 Transient errors detection and recovery
9 Real time search and reports
10 Security access and user administration
C Other activities
1 FinTP maintenance
2 Knowledge transfer
Co
mm
un
ity
Establishing the institutionscomponents
1 Mentor
2 Software Auditor amp Provider
3 Legal service
4 Members
5 Allevo initial role
6 Platform
7 Marketing
FinTP - Vision and Scope
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Business Information Systems (Allevo) SRL
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Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
9 Limitations The main limitations in the economy of the project consist of phasing several FinTP
operational features for the following year (eg debit instruments liquidity reporting
AML filtering accounting reconciliation resilience SaaS ready cloud ready etc)
At the same time for features intended to front-office usage like Remit it was not yet
decided to publish them as open source product
The synthetic view of the main limitations is provided in the following table
Crt
nrItem Limitation Exclusion Comments
1
FinTP
a
Operational features Available in 2013
b
Remit Not included in
open source
package
2
Community
a
Rules Tightly controlled The statute should
ensure the right
balance between
safety and free
association of talents
Given the significant budget allocation (at least from Allevo perspective) the strong
requirement to meet the maximum ceiling will limit the FinTP product initial preparation
and maintenance expenses
Community wise the obligation of a tight regulated statute will have to ensure the right
balance between safety (mandatory in an environment dealing with financial
transactions) and a free association of talents (typical in an open source community)
In the first period after launch (at least the first two years) of the initiative the
maintenance and support activities will be provided by Allevo (as initial contributor)
A major restriction would be to meet the budgeted development and maintenance
FinTP - Vision and Scope
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10 Appendix - Risks
Specific risks
1 Product
a Long delivery lead time This is a medium probability and impact risk however Allevo should make available the needed resources and motivate the entire team for the job
b Credibility loss if FinTP fails to further become certified on meaningful operations andor business tracks (ie SWIFT business certification tracks or similar) The single possible containment is lobbying if the application certification program rejects open source products Anyway the impact is very important and its materialization should be avoided
c Low quality of the allocated team and improper version management are highly unlikely to occur as long as the formal transfer of responsibility is smoothly made from Allevo to the corresponding body put in place by the community The real hidden risk is that this process could take too long and it thus has a very high impact
d Poor FinTP quality may result if the community fails to institutionalize proper quality assurance (QA) and verification amp validation (VampV) processes This is most expected not to happen but if it does the impact is at least medium The single path to overcome this risk consists in a professional approach to these items based on institutionalizing practice proven QA and VampV processes
e Allevo lack of expertise in the open source business This can be contained by carefully selecting trustful amp truly expert consultants Otherwise it means more money longer time spent on project and expenses without proper return
2 Service
a The software maintenance does not properly deliver as expected ie on-time and on-quality bug fixing regulation amp standards alignment and productivity amp technological improvement The key to contain this risk materialization is the community status having provisions to neatly provide maintenance and further development of the rules for FinTP as well as the applicable rules and fees for the ancillary services
b Low quality and safety of the service received by the members of the community To avoid the risk of performing the one-time amp recurring support services by under-prepared professionals the community has to rule the process of training and qualifying the companies willing to contribute in this area
c Not meeting the minimal SLA criteria The community should regulate and periodically revise the training curricula and to further audit both the teachers and the certified experts to ensure the service level agreements are met
d Under motivated service providing professionals - up to the level of not feeling the high impact of their activity The community status must provide guidance to the contributors on the minimal standards the professionals should meet
FinTP - Vision and Scope
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e Constrained expert resource pool This risk could be overcome by the communitys policy to ensure at all time a balanced number of motivated experts to the communitys size Failing to do so may result in high negative impact of the community business and public perception
3 Community
a Emergence of a parallel competitive community If the optimal timing between publically disclosing FinTP and community take-off is not achieved then there are high chances that following a competitive initiative other entrepreneurs successfully launch their own similar or derived community This could be avoided by periodical reviews of the progress of both FinTP and community status and deciding whether the project needs to be put on hold or not
b Unfit reputation of the Moderator or main contributors If either the Moderator or the initial contributors are not beyond any dispute and are reputable institutes then there is certainly something rotten in Denmark and the project should be put on-hold
c No commitment from the Moderator‟s side Similarly if the Moderator does not commit to the project it means that Denmark has a serious problem to solve The project should relinquish until the matter is fixed
4 Legal
a Misuse of copyright and intellectual property (IP)The assigned working team could not be aware of the limitations and liabilities of using (entirely or partially) third party software this risk can be contained by delivering the right training providing proper working procedures carefully recording and documenting the use of open source code and carefully cross-scanning
b Injunctive relief and financial damages can be caused by not properly and continuously controlling the use of third party open source code resulting in copyright or IP infringement There are two containment measures which can be taken tighten the compliance check during the product lifecycle or apply the sanction policy as to set an example
c The competition starts a class action - this may result in delaying the project
5 Financing
a Lack of long term financing institutions Allevo should urge its consultant to identify and draw a reasonable list of financial options institutions
b Exceeding the budget given that this type of project has no precedent in Allevo and to avoid exposing to the dependency on engagement to financial institutions or to commitments beyond the existing budget a further carefully drawn project plan is needed along with its explicit approval from the board of the company
Market related risks
1 False expectations
a Expensive services Not everything is free aside the initial and maintenance free licensing the training the support and other professional services can amount to more than in general expected Allevo rates this risk as medium possible but with low impact as long as the law governing the community and its initial period of operation will consecrate fair market prices and competitive sources of contribution
FinTP - Vision and Scope
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b Hidden costs for patches updates and upgrades While of similarly weight in terms of probability and impact this should be no real concern as long as the law governing the community clearly provides for free and accountable maintenance
2 Poor image on quality
a Too many releases making FinTP hard to manage and unsafe to operate Given proper regulation of the community and the mature root of FinTP Allevo disregards the possibility of this risk to materialize However if this were to happen this is a high impact risk and by all means should be avoided
b Backward technological (in)compatibility looks to us as a low risk in all respects and within organizations applying practice proven software engineering processes and professional - accountable team this is not likely to materialize
c Support can be perceived as the highest impact risk for FinTP This can be overcome by tight regulation of the commercial and professional conditions to deliver the service (for instance only qualified organizations should be recommended to members for supporting FinTP)
d SLA and accountability for both internally or externally performed services is closely correlated to the previous risk and the community status should provide the support for growing a community of competencies and accountable professionals around FinTP Periodical auditing (by the specialized community body) of this pool of professionals will further ensure the confidence that the skills are preserved at the required level
e Code fragmentation and forking is a high impact risk with a low probability of happening in the initial period provided the knowledge transfer is done orderly and in an institutionalized manner
3 Inherent uncertainty
a Community disputes can jeopardize its cohesion the project viability and future This is a high impact possibly high probability risk and it is the definite role of the Moderator to feel prevent and while materializing mitigate any conflicting situation
b FinTP going commercial post-launch This is a huge impact possibly high occurrence probability but manageable with the right legal instruments provisioned in the community
c Loss of alignment to industry standards and regulations This risk has medium probability and medium impact given the assumption that the community is tightly regulated and the working bodies institutionalized and gathering professionals
4 Legal
Copyright infringement given Allevo experience in the open source business this risk is highly probable and has a high impact on FinTP especially if mistakes are made in the launching phase Similarly if during the product maintenance and further development phase the community fails to institutionalize proper formal software development processes (covering all FinTP lifecycle phases) based on industry practice proven model(s) Supplementary the expert code scanning audit for compliance is the single resort to preclude external software source misuse
FinTP - Vision and Scope
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5 GPL specific
a Noncompliance to the GPL license If GPL license is used the product should further distribute in compliance with this part provisions High impact and probability but manageable if proper software development processes are used and if the statute clearly defines the licensing model for FinTP
b FinTP unconformity The risk that software engineers get inspired by a chic solution which they import and emulate similarly in FinTP And this is also highly possible since les grands esprits se rencontre
6 Existing customers attitude
Anger for having paid for something which now is free The existent customers can be concerned about the future of their installed system its further development (in one word its future) and on the quality of the service (SLA including) Some recent adopters can possibly be furious for spending their money on buying licenses for a piece of software that differently packaged becomes free of charge
For the first situation the single best solution for Allevo is to ensure a smooth transition from the current status to the new solution deployed Also highly probable Allevo should provide for simultaneous (for at most one more year) maintenance of both FinTP and for qPayIntegrator
For the 2012 new qPayIntegrator adopters Allevo should transparently state the product‟s future and propose a commercially attractive migration towards FinTP when it becomes publically available (like the option for the installation migration and recurring services) The decision should clearly stay with the customer if he still buys Allevo licenses delays the implementation until FinTP is available or if he goes for a competitive solution
In other words the key to mitigate the existing customer perception is switching places and discarding if the situation proves to be uncomfortable
Bottom-line is that to avoid most of the risks the FinTP community must be a rather tightly controlled one though still opened to anyone willingly abiding to the rules
The synthetic view of the main risks their assigned probability impact and the corresponding containment approach is provided in the attached file
Risk IDRisk
CategoryRisk
Probability
(High
Medium
Low)
Severity
(High
Medium
Low)
Containment (Mitigation Action Proposed)
M1Free as in a
Free Puppy
M101
The training service amp support cost could account more than the
commercial product its replacing (application software is typically 30 of
the total cost of ownership of most projects)
Medium Low
M102 Hidden costs ie charge for patches updates and upgrades Medium Low
M2Frequent
updates
M201
Projects might be updated frequently - as often as everyday Too frequent
updates could have a negative impact on the implementation
interoperability and support
Low HighMAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M3Backwards
compatibility
M301 Less accountability Low LowMAP03 Access to prior versions of source code (additional in-house
development and support procedures might be necessary)
M4Support
related risks
M401Support could be perceived as the biggest issue with open source
software deploymentsHigh High
M402 Internal External Accountability SLAs High High
M403Code fragmentation or forking if the community fails to institutionalize
corporate like formal structureHigh High
M404Support could require greater involvement and different skills set from
operations staffMedium Medium
M5Community
immaturity Low Low
M501Could generate incompatibility of FinTP with industry standards amp
regulationsMedium Medium
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M6 Uncertainty The inherent uncertainty in every open source project
M601 Community disputes might impact project viability and future High HighMAP04 The Mentor should prevent amp mitigate any conflicts inside the
community
M602 Open source projects may not stay open in future releases High HighMAP05 The originator liabilities should be strongly enforced by the
community statute
M7 Legal risks
M701 Copyright infringement High High
M702 Can open source software deployments pass an audit
M8 GPL General Public License specific development concerns
M801Software thatrsquos derived from an existing GPL project in whole or in part
might not be released under the same licenseHigh High M08 The community should regulate the licensing model
M802
Developer contamination - developer could review an existing open source
project could see an elegant solution then implement a similar function in
closed source project
High HighMAP09 Procedurals constrains for the software developers should be
enforced
M9
Current
customers
attitude
The actual customer perception could be negative High High
M12 To prevent a negative attitude Allevo should involve the customers
in the FinTP project Allevo needs their active support for a smooth and
issues less transition
ma
rke
t re
late
d r
isk
s
co
st
rela
ted
ris
ks
MAP01 The community should regulate the applicable rules and fees for
services and maintenance
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
bu
sin
es
s a
nd
le
ga
l ri
sk
s
MAP06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S1Product
related
S101 Late delivery lead time Medium MediumMAP15 Allevo should provide proper resources (funding and human
resources)
S102 Credibility loss if fail to certify with SWIFT Medium High MAP16 Should be discussedamp agreed with SWIFT
S103 Inexperienced team or allocation below needs Low HighMAP15 Allevo should provide proper resources (funding and human
resources)
S104 Improper or non efficient version management Low High MAP16 Review the current Allevo Configuration Management System
S105Poor quality if the community fails to institutionalize proper verification and
validation practices3
M06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S106 Lack of expertise in open source projects 2 Allevo should engage thoroughly selected Open Source consultants
S2Service
related
S201
The software maintenance not properly providing for bugs fixing
regulationamp standard alignment technological improvements communities
improvement requests
High HighMAP01 The community should regulate the applicable rules and fees for
services and maintenance
S202 One-time amp recurring services might be provided by unqualified resources High HighMAP17 The community should regulate the training curricula and related
expertise certification
S203 Provided services might not meet the minimal SLA performance criteria High HighMAP17 The community should regulate the training curricula and related
expertise certification
S204 Relaxed or lack of accountability of the professionals High HighMAP18 The community should regulate the employment agreement of
the professionals
S205 Lack of qualified professionals High HighMAP19 The community should ensure a balanced number of certified
professionals with the community size
S3Community
related
S301
If after disclosing FinTP the community does not enthusiastically adopt
the solution competitors might more successfully develop a similar
strategy
Medium MediumMAP20 FinTP promotion should be convincing and realistic A well
organized marketing campaign by Allevo
S302The community mentor andor early adhering members have no
undeniable prestige or are not largely trustfulMedium Medium MAP99 Project status review Ending the project could be one option
S303 The Mentor does not strongly commit for the project Medium Medium MAP99 Project status review Ending the project could be one option
S4 Legal
S401Exposure to copyright and IP infringement due to working team unaware of
the legal consequences of using third party softwareMedium Medium
MAP21 Allevo should keep records and fully document the use of open
source code
S402Copyright or intellectual property infringement can lead to injunctive relief
and monetary damagesHigh High
MAP23 Allevo should institutionalize a tight licensing and technical
control
S403 All risks related to open source compliance High HighMAP24 Allevo should appoint as soon as possible a FinTP compliance
Officer
S5 Financial
S501 Lack of financing institutions Medium MediumMAP25 Allevo should urge consultant to provide a consistent list of
potential investors
S502 Dependency on the financing institution approval Medium Medium
S503Not thoroughly planned project overlooking one or some project cost that
need to be financedMedium Medium
Sp
ec
ific
ris
ks
tec
hn
ica
lm
ark
eti
ng
leg
al
fun
din
g
MAP26 Allevo should carefully draw a consistent and eligible project for
financing
Risks
Riskspdf
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 40 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
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Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
11 Appendix - Bibliography 1 Accenture Open Source Research Geographic Findings
2 Accenture Open Source Research Industry Findings
3 Producing Open Source Software - How to Run a Successful Free Software
Project by Karl Fogel
4 Open Source Software Risks and Rewards by Gary Hein
5 A Business Case Study of Open Source Software by Carolyn A Kenwood
6 6 critical success factors for product development by Christian Wig
7 Bank 20 by Brett King
8 Managing the business risks of open innovation by Oliver Alexy and Markus
9 Product idea evaluation checklist shared by Startgass AS
10 SWIFT 2015 Strategy
11 Customers and business impact of product changes
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
12 Appendix - Glossary ACH Automated Clearing House that is used to clear retail payments
between banks in a country or region
APAC Asia and Pacific
AML Anti-Money Laundering
BCampDR Business continuity amp disaster recovery
B2B Business to business
C2B Consumer to business
CET Central European Time
CMMI Capability Maturity Model Integration
CMS Configuration Management System
Coexistence The situation of multiple standards existing at the same time in the same business space Within SWIFT this refers to the coexistence between the MT and MX standards This also refers to the set of measures being taken to make the situation easier to handle by the community (publication of mapping rules translation serviceshellip)
CSM Clearing and Settlement Mechanism
CUG Closed User Group
Dictionary Part of the ISO 20022 Repository that contains all items that can be re-used during business modelling and message definition activities
EAI Enterprise Application Integration - middleware to connect applications and communication interfaces Typical EAI software includes features for mapping data between various formats enriching messages with data from other systems and orchestrating message flows
ECB European Central Bank
EMEA Europe Middle-East Africa
EPC European Payment Council
ERP Enterprise Resource Planning
EU European Union
EUCLID Connectivity to EuroClear Bank services
FIN The messaging service offered by SWIFT for the secure and reliable exchange of MT messages in store-and-forward mode By extension the syntax used to format these MTs
IP intellectual property
Interoperability Capability to easily exchange business information while using different message standards ISO 20022 promotes global use of syntax-neutral business and message components as a common denominator to achieve interoperability between standards using different syntaxes
ISO The International Organization for Standardization - an international standard-setting body composed of representatives from more than 160 national standards organizations that promulgates worldwide standards in a variety of domains aiming at facilitating cross-border exchanges of goods services and techniques
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wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
ISO 15022 An ISO standard that describes the syntax to be used for developing securities messages used mainly to support back office related transaction flows It replaced the previous securities messaging standard ISO 7775
ISO 20022 RA Registration Authority - offers the services described in an ISO standard on behalf of and under a contractual agreement with the International Organization for Standardization
ISO 20022 Repository
Repository maintained by the ISO20022 RA which contains the financial business models message definitions and components defined in compliance with the ISO 20022 standard
ISO 20022 RMG Registration Management Group - in charge of the overall management of the ISO 20022 development and registration process in accordance with the ISO 20022 standard
ISO 20022 SEG Standards Evaluation Groups -in charge of validating candidate ISO 20022 messages within the scope of the business justification and ensuring that they address the needs of their future international community of users
ISV Independent Software Vendor
KYC Know Your Customer
MACUG Member Administered Closed User Group
Message A set of structured information exchanged between two parties involved in a financial transaction
Message component and element
A re-usable data structure used for assembling message definitions The data defined in a message component is bdquotraced‟ back to the business components and business elements In simple terms business components define the business meaning message components create data structures for messaging
MI Market Infrastructure - a system that provides services to the financial industry for trading clearing and settlement matching of financial transactions and depository functions
Middleware Software that enables data to be exchanged among different systems with standard communication components and tools for formatting mapping and processing
MT The traditional bdquotag value‟ Message Types for use on the FIN service offered by SWIFT
MX An XML message exchanged over SWIFTNet whether or not ISO 20022 compliant
OS Open source
PSP Payment service provider
QA Quality assurance
RMA Relationship Management Access
RTGS Real Time Gross Settlement System
SAA SWIFT Alliance Access
SAE SWIFT Alliance Entry
SAG SWIFT Alliance Gateway
SaaS Software as a Service
SCORE Standardized CORporate Environment
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
Semantics The study of meaning usually in language The word is often used in ordinary language to denote a problem of understanding that comes down to word selection or connotation
SEPA Single Euro Payment Area
SLA Service level agreement
SME Small and Medium-sized Business(es)
SOA Service Oriented Architecture
SSB SWIFT Service Bureau
STP Straight Through Processing
SWIFT Society for Worldwide Interbank Financial Telecommunication Visit wwwswiftcom
Syntax Physical format of a message used to identify and represent the conveyed pieces of information
T2S TARGET2 Securities - an initiative of the Eurosystem It is an IT platform that aims to make settlements across national borders simpler and more cost-efficient
TARGET2 The Eurosystem-owned European Real Time Gross Settlement (RTGS) system (Trans-European Automated Real-time Gross Settlement Express Transfer System) TARGET2 is one of the largest high-value payment systems in the world
Taxonomy The classification in a hierarchical system typically organized by super type - sub type relationships also called generalization-specialization relationships or less formally parent-child relationships
TSU Trade Service Utility
TCO Total cost of ownership
Translation rules
Set of rules to be used to map the pieces of information included in a message expressed in one syntax to the equivalent message expressed in another syntax
Remit Remittances
XML eXtensible Mark-up Language - popular syntax to encode documents (or messages) electronically on the Internet XML allows communities to define their own identifiers (or tags) and format (or data type) for each component of a message
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Maintenance amp user support 1-Jan-13 Marketing inst action
4 Activities
Initial planning amp budgeting 15-Dec-12 document
Roles allocation 15-Dec-12 document
Community inst Implementation 15-Dec-12 action
Awareness campaign 1-Jan-13 action ongoing process
Members recruiting 1-Jan-13 action ongoing process
Continued operation 1-Jan-13 action ongoing process
Service sales 1-Jan-13 action ongoing process
Future development planning 1-Jan-13 document ongoing process
5 Resource allocation
If existing institution - allocation 15-Dec-12 action
If newly formed - recruiting 15-Dec-12 action
Make FinTP available to comm 1-Jan-13 action ongoing process
Start community financing 1-Jan-13 action ongoing process
6 Financing
Initial investment 1-Jan-13 action secured by that date
First period of comm operation 31-Aug-13 action secured by that date
co
mm
un
ity
Project approach
Project approachpdf
FinTP - Vision and Scope
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Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
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Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
8 Scope This chapter deals with the phased availability of various FinTP features again considered from application and community points of view
In the first phase (due Dec 2012) the core of FinTP application is ready including the following technical features
- financial message routing between services and monitoring of exchanges
- multi-threading capabilities
- persistent end-to-end transactions
- batching de-batching
- archiving
- tracing and logging of transactions and user events
- transient errors detection and recovery
- real time search and reports
- security access and user administration
Similarly during the first phase the main community components need to be in place
- moderator
- software development and maintenance body (Allevo also available in the first and second phase of the project)
- test amp validation body
- (software) auditor
- legal
- main contributors (Allevo falls into this position)
- platform
- marketing
In the second phase (Dec2012 - Dec2013) several operational features of FinTP will be added
- predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit instruments securities settlement reconciliations
- MTMX coexistence
- multi-BIC multi-currency
- SEPA ready certification
- TARGET2 ready
- SAGSAASAE interfaces
- duplicate detection
- liquidity reports
- competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
- accounting reconciliation
- AML (sanctions list matching)
- SaaS and cloud ready
along with resilience and start of maintenance and knowledge transfer (the last two obviously continuing in the next phases)
FinTP - Vision and Scope
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Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
The synthetic view of the project scope is provided in the following table
Crt No
Feature Activity Phase1 31Dec12
Phase2 31Dec13
Phase3 31Dec14
Phase4 31Dec15
Fin
TP
A Operational features
1
Predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit Instruments bonds (Romanian Euroclear) reconciliations
2 MTMX coexistence
3 Multi-BIC multi-currency
4 SaaS ready cloud ready
5 SEPA ready certification
6 TARGET2 ready
7 SAGSAASAE interfaces
8 Liquidity reports
9 Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
10 Accounting reconciliation
11 AML (sanctions list matching)
12 Duplicate detection
B Technical features
1 Routing financial message between services and monitoring of data flows
2 Multi-threading capabilities
3 Persistent end-to-end transactions
4 Batching de-batching
5 Resilience (at transaction level)
6 Archiving
7 Tracing and logging of transactions and user events
8 Transient errors detection and recovery
9 Real time search and reports
10 Security access and user administration
C Other activities
1 FinTP maintenance
2 Knowledge transfer
Co
mm
un
ity
Establishing the institutionscomponents
1 Mentor
2 Software Auditor amp Provider
3 Legal service
4 Members
5 Allevo initial role
6 Platform
7 Marketing
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
9 Limitations The main limitations in the economy of the project consist of phasing several FinTP
operational features for the following year (eg debit instruments liquidity reporting
AML filtering accounting reconciliation resilience SaaS ready cloud ready etc)
At the same time for features intended to front-office usage like Remit it was not yet
decided to publish them as open source product
The synthetic view of the main limitations is provided in the following table
Crt
nrItem Limitation Exclusion Comments
1
FinTP
a
Operational features Available in 2013
b
Remit Not included in
open source
package
2
Community
a
Rules Tightly controlled The statute should
ensure the right
balance between
safety and free
association of talents
Given the significant budget allocation (at least from Allevo perspective) the strong
requirement to meet the maximum ceiling will limit the FinTP product initial preparation
and maintenance expenses
Community wise the obligation of a tight regulated statute will have to ensure the right
balance between safety (mandatory in an environment dealing with financial
transactions) and a free association of talents (typical in an open source community)
In the first period after launch (at least the first two years) of the initiative the
maintenance and support activities will be provided by Allevo (as initial contributor)
A major restriction would be to meet the budgeted development and maintenance
FinTP - Vision and Scope
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10 Appendix - Risks
Specific risks
1 Product
a Long delivery lead time This is a medium probability and impact risk however Allevo should make available the needed resources and motivate the entire team for the job
b Credibility loss if FinTP fails to further become certified on meaningful operations andor business tracks (ie SWIFT business certification tracks or similar) The single possible containment is lobbying if the application certification program rejects open source products Anyway the impact is very important and its materialization should be avoided
c Low quality of the allocated team and improper version management are highly unlikely to occur as long as the formal transfer of responsibility is smoothly made from Allevo to the corresponding body put in place by the community The real hidden risk is that this process could take too long and it thus has a very high impact
d Poor FinTP quality may result if the community fails to institutionalize proper quality assurance (QA) and verification amp validation (VampV) processes This is most expected not to happen but if it does the impact is at least medium The single path to overcome this risk consists in a professional approach to these items based on institutionalizing practice proven QA and VampV processes
e Allevo lack of expertise in the open source business This can be contained by carefully selecting trustful amp truly expert consultants Otherwise it means more money longer time spent on project and expenses without proper return
2 Service
a The software maintenance does not properly deliver as expected ie on-time and on-quality bug fixing regulation amp standards alignment and productivity amp technological improvement The key to contain this risk materialization is the community status having provisions to neatly provide maintenance and further development of the rules for FinTP as well as the applicable rules and fees for the ancillary services
b Low quality and safety of the service received by the members of the community To avoid the risk of performing the one-time amp recurring support services by under-prepared professionals the community has to rule the process of training and qualifying the companies willing to contribute in this area
c Not meeting the minimal SLA criteria The community should regulate and periodically revise the training curricula and to further audit both the teachers and the certified experts to ensure the service level agreements are met
d Under motivated service providing professionals - up to the level of not feeling the high impact of their activity The community status must provide guidance to the contributors on the minimal standards the professionals should meet
FinTP - Vision and Scope
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e Constrained expert resource pool This risk could be overcome by the communitys policy to ensure at all time a balanced number of motivated experts to the communitys size Failing to do so may result in high negative impact of the community business and public perception
3 Community
a Emergence of a parallel competitive community If the optimal timing between publically disclosing FinTP and community take-off is not achieved then there are high chances that following a competitive initiative other entrepreneurs successfully launch their own similar or derived community This could be avoided by periodical reviews of the progress of both FinTP and community status and deciding whether the project needs to be put on hold or not
b Unfit reputation of the Moderator or main contributors If either the Moderator or the initial contributors are not beyond any dispute and are reputable institutes then there is certainly something rotten in Denmark and the project should be put on-hold
c No commitment from the Moderator‟s side Similarly if the Moderator does not commit to the project it means that Denmark has a serious problem to solve The project should relinquish until the matter is fixed
4 Legal
a Misuse of copyright and intellectual property (IP)The assigned working team could not be aware of the limitations and liabilities of using (entirely or partially) third party software this risk can be contained by delivering the right training providing proper working procedures carefully recording and documenting the use of open source code and carefully cross-scanning
b Injunctive relief and financial damages can be caused by not properly and continuously controlling the use of third party open source code resulting in copyright or IP infringement There are two containment measures which can be taken tighten the compliance check during the product lifecycle or apply the sanction policy as to set an example
c The competition starts a class action - this may result in delaying the project
5 Financing
a Lack of long term financing institutions Allevo should urge its consultant to identify and draw a reasonable list of financial options institutions
b Exceeding the budget given that this type of project has no precedent in Allevo and to avoid exposing to the dependency on engagement to financial institutions or to commitments beyond the existing budget a further carefully drawn project plan is needed along with its explicit approval from the board of the company
Market related risks
1 False expectations
a Expensive services Not everything is free aside the initial and maintenance free licensing the training the support and other professional services can amount to more than in general expected Allevo rates this risk as medium possible but with low impact as long as the law governing the community and its initial period of operation will consecrate fair market prices and competitive sources of contribution
FinTP - Vision and Scope
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b Hidden costs for patches updates and upgrades While of similarly weight in terms of probability and impact this should be no real concern as long as the law governing the community clearly provides for free and accountable maintenance
2 Poor image on quality
a Too many releases making FinTP hard to manage and unsafe to operate Given proper regulation of the community and the mature root of FinTP Allevo disregards the possibility of this risk to materialize However if this were to happen this is a high impact risk and by all means should be avoided
b Backward technological (in)compatibility looks to us as a low risk in all respects and within organizations applying practice proven software engineering processes and professional - accountable team this is not likely to materialize
c Support can be perceived as the highest impact risk for FinTP This can be overcome by tight regulation of the commercial and professional conditions to deliver the service (for instance only qualified organizations should be recommended to members for supporting FinTP)
d SLA and accountability for both internally or externally performed services is closely correlated to the previous risk and the community status should provide the support for growing a community of competencies and accountable professionals around FinTP Periodical auditing (by the specialized community body) of this pool of professionals will further ensure the confidence that the skills are preserved at the required level
e Code fragmentation and forking is a high impact risk with a low probability of happening in the initial period provided the knowledge transfer is done orderly and in an institutionalized manner
3 Inherent uncertainty
a Community disputes can jeopardize its cohesion the project viability and future This is a high impact possibly high probability risk and it is the definite role of the Moderator to feel prevent and while materializing mitigate any conflicting situation
b FinTP going commercial post-launch This is a huge impact possibly high occurrence probability but manageable with the right legal instruments provisioned in the community
c Loss of alignment to industry standards and regulations This risk has medium probability and medium impact given the assumption that the community is tightly regulated and the working bodies institutionalized and gathering professionals
4 Legal
Copyright infringement given Allevo experience in the open source business this risk is highly probable and has a high impact on FinTP especially if mistakes are made in the launching phase Similarly if during the product maintenance and further development phase the community fails to institutionalize proper formal software development processes (covering all FinTP lifecycle phases) based on industry practice proven model(s) Supplementary the expert code scanning audit for compliance is the single resort to preclude external software source misuse
FinTP - Vision and Scope
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5 GPL specific
a Noncompliance to the GPL license If GPL license is used the product should further distribute in compliance with this part provisions High impact and probability but manageable if proper software development processes are used and if the statute clearly defines the licensing model for FinTP
b FinTP unconformity The risk that software engineers get inspired by a chic solution which they import and emulate similarly in FinTP And this is also highly possible since les grands esprits se rencontre
6 Existing customers attitude
Anger for having paid for something which now is free The existent customers can be concerned about the future of their installed system its further development (in one word its future) and on the quality of the service (SLA including) Some recent adopters can possibly be furious for spending their money on buying licenses for a piece of software that differently packaged becomes free of charge
For the first situation the single best solution for Allevo is to ensure a smooth transition from the current status to the new solution deployed Also highly probable Allevo should provide for simultaneous (for at most one more year) maintenance of both FinTP and for qPayIntegrator
For the 2012 new qPayIntegrator adopters Allevo should transparently state the product‟s future and propose a commercially attractive migration towards FinTP when it becomes publically available (like the option for the installation migration and recurring services) The decision should clearly stay with the customer if he still buys Allevo licenses delays the implementation until FinTP is available or if he goes for a competitive solution
