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Industry roundup: 25 June

Deutsche Bank partners with Oracle to accelerate technology modernisation

Deutsche Bank and Oracle have announced a multi-year collaboration to modernise its database technology and accelerate the bank’s digital transformation. The agreement will see Deutsche Bank upgrade its existing database systems and migrate the bulk of its Oracle Database estate to Oracle Exadata Cloud@Customer, an on-premises deployment option of the Oracle Exadata Cloud Service, to support applications that either will not move to the public cloud or may in the future. This will provide a dedicated platform to support and scale the bank’s existing mission-critical systems and services including trading, payments processing, risk and capital planning, and regulatory reporting.

Migrating its systems to Oracle Exadata Cloud@Customer is a move designed to enable Deutsche Bank to consolidate existing critical applications on a single platform while complying with its data residency requirements and significantly reducing operational costs. The service can run in the bank's current data centres as well as in future cloud co-location sites, minimising latency while supporting the shift of applications to the cloud. It should enable Deutsche Bank to drive data integration across its business in order to streamline operations, provide unified oversight of core service processes and implementations, and develop and scale applications based on customer demand.

The two companies have also agreed to form a joint innovation partnership, bringing together Oracle and Deutsche Bank engineering and technology teams to explore potential uses for data security technologies, blockchain, AI and analytics to shape the design of new financial products and services. The collaboration supports Deutsche Bank’s multi-year digital transformation initiative led by its Technology, Data and Innovation (TDI) division, and is a logical further step in the bank’s overall cloud strategy. This includes establishing a strategic public cloud partnership in December 2020.

"Data is fundamental to how we manage our operations, anticipate the needs of our customers and design new products and services," said Bernd Leukert, chief technology, data and innovation officer at Deutsche Bank. "Our collaboration with Oracle to modernise our databases will play an important role in our overall technology transformation. Our applications supported by Oracle Exadata Cloud@Customer will benefit from a platform with the flexibility to adapt and scale critical services at speed, as well as derive better data insights. In the process, we will simplify and modernise our technology environment, save the bank significant costs and reduce energy consumption through consolidated servers."


BIS: CBDCs herald a new chapter for the monetary system

Central bank digital currencies are moving from concept to practical design and renew the institution of money in a new form designed for the digital age, the Bank for International Settlements has said in its Annual Economic Report 2021. The Report lays out the design choices for CBDCs, which, alongside cash, would be issued and backed by a central bank. It offers an economic analysis of their implications for consumers, financial institutions and the central bank itself.

CBDCs would build on the central bank's traditional roles in the payment system, to ensure that payments are final and certain; that there is enough liquidity for the payment system to function; and that the playing field is level, by making central bank money available on an equal basis to all parties.

"CBDCs are a concept whose time has come," commented Hyun Song Shin, economic adviser and head of Research of the BIS. "They open a new chapter for the monetary system by providing a technologically advanced representation of central bank money. In doing so, they preserve the core features of money that only the central bank can provide, anchored in the foundation of trust in the central bank." 

BIS analysis finds that CBDCs would best function as part of a two-tier system where the central bank and the private sector work together to do what each does well. The central bank would operate the core of the system and ensure its safety and efficiency, while the private sector, such as banks and payment service providers, would use its innovative capacity to serve customers.

From a practical perspective, the BIS says the most promising CBDC design would be one tied to a digital identity, requiring users to identify themselves to access funds. A careful design would balance protecting users against the abuse of personal data with protecting the payment system against money laundering and financial crime. In addition, the BIS says international cooperation on design will be vital if central banks are to harness the full benefits of CBDCs, and to improve cross-border payments while countering foreign currency substitution.


Eka adds to solution for corporate treasury operations 

Eka Software Solutions, a cloud-based enterprise solutions provider, has announced it has shored up a team of industry experts tasked with delivering a new solution to dramatically transform corporate treasury operations. This new business initiative will be led by Devanshu Bhatt, former India head of ION's Corporate Treasury Group. Eka also completed the acqui-hire of banking and finance start-up Trxiea Platforms and Solutions, whose team will help accelerate the treasury solution's time-to-market.

The strategic hires are part of Eka's ongoing effort to expand its state-of-the-art cloud platform into a comprehensive multi-solution platform for global enterprises. The newly assembled team was curated to develop a purpose-built, cloud-native corporate treasury solution that provides CFOs with a complete, real-time view across their entire enterprise by unifying disparate applications across procurement, banking, financial planning, risk management.

Eka says it is a strong proponent of digitalising critical business processes, as part of its 'Mission Digital' effort with a solution-driven approach that delivers:

  • Automated workflows to drive business resiliency.
  • Simplified interface to support new ways of bringing employees, processes, and technologies together.
  • Instant access to buyers and suppliers across the supply chain.
  • Fast and flexible integration with pre-built connectors to ERP, CRM and Market data.


Fitch affirms two Wells Fargo MMFs at 'AAAmmf'

Fitch Ratings has affirmed the 'AAAmmf' ratings of Wells Fargo National Tax-Free Money Market Fund and Wells Fargo Municipal Cash Management Money Market Fund managed by Wells Fargo Funds Management following a regularly scheduled review of the sector. The key rating drivers for the affirmations of the money market funds (MMFs) are the funds' overall credit quality and diversification; low exposure to interest rate and spread risks; holdings of daily and weekly liquid assets consistent with shareholder profiles; asset maturity profiles meeting Fitch's rating criteria; and the capabilities and resources of the investment advisor.

Consistent with Fitch's criteria for rating MMFs at 'AAAmmf', the funds maintain high credit quality portfolios by investing exclusively in short-term securities rated at least 'F1' by Fitch or the equivalent. MMFs rated at 'AAAmmf' seek to manage their portfolios to limit exposure to individual issuers at less than, or equal to, 10% of the fund's assets, with no more than 5% of assets for those exposures above seven days in tenor. Minor and temporary deviations from these parameters may occur from time to time, mainly due to cash outflows. The funds also seek to limit their individual repurchase agreement (repo) exposures to individual counterparties to 25% of a fund's total assets, provided the counterparties are rated 'F1' or higher and such repos are fully collateralised by high credit quality and liquid government securities.

In the case of repos with counterparties rated 'F2', funds seek to limit their exposure to individual counterparties to 10% of assets, as long as the repo is collateralised by high quality government securities and matures in one week or less. MMFs also seek to limit their exposure to government agencies, with exposures above 35% of assets to any one agency and limited to short-dated securities. The funds' Portfolio Credit Factors (PCFs) were in line with Fitch's 'AAAmmf' rating criteria of 1.50 or less at the time of this review. PCF is a risk-weighted measure that considers the credit quality and maturity profile of the portfolio securities.

MMFs rated at 'AAAmmf' seek to limit interest rate and spread risk by maintaining their weighted average maturities (WAM) and weighted average lives (WAL) below 60 days and 120 days, respectively. MMFs rated at 'AAAmmf' also seek to maintain sufficient levels of daily and weekly liquidity to meet redemption requests. Specifically, taxable MMFs rated 'AAAmmf' invest at least 10% of total assets in securities offering daily liquidity and at least 30% of total assets in securities providing weekly liquidity in line with Fitch's rating criteria. Tax-exempt MMFs invest at least 30% of their assets in securities offering weekly liquidity, consistent with Fitch's MMF rating criteria. Fitch's rating criteria for MMFs also considers the degree of shareholder diversification and the manager's distribution platform and investor-related risk controls.

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