In other words the key to mitigate the existing customer perception is switching places and discarding if the situation proves to be uncomfortable
Bottom-line is that to avoid most of the risks the FinTP community must be a rather tightly controlled one though still opened to anyone willingly abiding to the rules
The synthetic view of the main risks their assigned probability impact and the corresponding containment approach is provided in the attached file
Risk IDRisk
CategoryRisk
Probability
(High
Medium
Low)
Severity
(High
Medium
Low)
Containment (Mitigation Action Proposed)
M1Free as in a
Free Puppy
M101
The training service amp support cost could account more than the
commercial product its replacing (application software is typically 30 of
the total cost of ownership of most projects)
Medium Low
M102 Hidden costs ie charge for patches updates and upgrades Medium Low
M2Frequent
updates
M201
Projects might be updated frequently - as often as everyday Too frequent
updates could have a negative impact on the implementation
interoperability and support
Low HighMAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M3Backwards
compatibility
M301 Less accountability Low LowMAP03 Access to prior versions of source code (additional in-house
development and support procedures might be necessary)
M4Support
related risks
M401Support could be perceived as the biggest issue with open source
software deploymentsHigh High
M402 Internal External Accountability SLAs High High
M403Code fragmentation or forking if the community fails to institutionalize
corporate like formal structureHigh High
M404Support could require greater involvement and different skills set from
operations staffMedium Medium
M5Community
immaturity Low Low
M501Could generate incompatibility of FinTP with industry standards amp
regulationsMedium Medium
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M6 Uncertainty The inherent uncertainty in every open source project
M601 Community disputes might impact project viability and future High HighMAP04 The Mentor should prevent amp mitigate any conflicts inside the
community
M602 Open source projects may not stay open in future releases High HighMAP05 The originator liabilities should be strongly enforced by the
community statute
M7 Legal risks
M701 Copyright infringement High High
M702 Can open source software deployments pass an audit
M8 GPL General Public License specific development concerns
M801Software thatrsquos derived from an existing GPL project in whole or in part
might not be released under the same licenseHigh High M08 The community should regulate the licensing model
M802
Developer contamination - developer could review an existing open source
project could see an elegant solution then implement a similar function in
closed source project
High HighMAP09 Procedurals constrains for the software developers should be
enforced
M9
Current
customers
attitude
The actual customer perception could be negative High High
M12 To prevent a negative attitude Allevo should involve the customers
in the FinTP project Allevo needs their active support for a smooth and
issues less transition
ma
rke
t re
late
d r
isk
s
co
st
rela
ted
ris
ks
MAP01 The community should regulate the applicable rules and fees for
services and maintenance
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
bu
sin
es
s a
nd
le
ga
l ri
sk
s
MAP06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S1Product
related
S101 Late delivery lead time Medium MediumMAP15 Allevo should provide proper resources (funding and human
resources)
S102 Credibility loss if fail to certify with SWIFT Medium High MAP16 Should be discussedamp agreed with SWIFT
S103 Inexperienced team or allocation below needs Low HighMAP15 Allevo should provide proper resources (funding and human
resources)
S104 Improper or non efficient version management Low High MAP16 Review the current Allevo Configuration Management System
S105Poor quality if the community fails to institutionalize proper verification and
validation practices3
M06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S106 Lack of expertise in open source projects 2 Allevo should engage thoroughly selected Open Source consultants
S2Service
related
S201
The software maintenance not properly providing for bugs fixing
regulationamp standard alignment technological improvements communities
improvement requests
High HighMAP01 The community should regulate the applicable rules and fees for
services and maintenance
S202 One-time amp recurring services might be provided by unqualified resources High HighMAP17 The community should regulate the training curricula and related
expertise certification
S203 Provided services might not meet the minimal SLA performance criteria High HighMAP17 The community should regulate the training curricula and related
expertise certification
S204 Relaxed or lack of accountability of the professionals High HighMAP18 The community should regulate the employment agreement of
the professionals
S205 Lack of qualified professionals High HighMAP19 The community should ensure a balanced number of certified
professionals with the community size
S3Community
related
S301
If after disclosing FinTP the community does not enthusiastically adopt
the solution competitors might more successfully develop a similar
strategy
Medium MediumMAP20 FinTP promotion should be convincing and realistic A well
organized marketing campaign by Allevo
S302The community mentor andor early adhering members have no
undeniable prestige or are not largely trustfulMedium Medium MAP99 Project status review Ending the project could be one option
S303 The Mentor does not strongly commit for the project Medium Medium MAP99 Project status review Ending the project could be one option
S4 Legal
S401Exposure to copyright and IP infringement due to working team unaware of
the legal consequences of using third party softwareMedium Medium
MAP21 Allevo should keep records and fully document the use of open
source code
S402Copyright or intellectual property infringement can lead to injunctive relief
and monetary damagesHigh High
MAP23 Allevo should institutionalize a tight licensing and technical
control
S403 All risks related to open source compliance High HighMAP24 Allevo should appoint as soon as possible a FinTP compliance
Officer
S5 Financial
S501 Lack of financing institutions Medium MediumMAP25 Allevo should urge consultant to provide a consistent list of
potential investors
S502 Dependency on the financing institution approval Medium Medium
S503Not thoroughly planned project overlooking one or some project cost that
need to be financedMedium Medium
Sp
ec
ific
ris
ks
tec
hn
ica
lm
ark
eti
ng
leg
al
fun
din
g
MAP26 Allevo should carefully draw a consistent and eligible project for
financing
Risks
Riskspdf
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 40 of 43 Allevo Confidential
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wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
11 Appendix - Bibliography 1 Accenture Open Source Research Geographic Findings
2 Accenture Open Source Research Industry Findings
3 Producing Open Source Software - How to Run a Successful Free Software
Project by Karl Fogel
4 Open Source Software Risks and Rewards by Gary Hein
5 A Business Case Study of Open Source Software by Carolyn A Kenwood
6 6 critical success factors for product development by Christian Wig
7 Bank 20 by Brett King
8 Managing the business risks of open innovation by Oliver Alexy and Markus
9 Product idea evaluation checklist shared by Startgass AS
10 SWIFT 2015 Strategy
11 Customers and business impact of product changes
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Tel fax +40212554577 +40212554578 +40212554579
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Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
12 Appendix - Glossary ACH Automated Clearing House that is used to clear retail payments
between banks in a country or region
APAC Asia and Pacific
AML Anti-Money Laundering
BCampDR Business continuity amp disaster recovery
B2B Business to business
C2B Consumer to business
CET Central European Time
CMMI Capability Maturity Model Integration
CMS Configuration Management System
Coexistence The situation of multiple standards existing at the same time in the same business space Within SWIFT this refers to the coexistence between the MT and MX standards This also refers to the set of measures being taken to make the situation easier to handle by the community (publication of mapping rules translation serviceshellip)
CSM Clearing and Settlement Mechanism
CUG Closed User Group
Dictionary Part of the ISO 20022 Repository that contains all items that can be re-used during business modelling and message definition activities
EAI Enterprise Application Integration - middleware to connect applications and communication interfaces Typical EAI software includes features for mapping data between various formats enriching messages with data from other systems and orchestrating message flows
ECB European Central Bank
EMEA Europe Middle-East Africa
EPC European Payment Council
ERP Enterprise Resource Planning
EU European Union
EUCLID Connectivity to EuroClear Bank services
FIN The messaging service offered by SWIFT for the secure and reliable exchange of MT messages in store-and-forward mode By extension the syntax used to format these MTs
IP intellectual property
Interoperability Capability to easily exchange business information while using different message standards ISO 20022 promotes global use of syntax-neutral business and message components as a common denominator to achieve interoperability between standards using different syntaxes
ISO The International Organization for Standardization - an international standard-setting body composed of representatives from more than 160 national standards organizations that promulgates worldwide standards in a variety of domains aiming at facilitating cross-border exchanges of goods services and techniques
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ISO 15022 An ISO standard that describes the syntax to be used for developing securities messages used mainly to support back office related transaction flows It replaced the previous securities messaging standard ISO 7775
ISO 20022 RA Registration Authority - offers the services described in an ISO standard on behalf of and under a contractual agreement with the International Organization for Standardization
ISO 20022 Repository
Repository maintained by the ISO20022 RA which contains the financial business models message definitions and components defined in compliance with the ISO 20022 standard
ISO 20022 RMG Registration Management Group - in charge of the overall management of the ISO 20022 development and registration process in accordance with the ISO 20022 standard
ISO 20022 SEG Standards Evaluation Groups -in charge of validating candidate ISO 20022 messages within the scope of the business justification and ensuring that they address the needs of their future international community of users
ISV Independent Software Vendor
KYC Know Your Customer
MACUG Member Administered Closed User Group
Message A set of structured information exchanged between two parties involved in a financial transaction
Message component and element
A re-usable data structure used for assembling message definitions The data defined in a message component is bdquotraced‟ back to the business components and business elements In simple terms business components define the business meaning message components create data structures for messaging
MI Market Infrastructure - a system that provides services to the financial industry for trading clearing and settlement matching of financial transactions and depository functions
Middleware Software that enables data to be exchanged among different systems with standard communication components and tools for formatting mapping and processing
MT The traditional bdquotag value‟ Message Types for use on the FIN service offered by SWIFT
MX An XML message exchanged over SWIFTNet whether or not ISO 20022 compliant
OS Open source
PSP Payment service provider
QA Quality assurance
RMA Relationship Management Access
RTGS Real Time Gross Settlement System
SAA SWIFT Alliance Access
SAE SWIFT Alliance Entry
SAG SWIFT Alliance Gateway
SaaS Software as a Service
SCORE Standardized CORporate Environment
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Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
Semantics The study of meaning usually in language The word is often used in ordinary language to denote a problem of understanding that comes down to word selection or connotation
SEPA Single Euro Payment Area
SLA Service level agreement
SME Small and Medium-sized Business(es)
SOA Service Oriented Architecture
SSB SWIFT Service Bureau
STP Straight Through Processing
SWIFT Society for Worldwide Interbank Financial Telecommunication Visit wwwswiftcom
Syntax Physical format of a message used to identify and represent the conveyed pieces of information
T2S TARGET2 Securities - an initiative of the Eurosystem It is an IT platform that aims to make settlements across national borders simpler and more cost-efficient
TARGET2 The Eurosystem-owned European Real Time Gross Settlement (RTGS) system (Trans-European Automated Real-time Gross Settlement Express Transfer System) TARGET2 is one of the largest high-value payment systems in the world
Taxonomy The classification in a hierarchical system typically organized by super type - sub type relationships also called generalization-specialization relationships or less formally parent-child relationships
TSU Trade Service Utility
TCO Total cost of ownership
Translation rules
Set of rules to be used to map the pieces of information included in a message expressed in one syntax to the equivalent message expressed in another syntax
Remit Remittances
XML eXtensible Mark-up Language - popular syntax to encode documents (or messages) electronically on the Internet XML allows communities to define their own identifiers (or tags) and format (or data type) for each component of a message
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Maintenance amp user support 1-Jan-13 Marketing inst action
4 Activities
Initial planning amp budgeting 15-Dec-12 document
Roles allocation 15-Dec-12 document
Community inst Implementation 15-Dec-12 action
Awareness campaign 1-Jan-13 action ongoing process
Members recruiting 1-Jan-13 action ongoing process
Continued operation 1-Jan-13 action ongoing process
Service sales 1-Jan-13 action ongoing process
Future development planning 1-Jan-13 document ongoing process
5 Resource allocation
If existing institution - allocation 15-Dec-12 action
If newly formed - recruiting 15-Dec-12 action
Make FinTP available to comm 1-Jan-13 action ongoing process
Start community financing 1-Jan-13 action ongoing process
6 Financing
Initial investment 1-Jan-13 action secured by that date
First period of comm operation 31-Aug-13 action secured by that date
co
mm
un
ity
Project approach
Project approachpdf
FinTP - Vision and Scope
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Business Information Systems (Allevo) SRL
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Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
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Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
8 Scope This chapter deals with the phased availability of various FinTP features again considered from application and community points of view
In the first phase (due Dec 2012) the core of FinTP application is ready including the following technical features
- financial message routing between services and monitoring of exchanges
- multi-threading capabilities
- persistent end-to-end transactions
- batching de-batching
- archiving
- tracing and logging of transactions and user events
- transient errors detection and recovery
- real time search and reports
- security access and user administration
Similarly during the first phase the main community components need to be in place
- moderator
- software development and maintenance body (Allevo also available in the first and second phase of the project)
- test amp validation body
- (software) auditor
- legal
- main contributors (Allevo falls into this position)
- platform
- marketing
In the second phase (Dec2012 - Dec2013) several operational features of FinTP will be added
- predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit instruments securities settlement reconciliations
- MTMX coexistence
- multi-BIC multi-currency
- SEPA ready certification
- TARGET2 ready
- SAGSAASAE interfaces
- duplicate detection
- liquidity reports
- competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
- accounting reconciliation
- AML (sanctions list matching)
- SaaS and cloud ready
along with resilience and start of maintenance and knowledge transfer (the last two obviously continuing in the next phases)
FinTP - Vision and Scope
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Business Information Systems (Allevo) SRL
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Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
The synthetic view of the project scope is provided in the following table
Crt No
Feature Activity Phase1 31Dec12
Phase2 31Dec13
Phase3 31Dec14
Phase4 31Dec15
Fin
TP
A Operational features
1
Predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit Instruments bonds (Romanian Euroclear) reconciliations
2 MTMX coexistence
3 Multi-BIC multi-currency
4 SaaS ready cloud ready
5 SEPA ready certification
6 TARGET2 ready
7 SAGSAASAE interfaces
8 Liquidity reports
9 Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
10 Accounting reconciliation
11 AML (sanctions list matching)
12 Duplicate detection
B Technical features
1 Routing financial message between services and monitoring of data flows
2 Multi-threading capabilities
3 Persistent end-to-end transactions
4 Batching de-batching
5 Resilience (at transaction level)
6 Archiving
7 Tracing and logging of transactions and user events
8 Transient errors detection and recovery
9 Real time search and reports
10 Security access and user administration
C Other activities
1 FinTP maintenance
2 Knowledge transfer
Co
mm
un
ity
Establishing the institutionscomponents
1 Mentor
2 Software Auditor amp Provider
3 Legal service
4 Members
5 Allevo initial role
6 Platform
7 Marketing
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
9 Limitations The main limitations in the economy of the project consist of phasing several FinTP
operational features for the following year (eg debit instruments liquidity reporting
AML filtering accounting reconciliation resilience SaaS ready cloud ready etc)
At the same time for features intended to front-office usage like Remit it was not yet
decided to publish them as open source product
The synthetic view of the main limitations is provided in the following table
Crt
nrItem Limitation Exclusion Comments
1
FinTP
a
Operational features Available in 2013
b
Remit Not included in
open source
package
2
Community
a
Rules Tightly controlled The statute should
ensure the right
balance between
safety and free
association of talents
Given the significant budget allocation (at least from Allevo perspective) the strong
requirement to meet the maximum ceiling will limit the FinTP product initial preparation
and maintenance expenses
Community wise the obligation of a tight regulated statute will have to ensure the right
balance between safety (mandatory in an environment dealing with financial
transactions) and a free association of talents (typical in an open source community)
In the first period after launch (at least the first two years) of the initiative the
maintenance and support activities will be provided by Allevo (as initial contributor)
A major restriction would be to meet the budgeted development and maintenance
FinTP - Vision and Scope
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10 Appendix - Risks
Specific risks
1 Product
a Long delivery lead time This is a medium probability and impact risk however Allevo should make available the needed resources and motivate the entire team for the job
b Credibility loss if FinTP fails to further become certified on meaningful operations andor business tracks (ie SWIFT business certification tracks or similar) The single possible containment is lobbying if the application certification program rejects open source products Anyway the impact is very important and its materialization should be avoided
c Low quality of the allocated team and improper version management are highly unlikely to occur as long as the formal transfer of responsibility is smoothly made from Allevo to the corresponding body put in place by the community The real hidden risk is that this process could take too long and it thus has a very high impact
d Poor FinTP quality may result if the community fails to institutionalize proper quality assurance (QA) and verification amp validation (VampV) processes This is most expected not to happen but if it does the impact is at least medium The single path to overcome this risk consists in a professional approach to these items based on institutionalizing practice proven QA and VampV processes
e Allevo lack of expertise in the open source business This can be contained by carefully selecting trustful amp truly expert consultants Otherwise it means more money longer time spent on project and expenses without proper return
2 Service
a The software maintenance does not properly deliver as expected ie on-time and on-quality bug fixing regulation amp standards alignment and productivity amp technological improvement The key to contain this risk materialization is the community status having provisions to neatly provide maintenance and further development of the rules for FinTP as well as the applicable rules and fees for the ancillary services
b Low quality and safety of the service received by the members of the community To avoid the risk of performing the one-time amp recurring support services by under-prepared professionals the community has to rule the process of training and qualifying the companies willing to contribute in this area
c Not meeting the minimal SLA criteria The community should regulate and periodically revise the training curricula and to further audit both the teachers and the certified experts to ensure the service level agreements are met
d Under motivated service providing professionals - up to the level of not feeling the high impact of their activity The community status must provide guidance to the contributors on the minimal standards the professionals should meet
FinTP - Vision and Scope
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e Constrained expert resource pool This risk could be overcome by the communitys policy to ensure at all time a balanced number of motivated experts to the communitys size Failing to do so may result in high negative impact of the community business and public perception
3 Community
a Emergence of a parallel competitive community If the optimal timing between publically disclosing FinTP and community take-off is not achieved then there are high chances that following a competitive initiative other entrepreneurs successfully launch their own similar or derived community This could be avoided by periodical reviews of the progress of both FinTP and community status and deciding whether the project needs to be put on hold or not
b Unfit reputation of the Moderator or main contributors If either the Moderator or the initial contributors are not beyond any dispute and are reputable institutes then there is certainly something rotten in Denmark and the project should be put on-hold
c No commitment from the Moderator‟s side Similarly if the Moderator does not commit to the project it means that Denmark has a serious problem to solve The project should relinquish until the matter is fixed
4 Legal
a Misuse of copyright and intellectual property (IP)The assigned working team could not be aware of the limitations and liabilities of using (entirely or partially) third party software this risk can be contained by delivering the right training providing proper working procedures carefully recording and documenting the use of open source code and carefully cross-scanning
b Injunctive relief and financial damages can be caused by not properly and continuously controlling the use of third party open source code resulting in copyright or IP infringement There are two containment measures which can be taken tighten the compliance check during the product lifecycle or apply the sanction policy as to set an example
c The competition starts a class action - this may result in delaying the project
5 Financing
a Lack of long term financing institutions Allevo should urge its consultant to identify and draw a reasonable list of financial options institutions
b Exceeding the budget given that this type of project has no precedent in Allevo and to avoid exposing to the dependency on engagement to financial institutions or to commitments beyond the existing budget a further carefully drawn project plan is needed along with its explicit approval from the board of the company
Market related risks
1 False expectations
a Expensive services Not everything is free aside the initial and maintenance free licensing the training the support and other professional services can amount to more than in general expected Allevo rates this risk as medium possible but with low impact as long as the law governing the community and its initial period of operation will consecrate fair market prices and competitive sources of contribution
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
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b Hidden costs for patches updates and upgrades While of similarly weight in terms of probability and impact this should be no real concern as long as the law governing the community clearly provides for free and accountable maintenance
2 Poor image on quality
a Too many releases making FinTP hard to manage and unsafe to operate Given proper regulation of the community and the mature root of FinTP Allevo disregards the possibility of this risk to materialize However if this were to happen this is a high impact risk and by all means should be avoided
b Backward technological (in)compatibility looks to us as a low risk in all respects and within organizations applying practice proven software engineering processes and professional - accountable team this is not likely to materialize
c Support can be perceived as the highest impact risk for FinTP This can be overcome by tight regulation of the commercial and professional conditions to deliver the service (for instance only qualified organizations should be recommended to members for supporting FinTP)
d SLA and accountability for both internally or externally performed services is closely correlated to the previous risk and the community status should provide the support for growing a community of competencies and accountable professionals around FinTP Periodical auditing (by the specialized community body) of this pool of professionals will further ensure the confidence that the skills are preserved at the required level
e Code fragmentation and forking is a high impact risk with a low probability of happening in the initial period provided the knowledge transfer is done orderly and in an institutionalized manner
3 Inherent uncertainty
a Community disputes can jeopardize its cohesion the project viability and future This is a high impact possibly high probability risk and it is the definite role of the Moderator to feel prevent and while materializing mitigate any conflicting situation
b FinTP going commercial post-launch This is a huge impact possibly high occurrence probability but manageable with the right legal instruments provisioned in the community
c Loss of alignment to industry standards and regulations This risk has medium probability and medium impact given the assumption that the community is tightly regulated and the working bodies institutionalized and gathering professionals
4 Legal
Copyright infringement given Allevo experience in the open source business this risk is highly probable and has a high impact on FinTP especially if mistakes are made in the launching phase Similarly if during the product maintenance and further development phase the community fails to institutionalize proper formal software development processes (covering all FinTP lifecycle phases) based on industry practice proven model(s) Supplementary the expert code scanning audit for compliance is the single resort to preclude external software source misuse
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
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5 GPL specific
a Noncompliance to the GPL license If GPL license is used the product should further distribute in compliance with this part provisions High impact and probability but manageable if proper software development processes are used and if the statute clearly defines the licensing model for FinTP
b FinTP unconformity The risk that software engineers get inspired by a chic solution which they import and emulate similarly in FinTP And this is also highly possible since les grands esprits se rencontre
6 Existing customers attitude
Anger for having paid for something which now is free The existent customers can be concerned about the future of their installed system its further development (in one word its future) and on the quality of the service (SLA including) Some recent adopters can possibly be furious for spending their money on buying licenses for a piece of software that differently packaged becomes free of charge
For the first situation the single best solution for Allevo is to ensure a smooth transition from the current status to the new solution deployed Also highly probable Allevo should provide for simultaneous (for at most one more year) maintenance of both FinTP and for qPayIntegrator
For the 2012 new qPayIntegrator adopters Allevo should transparently state the product‟s future and propose a commercially attractive migration towards FinTP when it becomes publically available (like the option for the installation migration and recurring services) The decision should clearly stay with the customer if he still buys Allevo licenses delays the implementation until FinTP is available or if he goes for a competitive solution
In other words the key to mitigate the existing customer perception is switching places and discarding if the situation proves to be uncomfortable
Bottom-line is that to avoid most of the risks the FinTP community must be a rather tightly controlled one though still opened to anyone willingly abiding to the rules
The synthetic view of the main risks their assigned probability impact and the corresponding containment approach is provided in the attached file
Risk IDRisk
CategoryRisk
Probability
(High
Medium
Low)
Severity
(High
Medium
Low)
Containment (Mitigation Action Proposed)
M1Free as in a
Free Puppy
M101
The training service amp support cost could account more than the
commercial product its replacing (application software is typically 30 of
the total cost of ownership of most projects)
Medium Low
M102 Hidden costs ie charge for patches updates and upgrades Medium Low
M2Frequent
updates
M201
Projects might be updated frequently - as often as everyday Too frequent
updates could have a negative impact on the implementation
interoperability and support
Low HighMAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M3Backwards
compatibility
M301 Less accountability Low LowMAP03 Access to prior versions of source code (additional in-house
development and support procedures might be necessary)
M4Support
related risks
M401Support could be perceived as the biggest issue with open source
software deploymentsHigh High
M402 Internal External Accountability SLAs High High
M403Code fragmentation or forking if the community fails to institutionalize
corporate like formal structureHigh High
M404Support could require greater involvement and different skills set from
operations staffMedium Medium
M5Community
immaturity Low Low
M501Could generate incompatibility of FinTP with industry standards amp
regulationsMedium Medium
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M6 Uncertainty The inherent uncertainty in every open source project
M601 Community disputes might impact project viability and future High HighMAP04 The Mentor should prevent amp mitigate any conflicts inside the
community
M602 Open source projects may not stay open in future releases High HighMAP05 The originator liabilities should be strongly enforced by the
community statute
M7 Legal risks
M701 Copyright infringement High High
M702 Can open source software deployments pass an audit
M8 GPL General Public License specific development concerns
M801Software thatrsquos derived from an existing GPL project in whole or in part
might not be released under the same licenseHigh High M08 The community should regulate the licensing model
M802
Developer contamination - developer could review an existing open source
project could see an elegant solution then implement a similar function in
closed source project
High HighMAP09 Procedurals constrains for the software developers should be
enforced
M9
Current
customers
attitude
The actual customer perception could be negative High High
M12 To prevent a negative attitude Allevo should involve the customers
in the FinTP project Allevo needs their active support for a smooth and
issues less transition
ma
rke
t re
late
d r
isk
s
co
st
rela
ted
ris
ks
MAP01 The community should regulate the applicable rules and fees for
services and maintenance
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
bu
sin
es
s a
nd
le
ga
l ri
sk
s
MAP06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S1Product
related
S101 Late delivery lead time Medium MediumMAP15 Allevo should provide proper resources (funding and human
resources)
S102 Credibility loss if fail to certify with SWIFT Medium High MAP16 Should be discussedamp agreed with SWIFT
S103 Inexperienced team or allocation below needs Low HighMAP15 Allevo should provide proper resources (funding and human
resources)
S104 Improper or non efficient version management Low High MAP16 Review the current Allevo Configuration Management System
S105Poor quality if the community fails to institutionalize proper verification and
validation practices3
M06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S106 Lack of expertise in open source projects 2 Allevo should engage thoroughly selected Open Source consultants
S2Service
related
S201
The software maintenance not properly providing for bugs fixing
regulationamp standard alignment technological improvements communities
improvement requests
High HighMAP01 The community should regulate the applicable rules and fees for
services and maintenance
S202 One-time amp recurring services might be provided by unqualified resources High HighMAP17 The community should regulate the training curricula and related
expertise certification
S203 Provided services might not meet the minimal SLA performance criteria High HighMAP17 The community should regulate the training curricula and related
expertise certification
S204 Relaxed or lack of accountability of the professionals High HighMAP18 The community should regulate the employment agreement of
the professionals
S205 Lack of qualified professionals High HighMAP19 The community should ensure a balanced number of certified
professionals with the community size
S3Community
related
S301
If after disclosing FinTP the community does not enthusiastically adopt
the solution competitors might more successfully develop a similar
strategy
Medium MediumMAP20 FinTP promotion should be convincing and realistic A well
organized marketing campaign by Allevo
S302The community mentor andor early adhering members have no
undeniable prestige or are not largely trustfulMedium Medium MAP99 Project status review Ending the project could be one option
S303 The Mentor does not strongly commit for the project Medium Medium MAP99 Project status review Ending the project could be one option
S4 Legal
S401Exposure to copyright and IP infringement due to working team unaware of
the legal consequences of using third party softwareMedium Medium
MAP21 Allevo should keep records and fully document the use of open
source code
S402Copyright or intellectual property infringement can lead to injunctive relief
and monetary damagesHigh High
MAP23 Allevo should institutionalize a tight licensing and technical
control
S403 All risks related to open source compliance High HighMAP24 Allevo should appoint as soon as possible a FinTP compliance
Officer
S5 Financial
S501 Lack of financing institutions Medium MediumMAP25 Allevo should urge consultant to provide a consistent list of
potential investors
S502 Dependency on the financing institution approval Medium Medium
S503Not thoroughly planned project overlooking one or some project cost that
need to be financedMedium Medium
Sp
ec
ific
ris
ks
tec
hn
ica
lm
ark
eti
ng
leg
al
fun
din
g
MAP26 Allevo should carefully draw a consistent and eligible project for
financing
Risks
Riskspdf
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 40 of 43 Allevo Confidential
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Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
11 Appendix - Bibliography 1 Accenture Open Source Research Geographic Findings
2 Accenture Open Source Research Industry Findings
3 Producing Open Source Software - How to Run a Successful Free Software
Project by Karl Fogel
4 Open Source Software Risks and Rewards by Gary Hein
5 A Business Case Study of Open Source Software by Carolyn A Kenwood
6 6 critical success factors for product development by Christian Wig
7 Bank 20 by Brett King
8 Managing the business risks of open innovation by Oliver Alexy and Markus
9 Product idea evaluation checklist shared by Startgass AS
10 SWIFT 2015 Strategy
11 Customers and business impact of product changes
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
12 Appendix - Glossary ACH Automated Clearing House that is used to clear retail payments
between banks in a country or region
APAC Asia and Pacific
AML Anti-Money Laundering
BCampDR Business continuity amp disaster recovery
B2B Business to business
C2B Consumer to business
CET Central European Time
CMMI Capability Maturity Model Integration
CMS Configuration Management System
Coexistence The situation of multiple standards existing at the same time in the same business space Within SWIFT this refers to the coexistence between the MT and MX standards This also refers to the set of measures being taken to make the situation easier to handle by the community (publication of mapping rules translation serviceshellip)
CSM Clearing and Settlement Mechanism
CUG Closed User Group
Dictionary Part of the ISO 20022 Repository that contains all items that can be re-used during business modelling and message definition activities
EAI Enterprise Application Integration - middleware to connect applications and communication interfaces Typical EAI software includes features for mapping data between various formats enriching messages with data from other systems and orchestrating message flows
ECB European Central Bank
EMEA Europe Middle-East Africa
EPC European Payment Council
ERP Enterprise Resource Planning
EU European Union
EUCLID Connectivity to EuroClear Bank services
FIN The messaging service offered by SWIFT for the secure and reliable exchange of MT messages in store-and-forward mode By extension the syntax used to format these MTs
IP intellectual property
Interoperability Capability to easily exchange business information while using different message standards ISO 20022 promotes global use of syntax-neutral business and message components as a common denominator to achieve interoperability between standards using different syntaxes
ISO The International Organization for Standardization - an international standard-setting body composed of representatives from more than 160 national standards organizations that promulgates worldwide standards in a variety of domains aiming at facilitating cross-border exchanges of goods services and techniques
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Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
ISO 15022 An ISO standard that describes the syntax to be used for developing securities messages used mainly to support back office related transaction flows It replaced the previous securities messaging standard ISO 7775
ISO 20022 RA Registration Authority - offers the services described in an ISO standard on behalf of and under a contractual agreement with the International Organization for Standardization
ISO 20022 Repository
Repository maintained by the ISO20022 RA which contains the financial business models message definitions and components defined in compliance with the ISO 20022 standard
ISO 20022 RMG Registration Management Group - in charge of the overall management of the ISO 20022 development and registration process in accordance with the ISO 20022 standard
ISO 20022 SEG Standards Evaluation Groups -in charge of validating candidate ISO 20022 messages within the scope of the business justification and ensuring that they address the needs of their future international community of users
ISV Independent Software Vendor
KYC Know Your Customer
MACUG Member Administered Closed User Group
Message A set of structured information exchanged between two parties involved in a financial transaction
Message component and element
A re-usable data structure used for assembling message definitions The data defined in a message component is bdquotraced‟ back to the business components and business elements In simple terms business components define the business meaning message components create data structures for messaging
MI Market Infrastructure - a system that provides services to the financial industry for trading clearing and settlement matching of financial transactions and depository functions
Middleware Software that enables data to be exchanged among different systems with standard communication components and tools for formatting mapping and processing
MT The traditional bdquotag value‟ Message Types for use on the FIN service offered by SWIFT
MX An XML message exchanged over SWIFTNet whether or not ISO 20022 compliant
OS Open source
PSP Payment service provider
QA Quality assurance
RMA Relationship Management Access
RTGS Real Time Gross Settlement System
SAA SWIFT Alliance Access
SAE SWIFT Alliance Entry
SAG SWIFT Alliance Gateway
SaaS Software as a Service
SCORE Standardized CORporate Environment
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Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
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Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
Semantics The study of meaning usually in language The word is often used in ordinary language to denote a problem of understanding that comes down to word selection or connotation
SEPA Single Euro Payment Area
SLA Service level agreement
SME Small and Medium-sized Business(es)
SOA Service Oriented Architecture
SSB SWIFT Service Bureau
STP Straight Through Processing
SWIFT Society for Worldwide Interbank Financial Telecommunication Visit wwwswiftcom
Syntax Physical format of a message used to identify and represent the conveyed pieces of information
T2S TARGET2 Securities - an initiative of the Eurosystem It is an IT platform that aims to make settlements across national borders simpler and more cost-efficient
TARGET2 The Eurosystem-owned European Real Time Gross Settlement (RTGS) system (Trans-European Automated Real-time Gross Settlement Express Transfer System) TARGET2 is one of the largest high-value payment systems in the world
Taxonomy The classification in a hierarchical system typically organized by super type - sub type relationships also called generalization-specialization relationships or less formally parent-child relationships
TSU Trade Service Utility
TCO Total cost of ownership
Translation rules
Set of rules to be used to map the pieces of information included in a message expressed in one syntax to the equivalent message expressed in another syntax
Remit Remittances
XML eXtensible Mark-up Language - popular syntax to encode documents (or messages) electronically on the Internet XML allows communities to define their own identifiers (or tags) and format (or data type) for each component of a message
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Maintenance amp user support 1-Jan-13 Marketing inst action
4 Activities
Initial planning amp budgeting 15-Dec-12 document
Roles allocation 15-Dec-12 document
Community inst Implementation 15-Dec-12 action
Awareness campaign 1-Jan-13 action ongoing process
Members recruiting 1-Jan-13 action ongoing process
Continued operation 1-Jan-13 action ongoing process
Service sales 1-Jan-13 action ongoing process
Future development planning 1-Jan-13 document ongoing process
5 Resource allocation
If existing institution - allocation 15-Dec-12 action
If newly formed - recruiting 15-Dec-12 action
Make FinTP available to comm 1-Jan-13 action ongoing process
Start community financing 1-Jan-13 action ongoing process
6 Financing
Initial investment 1-Jan-13 action secured by that date
First period of comm operation 31-Aug-13 action secured by that date
co
mm
un
ity
Project approach
Project approachpdf
FinTP - Vision and Scope
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Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
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Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
8 Scope This chapter deals with the phased availability of various FinTP features again considered from application and community points of view
In the first phase (due Dec 2012) the core of FinTP application is ready including the following technical features
- financial message routing between services and monitoring of exchanges
- multi-threading capabilities
- persistent end-to-end transactions
- batching de-batching
- archiving
- tracing and logging of transactions and user events
- transient errors detection and recovery
- real time search and reports
- security access and user administration
Similarly during the first phase the main community components need to be in place
- moderator
- software development and maintenance body (Allevo also available in the first and second phase of the project)
- test amp validation body
- (software) auditor
- legal
- main contributors (Allevo falls into this position)
- platform
- marketing
In the second phase (Dec2012 - Dec2013) several operational features of FinTP will be added
- predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit instruments securities settlement reconciliations
- MTMX coexistence
- multi-BIC multi-currency
- SEPA ready certification
- TARGET2 ready
- SAGSAASAE interfaces
- duplicate detection
- liquidity reports
- competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
- accounting reconciliation
- AML (sanctions list matching)
- SaaS and cloud ready
along with resilience and start of maintenance and knowledge transfer (the last two obviously continuing in the next phases)
FinTP - Vision and Scope
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Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
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Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
The synthetic view of the project scope is provided in the following table
Crt No
Feature Activity Phase1 31Dec12
Phase2 31Dec13
Phase3 31Dec14
Phase4 31Dec15
Fin
TP
A Operational features
1
Predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit Instruments bonds (Romanian Euroclear) reconciliations
2 MTMX coexistence
3 Multi-BIC multi-currency
4 SaaS ready cloud ready
5 SEPA ready certification
6 TARGET2 ready
7 SAGSAASAE interfaces
8 Liquidity reports
9 Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
10 Accounting reconciliation
11 AML (sanctions list matching)
12 Duplicate detection
B Technical features
1 Routing financial message between services and monitoring of data flows
2 Multi-threading capabilities
3 Persistent end-to-end transactions
4 Batching de-batching
5 Resilience (at transaction level)
6 Archiving
7 Tracing and logging of transactions and user events
8 Transient errors detection and recovery
9 Real time search and reports
10 Security access and user administration
C Other activities
1 FinTP maintenance
2 Knowledge transfer
Co
mm
un
ity
Establishing the institutionscomponents
1 Mentor
2 Software Auditor amp Provider
3 Legal service
4 Members
5 Allevo initial role
6 Platform
7 Marketing
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
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9 Limitations The main limitations in the economy of the project consist of phasing several FinTP
operational features for the following year (eg debit instruments liquidity reporting
AML filtering accounting reconciliation resilience SaaS ready cloud ready etc)
At the same time for features intended to front-office usage like Remit it was not yet
decided to publish them as open source product
The synthetic view of the main limitations is provided in the following table
Crt
nrItem Limitation Exclusion Comments
1
FinTP
a
Operational features Available in 2013
b
Remit Not included in
open source
package
2
Community
a
Rules Tightly controlled The statute should
ensure the right
balance between
safety and free
association of talents
Given the significant budget allocation (at least from Allevo perspective) the strong
requirement to meet the maximum ceiling will limit the FinTP product initial preparation
and maintenance expenses
Community wise the obligation of a tight regulated statute will have to ensure the right
balance between safety (mandatory in an environment dealing with financial
transactions) and a free association of talents (typical in an open source community)
In the first period after launch (at least the first two years) of the initiative the
maintenance and support activities will be provided by Allevo (as initial contributor)
A major restriction would be to meet the budgeted development and maintenance
FinTP - Vision and Scope
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10 Appendix - Risks
Specific risks
1 Product
a Long delivery lead time This is a medium probability and impact risk however Allevo should make available the needed resources and motivate the entire team for the job
b Credibility loss if FinTP fails to further become certified on meaningful operations andor business tracks (ie SWIFT business certification tracks or similar) The single possible containment is lobbying if the application certification program rejects open source products Anyway the impact is very important and its materialization should be avoided
c Low quality of the allocated team and improper version management are highly unlikely to occur as long as the formal transfer of responsibility is smoothly made from Allevo to the corresponding body put in place by the community The real hidden risk is that this process could take too long and it thus has a very high impact
d Poor FinTP quality may result if the community fails to institutionalize proper quality assurance (QA) and verification amp validation (VampV) processes This is most expected not to happen but if it does the impact is at least medium The single path to overcome this risk consists in a professional approach to these items based on institutionalizing practice proven QA and VampV processes
e Allevo lack of expertise in the open source business This can be contained by carefully selecting trustful amp truly expert consultants Otherwise it means more money longer time spent on project and expenses without proper return
2 Service
a The software maintenance does not properly deliver as expected ie on-time and on-quality bug fixing regulation amp standards alignment and productivity amp technological improvement The key to contain this risk materialization is the community status having provisions to neatly provide maintenance and further development of the rules for FinTP as well as the applicable rules and fees for the ancillary services
b Low quality and safety of the service received by the members of the community To avoid the risk of performing the one-time amp recurring support services by under-prepared professionals the community has to rule the process of training and qualifying the companies willing to contribute in this area
c Not meeting the minimal SLA criteria The community should regulate and periodically revise the training curricula and to further audit both the teachers and the certified experts to ensure the service level agreements are met
d Under motivated service providing professionals - up to the level of not feeling the high impact of their activity The community status must provide guidance to the contributors on the minimal standards the professionals should meet
FinTP - Vision and Scope
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e Constrained expert resource pool This risk could be overcome by the communitys policy to ensure at all time a balanced number of motivated experts to the communitys size Failing to do so may result in high negative impact of the community business and public perception
3 Community
a Emergence of a parallel competitive community If the optimal timing between publically disclosing FinTP and community take-off is not achieved then there are high chances that following a competitive initiative other entrepreneurs successfully launch their own similar or derived community This could be avoided by periodical reviews of the progress of both FinTP and community status and deciding whether the project needs to be put on hold or not
b Unfit reputation of the Moderator or main contributors If either the Moderator or the initial contributors are not beyond any dispute and are reputable institutes then there is certainly something rotten in Denmark and the project should be put on-hold
c No commitment from the Moderator‟s side Similarly if the Moderator does not commit to the project it means that Denmark has a serious problem to solve The project should relinquish until the matter is fixed
4 Legal
a Misuse of copyright and intellectual property (IP)The assigned working team could not be aware of the limitations and liabilities of using (entirely or partially) third party software this risk can be contained by delivering the right training providing proper working procedures carefully recording and documenting the use of open source code and carefully cross-scanning
b Injunctive relief and financial damages can be caused by not properly and continuously controlling the use of third party open source code resulting in copyright or IP infringement There are two containment measures which can be taken tighten the compliance check during the product lifecycle or apply the sanction policy as to set an example
c The competition starts a class action - this may result in delaying the project
5 Financing
a Lack of long term financing institutions Allevo should urge its consultant to identify and draw a reasonable list of financial options institutions
b Exceeding the budget given that this type of project has no precedent in Allevo and to avoid exposing to the dependency on engagement to financial institutions or to commitments beyond the existing budget a further carefully drawn project plan is needed along with its explicit approval from the board of the company
Market related risks
1 False expectations
a Expensive services Not everything is free aside the initial and maintenance free licensing the training the support and other professional services can amount to more than in general expected Allevo rates this risk as medium possible but with low impact as long as the law governing the community and its initial period of operation will consecrate fair market prices and competitive sources of contribution
FinTP - Vision and Scope
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b Hidden costs for patches updates and upgrades While of similarly weight in terms of probability and impact this should be no real concern as long as the law governing the community clearly provides for free and accountable maintenance
2 Poor image on quality
a Too many releases making FinTP hard to manage and unsafe to operate Given proper regulation of the community and the mature root of FinTP Allevo disregards the possibility of this risk to materialize However if this were to happen this is a high impact risk and by all means should be avoided
b Backward technological (in)compatibility looks to us as a low risk in all respects and within organizations applying practice proven software engineering processes and professional - accountable team this is not likely to materialize
c Support can be perceived as the highest impact risk for FinTP This can be overcome by tight regulation of the commercial and professional conditions to deliver the service (for instance only qualified organizations should be recommended to members for supporting FinTP)
d SLA and accountability for both internally or externally performed services is closely correlated to the previous risk and the community status should provide the support for growing a community of competencies and accountable professionals around FinTP Periodical auditing (by the specialized community body) of this pool of professionals will further ensure the confidence that the skills are preserved at the required level
e Code fragmentation and forking is a high impact risk with a low probability of happening in the initial period provided the knowledge transfer is done orderly and in an institutionalized manner
3 Inherent uncertainty
a Community disputes can jeopardize its cohesion the project viability and future This is a high impact possibly high probability risk and it is the definite role of the Moderator to feel prevent and while materializing mitigate any conflicting situation
b FinTP going commercial post-launch This is a huge impact possibly high occurrence probability but manageable with the right legal instruments provisioned in the community
c Loss of alignment to industry standards and regulations This risk has medium probability and medium impact given the assumption that the community is tightly regulated and the working bodies institutionalized and gathering professionals
4 Legal
Copyright infringement given Allevo experience in the open source business this risk is highly probable and has a high impact on FinTP especially if mistakes are made in the launching phase Similarly if during the product maintenance and further development phase the community fails to institutionalize proper formal software development processes (covering all FinTP lifecycle phases) based on industry practice proven model(s) Supplementary the expert code scanning audit for compliance is the single resort to preclude external software source misuse
FinTP - Vision and Scope
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5 GPL specific
a Noncompliance to the GPL license If GPL license is used the product should further distribute in compliance with this part provisions High impact and probability but manageable if proper software development processes are used and if the statute clearly defines the licensing model for FinTP
b FinTP unconformity The risk that software engineers get inspired by a chic solution which they import and emulate similarly in FinTP And this is also highly possible since les grands esprits se rencontre
6 Existing customers attitude
Anger for having paid for something which now is free The existent customers can be concerned about the future of their installed system its further development (in one word its future) and on the quality of the service (SLA including) Some recent adopters can possibly be furious for spending their money on buying licenses for a piece of software that differently packaged becomes free of charge
For the first situation the single best solution for Allevo is to ensure a smooth transition from the current status to the new solution deployed Also highly probable Allevo should provide for simultaneous (for at most one more year) maintenance of both FinTP and for qPayIntegrator
For the 2012 new qPayIntegrator adopters Allevo should transparently state the product‟s future and propose a commercially attractive migration towards FinTP when it becomes publically available (like the option for the installation migration and recurring services) The decision should clearly stay with the customer if he still buys Allevo licenses delays the implementation until FinTP is available or if he goes for a competitive solution
In other words the key to mitigate the existing customer perception is switching places and discarding if the situation proves to be uncomfortable
Bottom-line is that to avoid most of the risks the FinTP community must be a rather tightly controlled one though still opened to anyone willingly abiding to the rules
The synthetic view of the main risks their assigned probability impact and the corresponding containment approach is provided in the attached file
Risk IDRisk
CategoryRisk
Probability
(High
Medium
Low)
Severity
(High
Medium
Low)
Containment (Mitigation Action Proposed)
M1Free as in a
Free Puppy
M101
The training service amp support cost could account more than the
commercial product its replacing (application software is typically 30 of
the total cost of ownership of most projects)
Medium Low
M102 Hidden costs ie charge for patches updates and upgrades Medium Low
M2Frequent
updates
M201
Projects might be updated frequently - as often as everyday Too frequent
updates could have a negative impact on the implementation
interoperability and support
Low HighMAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M3Backwards
compatibility
M301 Less accountability Low LowMAP03 Access to prior versions of source code (additional in-house
development and support procedures might be necessary)
M4Support
related risks
M401Support could be perceived as the biggest issue with open source
software deploymentsHigh High
M402 Internal External Accountability SLAs High High
M403Code fragmentation or forking if the community fails to institutionalize
corporate like formal structureHigh High
M404Support could require greater involvement and different skills set from
operations staffMedium Medium
M5Community
immaturity Low Low
M501Could generate incompatibility of FinTP with industry standards amp
regulationsMedium Medium
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M6 Uncertainty The inherent uncertainty in every open source project
M601 Community disputes might impact project viability and future High HighMAP04 The Mentor should prevent amp mitigate any conflicts inside the
community
M602 Open source projects may not stay open in future releases High HighMAP05 The originator liabilities should be strongly enforced by the
community statute
M7 Legal risks
M701 Copyright infringement High High
M702 Can open source software deployments pass an audit
M8 GPL General Public License specific development concerns
M801Software thatrsquos derived from an existing GPL project in whole or in part
might not be released under the same licenseHigh High M08 The community should regulate the licensing model
M802
Developer contamination - developer could review an existing open source
project could see an elegant solution then implement a similar function in
closed source project
High HighMAP09 Procedurals constrains for the software developers should be
enforced
M9
Current
customers
attitude
The actual customer perception could be negative High High
M12 To prevent a negative attitude Allevo should involve the customers
in the FinTP project Allevo needs their active support for a smooth and
issues less transition
ma
rke
t re
late
d r
isk
s
co
st
rela
ted
ris
ks
MAP01 The community should regulate the applicable rules and fees for
services and maintenance
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
bu
sin
es
s a
nd
le
ga
l ri
sk
s
MAP06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S1Product
related
S101 Late delivery lead time Medium MediumMAP15 Allevo should provide proper resources (funding and human
resources)
S102 Credibility loss if fail to certify with SWIFT Medium High MAP16 Should be discussedamp agreed with SWIFT
S103 Inexperienced team or allocation below needs Low HighMAP15 Allevo should provide proper resources (funding and human
resources)
S104 Improper or non efficient version management Low High MAP16 Review the current Allevo Configuration Management System
S105Poor quality if the community fails to institutionalize proper verification and
validation practices3
M06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S106 Lack of expertise in open source projects 2 Allevo should engage thoroughly selected Open Source consultants
S2Service
related
S201
The software maintenance not properly providing for bugs fixing
regulationamp standard alignment technological improvements communities
improvement requests
High HighMAP01 The community should regulate the applicable rules and fees for
services and maintenance
S202 One-time amp recurring services might be provided by unqualified resources High HighMAP17 The community should regulate the training curricula and related
expertise certification
S203 Provided services might not meet the minimal SLA performance criteria High HighMAP17 The community should regulate the training curricula and related
expertise certification
S204 Relaxed or lack of accountability of the professionals High HighMAP18 The community should regulate the employment agreement of
the professionals
S205 Lack of qualified professionals High HighMAP19 The community should ensure a balanced number of certified
professionals with the community size
S3Community
related
S301
If after disclosing FinTP the community does not enthusiastically adopt
the solution competitors might more successfully develop a similar
strategy
Medium MediumMAP20 FinTP promotion should be convincing and realistic A well
organized marketing campaign by Allevo
S302The community mentor andor early adhering members have no
undeniable prestige or are not largely trustfulMedium Medium MAP99 Project status review Ending the project could be one option
S303 The Mentor does not strongly commit for the project Medium Medium MAP99 Project status review Ending the project could be one option
S4 Legal
S401Exposure to copyright and IP infringement due to working team unaware of
the legal consequences of using third party softwareMedium Medium
MAP21 Allevo should keep records and fully document the use of open
source code
S402Copyright or intellectual property infringement can lead to injunctive relief
and monetary damagesHigh High
MAP23 Allevo should institutionalize a tight licensing and technical
control
S403 All risks related to open source compliance High HighMAP24 Allevo should appoint as soon as possible a FinTP compliance
Officer
S5 Financial
S501 Lack of financing institutions Medium MediumMAP25 Allevo should urge consultant to provide a consistent list of
potential investors
S502 Dependency on the financing institution approval Medium Medium
S503Not thoroughly planned project overlooking one or some project cost that
need to be financedMedium Medium
Sp
ec
ific
ris
ks
tec
hn
ica
lm
ark
eti
ng
leg
al
fun
din
g
MAP26 Allevo should carefully draw a consistent and eligible project for
financing
Risks
Riskspdf
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 40 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
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wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
11 Appendix - Bibliography 1 Accenture Open Source Research Geographic Findings
2 Accenture Open Source Research Industry Findings
3 Producing Open Source Software - How to Run a Successful Free Software
Project by Karl Fogel
4 Open Source Software Risks and Rewards by Gary Hein
5 A Business Case Study of Open Source Software by Carolyn A Kenwood
6 6 critical success factors for product development by Christian Wig
7 Bank 20 by Brett King
8 Managing the business risks of open innovation by Oliver Alexy and Markus
9 Product idea evaluation checklist shared by Startgass AS
10 SWIFT 2015 Strategy
11 Customers and business impact of product changes
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 41 of 43 Allevo Confidential
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Sediu social 23 Coltei St 030245 Bucharest Romania
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Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
12 Appendix - Glossary ACH Automated Clearing House that is used to clear retail payments
between banks in a country or region
APAC Asia and Pacific
AML Anti-Money Laundering
BCampDR Business continuity amp disaster recovery
B2B Business to business
C2B Consumer to business
CET Central European Time
CMMI Capability Maturity Model Integration
CMS Configuration Management System
Coexistence The situation of multiple standards existing at the same time in the same business space Within SWIFT this refers to the coexistence between the MT and MX standards This also refers to the set of measures being taken to make the situation easier to handle by the community (publication of mapping rules translation serviceshellip)
CSM Clearing and Settlement Mechanism
CUG Closed User Group
Dictionary Part of the ISO 20022 Repository that contains all items that can be re-used during business modelling and message definition activities
EAI Enterprise Application Integration - middleware to connect applications and communication interfaces Typical EAI software includes features for mapping data between various formats enriching messages with data from other systems and orchestrating message flows
ECB European Central Bank
EMEA Europe Middle-East Africa
EPC European Payment Council
ERP Enterprise Resource Planning
EU European Union
EUCLID Connectivity to EuroClear Bank services
FIN The messaging service offered by SWIFT for the secure and reliable exchange of MT messages in store-and-forward mode By extension the syntax used to format these MTs
IP intellectual property
Interoperability Capability to easily exchange business information while using different message standards ISO 20022 promotes global use of syntax-neutral business and message components as a common denominator to achieve interoperability between standards using different syntaxes
ISO The International Organization for Standardization - an international standard-setting body composed of representatives from more than 160 national standards organizations that promulgates worldwide standards in a variety of domains aiming at facilitating cross-border exchanges of goods services and techniques
FinTP - Vision and Scope
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Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
ISO 15022 An ISO standard that describes the syntax to be used for developing securities messages used mainly to support back office related transaction flows It replaced the previous securities messaging standard ISO 7775
ISO 20022 RA Registration Authority - offers the services described in an ISO standard on behalf of and under a contractual agreement with the International Organization for Standardization
ISO 20022 Repository
Repository maintained by the ISO20022 RA which contains the financial business models message definitions and components defined in compliance with the ISO 20022 standard
ISO 20022 RMG Registration Management Group - in charge of the overall management of the ISO 20022 development and registration process in accordance with the ISO 20022 standard
ISO 20022 SEG Standards Evaluation Groups -in charge of validating candidate ISO 20022 messages within the scope of the business justification and ensuring that they address the needs of their future international community of users
ISV Independent Software Vendor
KYC Know Your Customer
MACUG Member Administered Closed User Group
Message A set of structured information exchanged between two parties involved in a financial transaction
Message component and element
A re-usable data structure used for assembling message definitions The data defined in a message component is bdquotraced‟ back to the business components and business elements In simple terms business components define the business meaning message components create data structures for messaging
MI Market Infrastructure - a system that provides services to the financial industry for trading clearing and settlement matching of financial transactions and depository functions
Middleware Software that enables data to be exchanged among different systems with standard communication components and tools for formatting mapping and processing
MT The traditional bdquotag value‟ Message Types for use on the FIN service offered by SWIFT
MX An XML message exchanged over SWIFTNet whether or not ISO 20022 compliant
OS Open source
PSP Payment service provider
QA Quality assurance
RMA Relationship Management Access
RTGS Real Time Gross Settlement System
SAA SWIFT Alliance Access
SAE SWIFT Alliance Entry
SAG SWIFT Alliance Gateway
SaaS Software as a Service
SCORE Standardized CORporate Environment
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 43 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
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Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
Semantics The study of meaning usually in language The word is often used in ordinary language to denote a problem of understanding that comes down to word selection or connotation
SEPA Single Euro Payment Area
SLA Service level agreement
SME Small and Medium-sized Business(es)
SOA Service Oriented Architecture
SSB SWIFT Service Bureau
STP Straight Through Processing
SWIFT Society for Worldwide Interbank Financial Telecommunication Visit wwwswiftcom
Syntax Physical format of a message used to identify and represent the conveyed pieces of information
T2S TARGET2 Securities - an initiative of the Eurosystem It is an IT platform that aims to make settlements across national borders simpler and more cost-efficient
TARGET2 The Eurosystem-owned European Real Time Gross Settlement (RTGS) system (Trans-European Automated Real-time Gross Settlement Express Transfer System) TARGET2 is one of the largest high-value payment systems in the world
Taxonomy The classification in a hierarchical system typically organized by super type - sub type relationships also called generalization-specialization relationships or less formally parent-child relationships
TSU Trade Service Utility
TCO Total cost of ownership
Translation rules
Set of rules to be used to map the pieces of information included in a message expressed in one syntax to the equivalent message expressed in another syntax
Remit Remittances
XML eXtensible Mark-up Language - popular syntax to encode documents (or messages) electronically on the Internet XML allows communities to define their own identifiers (or tags) and format (or data type) for each component of a message
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Bureaus etc) ISV regulatory institutionsMarketing plan feasibility campaign efficiency and costs
2 MentorPreferable SWIFT
Also eligible SunGard IBM affiliation to other OS communitySWIFT decision
3 Legalcopyright Expert legal consultant and RO apprentice Cost and time shift dependent
4 Tight regulation Clear membership admission amp software contribution criteria The quality of the consultant advice
5 Marketing Actively recruiting community members Marketing plan feasibility campaign efficiency amp customer skepticism
a community portala provide content amp debate space information consolidation amp dissemination virtual
showroom subscription management support
a business analysis solution availability and maintenance by one of the
members or employed company
b press releases amp
announcementsb PR and AR b communicators availability and costs
c events c periodical conferences user focused meetings c cost dependent
6 Financing World Bank EU amp private funds Lobby amp funds availability
Item
FinTP
FinTP community
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 33 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
8 Scope This chapter deals with the phased availability of various FinTP features again considered from application and community points of view
In the first phase (due Dec 2012) the core of FinTP application is ready including the following technical features
- financial message routing between services and monitoring of exchanges
- multi-threading capabilities
- persistent end-to-end transactions
- batching de-batching
- archiving
- tracing and logging of transactions and user events
- transient errors detection and recovery
- real time search and reports
- security access and user administration
Similarly during the first phase the main community components need to be in place
- moderator
- software development and maintenance body (Allevo also available in the first and second phase of the project)
- test amp validation body
- (software) auditor
- legal
- main contributors (Allevo falls into this position)
- platform
- marketing
In the second phase (Dec2012 - Dec2013) several operational features of FinTP will be added
- predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit instruments securities settlement reconciliations
- MTMX coexistence
- multi-BIC multi-currency
- SEPA ready certification
- TARGET2 ready
- SAGSAASAE interfaces
- duplicate detection
- liquidity reports
- competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
- accounting reconciliation
- AML (sanctions list matching)
- SaaS and cloud ready
along with resilience and start of maintenance and knowledge transfer (the last two obviously continuing in the next phases)
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 34 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
The synthetic view of the project scope is provided in the following table
Crt No
Feature Activity Phase1 31Dec12
Phase2 31Dec13
Phase3 31Dec14
Phase4 31Dec15
Fin
TP
A Operational features
1
Predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit Instruments bonds (Romanian Euroclear) reconciliations
2 MTMX coexistence
3 Multi-BIC multi-currency
4 SaaS ready cloud ready
5 SEPA ready certification
6 TARGET2 ready
7 SAGSAASAE interfaces
8 Liquidity reports
9 Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
10 Accounting reconciliation
11 AML (sanctions list matching)
12 Duplicate detection
B Technical features
1 Routing financial message between services and monitoring of data flows
2 Multi-threading capabilities
3 Persistent end-to-end transactions
4 Batching de-batching
5 Resilience (at transaction level)
6 Archiving
7 Tracing and logging of transactions and user events
8 Transient errors detection and recovery
9 Real time search and reports
10 Security access and user administration
C Other activities
1 FinTP maintenance
2 Knowledge transfer
Co
mm
un
ity
Establishing the institutionscomponents
1 Mentor
2 Software Auditor amp Provider
3 Legal service
4 Members
5 Allevo initial role
6 Platform
7 Marketing
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 35 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
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Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
9 Limitations The main limitations in the economy of the project consist of phasing several FinTP
operational features for the following year (eg debit instruments liquidity reporting
AML filtering accounting reconciliation resilience SaaS ready cloud ready etc)
At the same time for features intended to front-office usage like Remit it was not yet
decided to publish them as open source product
The synthetic view of the main limitations is provided in the following table
Crt
nrItem Limitation Exclusion Comments
1
FinTP
a
Operational features Available in 2013
b
Remit Not included in
open source
package
2
Community
a
Rules Tightly controlled The statute should
ensure the right
balance between
safety and free
association of talents
Given the significant budget allocation (at least from Allevo perspective) the strong
requirement to meet the maximum ceiling will limit the FinTP product initial preparation
and maintenance expenses
Community wise the obligation of a tight regulated statute will have to ensure the right
balance between safety (mandatory in an environment dealing with financial
transactions) and a free association of talents (typical in an open source community)
In the first period after launch (at least the first two years) of the initiative the
maintenance and support activities will be provided by Allevo (as initial contributor)
A major restriction would be to meet the budgeted development and maintenance
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
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Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
10 Appendix - Risks
Specific risks
1 Product
a Long delivery lead time This is a medium probability and impact risk however Allevo should make available the needed resources and motivate the entire team for the job
b Credibility loss if FinTP fails to further become certified on meaningful operations andor business tracks (ie SWIFT business certification tracks or similar) The single possible containment is lobbying if the application certification program rejects open source products Anyway the impact is very important and its materialization should be avoided
c Low quality of the allocated team and improper version management are highly unlikely to occur as long as the formal transfer of responsibility is smoothly made from Allevo to the corresponding body put in place by the community The real hidden risk is that this process could take too long and it thus has a very high impact
d Poor FinTP quality may result if the community fails to institutionalize proper quality assurance (QA) and verification amp validation (VampV) processes This is most expected not to happen but if it does the impact is at least medium The single path to overcome this risk consists in a professional approach to these items based on institutionalizing practice proven QA and VampV processes
e Allevo lack of expertise in the open source business This can be contained by carefully selecting trustful amp truly expert consultants Otherwise it means more money longer time spent on project and expenses without proper return
2 Service
a The software maintenance does not properly deliver as expected ie on-time and on-quality bug fixing regulation amp standards alignment and productivity amp technological improvement The key to contain this risk materialization is the community status having provisions to neatly provide maintenance and further development of the rules for FinTP as well as the applicable rules and fees for the ancillary services
b Low quality and safety of the service received by the members of the community To avoid the risk of performing the one-time amp recurring support services by under-prepared professionals the community has to rule the process of training and qualifying the companies willing to contribute in this area
c Not meeting the minimal SLA criteria The community should regulate and periodically revise the training curricula and to further audit both the teachers and the certified experts to ensure the service level agreements are met
d Under motivated service providing professionals - up to the level of not feeling the high impact of their activity The community status must provide guidance to the contributors on the minimal standards the professionals should meet
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
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e Constrained expert resource pool This risk could be overcome by the communitys policy to ensure at all time a balanced number of motivated experts to the communitys size Failing to do so may result in high negative impact of the community business and public perception
3 Community
a Emergence of a parallel competitive community If the optimal timing between publically disclosing FinTP and community take-off is not achieved then there are high chances that following a competitive initiative other entrepreneurs successfully launch their own similar or derived community This could be avoided by periodical reviews of the progress of both FinTP and community status and deciding whether the project needs to be put on hold or not
b Unfit reputation of the Moderator or main contributors If either the Moderator or the initial contributors are not beyond any dispute and are reputable institutes then there is certainly something rotten in Denmark and the project should be put on-hold
c No commitment from the Moderator‟s side Similarly if the Moderator does not commit to the project it means that Denmark has a serious problem to solve The project should relinquish until the matter is fixed
4 Legal
a Misuse of copyright and intellectual property (IP)The assigned working team could not be aware of the limitations and liabilities of using (entirely or partially) third party software this risk can be contained by delivering the right training providing proper working procedures carefully recording and documenting the use of open source code and carefully cross-scanning
b Injunctive relief and financial damages can be caused by not properly and continuously controlling the use of third party open source code resulting in copyright or IP infringement There are two containment measures which can be taken tighten the compliance check during the product lifecycle or apply the sanction policy as to set an example
c The competition starts a class action - this may result in delaying the project
5 Financing
a Lack of long term financing institutions Allevo should urge its consultant to identify and draw a reasonable list of financial options institutions
b Exceeding the budget given that this type of project has no precedent in Allevo and to avoid exposing to the dependency on engagement to financial institutions or to commitments beyond the existing budget a further carefully drawn project plan is needed along with its explicit approval from the board of the company
Market related risks
1 False expectations
a Expensive services Not everything is free aside the initial and maintenance free licensing the training the support and other professional services can amount to more than in general expected Allevo rates this risk as medium possible but with low impact as long as the law governing the community and its initial period of operation will consecrate fair market prices and competitive sources of contribution
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
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b Hidden costs for patches updates and upgrades While of similarly weight in terms of probability and impact this should be no real concern as long as the law governing the community clearly provides for free and accountable maintenance
2 Poor image on quality
a Too many releases making FinTP hard to manage and unsafe to operate Given proper regulation of the community and the mature root of FinTP Allevo disregards the possibility of this risk to materialize However if this were to happen this is a high impact risk and by all means should be avoided
b Backward technological (in)compatibility looks to us as a low risk in all respects and within organizations applying practice proven software engineering processes and professional - accountable team this is not likely to materialize
c Support can be perceived as the highest impact risk for FinTP This can be overcome by tight regulation of the commercial and professional conditions to deliver the service (for instance only qualified organizations should be recommended to members for supporting FinTP)
d SLA and accountability for both internally or externally performed services is closely correlated to the previous risk and the community status should provide the support for growing a community of competencies and accountable professionals around FinTP Periodical auditing (by the specialized community body) of this pool of professionals will further ensure the confidence that the skills are preserved at the required level
e Code fragmentation and forking is a high impact risk with a low probability of happening in the initial period provided the knowledge transfer is done orderly and in an institutionalized manner
3 Inherent uncertainty
a Community disputes can jeopardize its cohesion the project viability and future This is a high impact possibly high probability risk and it is the definite role of the Moderator to feel prevent and while materializing mitigate any conflicting situation
b FinTP going commercial post-launch This is a huge impact possibly high occurrence probability but manageable with the right legal instruments provisioned in the community
c Loss of alignment to industry standards and regulations This risk has medium probability and medium impact given the assumption that the community is tightly regulated and the working bodies institutionalized and gathering professionals
4 Legal
Copyright infringement given Allevo experience in the open source business this risk is highly probable and has a high impact on FinTP especially if mistakes are made in the launching phase Similarly if during the product maintenance and further development phase the community fails to institutionalize proper formal software development processes (covering all FinTP lifecycle phases) based on industry practice proven model(s) Supplementary the expert code scanning audit for compliance is the single resort to preclude external software source misuse
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
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5 GPL specific
a Noncompliance to the GPL license If GPL license is used the product should further distribute in compliance with this part provisions High impact and probability but manageable if proper software development processes are used and if the statute clearly defines the licensing model for FinTP
b FinTP unconformity The risk that software engineers get inspired by a chic solution which they import and emulate similarly in FinTP And this is also highly possible since les grands esprits se rencontre
6 Existing customers attitude
Anger for having paid for something which now is free The existent customers can be concerned about the future of their installed system its further development (in one word its future) and on the quality of the service (SLA including) Some recent adopters can possibly be furious for spending their money on buying licenses for a piece of software that differently packaged becomes free of charge
For the first situation the single best solution for Allevo is to ensure a smooth transition from the current status to the new solution deployed Also highly probable Allevo should provide for simultaneous (for at most one more year) maintenance of both FinTP and for qPayIntegrator
For the 2012 new qPayIntegrator adopters Allevo should transparently state the product‟s future and propose a commercially attractive migration towards FinTP when it becomes publically available (like the option for the installation migration and recurring services) The decision should clearly stay with the customer if he still buys Allevo licenses delays the implementation until FinTP is available or if he goes for a competitive solution
In other words the key to mitigate the existing customer perception is switching places and discarding if the situation proves to be uncomfortable
Bottom-line is that to avoid most of the risks the FinTP community must be a rather tightly controlled one though still opened to anyone willingly abiding to the rules
The synthetic view of the main risks their assigned probability impact and the corresponding containment approach is provided in the attached file
Risk IDRisk
CategoryRisk
Probability
(High
Medium
Low)
Severity
(High
Medium
Low)
Containment (Mitigation Action Proposed)
M1Free as in a
Free Puppy
M101
The training service amp support cost could account more than the
commercial product its replacing (application software is typically 30 of
the total cost of ownership of most projects)
Medium Low
M102 Hidden costs ie charge for patches updates and upgrades Medium Low
M2Frequent
updates
M201
Projects might be updated frequently - as often as everyday Too frequent
updates could have a negative impact on the implementation
interoperability and support
Low HighMAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M3Backwards
compatibility
M301 Less accountability Low LowMAP03 Access to prior versions of source code (additional in-house
development and support procedures might be necessary)
M4Support
related risks
M401Support could be perceived as the biggest issue with open source
software deploymentsHigh High
M402 Internal External Accountability SLAs High High
M403Code fragmentation or forking if the community fails to institutionalize
corporate like formal structureHigh High
M404Support could require greater involvement and different skills set from
operations staffMedium Medium
M5Community
immaturity Low Low
M501Could generate incompatibility of FinTP with industry standards amp
regulationsMedium Medium
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M6 Uncertainty The inherent uncertainty in every open source project
M601 Community disputes might impact project viability and future High HighMAP04 The Mentor should prevent amp mitigate any conflicts inside the
community
M602 Open source projects may not stay open in future releases High HighMAP05 The originator liabilities should be strongly enforced by the
community statute
M7 Legal risks
M701 Copyright infringement High High
M702 Can open source software deployments pass an audit
M8 GPL General Public License specific development concerns
M801Software thatrsquos derived from an existing GPL project in whole or in part
might not be released under the same licenseHigh High M08 The community should regulate the licensing model
M802
Developer contamination - developer could review an existing open source
project could see an elegant solution then implement a similar function in
closed source project
High HighMAP09 Procedurals constrains for the software developers should be
enforced
M9
Current
customers
attitude
The actual customer perception could be negative High High
M12 To prevent a negative attitude Allevo should involve the customers
in the FinTP project Allevo needs their active support for a smooth and
issues less transition
ma
rke
t re
late
d r
isk
s
co
st
rela
ted
ris
ks
MAP01 The community should regulate the applicable rules and fees for
services and maintenance
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
bu
sin
es
s a
nd
le
ga
l ri
sk
s
MAP06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S1Product
related
S101 Late delivery lead time Medium MediumMAP15 Allevo should provide proper resources (funding and human
resources)
S102 Credibility loss if fail to certify with SWIFT Medium High MAP16 Should be discussedamp agreed with SWIFT
S103 Inexperienced team or allocation below needs Low HighMAP15 Allevo should provide proper resources (funding and human
resources)
S104 Improper or non efficient version management Low High MAP16 Review the current Allevo Configuration Management System
S105Poor quality if the community fails to institutionalize proper verification and
validation practices3
M06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S106 Lack of expertise in open source projects 2 Allevo should engage thoroughly selected Open Source consultants
S2Service
related
S201
The software maintenance not properly providing for bugs fixing
regulationamp standard alignment technological improvements communities
improvement requests
High HighMAP01 The community should regulate the applicable rules and fees for
services and maintenance
S202 One-time amp recurring services might be provided by unqualified resources High HighMAP17 The community should regulate the training curricula and related
expertise certification
S203 Provided services might not meet the minimal SLA performance criteria High HighMAP17 The community should regulate the training curricula and related
expertise certification
S204 Relaxed or lack of accountability of the professionals High HighMAP18 The community should regulate the employment agreement of
the professionals
S205 Lack of qualified professionals High HighMAP19 The community should ensure a balanced number of certified
professionals with the community size
S3Community
related
S301
If after disclosing FinTP the community does not enthusiastically adopt
the solution competitors might more successfully develop a similar
strategy
Medium MediumMAP20 FinTP promotion should be convincing and realistic A well
organized marketing campaign by Allevo
S302The community mentor andor early adhering members have no
undeniable prestige or are not largely trustfulMedium Medium MAP99 Project status review Ending the project could be one option
S303 The Mentor does not strongly commit for the project Medium Medium MAP99 Project status review Ending the project could be one option
S4 Legal
S401Exposure to copyright and IP infringement due to working team unaware of
the legal consequences of using third party softwareMedium Medium
MAP21 Allevo should keep records and fully document the use of open
source code
S402Copyright or intellectual property infringement can lead to injunctive relief
and monetary damagesHigh High
MAP23 Allevo should institutionalize a tight licensing and technical
control
S403 All risks related to open source compliance High HighMAP24 Allevo should appoint as soon as possible a FinTP compliance
Officer
S5 Financial
S501 Lack of financing institutions Medium MediumMAP25 Allevo should urge consultant to provide a consistent list of
potential investors
S502 Dependency on the financing institution approval Medium Medium
S503Not thoroughly planned project overlooking one or some project cost that
need to be financedMedium Medium
Sp
ec
ific
ris
ks
tec
hn
ica
lm
ark
eti
ng
leg
al
fun
din
g
MAP26 Allevo should carefully draw a consistent and eligible project for
financing
Risks
Riskspdf
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 40 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
11 Appendix - Bibliography 1 Accenture Open Source Research Geographic Findings
2 Accenture Open Source Research Industry Findings
3 Producing Open Source Software - How to Run a Successful Free Software
Project by Karl Fogel
4 Open Source Software Risks and Rewards by Gary Hein
5 A Business Case Study of Open Source Software by Carolyn A Kenwood
6 6 critical success factors for product development by Christian Wig
7 Bank 20 by Brett King
8 Managing the business risks of open innovation by Oliver Alexy and Markus
9 Product idea evaluation checklist shared by Startgass AS
10 SWIFT 2015 Strategy
11 Customers and business impact of product changes
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 41 of 43 Allevo Confidential
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Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
12 Appendix - Glossary ACH Automated Clearing House that is used to clear retail payments
between banks in a country or region
APAC Asia and Pacific
AML Anti-Money Laundering
BCampDR Business continuity amp disaster recovery
B2B Business to business
C2B Consumer to business
CET Central European Time
CMMI Capability Maturity Model Integration
CMS Configuration Management System
Coexistence The situation of multiple standards existing at the same time in the same business space Within SWIFT this refers to the coexistence between the MT and MX standards This also refers to the set of measures being taken to make the situation easier to handle by the community (publication of mapping rules translation serviceshellip)
CSM Clearing and Settlement Mechanism
CUG Closed User Group
Dictionary Part of the ISO 20022 Repository that contains all items that can be re-used during business modelling and message definition activities
EAI Enterprise Application Integration - middleware to connect applications and communication interfaces Typical EAI software includes features for mapping data between various formats enriching messages with data from other systems and orchestrating message flows
ECB European Central Bank
EMEA Europe Middle-East Africa
EPC European Payment Council
ERP Enterprise Resource Planning
EU European Union
EUCLID Connectivity to EuroClear Bank services
FIN The messaging service offered by SWIFT for the secure and reliable exchange of MT messages in store-and-forward mode By extension the syntax used to format these MTs
IP intellectual property
Interoperability Capability to easily exchange business information while using different message standards ISO 20022 promotes global use of syntax-neutral business and message components as a common denominator to achieve interoperability between standards using different syntaxes
ISO The International Organization for Standardization - an international standard-setting body composed of representatives from more than 160 national standards organizations that promulgates worldwide standards in a variety of domains aiming at facilitating cross-border exchanges of goods services and techniques
FinTP - Vision and Scope
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Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
ISO 15022 An ISO standard that describes the syntax to be used for developing securities messages used mainly to support back office related transaction flows It replaced the previous securities messaging standard ISO 7775
ISO 20022 RA Registration Authority - offers the services described in an ISO standard on behalf of and under a contractual agreement with the International Organization for Standardization
ISO 20022 Repository
Repository maintained by the ISO20022 RA which contains the financial business models message definitions and components defined in compliance with the ISO 20022 standard
ISO 20022 RMG Registration Management Group - in charge of the overall management of the ISO 20022 development and registration process in accordance with the ISO 20022 standard
ISO 20022 SEG Standards Evaluation Groups -in charge of validating candidate ISO 20022 messages within the scope of the business justification and ensuring that they address the needs of their future international community of users
ISV Independent Software Vendor
KYC Know Your Customer
MACUG Member Administered Closed User Group
Message A set of structured information exchanged between two parties involved in a financial transaction
Message component and element
A re-usable data structure used for assembling message definitions The data defined in a message component is bdquotraced‟ back to the business components and business elements In simple terms business components define the business meaning message components create data structures for messaging
MI Market Infrastructure - a system that provides services to the financial industry for trading clearing and settlement matching of financial transactions and depository functions
Middleware Software that enables data to be exchanged among different systems with standard communication components and tools for formatting mapping and processing
MT The traditional bdquotag value‟ Message Types for use on the FIN service offered by SWIFT
MX An XML message exchanged over SWIFTNet whether or not ISO 20022 compliant
OS Open source
PSP Payment service provider
QA Quality assurance
RMA Relationship Management Access
RTGS Real Time Gross Settlement System
SAA SWIFT Alliance Access
SAE SWIFT Alliance Entry
SAG SWIFT Alliance Gateway
SaaS Software as a Service
SCORE Standardized CORporate Environment
FinTP - Vision and Scope
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Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
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Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
Semantics The study of meaning usually in language The word is often used in ordinary language to denote a problem of understanding that comes down to word selection or connotation
SEPA Single Euro Payment Area
SLA Service level agreement
SME Small and Medium-sized Business(es)
SOA Service Oriented Architecture
SSB SWIFT Service Bureau
STP Straight Through Processing
SWIFT Society for Worldwide Interbank Financial Telecommunication Visit wwwswiftcom
Syntax Physical format of a message used to identify and represent the conveyed pieces of information
T2S TARGET2 Securities - an initiative of the Eurosystem It is an IT platform that aims to make settlements across national borders simpler and more cost-efficient
TARGET2 The Eurosystem-owned European Real Time Gross Settlement (RTGS) system (Trans-European Automated Real-time Gross Settlement Express Transfer System) TARGET2 is one of the largest high-value payment systems in the world
Taxonomy The classification in a hierarchical system typically organized by super type - sub type relationships also called generalization-specialization relationships or less formally parent-child relationships
TSU Trade Service Utility
TCO Total cost of ownership
Translation rules
Set of rules to be used to map the pieces of information included in a message expressed in one syntax to the equivalent message expressed in another syntax
Remit Remittances
XML eXtensible Mark-up Language - popular syntax to encode documents (or messages) electronically on the Internet XML allows communities to define their own identifiers (or tags) and format (or data type) for each component of a message
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Bureaus etc) ISV regulatory institutionsMarketing plan feasibility campaign efficiency and costs
2 MentorPreferable SWIFT
Also eligible SunGard IBM affiliation to other OS communitySWIFT decision
3 Legalcopyright Expert legal consultant and RO apprentice Cost and time shift dependent
4 Tight regulation Clear membership admission amp software contribution criteria The quality of the consultant advice
5 Marketing Actively recruiting community members Marketing plan feasibility campaign efficiency amp customer skepticism
a community portala provide content amp debate space information consolidation amp dissemination virtual
showroom subscription management support
a business analysis solution availability and maintenance by one of the
members or employed company
b press releases amp
announcementsb PR and AR b communicators availability and costs
c events c periodical conferences user focused meetings c cost dependent
6 Financing World Bank EU amp private funds Lobby amp funds availability
Item
FinTP
FinTP community
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 34 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
The synthetic view of the project scope is provided in the following table
Crt No
Feature Activity Phase1 31Dec12
Phase2 31Dec13
Phase3 31Dec14
Phase4 31Dec15
Fin
TP
A Operational features
1
Predefined flows (including reconciliation of confirmations with transactions) and message formats for credit transfer direct debit debit Instruments bonds (Romanian Euroclear) reconciliations
2 MTMX coexistence
3 Multi-BIC multi-currency
4 SaaS ready cloud ready
5 SEPA ready certification
6 TARGET2 ready
7 SAGSAASAE interfaces
8 Liquidity reports
9 Competitive reports (based on standard deviation of the correspondent bank or customer behaviour)
10 Accounting reconciliation
11 AML (sanctions list matching)
12 Duplicate detection
B Technical features
1 Routing financial message between services and monitoring of data flows
2 Multi-threading capabilities
3 Persistent end-to-end transactions
4 Batching de-batching
5 Resilience (at transaction level)
6 Archiving
7 Tracing and logging of transactions and user events
8 Transient errors detection and recovery
9 Real time search and reports
10 Security access and user administration
C Other activities
1 FinTP maintenance
2 Knowledge transfer
Co
mm
un
ity
Establishing the institutionscomponents
1 Mentor
2 Software Auditor amp Provider
3 Legal service
4 Members
5 Allevo initial role
6 Platform
7 Marketing
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 35 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
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Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
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Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
9 Limitations The main limitations in the economy of the project consist of phasing several FinTP
operational features for the following year (eg debit instruments liquidity reporting
AML filtering accounting reconciliation resilience SaaS ready cloud ready etc)
At the same time for features intended to front-office usage like Remit it was not yet
decided to publish them as open source product
The synthetic view of the main limitations is provided in the following table
Crt
nrItem Limitation Exclusion Comments
1
FinTP
a
Operational features Available in 2013
b
Remit Not included in
open source
package
2
Community
a
Rules Tightly controlled The statute should
ensure the right
balance between
safety and free
association of talents
Given the significant budget allocation (at least from Allevo perspective) the strong
requirement to meet the maximum ceiling will limit the FinTP product initial preparation
and maintenance expenses
Community wise the obligation of a tight regulated statute will have to ensure the right
balance between safety (mandatory in an environment dealing with financial
transactions) and a free association of talents (typical in an open source community)
In the first period after launch (at least the first two years) of the initiative the
maintenance and support activities will be provided by Allevo (as initial contributor)
A major restriction would be to meet the budgeted development and maintenance
FinTP - Vision and Scope
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10 Appendix - Risks
Specific risks
1 Product
a Long delivery lead time This is a medium probability and impact risk however Allevo should make available the needed resources and motivate the entire team for the job
b Credibility loss if FinTP fails to further become certified on meaningful operations andor business tracks (ie SWIFT business certification tracks or similar) The single possible containment is lobbying if the application certification program rejects open source products Anyway the impact is very important and its materialization should be avoided
c Low quality of the allocated team and improper version management are highly unlikely to occur as long as the formal transfer of responsibility is smoothly made from Allevo to the corresponding body put in place by the community The real hidden risk is that this process could take too long and it thus has a very high impact
d Poor FinTP quality may result if the community fails to institutionalize proper quality assurance (QA) and verification amp validation (VampV) processes This is most expected not to happen but if it does the impact is at least medium The single path to overcome this risk consists in a professional approach to these items based on institutionalizing practice proven QA and VampV processes
e Allevo lack of expertise in the open source business This can be contained by carefully selecting trustful amp truly expert consultants Otherwise it means more money longer time spent on project and expenses without proper return
2 Service
a The software maintenance does not properly deliver as expected ie on-time and on-quality bug fixing regulation amp standards alignment and productivity amp technological improvement The key to contain this risk materialization is the community status having provisions to neatly provide maintenance and further development of the rules for FinTP as well as the applicable rules and fees for the ancillary services
b Low quality and safety of the service received by the members of the community To avoid the risk of performing the one-time amp recurring support services by under-prepared professionals the community has to rule the process of training and qualifying the companies willing to contribute in this area
c Not meeting the minimal SLA criteria The community should regulate and periodically revise the training curricula and to further audit both the teachers and the certified experts to ensure the service level agreements are met
d Under motivated service providing professionals - up to the level of not feeling the high impact of their activity The community status must provide guidance to the contributors on the minimal standards the professionals should meet
FinTP - Vision and Scope
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e Constrained expert resource pool This risk could be overcome by the communitys policy to ensure at all time a balanced number of motivated experts to the communitys size Failing to do so may result in high negative impact of the community business and public perception
3 Community
a Emergence of a parallel competitive community If the optimal timing between publically disclosing FinTP and community take-off is not achieved then there are high chances that following a competitive initiative other entrepreneurs successfully launch their own similar or derived community This could be avoided by periodical reviews of the progress of both FinTP and community status and deciding whether the project needs to be put on hold or not
b Unfit reputation of the Moderator or main contributors If either the Moderator or the initial contributors are not beyond any dispute and are reputable institutes then there is certainly something rotten in Denmark and the project should be put on-hold
c No commitment from the Moderator‟s side Similarly if the Moderator does not commit to the project it means that Denmark has a serious problem to solve The project should relinquish until the matter is fixed
4 Legal
a Misuse of copyright and intellectual property (IP)The assigned working team could not be aware of the limitations and liabilities of using (entirely or partially) third party software this risk can be contained by delivering the right training providing proper working procedures carefully recording and documenting the use of open source code and carefully cross-scanning
b Injunctive relief and financial damages can be caused by not properly and continuously controlling the use of third party open source code resulting in copyright or IP infringement There are two containment measures which can be taken tighten the compliance check during the product lifecycle or apply the sanction policy as to set an example
c The competition starts a class action - this may result in delaying the project
5 Financing
a Lack of long term financing institutions Allevo should urge its consultant to identify and draw a reasonable list of financial options institutions
b Exceeding the budget given that this type of project has no precedent in Allevo and to avoid exposing to the dependency on engagement to financial institutions or to commitments beyond the existing budget a further carefully drawn project plan is needed along with its explicit approval from the board of the company
Market related risks
1 False expectations
a Expensive services Not everything is free aside the initial and maintenance free licensing the training the support and other professional services can amount to more than in general expected Allevo rates this risk as medium possible but with low impact as long as the law governing the community and its initial period of operation will consecrate fair market prices and competitive sources of contribution
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
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b Hidden costs for patches updates and upgrades While of similarly weight in terms of probability and impact this should be no real concern as long as the law governing the community clearly provides for free and accountable maintenance
2 Poor image on quality
a Too many releases making FinTP hard to manage and unsafe to operate Given proper regulation of the community and the mature root of FinTP Allevo disregards the possibility of this risk to materialize However if this were to happen this is a high impact risk and by all means should be avoided
b Backward technological (in)compatibility looks to us as a low risk in all respects and within organizations applying practice proven software engineering processes and professional - accountable team this is not likely to materialize
c Support can be perceived as the highest impact risk for FinTP This can be overcome by tight regulation of the commercial and professional conditions to deliver the service (for instance only qualified organizations should be recommended to members for supporting FinTP)
d SLA and accountability for both internally or externally performed services is closely correlated to the previous risk and the community status should provide the support for growing a community of competencies and accountable professionals around FinTP Periodical auditing (by the specialized community body) of this pool of professionals will further ensure the confidence that the skills are preserved at the required level
e Code fragmentation and forking is a high impact risk with a low probability of happening in the initial period provided the knowledge transfer is done orderly and in an institutionalized manner
3 Inherent uncertainty
a Community disputes can jeopardize its cohesion the project viability and future This is a high impact possibly high probability risk and it is the definite role of the Moderator to feel prevent and while materializing mitigate any conflicting situation
b FinTP going commercial post-launch This is a huge impact possibly high occurrence probability but manageable with the right legal instruments provisioned in the community
c Loss of alignment to industry standards and regulations This risk has medium probability and medium impact given the assumption that the community is tightly regulated and the working bodies institutionalized and gathering professionals
4 Legal
Copyright infringement given Allevo experience in the open source business this risk is highly probable and has a high impact on FinTP especially if mistakes are made in the launching phase Similarly if during the product maintenance and further development phase the community fails to institutionalize proper formal software development processes (covering all FinTP lifecycle phases) based on industry practice proven model(s) Supplementary the expert code scanning audit for compliance is the single resort to preclude external software source misuse
FinTP - Vision and Scope
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Tel fax +40212554577 +40212554578 +40212554579
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5 GPL specific
a Noncompliance to the GPL license If GPL license is used the product should further distribute in compliance with this part provisions High impact and probability but manageable if proper software development processes are used and if the statute clearly defines the licensing model for FinTP
b FinTP unconformity The risk that software engineers get inspired by a chic solution which they import and emulate similarly in FinTP And this is also highly possible since les grands esprits se rencontre
6 Existing customers attitude
Anger for having paid for something which now is free The existent customers can be concerned about the future of their installed system its further development (in one word its future) and on the quality of the service (SLA including) Some recent adopters can possibly be furious for spending their money on buying licenses for a piece of software that differently packaged becomes free of charge
For the first situation the single best solution for Allevo is to ensure a smooth transition from the current status to the new solution deployed Also highly probable Allevo should provide for simultaneous (for at most one more year) maintenance of both FinTP and for qPayIntegrator
For the 2012 new qPayIntegrator adopters Allevo should transparently state the product‟s future and propose a commercially attractive migration towards FinTP when it becomes publically available (like the option for the installation migration and recurring services) The decision should clearly stay with the customer if he still buys Allevo licenses delays the implementation until FinTP is available or if he goes for a competitive solution
In other words the key to mitigate the existing customer perception is switching places and discarding if the situation proves to be uncomfortable
Bottom-line is that to avoid most of the risks the FinTP community must be a rather tightly controlled one though still opened to anyone willingly abiding to the rules
The synthetic view of the main risks their assigned probability impact and the corresponding containment approach is provided in the attached file
Risk IDRisk
CategoryRisk
Probability
(High
Medium
Low)
Severity
(High
Medium
Low)
Containment (Mitigation Action Proposed)
M1Free as in a
Free Puppy
M101
The training service amp support cost could account more than the
commercial product its replacing (application software is typically 30 of
the total cost of ownership of most projects)
Medium Low
M102 Hidden costs ie charge for patches updates and upgrades Medium Low
M2Frequent
updates
M201
Projects might be updated frequently - as often as everyday Too frequent
updates could have a negative impact on the implementation
interoperability and support
Low HighMAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M3Backwards
compatibility
M301 Less accountability Low LowMAP03 Access to prior versions of source code (additional in-house
development and support procedures might be necessary)
M4Support
related risks
M401Support could be perceived as the biggest issue with open source
software deploymentsHigh High
M402 Internal External Accountability SLAs High High
M403Code fragmentation or forking if the community fails to institutionalize
corporate like formal structureHigh High
M404Support could require greater involvement and different skills set from
operations staffMedium Medium
M5Community
immaturity Low Low
M501Could generate incompatibility of FinTP with industry standards amp
regulationsMedium Medium
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M6 Uncertainty The inherent uncertainty in every open source project
M601 Community disputes might impact project viability and future High HighMAP04 The Mentor should prevent amp mitigate any conflicts inside the
community
M602 Open source projects may not stay open in future releases High HighMAP05 The originator liabilities should be strongly enforced by the
community statute
M7 Legal risks
M701 Copyright infringement High High
M702 Can open source software deployments pass an audit
M8 GPL General Public License specific development concerns
M801Software thatrsquos derived from an existing GPL project in whole or in part
might not be released under the same licenseHigh High M08 The community should regulate the licensing model
M802
Developer contamination - developer could review an existing open source
project could see an elegant solution then implement a similar function in
closed source project
High HighMAP09 Procedurals constrains for the software developers should be
enforced
M9
Current
customers
attitude
The actual customer perception could be negative High High
M12 To prevent a negative attitude Allevo should involve the customers
in the FinTP project Allevo needs their active support for a smooth and
issues less transition
ma
rke
t re
late
d r
isk
s
co
st
rela
ted
ris
ks
MAP01 The community should regulate the applicable rules and fees for
services and maintenance
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
bu
sin
es
s a
nd
le
ga
l ri
sk
s
MAP06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S1Product
related
S101 Late delivery lead time Medium MediumMAP15 Allevo should provide proper resources (funding and human
resources)
S102 Credibility loss if fail to certify with SWIFT Medium High MAP16 Should be discussedamp agreed with SWIFT
S103 Inexperienced team or allocation below needs Low HighMAP15 Allevo should provide proper resources (funding and human
resources)
S104 Improper or non efficient version management Low High MAP16 Review the current Allevo Configuration Management System
S105Poor quality if the community fails to institutionalize proper verification and
validation practices3
M06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S106 Lack of expertise in open source projects 2 Allevo should engage thoroughly selected Open Source consultants
S2Service
related
S201
The software maintenance not properly providing for bugs fixing
regulationamp standard alignment technological improvements communities
improvement requests
High HighMAP01 The community should regulate the applicable rules and fees for
services and maintenance
S202 One-time amp recurring services might be provided by unqualified resources High HighMAP17 The community should regulate the training curricula and related
expertise certification
S203 Provided services might not meet the minimal SLA performance criteria High HighMAP17 The community should regulate the training curricula and related
expertise certification
S204 Relaxed or lack of accountability of the professionals High HighMAP18 The community should regulate the employment agreement of
the professionals
S205 Lack of qualified professionals High HighMAP19 The community should ensure a balanced number of certified
professionals with the community size
S3Community
related
S301
If after disclosing FinTP the community does not enthusiastically adopt
the solution competitors might more successfully develop a similar
strategy
Medium MediumMAP20 FinTP promotion should be convincing and realistic A well
organized marketing campaign by Allevo
S302The community mentor andor early adhering members have no
undeniable prestige or are not largely trustfulMedium Medium MAP99 Project status review Ending the project could be one option
S303 The Mentor does not strongly commit for the project Medium Medium MAP99 Project status review Ending the project could be one option
S4 Legal
S401Exposure to copyright and IP infringement due to working team unaware of
the legal consequences of using third party softwareMedium Medium
MAP21 Allevo should keep records and fully document the use of open
source code
S402Copyright or intellectual property infringement can lead to injunctive relief
and monetary damagesHigh High
MAP23 Allevo should institutionalize a tight licensing and technical
control
S403 All risks related to open source compliance High HighMAP24 Allevo should appoint as soon as possible a FinTP compliance
Officer
S5 Financial
S501 Lack of financing institutions Medium MediumMAP25 Allevo should urge consultant to provide a consistent list of
potential investors
S502 Dependency on the financing institution approval Medium Medium
S503Not thoroughly planned project overlooking one or some project cost that
need to be financedMedium Medium
Sp
ec
ific
ris
ks
tec
hn
ica
lm
ark
eti
ng
leg
al
fun
din
g
MAP26 Allevo should carefully draw a consistent and eligible project for
financing
Risks
Riskspdf
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 40 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
11 Appendix - Bibliography 1 Accenture Open Source Research Geographic Findings
2 Accenture Open Source Research Industry Findings
3 Producing Open Source Software - How to Run a Successful Free Software
Project by Karl Fogel
4 Open Source Software Risks and Rewards by Gary Hein
5 A Business Case Study of Open Source Software by Carolyn A Kenwood
6 6 critical success factors for product development by Christian Wig
7 Bank 20 by Brett King
8 Managing the business risks of open innovation by Oliver Alexy and Markus
9 Product idea evaluation checklist shared by Startgass AS
10 SWIFT 2015 Strategy
11 Customers and business impact of product changes
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 41 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
12 Appendix - Glossary ACH Automated Clearing House that is used to clear retail payments
between banks in a country or region
APAC Asia and Pacific
AML Anti-Money Laundering
BCampDR Business continuity amp disaster recovery
B2B Business to business
C2B Consumer to business
CET Central European Time
CMMI Capability Maturity Model Integration
CMS Configuration Management System
Coexistence The situation of multiple standards existing at the same time in the same business space Within SWIFT this refers to the coexistence between the MT and MX standards This also refers to the set of measures being taken to make the situation easier to handle by the community (publication of mapping rules translation serviceshellip)
CSM Clearing and Settlement Mechanism
CUG Closed User Group
Dictionary Part of the ISO 20022 Repository that contains all items that can be re-used during business modelling and message definition activities
EAI Enterprise Application Integration - middleware to connect applications and communication interfaces Typical EAI software includes features for mapping data between various formats enriching messages with data from other systems and orchestrating message flows
ECB European Central Bank
EMEA Europe Middle-East Africa
EPC European Payment Council
ERP Enterprise Resource Planning
EU European Union
EUCLID Connectivity to EuroClear Bank services
FIN The messaging service offered by SWIFT for the secure and reliable exchange of MT messages in store-and-forward mode By extension the syntax used to format these MTs
IP intellectual property
Interoperability Capability to easily exchange business information while using different message standards ISO 20022 promotes global use of syntax-neutral business and message components as a common denominator to achieve interoperability between standards using different syntaxes
ISO The International Organization for Standardization - an international standard-setting body composed of representatives from more than 160 national standards organizations that promulgates worldwide standards in a variety of domains aiming at facilitating cross-border exchanges of goods services and techniques
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 42 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
ISO 15022 An ISO standard that describes the syntax to be used for developing securities messages used mainly to support back office related transaction flows It replaced the previous securities messaging standard ISO 7775
ISO 20022 RA Registration Authority - offers the services described in an ISO standard on behalf of and under a contractual agreement with the International Organization for Standardization
ISO 20022 Repository
Repository maintained by the ISO20022 RA which contains the financial business models message definitions and components defined in compliance with the ISO 20022 standard
ISO 20022 RMG Registration Management Group - in charge of the overall management of the ISO 20022 development and registration process in accordance with the ISO 20022 standard
ISO 20022 SEG Standards Evaluation Groups -in charge of validating candidate ISO 20022 messages within the scope of the business justification and ensuring that they address the needs of their future international community of users
ISV Independent Software Vendor
KYC Know Your Customer
MACUG Member Administered Closed User Group
Message A set of structured information exchanged between two parties involved in a financial transaction
Message component and element
A re-usable data structure used for assembling message definitions The data defined in a message component is bdquotraced‟ back to the business components and business elements In simple terms business components define the business meaning message components create data structures for messaging
MI Market Infrastructure - a system that provides services to the financial industry for trading clearing and settlement matching of financial transactions and depository functions
Middleware Software that enables data to be exchanged among different systems with standard communication components and tools for formatting mapping and processing
MT The traditional bdquotag value‟ Message Types for use on the FIN service offered by SWIFT
MX An XML message exchanged over SWIFTNet whether or not ISO 20022 compliant
OS Open source
PSP Payment service provider
QA Quality assurance
RMA Relationship Management Access
RTGS Real Time Gross Settlement System
SAA SWIFT Alliance Access
SAE SWIFT Alliance Entry
SAG SWIFT Alliance Gateway
SaaS Software as a Service
SCORE Standardized CORporate Environment
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 43 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
Semantics The study of meaning usually in language The word is often used in ordinary language to denote a problem of understanding that comes down to word selection or connotation
SEPA Single Euro Payment Area
SLA Service level agreement
SME Small and Medium-sized Business(es)
SOA Service Oriented Architecture
SSB SWIFT Service Bureau
STP Straight Through Processing
SWIFT Society for Worldwide Interbank Financial Telecommunication Visit wwwswiftcom
Syntax Physical format of a message used to identify and represent the conveyed pieces of information
T2S TARGET2 Securities - an initiative of the Eurosystem It is an IT platform that aims to make settlements across national borders simpler and more cost-efficient
TARGET2 The Eurosystem-owned European Real Time Gross Settlement (RTGS) system (Trans-European Automated Real-time Gross Settlement Express Transfer System) TARGET2 is one of the largest high-value payment systems in the world
Taxonomy The classification in a hierarchical system typically organized by super type - sub type relationships also called generalization-specialization relationships or less formally parent-child relationships
TSU Trade Service Utility
TCO Total cost of ownership
Translation rules
Set of rules to be used to map the pieces of information included in a message expressed in one syntax to the equivalent message expressed in another syntax
Remit Remittances
XML eXtensible Mark-up Language - popular syntax to encode documents (or messages) electronically on the Internet XML allows communities to define their own identifiers (or tags) and format (or data type) for each component of a message
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Bureaus etc) ISV regulatory institutionsMarketing plan feasibility campaign efficiency and costs
2 MentorPreferable SWIFT
Also eligible SunGard IBM affiliation to other OS communitySWIFT decision
3 Legalcopyright Expert legal consultant and RO apprentice Cost and time shift dependent
4 Tight regulation Clear membership admission amp software contribution criteria The quality of the consultant advice
5 Marketing Actively recruiting community members Marketing plan feasibility campaign efficiency amp customer skepticism
a community portala provide content amp debate space information consolidation amp dissemination virtual
showroom subscription management support
a business analysis solution availability and maintenance by one of the
members or employed company
b press releases amp
announcementsb PR and AR b communicators availability and costs
c events c periodical conferences user focused meetings c cost dependent
6 Financing World Bank EU amp private funds Lobby amp funds availability
Item
FinTP
FinTP community
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 35 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
9 Limitations The main limitations in the economy of the project consist of phasing several FinTP
operational features for the following year (eg debit instruments liquidity reporting
AML filtering accounting reconciliation resilience SaaS ready cloud ready etc)
At the same time for features intended to front-office usage like Remit it was not yet
decided to publish them as open source product
The synthetic view of the main limitations is provided in the following table
Crt
nrItem Limitation Exclusion Comments
1
FinTP
a
Operational features Available in 2013
b
Remit Not included in
open source
package
2
Community
a
Rules Tightly controlled The statute should
ensure the right
balance between
safety and free
association of talents
Given the significant budget allocation (at least from Allevo perspective) the strong
requirement to meet the maximum ceiling will limit the FinTP product initial preparation
and maintenance expenses
Community wise the obligation of a tight regulated statute will have to ensure the right
balance between safety (mandatory in an environment dealing with financial
transactions) and a free association of talents (typical in an open source community)
In the first period after launch (at least the first two years) of the initiative the
maintenance and support activities will be provided by Allevo (as initial contributor)
A major restriction would be to meet the budgeted development and maintenance
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 36 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
10 Appendix - Risks
Specific risks
1 Product
a Long delivery lead time This is a medium probability and impact risk however Allevo should make available the needed resources and motivate the entire team for the job
b Credibility loss if FinTP fails to further become certified on meaningful operations andor business tracks (ie SWIFT business certification tracks or similar) The single possible containment is lobbying if the application certification program rejects open source products Anyway the impact is very important and its materialization should be avoided
c Low quality of the allocated team and improper version management are highly unlikely to occur as long as the formal transfer of responsibility is smoothly made from Allevo to the corresponding body put in place by the community The real hidden risk is that this process could take too long and it thus has a very high impact
d Poor FinTP quality may result if the community fails to institutionalize proper quality assurance (QA) and verification amp validation (VampV) processes This is most expected not to happen but if it does the impact is at least medium The single path to overcome this risk consists in a professional approach to these items based on institutionalizing practice proven QA and VampV processes
e Allevo lack of expertise in the open source business This can be contained by carefully selecting trustful amp truly expert consultants Otherwise it means more money longer time spent on project and expenses without proper return
2 Service
a The software maintenance does not properly deliver as expected ie on-time and on-quality bug fixing regulation amp standards alignment and productivity amp technological improvement The key to contain this risk materialization is the community status having provisions to neatly provide maintenance and further development of the rules for FinTP as well as the applicable rules and fees for the ancillary services
b Low quality and safety of the service received by the members of the community To avoid the risk of performing the one-time amp recurring support services by under-prepared professionals the community has to rule the process of training and qualifying the companies willing to contribute in this area
c Not meeting the minimal SLA criteria The community should regulate and periodically revise the training curricula and to further audit both the teachers and the certified experts to ensure the service level agreements are met
d Under motivated service providing professionals - up to the level of not feeling the high impact of their activity The community status must provide guidance to the contributors on the minimal standards the professionals should meet
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 37 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
e Constrained expert resource pool This risk could be overcome by the communitys policy to ensure at all time a balanced number of motivated experts to the communitys size Failing to do so may result in high negative impact of the community business and public perception
3 Community
a Emergence of a parallel competitive community If the optimal timing between publically disclosing FinTP and community take-off is not achieved then there are high chances that following a competitive initiative other entrepreneurs successfully launch their own similar or derived community This could be avoided by periodical reviews of the progress of both FinTP and community status and deciding whether the project needs to be put on hold or not
b Unfit reputation of the Moderator or main contributors If either the Moderator or the initial contributors are not beyond any dispute and are reputable institutes then there is certainly something rotten in Denmark and the project should be put on-hold
c No commitment from the Moderator‟s side Similarly if the Moderator does not commit to the project it means that Denmark has a serious problem to solve The project should relinquish until the matter is fixed
4 Legal
a Misuse of copyright and intellectual property (IP)The assigned working team could not be aware of the limitations and liabilities of using (entirely or partially) third party software this risk can be contained by delivering the right training providing proper working procedures carefully recording and documenting the use of open source code and carefully cross-scanning
b Injunctive relief and financial damages can be caused by not properly and continuously controlling the use of third party open source code resulting in copyright or IP infringement There are two containment measures which can be taken tighten the compliance check during the product lifecycle or apply the sanction policy as to set an example
c The competition starts a class action - this may result in delaying the project
5 Financing
a Lack of long term financing institutions Allevo should urge its consultant to identify and draw a reasonable list of financial options institutions
b Exceeding the budget given that this type of project has no precedent in Allevo and to avoid exposing to the dependency on engagement to financial institutions or to commitments beyond the existing budget a further carefully drawn project plan is needed along with its explicit approval from the board of the company
Market related risks
1 False expectations
a Expensive services Not everything is free aside the initial and maintenance free licensing the training the support and other professional services can amount to more than in general expected Allevo rates this risk as medium possible but with low impact as long as the law governing the community and its initial period of operation will consecrate fair market prices and competitive sources of contribution
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 38 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
b Hidden costs for patches updates and upgrades While of similarly weight in terms of probability and impact this should be no real concern as long as the law governing the community clearly provides for free and accountable maintenance
2 Poor image on quality
a Too many releases making FinTP hard to manage and unsafe to operate Given proper regulation of the community and the mature root of FinTP Allevo disregards the possibility of this risk to materialize However if this were to happen this is a high impact risk and by all means should be avoided
b Backward technological (in)compatibility looks to us as a low risk in all respects and within organizations applying practice proven software engineering processes and professional - accountable team this is not likely to materialize
c Support can be perceived as the highest impact risk for FinTP This can be overcome by tight regulation of the commercial and professional conditions to deliver the service (for instance only qualified organizations should be recommended to members for supporting FinTP)
d SLA and accountability for both internally or externally performed services is closely correlated to the previous risk and the community status should provide the support for growing a community of competencies and accountable professionals around FinTP Periodical auditing (by the specialized community body) of this pool of professionals will further ensure the confidence that the skills are preserved at the required level
e Code fragmentation and forking is a high impact risk with a low probability of happening in the initial period provided the knowledge transfer is done orderly and in an institutionalized manner
3 Inherent uncertainty
a Community disputes can jeopardize its cohesion the project viability and future This is a high impact possibly high probability risk and it is the definite role of the Moderator to feel prevent and while materializing mitigate any conflicting situation
b FinTP going commercial post-launch This is a huge impact possibly high occurrence probability but manageable with the right legal instruments provisioned in the community
c Loss of alignment to industry standards and regulations This risk has medium probability and medium impact given the assumption that the community is tightly regulated and the working bodies institutionalized and gathering professionals
4 Legal
Copyright infringement given Allevo experience in the open source business this risk is highly probable and has a high impact on FinTP especially if mistakes are made in the launching phase Similarly if during the product maintenance and further development phase the community fails to institutionalize proper formal software development processes (covering all FinTP lifecycle phases) based on industry practice proven model(s) Supplementary the expert code scanning audit for compliance is the single resort to preclude external software source misuse
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 39 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
5 GPL specific
a Noncompliance to the GPL license If GPL license is used the product should further distribute in compliance with this part provisions High impact and probability but manageable if proper software development processes are used and if the statute clearly defines the licensing model for FinTP
b FinTP unconformity The risk that software engineers get inspired by a chic solution which they import and emulate similarly in FinTP And this is also highly possible since les grands esprits se rencontre
6 Existing customers attitude
Anger for having paid for something which now is free The existent customers can be concerned about the future of their installed system its further development (in one word its future) and on the quality of the service (SLA including) Some recent adopters can possibly be furious for spending their money on buying licenses for a piece of software that differently packaged becomes free of charge
For the first situation the single best solution for Allevo is to ensure a smooth transition from the current status to the new solution deployed Also highly probable Allevo should provide for simultaneous (for at most one more year) maintenance of both FinTP and for qPayIntegrator
For the 2012 new qPayIntegrator adopters Allevo should transparently state the product‟s future and propose a commercially attractive migration towards FinTP when it becomes publically available (like the option for the installation migration and recurring services) The decision should clearly stay with the customer if he still buys Allevo licenses delays the implementation until FinTP is available or if he goes for a competitive solution
In other words the key to mitigate the existing customer perception is switching places and discarding if the situation proves to be uncomfortable
Bottom-line is that to avoid most of the risks the FinTP community must be a rather tightly controlled one though still opened to anyone willingly abiding to the rules
The synthetic view of the main risks their assigned probability impact and the corresponding containment approach is provided in the attached file
Risk IDRisk
CategoryRisk
Probability
(High
Medium
Low)
Severity
(High
Medium
Low)
Containment (Mitigation Action Proposed)
M1Free as in a
Free Puppy
M101
The training service amp support cost could account more than the
commercial product its replacing (application software is typically 30 of
the total cost of ownership of most projects)
Medium Low
M102 Hidden costs ie charge for patches updates and upgrades Medium Low
M2Frequent
updates
M201
Projects might be updated frequently - as often as everyday Too frequent
updates could have a negative impact on the implementation
interoperability and support
Low HighMAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M3Backwards
compatibility
M301 Less accountability Low LowMAP03 Access to prior versions of source code (additional in-house
development and support procedures might be necessary)
M4Support
related risks
M401Support could be perceived as the biggest issue with open source
software deploymentsHigh High
M402 Internal External Accountability SLAs High High
M403Code fragmentation or forking if the community fails to institutionalize
corporate like formal structureHigh High
M404Support could require greater involvement and different skills set from
operations staffMedium Medium
M5Community
immaturity Low Low
M501Could generate incompatibility of FinTP with industry standards amp
regulationsMedium Medium
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M6 Uncertainty The inherent uncertainty in every open source project
M601 Community disputes might impact project viability and future High HighMAP04 The Mentor should prevent amp mitigate any conflicts inside the
community
M602 Open source projects may not stay open in future releases High HighMAP05 The originator liabilities should be strongly enforced by the
community statute
M7 Legal risks
M701 Copyright infringement High High
M702 Can open source software deployments pass an audit
M8 GPL General Public License specific development concerns
M801Software thatrsquos derived from an existing GPL project in whole or in part
might not be released under the same licenseHigh High M08 The community should regulate the licensing model
M802
Developer contamination - developer could review an existing open source
project could see an elegant solution then implement a similar function in
closed source project
High HighMAP09 Procedurals constrains for the software developers should be
enforced
M9
Current
customers
attitude
The actual customer perception could be negative High High
M12 To prevent a negative attitude Allevo should involve the customers
in the FinTP project Allevo needs their active support for a smooth and
issues less transition
ma
rke
t re
late
d r
isk
s
co
st
rela
ted
ris
ks
MAP01 The community should regulate the applicable rules and fees for
services and maintenance
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
bu
sin
es
s a
nd
le
ga
l ri
sk
s
MAP06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S1Product
related
S101 Late delivery lead time Medium MediumMAP15 Allevo should provide proper resources (funding and human
resources)
S102 Credibility loss if fail to certify with SWIFT Medium High MAP16 Should be discussedamp agreed with SWIFT
S103 Inexperienced team or allocation below needs Low HighMAP15 Allevo should provide proper resources (funding and human
resources)
S104 Improper or non efficient version management Low High MAP16 Review the current Allevo Configuration Management System
S105Poor quality if the community fails to institutionalize proper verification and
validation practices3
M06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S106 Lack of expertise in open source projects 2 Allevo should engage thoroughly selected Open Source consultants
S2Service
related
S201
The software maintenance not properly providing for bugs fixing
regulationamp standard alignment technological improvements communities
improvement requests
High HighMAP01 The community should regulate the applicable rules and fees for
services and maintenance
S202 One-time amp recurring services might be provided by unqualified resources High HighMAP17 The community should regulate the training curricula and related
expertise certification
S203 Provided services might not meet the minimal SLA performance criteria High HighMAP17 The community should regulate the training curricula and related
expertise certification
S204 Relaxed or lack of accountability of the professionals High HighMAP18 The community should regulate the employment agreement of
the professionals
S205 Lack of qualified professionals High HighMAP19 The community should ensure a balanced number of certified
professionals with the community size
S3Community
related
S301
If after disclosing FinTP the community does not enthusiastically adopt
the solution competitors might more successfully develop a similar
strategy
Medium MediumMAP20 FinTP promotion should be convincing and realistic A well
organized marketing campaign by Allevo
S302The community mentor andor early adhering members have no
undeniable prestige or are not largely trustfulMedium Medium MAP99 Project status review Ending the project could be one option
S303 The Mentor does not strongly commit for the project Medium Medium MAP99 Project status review Ending the project could be one option
S4 Legal
S401Exposure to copyright and IP infringement due to working team unaware of
the legal consequences of using third party softwareMedium Medium
MAP21 Allevo should keep records and fully document the use of open
source code
S402Copyright or intellectual property infringement can lead to injunctive relief
and monetary damagesHigh High
MAP23 Allevo should institutionalize a tight licensing and technical
control
S403 All risks related to open source compliance High HighMAP24 Allevo should appoint as soon as possible a FinTP compliance
Officer
S5 Financial
S501 Lack of financing institutions Medium MediumMAP25 Allevo should urge consultant to provide a consistent list of
potential investors
S502 Dependency on the financing institution approval Medium Medium
S503Not thoroughly planned project overlooking one or some project cost that
need to be financedMedium Medium
Sp
ec
ific
ris
ks
tec
hn
ica
lm
ark
eti
ng
leg
al
fun
din
g
MAP26 Allevo should carefully draw a consistent and eligible project for
financing
Risks
Riskspdf
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 40 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
11 Appendix - Bibliography 1 Accenture Open Source Research Geographic Findings
2 Accenture Open Source Research Industry Findings
3 Producing Open Source Software - How to Run a Successful Free Software
Project by Karl Fogel
4 Open Source Software Risks and Rewards by Gary Hein
5 A Business Case Study of Open Source Software by Carolyn A Kenwood
6 6 critical success factors for product development by Christian Wig
7 Bank 20 by Brett King
8 Managing the business risks of open innovation by Oliver Alexy and Markus
9 Product idea evaluation checklist shared by Startgass AS
10 SWIFT 2015 Strategy
11 Customers and business impact of product changes
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 41 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
12 Appendix - Glossary ACH Automated Clearing House that is used to clear retail payments
between banks in a country or region
APAC Asia and Pacific
AML Anti-Money Laundering
BCampDR Business continuity amp disaster recovery
B2B Business to business
C2B Consumer to business
CET Central European Time
CMMI Capability Maturity Model Integration
CMS Configuration Management System
Coexistence The situation of multiple standards existing at the same time in the same business space Within SWIFT this refers to the coexistence between the MT and MX standards This also refers to the set of measures being taken to make the situation easier to handle by the community (publication of mapping rules translation serviceshellip)
CSM Clearing and Settlement Mechanism
CUG Closed User Group
Dictionary Part of the ISO 20022 Repository that contains all items that can be re-used during business modelling and message definition activities
EAI Enterprise Application Integration - middleware to connect applications and communication interfaces Typical EAI software includes features for mapping data between various formats enriching messages with data from other systems and orchestrating message flows
ECB European Central Bank
EMEA Europe Middle-East Africa
EPC European Payment Council
ERP Enterprise Resource Planning
EU European Union
EUCLID Connectivity to EuroClear Bank services
FIN The messaging service offered by SWIFT for the secure and reliable exchange of MT messages in store-and-forward mode By extension the syntax used to format these MTs
IP intellectual property
Interoperability Capability to easily exchange business information while using different message standards ISO 20022 promotes global use of syntax-neutral business and message components as a common denominator to achieve interoperability between standards using different syntaxes
ISO The International Organization for Standardization - an international standard-setting body composed of representatives from more than 160 national standards organizations that promulgates worldwide standards in a variety of domains aiming at facilitating cross-border exchanges of goods services and techniques
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 42 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
ISO 15022 An ISO standard that describes the syntax to be used for developing securities messages used mainly to support back office related transaction flows It replaced the previous securities messaging standard ISO 7775
ISO 20022 RA Registration Authority - offers the services described in an ISO standard on behalf of and under a contractual agreement with the International Organization for Standardization
ISO 20022 Repository
Repository maintained by the ISO20022 RA which contains the financial business models message definitions and components defined in compliance with the ISO 20022 standard
ISO 20022 RMG Registration Management Group - in charge of the overall management of the ISO 20022 development and registration process in accordance with the ISO 20022 standard
ISO 20022 SEG Standards Evaluation Groups -in charge of validating candidate ISO 20022 messages within the scope of the business justification and ensuring that they address the needs of their future international community of users
ISV Independent Software Vendor
KYC Know Your Customer
MACUG Member Administered Closed User Group
Message A set of structured information exchanged between two parties involved in a financial transaction
Message component and element
A re-usable data structure used for assembling message definitions The data defined in a message component is bdquotraced‟ back to the business components and business elements In simple terms business components define the business meaning message components create data structures for messaging
MI Market Infrastructure - a system that provides services to the financial industry for trading clearing and settlement matching of financial transactions and depository functions
Middleware Software that enables data to be exchanged among different systems with standard communication components and tools for formatting mapping and processing
MT The traditional bdquotag value‟ Message Types for use on the FIN service offered by SWIFT
MX An XML message exchanged over SWIFTNet whether or not ISO 20022 compliant
OS Open source
PSP Payment service provider
QA Quality assurance
RMA Relationship Management Access
RTGS Real Time Gross Settlement System
SAA SWIFT Alliance Access
SAE SWIFT Alliance Entry
SAG SWIFT Alliance Gateway
SaaS Software as a Service
SCORE Standardized CORporate Environment
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 43 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
Semantics The study of meaning usually in language The word is often used in ordinary language to denote a problem of understanding that comes down to word selection or connotation
SEPA Single Euro Payment Area
SLA Service level agreement
SME Small and Medium-sized Business(es)
SOA Service Oriented Architecture
SSB SWIFT Service Bureau
STP Straight Through Processing
SWIFT Society for Worldwide Interbank Financial Telecommunication Visit wwwswiftcom
Syntax Physical format of a message used to identify and represent the conveyed pieces of information
T2S TARGET2 Securities - an initiative of the Eurosystem It is an IT platform that aims to make settlements across national borders simpler and more cost-efficient
TARGET2 The Eurosystem-owned European Real Time Gross Settlement (RTGS) system (Trans-European Automated Real-time Gross Settlement Express Transfer System) TARGET2 is one of the largest high-value payment systems in the world
Taxonomy The classification in a hierarchical system typically organized by super type - sub type relationships also called generalization-specialization relationships or less formally parent-child relationships
TSU Trade Service Utility
TCO Total cost of ownership
Translation rules
Set of rules to be used to map the pieces of information included in a message expressed in one syntax to the equivalent message expressed in another syntax
Remit Remittances
XML eXtensible Mark-up Language - popular syntax to encode documents (or messages) electronically on the Internet XML allows communities to define their own identifiers (or tags) and format (or data type) for each component of a message
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Bureaus etc) ISV regulatory institutionsMarketing plan feasibility campaign efficiency and costs
2 MentorPreferable SWIFT
Also eligible SunGard IBM affiliation to other OS communitySWIFT decision
3 Legalcopyright Expert legal consultant and RO apprentice Cost and time shift dependent
4 Tight regulation Clear membership admission amp software contribution criteria The quality of the consultant advice
5 Marketing Actively recruiting community members Marketing plan feasibility campaign efficiency amp customer skepticism
a community portala provide content amp debate space information consolidation amp dissemination virtual
showroom subscription management support
a business analysis solution availability and maintenance by one of the
members or employed company
b press releases amp
announcementsb PR and AR b communicators availability and costs
c events c periodical conferences user focused meetings c cost dependent
6 Financing World Bank EU amp private funds Lobby amp funds availability
Item
FinTP
FinTP community
FinTP - Vision and Scope
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10 Appendix - Risks
Specific risks
1 Product
a Long delivery lead time This is a medium probability and impact risk however Allevo should make available the needed resources and motivate the entire team for the job
b Credibility loss if FinTP fails to further become certified on meaningful operations andor business tracks (ie SWIFT business certification tracks or similar) The single possible containment is lobbying if the application certification program rejects open source products Anyway the impact is very important and its materialization should be avoided
c Low quality of the allocated team and improper version management are highly unlikely to occur as long as the formal transfer of responsibility is smoothly made from Allevo to the corresponding body put in place by the community The real hidden risk is that this process could take too long and it thus has a very high impact
d Poor FinTP quality may result if the community fails to institutionalize proper quality assurance (QA) and verification amp validation (VampV) processes This is most expected not to happen but if it does the impact is at least medium The single path to overcome this risk consists in a professional approach to these items based on institutionalizing practice proven QA and VampV processes
e Allevo lack of expertise in the open source business This can be contained by carefully selecting trustful amp truly expert consultants Otherwise it means more money longer time spent on project and expenses without proper return
2 Service
a The software maintenance does not properly deliver as expected ie on-time and on-quality bug fixing regulation amp standards alignment and productivity amp technological improvement The key to contain this risk materialization is the community status having provisions to neatly provide maintenance and further development of the rules for FinTP as well as the applicable rules and fees for the ancillary services
b Low quality and safety of the service received by the members of the community To avoid the risk of performing the one-time amp recurring support services by under-prepared professionals the community has to rule the process of training and qualifying the companies willing to contribute in this area
c Not meeting the minimal SLA criteria The community should regulate and periodically revise the training curricula and to further audit both the teachers and the certified experts to ensure the service level agreements are met
d Under motivated service providing professionals - up to the level of not feeling the high impact of their activity The community status must provide guidance to the contributors on the minimal standards the professionals should meet
FinTP - Vision and Scope
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e Constrained expert resource pool This risk could be overcome by the communitys policy to ensure at all time a balanced number of motivated experts to the communitys size Failing to do so may result in high negative impact of the community business and public perception
3 Community
a Emergence of a parallel competitive community If the optimal timing between publically disclosing FinTP and community take-off is not achieved then there are high chances that following a competitive initiative other entrepreneurs successfully launch their own similar or derived community This could be avoided by periodical reviews of the progress of both FinTP and community status and deciding whether the project needs to be put on hold or not
b Unfit reputation of the Moderator or main contributors If either the Moderator or the initial contributors are not beyond any dispute and are reputable institutes then there is certainly something rotten in Denmark and the project should be put on-hold
c No commitment from the Moderator‟s side Similarly if the Moderator does not commit to the project it means that Denmark has a serious problem to solve The project should relinquish until the matter is fixed
4 Legal
a Misuse of copyright and intellectual property (IP)The assigned working team could not be aware of the limitations and liabilities of using (entirely or partially) third party software this risk can be contained by delivering the right training providing proper working procedures carefully recording and documenting the use of open source code and carefully cross-scanning
b Injunctive relief and financial damages can be caused by not properly and continuously controlling the use of third party open source code resulting in copyright or IP infringement There are two containment measures which can be taken tighten the compliance check during the product lifecycle or apply the sanction policy as to set an example
c The competition starts a class action - this may result in delaying the project
5 Financing
a Lack of long term financing institutions Allevo should urge its consultant to identify and draw a reasonable list of financial options institutions
b Exceeding the budget given that this type of project has no precedent in Allevo and to avoid exposing to the dependency on engagement to financial institutions or to commitments beyond the existing budget a further carefully drawn project plan is needed along with its explicit approval from the board of the company
Market related risks
1 False expectations
a Expensive services Not everything is free aside the initial and maintenance free licensing the training the support and other professional services can amount to more than in general expected Allevo rates this risk as medium possible but with low impact as long as the law governing the community and its initial period of operation will consecrate fair market prices and competitive sources of contribution
FinTP - Vision and Scope
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Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
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b Hidden costs for patches updates and upgrades While of similarly weight in terms of probability and impact this should be no real concern as long as the law governing the community clearly provides for free and accountable maintenance
2 Poor image on quality
a Too many releases making FinTP hard to manage and unsafe to operate Given proper regulation of the community and the mature root of FinTP Allevo disregards the possibility of this risk to materialize However if this were to happen this is a high impact risk and by all means should be avoided
b Backward technological (in)compatibility looks to us as a low risk in all respects and within organizations applying practice proven software engineering processes and professional - accountable team this is not likely to materialize
c Support can be perceived as the highest impact risk for FinTP This can be overcome by tight regulation of the commercial and professional conditions to deliver the service (for instance only qualified organizations should be recommended to members for supporting FinTP)
d SLA and accountability for both internally or externally performed services is closely correlated to the previous risk and the community status should provide the support for growing a community of competencies and accountable professionals around FinTP Periodical auditing (by the specialized community body) of this pool of professionals will further ensure the confidence that the skills are preserved at the required level
e Code fragmentation and forking is a high impact risk with a low probability of happening in the initial period provided the knowledge transfer is done orderly and in an institutionalized manner
3 Inherent uncertainty
a Community disputes can jeopardize its cohesion the project viability and future This is a high impact possibly high probability risk and it is the definite role of the Moderator to feel prevent and while materializing mitigate any conflicting situation
b FinTP going commercial post-launch This is a huge impact possibly high occurrence probability but manageable with the right legal instruments provisioned in the community
c Loss of alignment to industry standards and regulations This risk has medium probability and medium impact given the assumption that the community is tightly regulated and the working bodies institutionalized and gathering professionals
4 Legal
Copyright infringement given Allevo experience in the open source business this risk is highly probable and has a high impact on FinTP especially if mistakes are made in the launching phase Similarly if during the product maintenance and further development phase the community fails to institutionalize proper formal software development processes (covering all FinTP lifecycle phases) based on industry practice proven model(s) Supplementary the expert code scanning audit for compliance is the single resort to preclude external software source misuse
FinTP - Vision and Scope
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Business Information Systems (Allevo) SRL
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Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
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5 GPL specific
a Noncompliance to the GPL license If GPL license is used the product should further distribute in compliance with this part provisions High impact and probability but manageable if proper software development processes are used and if the statute clearly defines the licensing model for FinTP
b FinTP unconformity The risk that software engineers get inspired by a chic solution which they import and emulate similarly in FinTP And this is also highly possible since les grands esprits se rencontre
6 Existing customers attitude
Anger for having paid for something which now is free The existent customers can be concerned about the future of their installed system its further development (in one word its future) and on the quality of the service (SLA including) Some recent adopters can possibly be furious for spending their money on buying licenses for a piece of software that differently packaged becomes free of charge
For the first situation the single best solution for Allevo is to ensure a smooth transition from the current status to the new solution deployed Also highly probable Allevo should provide for simultaneous (for at most one more year) maintenance of both FinTP and for qPayIntegrator
For the 2012 new qPayIntegrator adopters Allevo should transparently state the product‟s future and propose a commercially attractive migration towards FinTP when it becomes publically available (like the option for the installation migration and recurring services) The decision should clearly stay with the customer if he still buys Allevo licenses delays the implementation until FinTP is available or if he goes for a competitive solution
In other words the key to mitigate the existing customer perception is switching places and discarding if the situation proves to be uncomfortable
Bottom-line is that to avoid most of the risks the FinTP community must be a rather tightly controlled one though still opened to anyone willingly abiding to the rules
The synthetic view of the main risks their assigned probability impact and the corresponding containment approach is provided in the attached file
Risk IDRisk
CategoryRisk
Probability
(High
Medium
Low)
Severity
(High
Medium
Low)
Containment (Mitigation Action Proposed)
M1Free as in a
Free Puppy
M101
The training service amp support cost could account more than the
commercial product its replacing (application software is typically 30 of
the total cost of ownership of most projects)
Medium Low
M102 Hidden costs ie charge for patches updates and upgrades Medium Low
M2Frequent
updates
M201
Projects might be updated frequently - as often as everyday Too frequent
updates could have a negative impact on the implementation
interoperability and support
Low HighMAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M3Backwards
compatibility
M301 Less accountability Low LowMAP03 Access to prior versions of source code (additional in-house
development and support procedures might be necessary)
M4Support
related risks
M401Support could be perceived as the biggest issue with open source
software deploymentsHigh High
M402 Internal External Accountability SLAs High High
M403Code fragmentation or forking if the community fails to institutionalize
corporate like formal structureHigh High
M404Support could require greater involvement and different skills set from
operations staffMedium Medium
M5Community
immaturity Low Low
M501Could generate incompatibility of FinTP with industry standards amp
regulationsMedium Medium
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M6 Uncertainty The inherent uncertainty in every open source project
M601 Community disputes might impact project viability and future High HighMAP04 The Mentor should prevent amp mitigate any conflicts inside the
community
M602 Open source projects may not stay open in future releases High HighMAP05 The originator liabilities should be strongly enforced by the
community statute
M7 Legal risks
M701 Copyright infringement High High
M702 Can open source software deployments pass an audit
M8 GPL General Public License specific development concerns
M801Software thatrsquos derived from an existing GPL project in whole or in part
might not be released under the same licenseHigh High M08 The community should regulate the licensing model
M802
Developer contamination - developer could review an existing open source
project could see an elegant solution then implement a similar function in
closed source project
High HighMAP09 Procedurals constrains for the software developers should be
enforced
M9
Current
customers
attitude
The actual customer perception could be negative High High
M12 To prevent a negative attitude Allevo should involve the customers
in the FinTP project Allevo needs their active support for a smooth and
issues less transition
ma
rke
t re
late
d r
isk
s
co
st
rela
ted
ris
ks
MAP01 The community should regulate the applicable rules and fees for
services and maintenance
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
bu
sin
es
s a
nd
le
ga
l ri
sk
s
MAP06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S1Product
related
S101 Late delivery lead time Medium MediumMAP15 Allevo should provide proper resources (funding and human
resources)
S102 Credibility loss if fail to certify with SWIFT Medium High MAP16 Should be discussedamp agreed with SWIFT
S103 Inexperienced team or allocation below needs Low HighMAP15 Allevo should provide proper resources (funding and human
resources)
S104 Improper or non efficient version management Low High MAP16 Review the current Allevo Configuration Management System
S105Poor quality if the community fails to institutionalize proper verification and
validation practices3
M06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S106 Lack of expertise in open source projects 2 Allevo should engage thoroughly selected Open Source consultants
S2Service
related
S201
The software maintenance not properly providing for bugs fixing
regulationamp standard alignment technological improvements communities
improvement requests
High HighMAP01 The community should regulate the applicable rules and fees for
services and maintenance
S202 One-time amp recurring services might be provided by unqualified resources High HighMAP17 The community should regulate the training curricula and related
expertise certification
S203 Provided services might not meet the minimal SLA performance criteria High HighMAP17 The community should regulate the training curricula and related
expertise certification
S204 Relaxed or lack of accountability of the professionals High HighMAP18 The community should regulate the employment agreement of
the professionals
S205 Lack of qualified professionals High HighMAP19 The community should ensure a balanced number of certified
professionals with the community size
S3Community
related
S301
If after disclosing FinTP the community does not enthusiastically adopt
the solution competitors might more successfully develop a similar
strategy
Medium MediumMAP20 FinTP promotion should be convincing and realistic A well
organized marketing campaign by Allevo
S302The community mentor andor early adhering members have no
undeniable prestige or are not largely trustfulMedium Medium MAP99 Project status review Ending the project could be one option
S303 The Mentor does not strongly commit for the project Medium Medium MAP99 Project status review Ending the project could be one option
S4 Legal
S401Exposure to copyright and IP infringement due to working team unaware of
the legal consequences of using third party softwareMedium Medium
MAP21 Allevo should keep records and fully document the use of open
source code
S402Copyright or intellectual property infringement can lead to injunctive relief
and monetary damagesHigh High
MAP23 Allevo should institutionalize a tight licensing and technical
control
S403 All risks related to open source compliance High HighMAP24 Allevo should appoint as soon as possible a FinTP compliance
Officer
S5 Financial
S501 Lack of financing institutions Medium MediumMAP25 Allevo should urge consultant to provide a consistent list of
potential investors
S502 Dependency on the financing institution approval Medium Medium
S503Not thoroughly planned project overlooking one or some project cost that
need to be financedMedium Medium
Sp
ec
ific
ris
ks
tec
hn
ica
lm
ark
eti
ng
leg
al
fun
din
g
MAP26 Allevo should carefully draw a consistent and eligible project for
financing
Risks
Riskspdf
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 40 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
11 Appendix - Bibliography 1 Accenture Open Source Research Geographic Findings
2 Accenture Open Source Research Industry Findings
3 Producing Open Source Software - How to Run a Successful Free Software
Project by Karl Fogel
4 Open Source Software Risks and Rewards by Gary Hein
5 A Business Case Study of Open Source Software by Carolyn A Kenwood
6 6 critical success factors for product development by Christian Wig
7 Bank 20 by Brett King
8 Managing the business risks of open innovation by Oliver Alexy and Markus
9 Product idea evaluation checklist shared by Startgass AS
10 SWIFT 2015 Strategy
11 Customers and business impact of product changes
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 41 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
12 Appendix - Glossary ACH Automated Clearing House that is used to clear retail payments
between banks in a country or region
APAC Asia and Pacific
AML Anti-Money Laundering
BCampDR Business continuity amp disaster recovery
B2B Business to business
C2B Consumer to business
CET Central European Time
CMMI Capability Maturity Model Integration
CMS Configuration Management System
Coexistence The situation of multiple standards existing at the same time in the same business space Within SWIFT this refers to the coexistence between the MT and MX standards This also refers to the set of measures being taken to make the situation easier to handle by the community (publication of mapping rules translation serviceshellip)
CSM Clearing and Settlement Mechanism
CUG Closed User Group
Dictionary Part of the ISO 20022 Repository that contains all items that can be re-used during business modelling and message definition activities
EAI Enterprise Application Integration - middleware to connect applications and communication interfaces Typical EAI software includes features for mapping data between various formats enriching messages with data from other systems and orchestrating message flows
ECB European Central Bank
EMEA Europe Middle-East Africa
EPC European Payment Council
ERP Enterprise Resource Planning
EU European Union
EUCLID Connectivity to EuroClear Bank services
FIN The messaging service offered by SWIFT for the secure and reliable exchange of MT messages in store-and-forward mode By extension the syntax used to format these MTs
IP intellectual property
Interoperability Capability to easily exchange business information while using different message standards ISO 20022 promotes global use of syntax-neutral business and message components as a common denominator to achieve interoperability between standards using different syntaxes
ISO The International Organization for Standardization - an international standard-setting body composed of representatives from more than 160 national standards organizations that promulgates worldwide standards in a variety of domains aiming at facilitating cross-border exchanges of goods services and techniques
FinTP - Vision and Scope
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Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
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Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
ISO 15022 An ISO standard that describes the syntax to be used for developing securities messages used mainly to support back office related transaction flows It replaced the previous securities messaging standard ISO 7775
ISO 20022 RA Registration Authority - offers the services described in an ISO standard on behalf of and under a contractual agreement with the International Organization for Standardization
ISO 20022 Repository
Repository maintained by the ISO20022 RA which contains the financial business models message definitions and components defined in compliance with the ISO 20022 standard
ISO 20022 RMG Registration Management Group - in charge of the overall management of the ISO 20022 development and registration process in accordance with the ISO 20022 standard
ISO 20022 SEG Standards Evaluation Groups -in charge of validating candidate ISO 20022 messages within the scope of the business justification and ensuring that they address the needs of their future international community of users
ISV Independent Software Vendor
KYC Know Your Customer
MACUG Member Administered Closed User Group
Message A set of structured information exchanged between two parties involved in a financial transaction
Message component and element
A re-usable data structure used for assembling message definitions The data defined in a message component is bdquotraced‟ back to the business components and business elements In simple terms business components define the business meaning message components create data structures for messaging
MI Market Infrastructure - a system that provides services to the financial industry for trading clearing and settlement matching of financial transactions and depository functions
Middleware Software that enables data to be exchanged among different systems with standard communication components and tools for formatting mapping and processing
MT The traditional bdquotag value‟ Message Types for use on the FIN service offered by SWIFT
MX An XML message exchanged over SWIFTNet whether or not ISO 20022 compliant
OS Open source
PSP Payment service provider
QA Quality assurance
RMA Relationship Management Access
RTGS Real Time Gross Settlement System
SAA SWIFT Alliance Access
SAE SWIFT Alliance Entry
SAG SWIFT Alliance Gateway
SaaS Software as a Service
SCORE Standardized CORporate Environment
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 43 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
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Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
Semantics The study of meaning usually in language The word is often used in ordinary language to denote a problem of understanding that comes down to word selection or connotation
SEPA Single Euro Payment Area
SLA Service level agreement
SME Small and Medium-sized Business(es)
SOA Service Oriented Architecture
SSB SWIFT Service Bureau
STP Straight Through Processing
SWIFT Society for Worldwide Interbank Financial Telecommunication Visit wwwswiftcom
Syntax Physical format of a message used to identify and represent the conveyed pieces of information
T2S TARGET2 Securities - an initiative of the Eurosystem It is an IT platform that aims to make settlements across national borders simpler and more cost-efficient
TARGET2 The Eurosystem-owned European Real Time Gross Settlement (RTGS) system (Trans-European Automated Real-time Gross Settlement Express Transfer System) TARGET2 is one of the largest high-value payment systems in the world
Taxonomy The classification in a hierarchical system typically organized by super type - sub type relationships also called generalization-specialization relationships or less formally parent-child relationships
TSU Trade Service Utility
TCO Total cost of ownership
Translation rules
Set of rules to be used to map the pieces of information included in a message expressed in one syntax to the equivalent message expressed in another syntax
Remit Remittances
XML eXtensible Mark-up Language - popular syntax to encode documents (or messages) electronically on the Internet XML allows communities to define their own identifiers (or tags) and format (or data type) for each component of a message
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Bureaus etc) ISV regulatory institutionsMarketing plan feasibility campaign efficiency and costs
2 MentorPreferable SWIFT
Also eligible SunGard IBM affiliation to other OS communitySWIFT decision
3 Legalcopyright Expert legal consultant and RO apprentice Cost and time shift dependent
4 Tight regulation Clear membership admission amp software contribution criteria The quality of the consultant advice
5 Marketing Actively recruiting community members Marketing plan feasibility campaign efficiency amp customer skepticism
a community portala provide content amp debate space information consolidation amp dissemination virtual
showroom subscription management support
a business analysis solution availability and maintenance by one of the
members or employed company
b press releases amp
announcementsb PR and AR b communicators availability and costs
c events c periodical conferences user focused meetings c cost dependent
6 Financing World Bank EU amp private funds Lobby amp funds availability
Item
FinTP
FinTP community
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 37 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
e Constrained expert resource pool This risk could be overcome by the communitys policy to ensure at all time a balanced number of motivated experts to the communitys size Failing to do so may result in high negative impact of the community business and public perception
3 Community
a Emergence of a parallel competitive community If the optimal timing between publically disclosing FinTP and community take-off is not achieved then there are high chances that following a competitive initiative other entrepreneurs successfully launch their own similar or derived community This could be avoided by periodical reviews of the progress of both FinTP and community status and deciding whether the project needs to be put on hold or not
b Unfit reputation of the Moderator or main contributors If either the Moderator or the initial contributors are not beyond any dispute and are reputable institutes then there is certainly something rotten in Denmark and the project should be put on-hold
c No commitment from the Moderator‟s side Similarly if the Moderator does not commit to the project it means that Denmark has a serious problem to solve The project should relinquish until the matter is fixed
4 Legal
a Misuse of copyright and intellectual property (IP)The assigned working team could not be aware of the limitations and liabilities of using (entirely or partially) third party software this risk can be contained by delivering the right training providing proper working procedures carefully recording and documenting the use of open source code and carefully cross-scanning
b Injunctive relief and financial damages can be caused by not properly and continuously controlling the use of third party open source code resulting in copyright or IP infringement There are two containment measures which can be taken tighten the compliance check during the product lifecycle or apply the sanction policy as to set an example
c The competition starts a class action - this may result in delaying the project
5 Financing
a Lack of long term financing institutions Allevo should urge its consultant to identify and draw a reasonable list of financial options institutions
b Exceeding the budget given that this type of project has no precedent in Allevo and to avoid exposing to the dependency on engagement to financial institutions or to commitments beyond the existing budget a further carefully drawn project plan is needed along with its explicit approval from the board of the company
Market related risks
1 False expectations
a Expensive services Not everything is free aside the initial and maintenance free licensing the training the support and other professional services can amount to more than in general expected Allevo rates this risk as medium possible but with low impact as long as the law governing the community and its initial period of operation will consecrate fair market prices and competitive sources of contribution
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 38 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
b Hidden costs for patches updates and upgrades While of similarly weight in terms of probability and impact this should be no real concern as long as the law governing the community clearly provides for free and accountable maintenance
2 Poor image on quality
a Too many releases making FinTP hard to manage and unsafe to operate Given proper regulation of the community and the mature root of FinTP Allevo disregards the possibility of this risk to materialize However if this were to happen this is a high impact risk and by all means should be avoided
b Backward technological (in)compatibility looks to us as a low risk in all respects and within organizations applying practice proven software engineering processes and professional - accountable team this is not likely to materialize
c Support can be perceived as the highest impact risk for FinTP This can be overcome by tight regulation of the commercial and professional conditions to deliver the service (for instance only qualified organizations should be recommended to members for supporting FinTP)
d SLA and accountability for both internally or externally performed services is closely correlated to the previous risk and the community status should provide the support for growing a community of competencies and accountable professionals around FinTP Periodical auditing (by the specialized community body) of this pool of professionals will further ensure the confidence that the skills are preserved at the required level
e Code fragmentation and forking is a high impact risk with a low probability of happening in the initial period provided the knowledge transfer is done orderly and in an institutionalized manner
3 Inherent uncertainty
a Community disputes can jeopardize its cohesion the project viability and future This is a high impact possibly high probability risk and it is the definite role of the Moderator to feel prevent and while materializing mitigate any conflicting situation
b FinTP going commercial post-launch This is a huge impact possibly high occurrence probability but manageable with the right legal instruments provisioned in the community
c Loss of alignment to industry standards and regulations This risk has medium probability and medium impact given the assumption that the community is tightly regulated and the working bodies institutionalized and gathering professionals
4 Legal
Copyright infringement given Allevo experience in the open source business this risk is highly probable and has a high impact on FinTP especially if mistakes are made in the launching phase Similarly if during the product maintenance and further development phase the community fails to institutionalize proper formal software development processes (covering all FinTP lifecycle phases) based on industry practice proven model(s) Supplementary the expert code scanning audit for compliance is the single resort to preclude external software source misuse
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 39 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
5 GPL specific
a Noncompliance to the GPL license If GPL license is used the product should further distribute in compliance with this part provisions High impact and probability but manageable if proper software development processes are used and if the statute clearly defines the licensing model for FinTP
b FinTP unconformity The risk that software engineers get inspired by a chic solution which they import and emulate similarly in FinTP And this is also highly possible since les grands esprits se rencontre
6 Existing customers attitude
Anger for having paid for something which now is free The existent customers can be concerned about the future of their installed system its further development (in one word its future) and on the quality of the service (SLA including) Some recent adopters can possibly be furious for spending their money on buying licenses for a piece of software that differently packaged becomes free of charge
For the first situation the single best solution for Allevo is to ensure a smooth transition from the current status to the new solution deployed Also highly probable Allevo should provide for simultaneous (for at most one more year) maintenance of both FinTP and for qPayIntegrator
For the 2012 new qPayIntegrator adopters Allevo should transparently state the product‟s future and propose a commercially attractive migration towards FinTP when it becomes publically available (like the option for the installation migration and recurring services) The decision should clearly stay with the customer if he still buys Allevo licenses delays the implementation until FinTP is available or if he goes for a competitive solution
In other words the key to mitigate the existing customer perception is switching places and discarding if the situation proves to be uncomfortable
Bottom-line is that to avoid most of the risks the FinTP community must be a rather tightly controlled one though still opened to anyone willingly abiding to the rules
The synthetic view of the main risks their assigned probability impact and the corresponding containment approach is provided in the attached file
Risk IDRisk
CategoryRisk
Probability
(High
Medium
Low)
Severity
(High
Medium
Low)
Containment (Mitigation Action Proposed)
M1Free as in a
Free Puppy
M101
The training service amp support cost could account more than the
commercial product its replacing (application software is typically 30 of
the total cost of ownership of most projects)
Medium Low
M102 Hidden costs ie charge for patches updates and upgrades Medium Low
M2Frequent
updates
M201
Projects might be updated frequently - as often as everyday Too frequent
updates could have a negative impact on the implementation
interoperability and support
Low HighMAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M3Backwards
compatibility
M301 Less accountability Low LowMAP03 Access to prior versions of source code (additional in-house
development and support procedures might be necessary)
M4Support
related risks
M401Support could be perceived as the biggest issue with open source
software deploymentsHigh High
M402 Internal External Accountability SLAs High High
M403Code fragmentation or forking if the community fails to institutionalize
corporate like formal structureHigh High
M404Support could require greater involvement and different skills set from
operations staffMedium Medium
M5Community
immaturity Low Low
M501Could generate incompatibility of FinTP with industry standards amp
regulationsMedium Medium
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M6 Uncertainty The inherent uncertainty in every open source project
M601 Community disputes might impact project viability and future High HighMAP04 The Mentor should prevent amp mitigate any conflicts inside the
community
M602 Open source projects may not stay open in future releases High HighMAP05 The originator liabilities should be strongly enforced by the
community statute
M7 Legal risks
M701 Copyright infringement High High
M702 Can open source software deployments pass an audit
M8 GPL General Public License specific development concerns
M801Software thatrsquos derived from an existing GPL project in whole or in part
might not be released under the same licenseHigh High M08 The community should regulate the licensing model
M802
Developer contamination - developer could review an existing open source
project could see an elegant solution then implement a similar function in
closed source project
High HighMAP09 Procedurals constrains for the software developers should be
enforced
M9
Current
customers
attitude
The actual customer perception could be negative High High
M12 To prevent a negative attitude Allevo should involve the customers
in the FinTP project Allevo needs their active support for a smooth and
issues less transition
ma
rke
t re
late
d r
isk
s
co
st
rela
ted
ris
ks
MAP01 The community should regulate the applicable rules and fees for
services and maintenance
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
bu
sin
es
s a
nd
le
ga
l ri
sk
s
MAP06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S1Product
related
S101 Late delivery lead time Medium MediumMAP15 Allevo should provide proper resources (funding and human
resources)
S102 Credibility loss if fail to certify with SWIFT Medium High MAP16 Should be discussedamp agreed with SWIFT
S103 Inexperienced team or allocation below needs Low HighMAP15 Allevo should provide proper resources (funding and human
resources)
S104 Improper or non efficient version management Low High MAP16 Review the current Allevo Configuration Management System
S105Poor quality if the community fails to institutionalize proper verification and
validation practices3
M06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S106 Lack of expertise in open source projects 2 Allevo should engage thoroughly selected Open Source consultants
S2Service
related
S201
The software maintenance not properly providing for bugs fixing
regulationamp standard alignment technological improvements communities
improvement requests
High HighMAP01 The community should regulate the applicable rules and fees for
services and maintenance
S202 One-time amp recurring services might be provided by unqualified resources High HighMAP17 The community should regulate the training curricula and related
expertise certification
S203 Provided services might not meet the minimal SLA performance criteria High HighMAP17 The community should regulate the training curricula and related
expertise certification
S204 Relaxed or lack of accountability of the professionals High HighMAP18 The community should regulate the employment agreement of
the professionals
S205 Lack of qualified professionals High HighMAP19 The community should ensure a balanced number of certified
professionals with the community size
S3Community
related
S301
If after disclosing FinTP the community does not enthusiastically adopt
the solution competitors might more successfully develop a similar
strategy
Medium MediumMAP20 FinTP promotion should be convincing and realistic A well
organized marketing campaign by Allevo
S302The community mentor andor early adhering members have no
undeniable prestige or are not largely trustfulMedium Medium MAP99 Project status review Ending the project could be one option
S303 The Mentor does not strongly commit for the project Medium Medium MAP99 Project status review Ending the project could be one option
S4 Legal
S401Exposure to copyright and IP infringement due to working team unaware of
the legal consequences of using third party softwareMedium Medium
MAP21 Allevo should keep records and fully document the use of open
source code
S402Copyright or intellectual property infringement can lead to injunctive relief
and monetary damagesHigh High
MAP23 Allevo should institutionalize a tight licensing and technical
control
S403 All risks related to open source compliance High HighMAP24 Allevo should appoint as soon as possible a FinTP compliance
Officer
S5 Financial
S501 Lack of financing institutions Medium MediumMAP25 Allevo should urge consultant to provide a consistent list of
potential investors
S502 Dependency on the financing institution approval Medium Medium
S503Not thoroughly planned project overlooking one or some project cost that
need to be financedMedium Medium
Sp
ec
ific
ris
ks
tec
hn
ica
lm
ark
eti
ng
leg
al
fun
din
g
MAP26 Allevo should carefully draw a consistent and eligible project for
financing
Risks
Riskspdf
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 40 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
11 Appendix - Bibliography 1 Accenture Open Source Research Geographic Findings
2 Accenture Open Source Research Industry Findings
3 Producing Open Source Software - How to Run a Successful Free Software
Project by Karl Fogel
4 Open Source Software Risks and Rewards by Gary Hein
5 A Business Case Study of Open Source Software by Carolyn A Kenwood
6 6 critical success factors for product development by Christian Wig
7 Bank 20 by Brett King
8 Managing the business risks of open innovation by Oliver Alexy and Markus
9 Product idea evaluation checklist shared by Startgass AS
10 SWIFT 2015 Strategy
11 Customers and business impact of product changes
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 41 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
12 Appendix - Glossary ACH Automated Clearing House that is used to clear retail payments
between banks in a country or region
APAC Asia and Pacific
AML Anti-Money Laundering
BCampDR Business continuity amp disaster recovery
B2B Business to business
C2B Consumer to business
CET Central European Time
CMMI Capability Maturity Model Integration
CMS Configuration Management System
Coexistence The situation of multiple standards existing at the same time in the same business space Within SWIFT this refers to the coexistence between the MT and MX standards This also refers to the set of measures being taken to make the situation easier to handle by the community (publication of mapping rules translation serviceshellip)
CSM Clearing and Settlement Mechanism
CUG Closed User Group
Dictionary Part of the ISO 20022 Repository that contains all items that can be re-used during business modelling and message definition activities
EAI Enterprise Application Integration - middleware to connect applications and communication interfaces Typical EAI software includes features for mapping data between various formats enriching messages with data from other systems and orchestrating message flows
ECB European Central Bank
EMEA Europe Middle-East Africa
EPC European Payment Council
ERP Enterprise Resource Planning
EU European Union
EUCLID Connectivity to EuroClear Bank services
FIN The messaging service offered by SWIFT for the secure and reliable exchange of MT messages in store-and-forward mode By extension the syntax used to format these MTs
IP intellectual property
Interoperability Capability to easily exchange business information while using different message standards ISO 20022 promotes global use of syntax-neutral business and message components as a common denominator to achieve interoperability between standards using different syntaxes
ISO The International Organization for Standardization - an international standard-setting body composed of representatives from more than 160 national standards organizations that promulgates worldwide standards in a variety of domains aiming at facilitating cross-border exchanges of goods services and techniques
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 42 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
ISO 15022 An ISO standard that describes the syntax to be used for developing securities messages used mainly to support back office related transaction flows It replaced the previous securities messaging standard ISO 7775
ISO 20022 RA Registration Authority - offers the services described in an ISO standard on behalf of and under a contractual agreement with the International Organization for Standardization
ISO 20022 Repository
Repository maintained by the ISO20022 RA which contains the financial business models message definitions and components defined in compliance with the ISO 20022 standard
ISO 20022 RMG Registration Management Group - in charge of the overall management of the ISO 20022 development and registration process in accordance with the ISO 20022 standard
ISO 20022 SEG Standards Evaluation Groups -in charge of validating candidate ISO 20022 messages within the scope of the business justification and ensuring that they address the needs of their future international community of users
ISV Independent Software Vendor
KYC Know Your Customer
MACUG Member Administered Closed User Group
Message A set of structured information exchanged between two parties involved in a financial transaction
Message component and element
A re-usable data structure used for assembling message definitions The data defined in a message component is bdquotraced‟ back to the business components and business elements In simple terms business components define the business meaning message components create data structures for messaging
MI Market Infrastructure - a system that provides services to the financial industry for trading clearing and settlement matching of financial transactions and depository functions
Middleware Software that enables data to be exchanged among different systems with standard communication components and tools for formatting mapping and processing
MT The traditional bdquotag value‟ Message Types for use on the FIN service offered by SWIFT
MX An XML message exchanged over SWIFTNet whether or not ISO 20022 compliant
OS Open source
PSP Payment service provider
QA Quality assurance
RMA Relationship Management Access
RTGS Real Time Gross Settlement System
SAA SWIFT Alliance Access
SAE SWIFT Alliance Entry
SAG SWIFT Alliance Gateway
SaaS Software as a Service
SCORE Standardized CORporate Environment
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 43 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
Semantics The study of meaning usually in language The word is often used in ordinary language to denote a problem of understanding that comes down to word selection or connotation
SEPA Single Euro Payment Area
SLA Service level agreement
SME Small and Medium-sized Business(es)
SOA Service Oriented Architecture
SSB SWIFT Service Bureau
STP Straight Through Processing
SWIFT Society for Worldwide Interbank Financial Telecommunication Visit wwwswiftcom
Syntax Physical format of a message used to identify and represent the conveyed pieces of information
T2S TARGET2 Securities - an initiative of the Eurosystem It is an IT platform that aims to make settlements across national borders simpler and more cost-efficient
TARGET2 The Eurosystem-owned European Real Time Gross Settlement (RTGS) system (Trans-European Automated Real-time Gross Settlement Express Transfer System) TARGET2 is one of the largest high-value payment systems in the world
Taxonomy The classification in a hierarchical system typically organized by super type - sub type relationships also called generalization-specialization relationships or less formally parent-child relationships
TSU Trade Service Utility
TCO Total cost of ownership
Translation rules
Set of rules to be used to map the pieces of information included in a message expressed in one syntax to the equivalent message expressed in another syntax
Remit Remittances
XML eXtensible Mark-up Language - popular syntax to encode documents (or messages) electronically on the Internet XML allows communities to define their own identifiers (or tags) and format (or data type) for each component of a message
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Bureaus etc) ISV regulatory institutionsMarketing plan feasibility campaign efficiency and costs
2 MentorPreferable SWIFT
Also eligible SunGard IBM affiliation to other OS communitySWIFT decision
3 Legalcopyright Expert legal consultant and RO apprentice Cost and time shift dependent
4 Tight regulation Clear membership admission amp software contribution criteria The quality of the consultant advice
5 Marketing Actively recruiting community members Marketing plan feasibility campaign efficiency amp customer skepticism
a community portala provide content amp debate space information consolidation amp dissemination virtual
showroom subscription management support
a business analysis solution availability and maintenance by one of the
members or employed company
b press releases amp
announcementsb PR and AR b communicators availability and costs
c events c periodical conferences user focused meetings c cost dependent
6 Financing World Bank EU amp private funds Lobby amp funds availability
Item
FinTP
FinTP community
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 38 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
b Hidden costs for patches updates and upgrades While of similarly weight in terms of probability and impact this should be no real concern as long as the law governing the community clearly provides for free and accountable maintenance
2 Poor image on quality
a Too many releases making FinTP hard to manage and unsafe to operate Given proper regulation of the community and the mature root of FinTP Allevo disregards the possibility of this risk to materialize However if this were to happen this is a high impact risk and by all means should be avoided
b Backward technological (in)compatibility looks to us as a low risk in all respects and within organizations applying practice proven software engineering processes and professional - accountable team this is not likely to materialize
c Support can be perceived as the highest impact risk for FinTP This can be overcome by tight regulation of the commercial and professional conditions to deliver the service (for instance only qualified organizations should be recommended to members for supporting FinTP)
d SLA and accountability for both internally or externally performed services is closely correlated to the previous risk and the community status should provide the support for growing a community of competencies and accountable professionals around FinTP Periodical auditing (by the specialized community body) of this pool of professionals will further ensure the confidence that the skills are preserved at the required level
e Code fragmentation and forking is a high impact risk with a low probability of happening in the initial period provided the knowledge transfer is done orderly and in an institutionalized manner
3 Inherent uncertainty
a Community disputes can jeopardize its cohesion the project viability and future This is a high impact possibly high probability risk and it is the definite role of the Moderator to feel prevent and while materializing mitigate any conflicting situation
b FinTP going commercial post-launch This is a huge impact possibly high occurrence probability but manageable with the right legal instruments provisioned in the community
c Loss of alignment to industry standards and regulations This risk has medium probability and medium impact given the assumption that the community is tightly regulated and the working bodies institutionalized and gathering professionals
4 Legal
Copyright infringement given Allevo experience in the open source business this risk is highly probable and has a high impact on FinTP especially if mistakes are made in the launching phase Similarly if during the product maintenance and further development phase the community fails to institutionalize proper formal software development processes (covering all FinTP lifecycle phases) based on industry practice proven model(s) Supplementary the expert code scanning audit for compliance is the single resort to preclude external software source misuse
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 39 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
5 GPL specific
a Noncompliance to the GPL license If GPL license is used the product should further distribute in compliance with this part provisions High impact and probability but manageable if proper software development processes are used and if the statute clearly defines the licensing model for FinTP
b FinTP unconformity The risk that software engineers get inspired by a chic solution which they import and emulate similarly in FinTP And this is also highly possible since les grands esprits se rencontre
6 Existing customers attitude
Anger for having paid for something which now is free The existent customers can be concerned about the future of their installed system its further development (in one word its future) and on the quality of the service (SLA including) Some recent adopters can possibly be furious for spending their money on buying licenses for a piece of software that differently packaged becomes free of charge
For the first situation the single best solution for Allevo is to ensure a smooth transition from the current status to the new solution deployed Also highly probable Allevo should provide for simultaneous (for at most one more year) maintenance of both FinTP and for qPayIntegrator
For the 2012 new qPayIntegrator adopters Allevo should transparently state the product‟s future and propose a commercially attractive migration towards FinTP when it becomes publically available (like the option for the installation migration and recurring services) The decision should clearly stay with the customer if he still buys Allevo licenses delays the implementation until FinTP is available or if he goes for a competitive solution
In other words the key to mitigate the existing customer perception is switching places and discarding if the situation proves to be uncomfortable
Bottom-line is that to avoid most of the risks the FinTP community must be a rather tightly controlled one though still opened to anyone willingly abiding to the rules
The synthetic view of the main risks their assigned probability impact and the corresponding containment approach is provided in the attached file
Risk IDRisk
CategoryRisk
Probability
(High
Medium
Low)
Severity
(High
Medium
Low)
Containment (Mitigation Action Proposed)
M1Free as in a
Free Puppy
M101
The training service amp support cost could account more than the
commercial product its replacing (application software is typically 30 of
the total cost of ownership of most projects)
Medium Low
M102 Hidden costs ie charge for patches updates and upgrades Medium Low
M2Frequent
updates
M201
Projects might be updated frequently - as often as everyday Too frequent
updates could have a negative impact on the implementation
interoperability and support
Low HighMAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M3Backwards
compatibility
M301 Less accountability Low LowMAP03 Access to prior versions of source code (additional in-house
development and support procedures might be necessary)
M4Support
related risks
M401Support could be perceived as the biggest issue with open source
software deploymentsHigh High
M402 Internal External Accountability SLAs High High
M403Code fragmentation or forking if the community fails to institutionalize
corporate like formal structureHigh High
M404Support could require greater involvement and different skills set from
operations staffMedium Medium
M5Community
immaturity Low Low
M501Could generate incompatibility of FinTP with industry standards amp
regulationsMedium Medium
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M6 Uncertainty The inherent uncertainty in every open source project
M601 Community disputes might impact project viability and future High HighMAP04 The Mentor should prevent amp mitigate any conflicts inside the
community
M602 Open source projects may not stay open in future releases High HighMAP05 The originator liabilities should be strongly enforced by the
community statute
M7 Legal risks
M701 Copyright infringement High High
M702 Can open source software deployments pass an audit
M8 GPL General Public License specific development concerns
M801Software thatrsquos derived from an existing GPL project in whole or in part
might not be released under the same licenseHigh High M08 The community should regulate the licensing model
M802
Developer contamination - developer could review an existing open source
project could see an elegant solution then implement a similar function in
closed source project
High HighMAP09 Procedurals constrains for the software developers should be
enforced
M9
Current
customers
attitude
The actual customer perception could be negative High High
M12 To prevent a negative attitude Allevo should involve the customers
in the FinTP project Allevo needs their active support for a smooth and
issues less transition
ma
rke
t re
late
d r
isk
s
co
st
rela
ted
ris
ks
MAP01 The community should regulate the applicable rules and fees for
services and maintenance
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
bu
sin
es
s a
nd
le
ga
l ri
sk
s
MAP06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S1Product
related
S101 Late delivery lead time Medium MediumMAP15 Allevo should provide proper resources (funding and human
resources)
S102 Credibility loss if fail to certify with SWIFT Medium High MAP16 Should be discussedamp agreed with SWIFT
S103 Inexperienced team or allocation below needs Low HighMAP15 Allevo should provide proper resources (funding and human
resources)
S104 Improper or non efficient version management Low High MAP16 Review the current Allevo Configuration Management System
S105Poor quality if the community fails to institutionalize proper verification and
validation practices3
M06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S106 Lack of expertise in open source projects 2 Allevo should engage thoroughly selected Open Source consultants
S2Service
related
S201
The software maintenance not properly providing for bugs fixing
regulationamp standard alignment technological improvements communities
improvement requests
High HighMAP01 The community should regulate the applicable rules and fees for
services and maintenance
S202 One-time amp recurring services might be provided by unqualified resources High HighMAP17 The community should regulate the training curricula and related
expertise certification
S203 Provided services might not meet the minimal SLA performance criteria High HighMAP17 The community should regulate the training curricula and related
expertise certification
S204 Relaxed or lack of accountability of the professionals High HighMAP18 The community should regulate the employment agreement of
the professionals
S205 Lack of qualified professionals High HighMAP19 The community should ensure a balanced number of certified
professionals with the community size
S3Community
related
S301
If after disclosing FinTP the community does not enthusiastically adopt
the solution competitors might more successfully develop a similar
strategy
Medium MediumMAP20 FinTP promotion should be convincing and realistic A well
organized marketing campaign by Allevo
S302The community mentor andor early adhering members have no
undeniable prestige or are not largely trustfulMedium Medium MAP99 Project status review Ending the project could be one option
S303 The Mentor does not strongly commit for the project Medium Medium MAP99 Project status review Ending the project could be one option
S4 Legal
S401Exposure to copyright and IP infringement due to working team unaware of
the legal consequences of using third party softwareMedium Medium
MAP21 Allevo should keep records and fully document the use of open
source code
S402Copyright or intellectual property infringement can lead to injunctive relief
and monetary damagesHigh High
MAP23 Allevo should institutionalize a tight licensing and technical
control
S403 All risks related to open source compliance High HighMAP24 Allevo should appoint as soon as possible a FinTP compliance
Officer
S5 Financial
S501 Lack of financing institutions Medium MediumMAP25 Allevo should urge consultant to provide a consistent list of
potential investors
S502 Dependency on the financing institution approval Medium Medium
S503Not thoroughly planned project overlooking one or some project cost that
need to be financedMedium Medium
Sp
ec
ific
ris
ks
tec
hn
ica
lm
ark
eti
ng
leg
al
fun
din
g
MAP26 Allevo should carefully draw a consistent and eligible project for
financing
Risks
Riskspdf
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 40 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
11 Appendix - Bibliography 1 Accenture Open Source Research Geographic Findings
2 Accenture Open Source Research Industry Findings
3 Producing Open Source Software - How to Run a Successful Free Software
Project by Karl Fogel
4 Open Source Software Risks and Rewards by Gary Hein
5 A Business Case Study of Open Source Software by Carolyn A Kenwood
6 6 critical success factors for product development by Christian Wig
7 Bank 20 by Brett King
8 Managing the business risks of open innovation by Oliver Alexy and Markus
9 Product idea evaluation checklist shared by Startgass AS
10 SWIFT 2015 Strategy
11 Customers and business impact of product changes
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 41 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
12 Appendix - Glossary ACH Automated Clearing House that is used to clear retail payments
between banks in a country or region
APAC Asia and Pacific
AML Anti-Money Laundering
BCampDR Business continuity amp disaster recovery
B2B Business to business
C2B Consumer to business
CET Central European Time
CMMI Capability Maturity Model Integration
CMS Configuration Management System
Coexistence The situation of multiple standards existing at the same time in the same business space Within SWIFT this refers to the coexistence between the MT and MX standards This also refers to the set of measures being taken to make the situation easier to handle by the community (publication of mapping rules translation serviceshellip)
CSM Clearing and Settlement Mechanism
CUG Closed User Group
Dictionary Part of the ISO 20022 Repository that contains all items that can be re-used during business modelling and message definition activities
EAI Enterprise Application Integration - middleware to connect applications and communication interfaces Typical EAI software includes features for mapping data between various formats enriching messages with data from other systems and orchestrating message flows
ECB European Central Bank
EMEA Europe Middle-East Africa
EPC European Payment Council
ERP Enterprise Resource Planning
EU European Union
EUCLID Connectivity to EuroClear Bank services
FIN The messaging service offered by SWIFT for the secure and reliable exchange of MT messages in store-and-forward mode By extension the syntax used to format these MTs
IP intellectual property
Interoperability Capability to easily exchange business information while using different message standards ISO 20022 promotes global use of syntax-neutral business and message components as a common denominator to achieve interoperability between standards using different syntaxes
ISO The International Organization for Standardization - an international standard-setting body composed of representatives from more than 160 national standards organizations that promulgates worldwide standards in a variety of domains aiming at facilitating cross-border exchanges of goods services and techniques
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 42 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
ISO 15022 An ISO standard that describes the syntax to be used for developing securities messages used mainly to support back office related transaction flows It replaced the previous securities messaging standard ISO 7775
ISO 20022 RA Registration Authority - offers the services described in an ISO standard on behalf of and under a contractual agreement with the International Organization for Standardization
ISO 20022 Repository
Repository maintained by the ISO20022 RA which contains the financial business models message definitions and components defined in compliance with the ISO 20022 standard
ISO 20022 RMG Registration Management Group - in charge of the overall management of the ISO 20022 development and registration process in accordance with the ISO 20022 standard
ISO 20022 SEG Standards Evaluation Groups -in charge of validating candidate ISO 20022 messages within the scope of the business justification and ensuring that they address the needs of their future international community of users
ISV Independent Software Vendor
KYC Know Your Customer
MACUG Member Administered Closed User Group
Message A set of structured information exchanged between two parties involved in a financial transaction
Message component and element
A re-usable data structure used for assembling message definitions The data defined in a message component is bdquotraced‟ back to the business components and business elements In simple terms business components define the business meaning message components create data structures for messaging
MI Market Infrastructure - a system that provides services to the financial industry for trading clearing and settlement matching of financial transactions and depository functions
Middleware Software that enables data to be exchanged among different systems with standard communication components and tools for formatting mapping and processing
MT The traditional bdquotag value‟ Message Types for use on the FIN service offered by SWIFT
MX An XML message exchanged over SWIFTNet whether or not ISO 20022 compliant
OS Open source
PSP Payment service provider
QA Quality assurance
RMA Relationship Management Access
RTGS Real Time Gross Settlement System
SAA SWIFT Alliance Access
SAE SWIFT Alliance Entry
SAG SWIFT Alliance Gateway
SaaS Software as a Service
SCORE Standardized CORporate Environment
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 43 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
Semantics The study of meaning usually in language The word is often used in ordinary language to denote a problem of understanding that comes down to word selection or connotation
SEPA Single Euro Payment Area
SLA Service level agreement
SME Small and Medium-sized Business(es)
SOA Service Oriented Architecture
SSB SWIFT Service Bureau
STP Straight Through Processing
SWIFT Society for Worldwide Interbank Financial Telecommunication Visit wwwswiftcom
Syntax Physical format of a message used to identify and represent the conveyed pieces of information
T2S TARGET2 Securities - an initiative of the Eurosystem It is an IT platform that aims to make settlements across national borders simpler and more cost-efficient
TARGET2 The Eurosystem-owned European Real Time Gross Settlement (RTGS) system (Trans-European Automated Real-time Gross Settlement Express Transfer System) TARGET2 is one of the largest high-value payment systems in the world
Taxonomy The classification in a hierarchical system typically organized by super type - sub type relationships also called generalization-specialization relationships or less formally parent-child relationships
TSU Trade Service Utility
TCO Total cost of ownership
Translation rules
Set of rules to be used to map the pieces of information included in a message expressed in one syntax to the equivalent message expressed in another syntax
Remit Remittances
XML eXtensible Mark-up Language - popular syntax to encode documents (or messages) electronically on the Internet XML allows communities to define their own identifiers (or tags) and format (or data type) for each component of a message
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Bureaus etc) ISV regulatory institutionsMarketing plan feasibility campaign efficiency and costs
2 MentorPreferable SWIFT
Also eligible SunGard IBM affiliation to other OS communitySWIFT decision
3 Legalcopyright Expert legal consultant and RO apprentice Cost and time shift dependent
4 Tight regulation Clear membership admission amp software contribution criteria The quality of the consultant advice
5 Marketing Actively recruiting community members Marketing plan feasibility campaign efficiency amp customer skepticism
a community portala provide content amp debate space information consolidation amp dissemination virtual
showroom subscription management support
a business analysis solution availability and maintenance by one of the
members or employed company
b press releases amp
announcementsb PR and AR b communicators availability and costs
c events c periodical conferences user focused meetings c cost dependent
6 Financing World Bank EU amp private funds Lobby amp funds availability
Item
FinTP
FinTP community
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 39 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
5 GPL specific
a Noncompliance to the GPL license If GPL license is used the product should further distribute in compliance with this part provisions High impact and probability but manageable if proper software development processes are used and if the statute clearly defines the licensing model for FinTP
b FinTP unconformity The risk that software engineers get inspired by a chic solution which they import and emulate similarly in FinTP And this is also highly possible since les grands esprits se rencontre
6 Existing customers attitude
Anger for having paid for something which now is free The existent customers can be concerned about the future of their installed system its further development (in one word its future) and on the quality of the service (SLA including) Some recent adopters can possibly be furious for spending their money on buying licenses for a piece of software that differently packaged becomes free of charge
For the first situation the single best solution for Allevo is to ensure a smooth transition from the current status to the new solution deployed Also highly probable Allevo should provide for simultaneous (for at most one more year) maintenance of both FinTP and for qPayIntegrator
For the 2012 new qPayIntegrator adopters Allevo should transparently state the product‟s future and propose a commercially attractive migration towards FinTP when it becomes publically available (like the option for the installation migration and recurring services) The decision should clearly stay with the customer if he still buys Allevo licenses delays the implementation until FinTP is available or if he goes for a competitive solution
In other words the key to mitigate the existing customer perception is switching places and discarding if the situation proves to be uncomfortable
Bottom-line is that to avoid most of the risks the FinTP community must be a rather tightly controlled one though still opened to anyone willingly abiding to the rules
The synthetic view of the main risks their assigned probability impact and the corresponding containment approach is provided in the attached file
Risk IDRisk
CategoryRisk
Probability
(High
Medium
Low)
Severity
(High
Medium
Low)
Containment (Mitigation Action Proposed)
M1Free as in a
Free Puppy
M101
The training service amp support cost could account more than the
commercial product its replacing (application software is typically 30 of
the total cost of ownership of most projects)
Medium Low
M102 Hidden costs ie charge for patches updates and upgrades Medium Low
M2Frequent
updates
M201
Projects might be updated frequently - as often as everyday Too frequent
updates could have a negative impact on the implementation
interoperability and support
Low HighMAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M3Backwards
compatibility
M301 Less accountability Low LowMAP03 Access to prior versions of source code (additional in-house
development and support procedures might be necessary)
M4Support
related risks
M401Support could be perceived as the biggest issue with open source
software deploymentsHigh High
M402 Internal External Accountability SLAs High High
M403Code fragmentation or forking if the community fails to institutionalize
corporate like formal structureHigh High
M404Support could require greater involvement and different skills set from
operations staffMedium Medium
M5Community
immaturity Low Low
M501Could generate incompatibility of FinTP with industry standards amp
regulationsMedium Medium
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M6 Uncertainty The inherent uncertainty in every open source project
M601 Community disputes might impact project viability and future High HighMAP04 The Mentor should prevent amp mitigate any conflicts inside the
community
M602 Open source projects may not stay open in future releases High HighMAP05 The originator liabilities should be strongly enforced by the
community statute
M7 Legal risks
M701 Copyright infringement High High
M702 Can open source software deployments pass an audit
M8 GPL General Public License specific development concerns
M801Software thatrsquos derived from an existing GPL project in whole or in part
might not be released under the same licenseHigh High M08 The community should regulate the licensing model
M802
Developer contamination - developer could review an existing open source
project could see an elegant solution then implement a similar function in
closed source project
High HighMAP09 Procedurals constrains for the software developers should be
enforced
M9
Current
customers
attitude
The actual customer perception could be negative High High
M12 To prevent a negative attitude Allevo should involve the customers
in the FinTP project Allevo needs their active support for a smooth and
issues less transition
ma
rke
t re
late
d r
isk
s
co
st
rela
ted
ris
ks
MAP01 The community should regulate the applicable rules and fees for
services and maintenance
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
bu
sin
es
s a
nd
le
ga
l ri
sk
s
MAP06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S1Product
related
S101 Late delivery lead time Medium MediumMAP15 Allevo should provide proper resources (funding and human
resources)
S102 Credibility loss if fail to certify with SWIFT Medium High MAP16 Should be discussedamp agreed with SWIFT
S103 Inexperienced team or allocation below needs Low HighMAP15 Allevo should provide proper resources (funding and human
resources)
S104 Improper or non efficient version management Low High MAP16 Review the current Allevo Configuration Management System
S105Poor quality if the community fails to institutionalize proper verification and
validation practices3
M06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S106 Lack of expertise in open source projects 2 Allevo should engage thoroughly selected Open Source consultants
S2Service
related
S201
The software maintenance not properly providing for bugs fixing
regulationamp standard alignment technological improvements communities
improvement requests
High HighMAP01 The community should regulate the applicable rules and fees for
services and maintenance
S202 One-time amp recurring services might be provided by unqualified resources High HighMAP17 The community should regulate the training curricula and related
expertise certification
S203 Provided services might not meet the minimal SLA performance criteria High HighMAP17 The community should regulate the training curricula and related
expertise certification
S204 Relaxed or lack of accountability of the professionals High HighMAP18 The community should regulate the employment agreement of
the professionals
S205 Lack of qualified professionals High HighMAP19 The community should ensure a balanced number of certified
professionals with the community size
S3Community
related
S301
If after disclosing FinTP the community does not enthusiastically adopt
the solution competitors might more successfully develop a similar
strategy
Medium MediumMAP20 FinTP promotion should be convincing and realistic A well
organized marketing campaign by Allevo
S302The community mentor andor early adhering members have no
undeniable prestige or are not largely trustfulMedium Medium MAP99 Project status review Ending the project could be one option
S303 The Mentor does not strongly commit for the project Medium Medium MAP99 Project status review Ending the project could be one option
S4 Legal
S401Exposure to copyright and IP infringement due to working team unaware of
the legal consequences of using third party softwareMedium Medium
MAP21 Allevo should keep records and fully document the use of open
source code
S402Copyright or intellectual property infringement can lead to injunctive relief
and monetary damagesHigh High
MAP23 Allevo should institutionalize a tight licensing and technical
control
S403 All risks related to open source compliance High HighMAP24 Allevo should appoint as soon as possible a FinTP compliance
Officer
S5 Financial
S501 Lack of financing institutions Medium MediumMAP25 Allevo should urge consultant to provide a consistent list of
potential investors
S502 Dependency on the financing institution approval Medium Medium
S503Not thoroughly planned project overlooking one or some project cost that
need to be financedMedium Medium
Sp
ec
ific
ris
ks
tec
hn
ica
lm
ark
eti
ng
leg
al
fun
din
g
MAP26 Allevo should carefully draw a consistent and eligible project for
financing
Risks
Riskspdf
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 40 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
11 Appendix - Bibliography 1 Accenture Open Source Research Geographic Findings
2 Accenture Open Source Research Industry Findings
3 Producing Open Source Software - How to Run a Successful Free Software
Project by Karl Fogel
4 Open Source Software Risks and Rewards by Gary Hein
5 A Business Case Study of Open Source Software by Carolyn A Kenwood
6 6 critical success factors for product development by Christian Wig
7 Bank 20 by Brett King
8 Managing the business risks of open innovation by Oliver Alexy and Markus
9 Product idea evaluation checklist shared by Startgass AS
10 SWIFT 2015 Strategy
11 Customers and business impact of product changes
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 41 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
12 Appendix - Glossary ACH Automated Clearing House that is used to clear retail payments
between banks in a country or region
APAC Asia and Pacific
AML Anti-Money Laundering
BCampDR Business continuity amp disaster recovery
B2B Business to business
C2B Consumer to business
CET Central European Time
CMMI Capability Maturity Model Integration
CMS Configuration Management System
Coexistence The situation of multiple standards existing at the same time in the same business space Within SWIFT this refers to the coexistence between the MT and MX standards This also refers to the set of measures being taken to make the situation easier to handle by the community (publication of mapping rules translation serviceshellip)
CSM Clearing and Settlement Mechanism
CUG Closed User Group
Dictionary Part of the ISO 20022 Repository that contains all items that can be re-used during business modelling and message definition activities
EAI Enterprise Application Integration - middleware to connect applications and communication interfaces Typical EAI software includes features for mapping data between various formats enriching messages with data from other systems and orchestrating message flows
ECB European Central Bank
EMEA Europe Middle-East Africa
EPC European Payment Council
ERP Enterprise Resource Planning
EU European Union
EUCLID Connectivity to EuroClear Bank services
FIN The messaging service offered by SWIFT for the secure and reliable exchange of MT messages in store-and-forward mode By extension the syntax used to format these MTs
IP intellectual property
Interoperability Capability to easily exchange business information while using different message standards ISO 20022 promotes global use of syntax-neutral business and message components as a common denominator to achieve interoperability between standards using different syntaxes
ISO The International Organization for Standardization - an international standard-setting body composed of representatives from more than 160 national standards organizations that promulgates worldwide standards in a variety of domains aiming at facilitating cross-border exchanges of goods services and techniques
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 42 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
ISO 15022 An ISO standard that describes the syntax to be used for developing securities messages used mainly to support back office related transaction flows It replaced the previous securities messaging standard ISO 7775
ISO 20022 RA Registration Authority - offers the services described in an ISO standard on behalf of and under a contractual agreement with the International Organization for Standardization
ISO 20022 Repository
Repository maintained by the ISO20022 RA which contains the financial business models message definitions and components defined in compliance with the ISO 20022 standard
ISO 20022 RMG Registration Management Group - in charge of the overall management of the ISO 20022 development and registration process in accordance with the ISO 20022 standard
ISO 20022 SEG Standards Evaluation Groups -in charge of validating candidate ISO 20022 messages within the scope of the business justification and ensuring that they address the needs of their future international community of users
ISV Independent Software Vendor
KYC Know Your Customer
MACUG Member Administered Closed User Group
Message A set of structured information exchanged between two parties involved in a financial transaction
Message component and element
A re-usable data structure used for assembling message definitions The data defined in a message component is bdquotraced‟ back to the business components and business elements In simple terms business components define the business meaning message components create data structures for messaging
MI Market Infrastructure - a system that provides services to the financial industry for trading clearing and settlement matching of financial transactions and depository functions
Middleware Software that enables data to be exchanged among different systems with standard communication components and tools for formatting mapping and processing
MT The traditional bdquotag value‟ Message Types for use on the FIN service offered by SWIFT
MX An XML message exchanged over SWIFTNet whether or not ISO 20022 compliant
OS Open source
PSP Payment service provider
QA Quality assurance
RMA Relationship Management Access
RTGS Real Time Gross Settlement System
SAA SWIFT Alliance Access
SAE SWIFT Alliance Entry
SAG SWIFT Alliance Gateway
SaaS Software as a Service
SCORE Standardized CORporate Environment
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 43 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
Semantics The study of meaning usually in language The word is often used in ordinary language to denote a problem of understanding that comes down to word selection or connotation
SEPA Single Euro Payment Area
SLA Service level agreement
SME Small and Medium-sized Business(es)
SOA Service Oriented Architecture
SSB SWIFT Service Bureau
STP Straight Through Processing
SWIFT Society for Worldwide Interbank Financial Telecommunication Visit wwwswiftcom
Syntax Physical format of a message used to identify and represent the conveyed pieces of information
T2S TARGET2 Securities - an initiative of the Eurosystem It is an IT platform that aims to make settlements across national borders simpler and more cost-efficient
TARGET2 The Eurosystem-owned European Real Time Gross Settlement (RTGS) system (Trans-European Automated Real-time Gross Settlement Express Transfer System) TARGET2 is one of the largest high-value payment systems in the world
Taxonomy The classification in a hierarchical system typically organized by super type - sub type relationships also called generalization-specialization relationships or less formally parent-child relationships
TSU Trade Service Utility
TCO Total cost of ownership
Translation rules
Set of rules to be used to map the pieces of information included in a message expressed in one syntax to the equivalent message expressed in another syntax
Remit Remittances
XML eXtensible Mark-up Language - popular syntax to encode documents (or messages) electronically on the Internet XML allows communities to define their own identifiers (or tags) and format (or data type) for each component of a message
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Bureaus etc) ISV regulatory institutionsMarketing plan feasibility campaign efficiency and costs
2 MentorPreferable SWIFT
Also eligible SunGard IBM affiliation to other OS communitySWIFT decision
3 Legalcopyright Expert legal consultant and RO apprentice Cost and time shift dependent
4 Tight regulation Clear membership admission amp software contribution criteria The quality of the consultant advice
5 Marketing Actively recruiting community members Marketing plan feasibility campaign efficiency amp customer skepticism
a community portala provide content amp debate space information consolidation amp dissemination virtual
showroom subscription management support
a business analysis solution availability and maintenance by one of the
members or employed company
b press releases amp
announcementsb PR and AR b communicators availability and costs
c events c periodical conferences user focused meetings c cost dependent
6 Financing World Bank EU amp private funds Lobby amp funds availability
Item
FinTP
FinTP community
Risk IDRisk
CategoryRisk
Probability
(High
Medium
Low)
Severity
(High
Medium
Low)
Containment (Mitigation Action Proposed)
M1Free as in a
Free Puppy
M101
The training service amp support cost could account more than the
commercial product its replacing (application software is typically 30 of
the total cost of ownership of most projects)
Medium Low
M102 Hidden costs ie charge for patches updates and upgrades Medium Low
M2Frequent
updates
M201
Projects might be updated frequently - as often as everyday Too frequent
updates could have a negative impact on the implementation
interoperability and support
Low HighMAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M3Backwards
compatibility
M301 Less accountability Low LowMAP03 Access to prior versions of source code (additional in-house
development and support procedures might be necessary)
M4Support
related risks
M401Support could be perceived as the biggest issue with open source
software deploymentsHigh High
M402 Internal External Accountability SLAs High High
M403Code fragmentation or forking if the community fails to institutionalize
corporate like formal structureHigh High
M404Support could require greater involvement and different skills set from
operations staffMedium Medium
M5Community
immaturity Low Low
M501Could generate incompatibility of FinTP with industry standards amp
regulationsMedium Medium
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
M6 Uncertainty The inherent uncertainty in every open source project
M601 Community disputes might impact project viability and future High HighMAP04 The Mentor should prevent amp mitigate any conflicts inside the
community
M602 Open source projects may not stay open in future releases High HighMAP05 The originator liabilities should be strongly enforced by the
community statute
M7 Legal risks
M701 Copyright infringement High High
M702 Can open source software deployments pass an audit
M8 GPL General Public License specific development concerns
M801Software thatrsquos derived from an existing GPL project in whole or in part
might not be released under the same licenseHigh High M08 The community should regulate the licensing model
M802
Developer contamination - developer could review an existing open source
project could see an elegant solution then implement a similar function in
closed source project
High HighMAP09 Procedurals constrains for the software developers should be
enforced
M9
Current
customers
attitude
The actual customer perception could be negative High High
M12 To prevent a negative attitude Allevo should involve the customers
in the FinTP project Allevo needs their active support for a smooth and
issues less transition
ma
rke
t re
late
d r
isk
s
co
st
rela
ted
ris
ks
MAP01 The community should regulate the applicable rules and fees for
services and maintenance
MAP02 The community should be tightly controlled and audited (closed
community in regard to software contributions)
bu
sin
es
s a
nd
le
ga
l ri
sk
s
MAP06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S1Product
related
S101 Late delivery lead time Medium MediumMAP15 Allevo should provide proper resources (funding and human
resources)
S102 Credibility loss if fail to certify with SWIFT Medium High MAP16 Should be discussedamp agreed with SWIFT
S103 Inexperienced team or allocation below needs Low HighMAP15 Allevo should provide proper resources (funding and human
resources)
S104 Improper or non efficient version management Low High MAP16 Review the current Allevo Configuration Management System
S105Poor quality if the community fails to institutionalize proper verification and
validation practices3
M06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S106 Lack of expertise in open source projects 2 Allevo should engage thoroughly selected Open Source consultants
S2Service
related
S201
The software maintenance not properly providing for bugs fixing
regulationamp standard alignment technological improvements communities
improvement requests
High HighMAP01 The community should regulate the applicable rules and fees for
services and maintenance
S202 One-time amp recurring services might be provided by unqualified resources High HighMAP17 The community should regulate the training curricula and related
expertise certification
S203 Provided services might not meet the minimal SLA performance criteria High HighMAP17 The community should regulate the training curricula and related
expertise certification
S204 Relaxed or lack of accountability of the professionals High HighMAP18 The community should regulate the employment agreement of
the professionals
S205 Lack of qualified professionals High HighMAP19 The community should ensure a balanced number of certified
professionals with the community size
S3Community
related
S301
If after disclosing FinTP the community does not enthusiastically adopt
the solution competitors might more successfully develop a similar
strategy
Medium MediumMAP20 FinTP promotion should be convincing and realistic A well
organized marketing campaign by Allevo
S302The community mentor andor early adhering members have no
undeniable prestige or are not largely trustfulMedium Medium MAP99 Project status review Ending the project could be one option
S303 The Mentor does not strongly commit for the project Medium Medium MAP99 Project status review Ending the project could be one option
S4 Legal
S401Exposure to copyright and IP infringement due to working team unaware of
the legal consequences of using third party softwareMedium Medium
MAP21 Allevo should keep records and fully document the use of open
source code
S402Copyright or intellectual property infringement can lead to injunctive relief
and monetary damagesHigh High
MAP23 Allevo should institutionalize a tight licensing and technical
control
S403 All risks related to open source compliance High HighMAP24 Allevo should appoint as soon as possible a FinTP compliance
Officer
S5 Financial
S501 Lack of financing institutions Medium MediumMAP25 Allevo should urge consultant to provide a consistent list of
potential investors
S502 Dependency on the financing institution approval Medium Medium
S503Not thoroughly planned project overlooking one or some project cost that
need to be financedMedium Medium
Sp
ec
ific
ris
ks
tec
hn
ica
lm
ark
eti
ng
leg
al
fun
din
g
MAP26 Allevo should carefully draw a consistent and eligible project for
financing
Risks
Riskspdf
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 40 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
11 Appendix - Bibliography 1 Accenture Open Source Research Geographic Findings
2 Accenture Open Source Research Industry Findings
3 Producing Open Source Software - How to Run a Successful Free Software
Project by Karl Fogel
4 Open Source Software Risks and Rewards by Gary Hein
5 A Business Case Study of Open Source Software by Carolyn A Kenwood
6 6 critical success factors for product development by Christian Wig
7 Bank 20 by Brett King
8 Managing the business risks of open innovation by Oliver Alexy and Markus
9 Product idea evaluation checklist shared by Startgass AS
10 SWIFT 2015 Strategy
11 Customers and business impact of product changes
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 41 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
12 Appendix - Glossary ACH Automated Clearing House that is used to clear retail payments
between banks in a country or region
APAC Asia and Pacific
AML Anti-Money Laundering
BCampDR Business continuity amp disaster recovery
B2B Business to business
C2B Consumer to business
CET Central European Time
CMMI Capability Maturity Model Integration
CMS Configuration Management System
Coexistence The situation of multiple standards existing at the same time in the same business space Within SWIFT this refers to the coexistence between the MT and MX standards This also refers to the set of measures being taken to make the situation easier to handle by the community (publication of mapping rules translation serviceshellip)
CSM Clearing and Settlement Mechanism
CUG Closed User Group
Dictionary Part of the ISO 20022 Repository that contains all items that can be re-used during business modelling and message definition activities
EAI Enterprise Application Integration - middleware to connect applications and communication interfaces Typical EAI software includes features for mapping data between various formats enriching messages with data from other systems and orchestrating message flows
ECB European Central Bank
EMEA Europe Middle-East Africa
EPC European Payment Council
ERP Enterprise Resource Planning
EU European Union
EUCLID Connectivity to EuroClear Bank services
FIN The messaging service offered by SWIFT for the secure and reliable exchange of MT messages in store-and-forward mode By extension the syntax used to format these MTs
IP intellectual property
Interoperability Capability to easily exchange business information while using different message standards ISO 20022 promotes global use of syntax-neutral business and message components as a common denominator to achieve interoperability between standards using different syntaxes
ISO The International Organization for Standardization - an international standard-setting body composed of representatives from more than 160 national standards organizations that promulgates worldwide standards in a variety of domains aiming at facilitating cross-border exchanges of goods services and techniques
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 42 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
ISO 15022 An ISO standard that describes the syntax to be used for developing securities messages used mainly to support back office related transaction flows It replaced the previous securities messaging standard ISO 7775
ISO 20022 RA Registration Authority - offers the services described in an ISO standard on behalf of and under a contractual agreement with the International Organization for Standardization
ISO 20022 Repository
Repository maintained by the ISO20022 RA which contains the financial business models message definitions and components defined in compliance with the ISO 20022 standard
ISO 20022 RMG Registration Management Group - in charge of the overall management of the ISO 20022 development and registration process in accordance with the ISO 20022 standard
ISO 20022 SEG Standards Evaluation Groups -in charge of validating candidate ISO 20022 messages within the scope of the business justification and ensuring that they address the needs of their future international community of users
ISV Independent Software Vendor
KYC Know Your Customer
MACUG Member Administered Closed User Group
Message A set of structured information exchanged between two parties involved in a financial transaction
Message component and element
A re-usable data structure used for assembling message definitions The data defined in a message component is bdquotraced‟ back to the business components and business elements In simple terms business components define the business meaning message components create data structures for messaging
MI Market Infrastructure - a system that provides services to the financial industry for trading clearing and settlement matching of financial transactions and depository functions
Middleware Software that enables data to be exchanged among different systems with standard communication components and tools for formatting mapping and processing
MT The traditional bdquotag value‟ Message Types for use on the FIN service offered by SWIFT
MX An XML message exchanged over SWIFTNet whether or not ISO 20022 compliant
OS Open source
PSP Payment service provider
QA Quality assurance
RMA Relationship Management Access
RTGS Real Time Gross Settlement System
SAA SWIFT Alliance Access
SAE SWIFT Alliance Entry
SAG SWIFT Alliance Gateway
SaaS Software as a Service
SCORE Standardized CORporate Environment
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 43 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
Semantics The study of meaning usually in language The word is often used in ordinary language to denote a problem of understanding that comes down to word selection or connotation
SEPA Single Euro Payment Area
SLA Service level agreement
SME Small and Medium-sized Business(es)
SOA Service Oriented Architecture
SSB SWIFT Service Bureau
STP Straight Through Processing
SWIFT Society for Worldwide Interbank Financial Telecommunication Visit wwwswiftcom
Syntax Physical format of a message used to identify and represent the conveyed pieces of information
T2S TARGET2 Securities - an initiative of the Eurosystem It is an IT platform that aims to make settlements across national borders simpler and more cost-efficient
TARGET2 The Eurosystem-owned European Real Time Gross Settlement (RTGS) system (Trans-European Automated Real-time Gross Settlement Express Transfer System) TARGET2 is one of the largest high-value payment systems in the world
Taxonomy The classification in a hierarchical system typically organized by super type - sub type relationships also called generalization-specialization relationships or less formally parent-child relationships
TSU Trade Service Utility
TCO Total cost of ownership
Translation rules
Set of rules to be used to map the pieces of information included in a message expressed in one syntax to the equivalent message expressed in another syntax
Remit Remittances
XML eXtensible Mark-up Language - popular syntax to encode documents (or messages) electronically on the Internet XML allows communities to define their own identifiers (or tags) and format (or data type) for each component of a message
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Bureaus etc) ISV regulatory institutionsMarketing plan feasibility campaign efficiency and costs
2 MentorPreferable SWIFT
Also eligible SunGard IBM affiliation to other OS communitySWIFT decision
3 Legalcopyright Expert legal consultant and RO apprentice Cost and time shift dependent
4 Tight regulation Clear membership admission amp software contribution criteria The quality of the consultant advice
5 Marketing Actively recruiting community members Marketing plan feasibility campaign efficiency amp customer skepticism
a community portala provide content amp debate space information consolidation amp dissemination virtual
showroom subscription management support
a business analysis solution availability and maintenance by one of the
members or employed company
b press releases amp
announcementsb PR and AR b communicators availability and costs
c events c periodical conferences user focused meetings c cost dependent
6 Financing World Bank EU amp private funds Lobby amp funds availability
Item
FinTP
FinTP community
S1Product
related
S101 Late delivery lead time Medium MediumMAP15 Allevo should provide proper resources (funding and human
resources)
S102 Credibility loss if fail to certify with SWIFT Medium High MAP16 Should be discussedamp agreed with SWIFT
S103 Inexperienced team or allocation below needs Low HighMAP15 Allevo should provide proper resources (funding and human
resources)
S104 Improper or non efficient version management Low High MAP16 Review the current Allevo Configuration Management System
S105Poor quality if the community fails to institutionalize proper verification and
validation practices3
M06 The community should institutionalize a formal software
development process based on the industry practices (ie design
programming test amp validation version management etc)
S106 Lack of expertise in open source projects 2 Allevo should engage thoroughly selected Open Source consultants
S2Service
related
S201
The software maintenance not properly providing for bugs fixing
regulationamp standard alignment technological improvements communities
improvement requests
High HighMAP01 The community should regulate the applicable rules and fees for
services and maintenance
S202 One-time amp recurring services might be provided by unqualified resources High HighMAP17 The community should regulate the training curricula and related
expertise certification
S203 Provided services might not meet the minimal SLA performance criteria High HighMAP17 The community should regulate the training curricula and related
expertise certification
S204 Relaxed or lack of accountability of the professionals High HighMAP18 The community should regulate the employment agreement of
the professionals
S205 Lack of qualified professionals High HighMAP19 The community should ensure a balanced number of certified
professionals with the community size
S3Community
related
S301
If after disclosing FinTP the community does not enthusiastically adopt
the solution competitors might more successfully develop a similar
strategy
Medium MediumMAP20 FinTP promotion should be convincing and realistic A well
organized marketing campaign by Allevo
S302The community mentor andor early adhering members have no
undeniable prestige or are not largely trustfulMedium Medium MAP99 Project status review Ending the project could be one option
S303 The Mentor does not strongly commit for the project Medium Medium MAP99 Project status review Ending the project could be one option
S4 Legal
S401Exposure to copyright and IP infringement due to working team unaware of
the legal consequences of using third party softwareMedium Medium
MAP21 Allevo should keep records and fully document the use of open
source code
S402Copyright or intellectual property infringement can lead to injunctive relief
and monetary damagesHigh High
MAP23 Allevo should institutionalize a tight licensing and technical
control
S403 All risks related to open source compliance High HighMAP24 Allevo should appoint as soon as possible a FinTP compliance
Officer
S5 Financial
S501 Lack of financing institutions Medium MediumMAP25 Allevo should urge consultant to provide a consistent list of
potential investors
S502 Dependency on the financing institution approval Medium Medium
S503Not thoroughly planned project overlooking one or some project cost that
need to be financedMedium Medium
Sp
ec
ific
ris
ks
tec
hn
ica
lm
ark
eti
ng
leg
al
fun
din
g
MAP26 Allevo should carefully draw a consistent and eligible project for
financing
Risks
Riskspdf
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 40 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
11 Appendix - Bibliography 1 Accenture Open Source Research Geographic Findings
2 Accenture Open Source Research Industry Findings
3 Producing Open Source Software - How to Run a Successful Free Software
Project by Karl Fogel
4 Open Source Software Risks and Rewards by Gary Hein
5 A Business Case Study of Open Source Software by Carolyn A Kenwood
6 6 critical success factors for product development by Christian Wig
7 Bank 20 by Brett King
8 Managing the business risks of open innovation by Oliver Alexy and Markus
9 Product idea evaluation checklist shared by Startgass AS
10 SWIFT 2015 Strategy
11 Customers and business impact of product changes
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 41 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
12 Appendix - Glossary ACH Automated Clearing House that is used to clear retail payments
between banks in a country or region
APAC Asia and Pacific
AML Anti-Money Laundering
BCampDR Business continuity amp disaster recovery
B2B Business to business
C2B Consumer to business
CET Central European Time
CMMI Capability Maturity Model Integration
CMS Configuration Management System
Coexistence The situation of multiple standards existing at the same time in the same business space Within SWIFT this refers to the coexistence between the MT and MX standards This also refers to the set of measures being taken to make the situation easier to handle by the community (publication of mapping rules translation serviceshellip)
CSM Clearing and Settlement Mechanism
CUG Closed User Group
Dictionary Part of the ISO 20022 Repository that contains all items that can be re-used during business modelling and message definition activities
EAI Enterprise Application Integration - middleware to connect applications and communication interfaces Typical EAI software includes features for mapping data between various formats enriching messages with data from other systems and orchestrating message flows
ECB European Central Bank
EMEA Europe Middle-East Africa
EPC European Payment Council
ERP Enterprise Resource Planning
EU European Union
EUCLID Connectivity to EuroClear Bank services
FIN The messaging service offered by SWIFT for the secure and reliable exchange of MT messages in store-and-forward mode By extension the syntax used to format these MTs
IP intellectual property
Interoperability Capability to easily exchange business information while using different message standards ISO 20022 promotes global use of syntax-neutral business and message components as a common denominator to achieve interoperability between standards using different syntaxes
ISO The International Organization for Standardization - an international standard-setting body composed of representatives from more than 160 national standards organizations that promulgates worldwide standards in a variety of domains aiming at facilitating cross-border exchanges of goods services and techniques
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 42 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
ISO 15022 An ISO standard that describes the syntax to be used for developing securities messages used mainly to support back office related transaction flows It replaced the previous securities messaging standard ISO 7775
ISO 20022 RA Registration Authority - offers the services described in an ISO standard on behalf of and under a contractual agreement with the International Organization for Standardization
ISO 20022 Repository
Repository maintained by the ISO20022 RA which contains the financial business models message definitions and components defined in compliance with the ISO 20022 standard
ISO 20022 RMG Registration Management Group - in charge of the overall management of the ISO 20022 development and registration process in accordance with the ISO 20022 standard
ISO 20022 SEG Standards Evaluation Groups -in charge of validating candidate ISO 20022 messages within the scope of the business justification and ensuring that they address the needs of their future international community of users
ISV Independent Software Vendor
KYC Know Your Customer
MACUG Member Administered Closed User Group
Message A set of structured information exchanged between two parties involved in a financial transaction
Message component and element
A re-usable data structure used for assembling message definitions The data defined in a message component is bdquotraced‟ back to the business components and business elements In simple terms business components define the business meaning message components create data structures for messaging
MI Market Infrastructure - a system that provides services to the financial industry for trading clearing and settlement matching of financial transactions and depository functions
Middleware Software that enables data to be exchanged among different systems with standard communication components and tools for formatting mapping and processing
MT The traditional bdquotag value‟ Message Types for use on the FIN service offered by SWIFT
MX An XML message exchanged over SWIFTNet whether or not ISO 20022 compliant
OS Open source
PSP Payment service provider
QA Quality assurance
RMA Relationship Management Access
RTGS Real Time Gross Settlement System
SAA SWIFT Alliance Access
SAE SWIFT Alliance Entry
SAG SWIFT Alliance Gateway
SaaS Software as a Service
SCORE Standardized CORporate Environment
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 43 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
Semantics The study of meaning usually in language The word is often used in ordinary language to denote a problem of understanding that comes down to word selection or connotation
SEPA Single Euro Payment Area
SLA Service level agreement
SME Small and Medium-sized Business(es)
SOA Service Oriented Architecture
SSB SWIFT Service Bureau
STP Straight Through Processing
SWIFT Society for Worldwide Interbank Financial Telecommunication Visit wwwswiftcom
Syntax Physical format of a message used to identify and represent the conveyed pieces of information
T2S TARGET2 Securities - an initiative of the Eurosystem It is an IT platform that aims to make settlements across national borders simpler and more cost-efficient
TARGET2 The Eurosystem-owned European Real Time Gross Settlement (RTGS) system (Trans-European Automated Real-time Gross Settlement Express Transfer System) TARGET2 is one of the largest high-value payment systems in the world
Taxonomy The classification in a hierarchical system typically organized by super type - sub type relationships also called generalization-specialization relationships or less formally parent-child relationships
TSU Trade Service Utility
TCO Total cost of ownership
Translation rules
Set of rules to be used to map the pieces of information included in a message expressed in one syntax to the equivalent message expressed in another syntax
Remit Remittances
XML eXtensible Mark-up Language - popular syntax to encode documents (or messages) electronically on the Internet XML allows communities to define their own identifiers (or tags) and format (or data type) for each component of a message
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
9 Product idea evaluation checklist shared by Startgass AS
10 SWIFT 2015 Strategy
11 Customers and business impact of product changes
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 41 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
12 Appendix - Glossary ACH Automated Clearing House that is used to clear retail payments
between banks in a country or region
APAC Asia and Pacific
AML Anti-Money Laundering
BCampDR Business continuity amp disaster recovery
B2B Business to business
C2B Consumer to business
CET Central European Time
CMMI Capability Maturity Model Integration
CMS Configuration Management System
Coexistence The situation of multiple standards existing at the same time in the same business space Within SWIFT this refers to the coexistence between the MT and MX standards This also refers to the set of measures being taken to make the situation easier to handle by the community (publication of mapping rules translation serviceshellip)
CSM Clearing and Settlement Mechanism
CUG Closed User Group
Dictionary Part of the ISO 20022 Repository that contains all items that can be re-used during business modelling and message definition activities
EAI Enterprise Application Integration - middleware to connect applications and communication interfaces Typical EAI software includes features for mapping data between various formats enriching messages with data from other systems and orchestrating message flows
ECB European Central Bank
EMEA Europe Middle-East Africa
EPC European Payment Council
ERP Enterprise Resource Planning
EU European Union
EUCLID Connectivity to EuroClear Bank services
FIN The messaging service offered by SWIFT for the secure and reliable exchange of MT messages in store-and-forward mode By extension the syntax used to format these MTs
IP intellectual property
Interoperability Capability to easily exchange business information while using different message standards ISO 20022 promotes global use of syntax-neutral business and message components as a common denominator to achieve interoperability between standards using different syntaxes
ISO The International Organization for Standardization - an international standard-setting body composed of representatives from more than 160 national standards organizations that promulgates worldwide standards in a variety of domains aiming at facilitating cross-border exchanges of goods services and techniques
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 42 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
ISO 15022 An ISO standard that describes the syntax to be used for developing securities messages used mainly to support back office related transaction flows It replaced the previous securities messaging standard ISO 7775
ISO 20022 RA Registration Authority - offers the services described in an ISO standard on behalf of and under a contractual agreement with the International Organization for Standardization
ISO 20022 Repository
Repository maintained by the ISO20022 RA which contains the financial business models message definitions and components defined in compliance with the ISO 20022 standard
ISO 20022 RMG Registration Management Group - in charge of the overall management of the ISO 20022 development and registration process in accordance with the ISO 20022 standard
ISO 20022 SEG Standards Evaluation Groups -in charge of validating candidate ISO 20022 messages within the scope of the business justification and ensuring that they address the needs of their future international community of users
ISV Independent Software Vendor
KYC Know Your Customer
MACUG Member Administered Closed User Group
Message A set of structured information exchanged between two parties involved in a financial transaction
Message component and element
A re-usable data structure used for assembling message definitions The data defined in a message component is bdquotraced‟ back to the business components and business elements In simple terms business components define the business meaning message components create data structures for messaging
MI Market Infrastructure - a system that provides services to the financial industry for trading clearing and settlement matching of financial transactions and depository functions
Middleware Software that enables data to be exchanged among different systems with standard communication components and tools for formatting mapping and processing
MT The traditional bdquotag value‟ Message Types for use on the FIN service offered by SWIFT
MX An XML message exchanged over SWIFTNet whether or not ISO 20022 compliant
OS Open source
PSP Payment service provider
QA Quality assurance
RMA Relationship Management Access
RTGS Real Time Gross Settlement System
SAA SWIFT Alliance Access
SAE SWIFT Alliance Entry
SAG SWIFT Alliance Gateway
SaaS Software as a Service
SCORE Standardized CORporate Environment
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 43 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
Semantics The study of meaning usually in language The word is often used in ordinary language to denote a problem of understanding that comes down to word selection or connotation
SEPA Single Euro Payment Area
SLA Service level agreement
SME Small and Medium-sized Business(es)
SOA Service Oriented Architecture
SSB SWIFT Service Bureau
STP Straight Through Processing
SWIFT Society for Worldwide Interbank Financial Telecommunication Visit wwwswiftcom
Syntax Physical format of a message used to identify and represent the conveyed pieces of information
T2S TARGET2 Securities - an initiative of the Eurosystem It is an IT platform that aims to make settlements across national borders simpler and more cost-efficient
TARGET2 The Eurosystem-owned European Real Time Gross Settlement (RTGS) system (Trans-European Automated Real-time Gross Settlement Express Transfer System) TARGET2 is one of the largest high-value payment systems in the world
Taxonomy The classification in a hierarchical system typically organized by super type - sub type relationships also called generalization-specialization relationships or less formally parent-child relationships
TSU Trade Service Utility
TCO Total cost of ownership
Translation rules
Set of rules to be used to map the pieces of information included in a message expressed in one syntax to the equivalent message expressed in another syntax
Remit Remittances
XML eXtensible Mark-up Language - popular syntax to encode documents (or messages) electronically on the Internet XML allows communities to define their own identifiers (or tags) and format (or data type) for each component of a message
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Bureaus etc) ISV regulatory institutionsMarketing plan feasibility campaign efficiency and costs
2 MentorPreferable SWIFT
Also eligible SunGard IBM affiliation to other OS communitySWIFT decision
3 Legalcopyright Expert legal consultant and RO apprentice Cost and time shift dependent
4 Tight regulation Clear membership admission amp software contribution criteria The quality of the consultant advice
5 Marketing Actively recruiting community members Marketing plan feasibility campaign efficiency amp customer skepticism
a community portala provide content amp debate space information consolidation amp dissemination virtual
showroom subscription management support
a business analysis solution availability and maintenance by one of the
members or employed company
b press releases amp
announcementsb PR and AR b communicators availability and costs
c events c periodical conferences user focused meetings c cost dependent
6 Financing World Bank EU amp private funds Lobby amp funds availability
Item
FinTP
FinTP community
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 41 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
12 Appendix - Glossary ACH Automated Clearing House that is used to clear retail payments
between banks in a country or region
APAC Asia and Pacific
AML Anti-Money Laundering
BCampDR Business continuity amp disaster recovery
B2B Business to business
C2B Consumer to business
CET Central European Time
CMMI Capability Maturity Model Integration
CMS Configuration Management System
Coexistence The situation of multiple standards existing at the same time in the same business space Within SWIFT this refers to the coexistence between the MT and MX standards This also refers to the set of measures being taken to make the situation easier to handle by the community (publication of mapping rules translation serviceshellip)
CSM Clearing and Settlement Mechanism
CUG Closed User Group
Dictionary Part of the ISO 20022 Repository that contains all items that can be re-used during business modelling and message definition activities
EAI Enterprise Application Integration - middleware to connect applications and communication interfaces Typical EAI software includes features for mapping data between various formats enriching messages with data from other systems and orchestrating message flows
ECB European Central Bank
EMEA Europe Middle-East Africa
EPC European Payment Council
ERP Enterprise Resource Planning
EU European Union
EUCLID Connectivity to EuroClear Bank services
FIN The messaging service offered by SWIFT for the secure and reliable exchange of MT messages in store-and-forward mode By extension the syntax used to format these MTs
IP intellectual property
Interoperability Capability to easily exchange business information while using different message standards ISO 20022 promotes global use of syntax-neutral business and message components as a common denominator to achieve interoperability between standards using different syntaxes
ISO The International Organization for Standardization - an international standard-setting body composed of representatives from more than 160 national standards organizations that promulgates worldwide standards in a variety of domains aiming at facilitating cross-border exchanges of goods services and techniques
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 42 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
ISO 15022 An ISO standard that describes the syntax to be used for developing securities messages used mainly to support back office related transaction flows It replaced the previous securities messaging standard ISO 7775
ISO 20022 RA Registration Authority - offers the services described in an ISO standard on behalf of and under a contractual agreement with the International Organization for Standardization
ISO 20022 Repository
Repository maintained by the ISO20022 RA which contains the financial business models message definitions and components defined in compliance with the ISO 20022 standard
ISO 20022 RMG Registration Management Group - in charge of the overall management of the ISO 20022 development and registration process in accordance with the ISO 20022 standard
ISO 20022 SEG Standards Evaluation Groups -in charge of validating candidate ISO 20022 messages within the scope of the business justification and ensuring that they address the needs of their future international community of users
ISV Independent Software Vendor
KYC Know Your Customer
MACUG Member Administered Closed User Group
Message A set of structured information exchanged between two parties involved in a financial transaction
Message component and element
A re-usable data structure used for assembling message definitions The data defined in a message component is bdquotraced‟ back to the business components and business elements In simple terms business components define the business meaning message components create data structures for messaging
MI Market Infrastructure - a system that provides services to the financial industry for trading clearing and settlement matching of financial transactions and depository functions
Middleware Software that enables data to be exchanged among different systems with standard communication components and tools for formatting mapping and processing
MT The traditional bdquotag value‟ Message Types for use on the FIN service offered by SWIFT
MX An XML message exchanged over SWIFTNet whether or not ISO 20022 compliant
OS Open source
PSP Payment service provider
QA Quality assurance
RMA Relationship Management Access
RTGS Real Time Gross Settlement System
SAA SWIFT Alliance Access
SAE SWIFT Alliance Entry
SAG SWIFT Alliance Gateway
SaaS Software as a Service
SCORE Standardized CORporate Environment
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 43 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
Semantics The study of meaning usually in language The word is often used in ordinary language to denote a problem of understanding that comes down to word selection or connotation
SEPA Single Euro Payment Area
SLA Service level agreement
SME Small and Medium-sized Business(es)
SOA Service Oriented Architecture
SSB SWIFT Service Bureau
STP Straight Through Processing
SWIFT Society for Worldwide Interbank Financial Telecommunication Visit wwwswiftcom
Syntax Physical format of a message used to identify and represent the conveyed pieces of information
T2S TARGET2 Securities - an initiative of the Eurosystem It is an IT platform that aims to make settlements across national borders simpler and more cost-efficient
TARGET2 The Eurosystem-owned European Real Time Gross Settlement (RTGS) system (Trans-European Automated Real-time Gross Settlement Express Transfer System) TARGET2 is one of the largest high-value payment systems in the world
Taxonomy The classification in a hierarchical system typically organized by super type - sub type relationships also called generalization-specialization relationships or less formally parent-child relationships
TSU Trade Service Utility
TCO Total cost of ownership
Translation rules
Set of rules to be used to map the pieces of information included in a message expressed in one syntax to the equivalent message expressed in another syntax
Remit Remittances
XML eXtensible Mark-up Language - popular syntax to encode documents (or messages) electronically on the Internet XML allows communities to define their own identifiers (or tags) and format (or data type) for each component of a message
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Bureaus etc) ISV regulatory institutionsMarketing plan feasibility campaign efficiency and costs
2 MentorPreferable SWIFT
Also eligible SunGard IBM affiliation to other OS communitySWIFT decision
3 Legalcopyright Expert legal consultant and RO apprentice Cost and time shift dependent
4 Tight regulation Clear membership admission amp software contribution criteria The quality of the consultant advice
5 Marketing Actively recruiting community members Marketing plan feasibility campaign efficiency amp customer skepticism
a community portala provide content amp debate space information consolidation amp dissemination virtual
showroom subscription management support
a business analysis solution availability and maintenance by one of the
members or employed company
b press releases amp
announcementsb PR and AR b communicators availability and costs
c events c periodical conferences user focused meetings c cost dependent
6 Financing World Bank EU amp private funds Lobby amp funds availability
Item
FinTP
FinTP community
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 42 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
ISO 15022 An ISO standard that describes the syntax to be used for developing securities messages used mainly to support back office related transaction flows It replaced the previous securities messaging standard ISO 7775
ISO 20022 RA Registration Authority - offers the services described in an ISO standard on behalf of and under a contractual agreement with the International Organization for Standardization
ISO 20022 Repository
Repository maintained by the ISO20022 RA which contains the financial business models message definitions and components defined in compliance with the ISO 20022 standard
ISO 20022 RMG Registration Management Group - in charge of the overall management of the ISO 20022 development and registration process in accordance with the ISO 20022 standard
ISO 20022 SEG Standards Evaluation Groups -in charge of validating candidate ISO 20022 messages within the scope of the business justification and ensuring that they address the needs of their future international community of users
ISV Independent Software Vendor
KYC Know Your Customer
MACUG Member Administered Closed User Group
Message A set of structured information exchanged between two parties involved in a financial transaction
Message component and element
A re-usable data structure used for assembling message definitions The data defined in a message component is bdquotraced‟ back to the business components and business elements In simple terms business components define the business meaning message components create data structures for messaging
MI Market Infrastructure - a system that provides services to the financial industry for trading clearing and settlement matching of financial transactions and depository functions
Middleware Software that enables data to be exchanged among different systems with standard communication components and tools for formatting mapping and processing
MT The traditional bdquotag value‟ Message Types for use on the FIN service offered by SWIFT
MX An XML message exchanged over SWIFTNet whether or not ISO 20022 compliant
OS Open source
PSP Payment service provider
QA Quality assurance
RMA Relationship Management Access
RTGS Real Time Gross Settlement System
SAA SWIFT Alliance Access
SAE SWIFT Alliance Entry
SAG SWIFT Alliance Gateway
SaaS Software as a Service
SCORE Standardized CORporate Environment
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 43 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
Semantics The study of meaning usually in language The word is often used in ordinary language to denote a problem of understanding that comes down to word selection or connotation
SEPA Single Euro Payment Area
SLA Service level agreement
SME Small and Medium-sized Business(es)
SOA Service Oriented Architecture
SSB SWIFT Service Bureau
STP Straight Through Processing
SWIFT Society for Worldwide Interbank Financial Telecommunication Visit wwwswiftcom
Syntax Physical format of a message used to identify and represent the conveyed pieces of information
T2S TARGET2 Securities - an initiative of the Eurosystem It is an IT platform that aims to make settlements across national borders simpler and more cost-efficient
TARGET2 The Eurosystem-owned European Real Time Gross Settlement (RTGS) system (Trans-European Automated Real-time Gross Settlement Express Transfer System) TARGET2 is one of the largest high-value payment systems in the world
Taxonomy The classification in a hierarchical system typically organized by super type - sub type relationships also called generalization-specialization relationships or less formally parent-child relationships
TSU Trade Service Utility
TCO Total cost of ownership
Translation rules
Set of rules to be used to map the pieces of information included in a message expressed in one syntax to the equivalent message expressed in another syntax
Remit Remittances
XML eXtensible Mark-up Language - popular syntax to encode documents (or messages) electronically on the Internet XML allows communities to define their own identifiers (or tags) and format (or data type) for each component of a message
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability
Bureaus etc) ISV regulatory institutionsMarketing plan feasibility campaign efficiency and costs
2 MentorPreferable SWIFT
Also eligible SunGard IBM affiliation to other OS communitySWIFT decision
3 Legalcopyright Expert legal consultant and RO apprentice Cost and time shift dependent
4 Tight regulation Clear membership admission amp software contribution criteria The quality of the consultant advice
5 Marketing Actively recruiting community members Marketing plan feasibility campaign efficiency amp customer skepticism
a community portala provide content amp debate space information consolidation amp dissemination virtual
showroom subscription management support
a business analysis solution availability and maintenance by one of the
members or employed company
b press releases amp
announcementsb PR and AR b communicators availability and costs
c events c periodical conferences user focused meetings c cost dependent
6 Financing World Bank EU amp private funds Lobby amp funds availability
Item
FinTP
FinTP community
FinTP - Vision and Scope
Both last valid version and version history are available on the project site Page 43 of 43 Allevo Confidential
Business Information Systems (Allevo) SRL
Sediu social 23 Coltei St 030245 Bucharest Romania
Sediu executiv 23C Calea Vitan 031281 Bucharest Romania
Tel fax +40212554577 +40212554578 +40212554579
wwwallevoro
Capital social 1742000 Lei Active 2169105 Lei RC J40206794 CIF RO5258486 SWIFT PIC PTSAROAA DUNS 55-244-8078 Certificat EN ISO 90012008
Semantics The study of meaning usually in language The word is often used in ordinary language to denote a problem of understanding that comes down to word selection or connotation
SEPA Single Euro Payment Area
SLA Service level agreement
SME Small and Medium-sized Business(es)
SOA Service Oriented Architecture
SSB SWIFT Service Bureau
STP Straight Through Processing
SWIFT Society for Worldwide Interbank Financial Telecommunication Visit wwwswiftcom
Syntax Physical format of a message used to identify and represent the conveyed pieces of information
T2S TARGET2 Securities - an initiative of the Eurosystem It is an IT platform that aims to make settlements across national borders simpler and more cost-efficient
TARGET2 The Eurosystem-owned European Real Time Gross Settlement (RTGS) system (Trans-European Automated Real-time Gross Settlement Express Transfer System) TARGET2 is one of the largest high-value payment systems in the world
Taxonomy The classification in a hierarchical system typically organized by super type - sub type relationships also called generalization-specialization relationships or less formally parent-child relationships
TSU Trade Service Utility
TCO Total cost of ownership
Translation rules
Set of rules to be used to map the pieces of information included in a message expressed in one syntax to the equivalent message expressed in another syntax
Remit Remittances
XML eXtensible Mark-up Language - popular syntax to encode documents (or messages) electronically on the Internet XML allows communities to define their own identifiers (or tags) and format (or data type) for each component of a message
Assumptions Dependencies
1 Technology Only open source available Internal audit approval
a architecture a qPI inspired a
i scalability
ii resilience
iii security
i functional amp productivity
ii at transaction level
iii access amp authentication
i flexible design
ii by design
iii by design
b 3rd party components b Open source 3rd party b FinTP licensing model
i application server
ii transport mechanism
iii data base
i Apache AS
ii Apache MQ
iii Tbd
Includes 3rd parties licensing provisions
2
Special tools (for
documenting and auditing
the source code)
Tools availability Cost dependent
3 Licensing
a Initial and recurring licenses free of charge
b The product should not use software components that may lead to liabilities for the user
c The maintenance body is accountable only for its own product releases
d 3rd party usage of FinTP source code (partially or entirely) is subject to conformance to
licensing provisions
Licensing provisions resulting from legal and business open source specific
consultation
4 Regulatory compliance
a SWIFT standards
b ECB regulations
c EPC specifications
d Regional regulations
a ISO20022 FIN
b T2 T2S
c SEPA
d eg BNR TFD
a annually
b annually
c annually
d annually
7 Consultancy Expert consultant availability Cost and time shift dependent
8 Financing World Bank EU funds Lobby amp funds availability