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Industry roundup: 3 August

IBM and SAP partner to help financial institutions accelerate cloud adoption 

IBM and SAP have announced that SAP intends to onboard two of its finance and data management solutions to IBM Cloud for Financial Services to help accelerate IBM cloud adoption within the financial services industry. The collaboration will be designed to help the companies address the industry's stringent compliance, security and resiliency requirements, while supporting business transformation and innovation for financial services institutions.

As banks and insurers balance the need to deliver innovative services and meeting the industry's strict security and compliance requirements, hybrid cloud environments have become increasingly important. To fuel industry-wide innovation, IBM introduced the IBM Cloud for Financial Services with built-in security and compliance controls that help companies reduce risk and regulatory barriers impeding IT landscape modernisation, transformation, and innovation. 

The cloud solution is a purpose-built environment for financial services institutions to transact with their technology partners and fintechs. By onboarding to the IBM Cloud for Financial Services, clients can adopt onboarded SAP offerings, while addressing their regulatory and compliance standards. Supported by a growing ecosystem of more than 100 partners and fintechs, the cloud platform is designed to speed customers' business transformations by addressing risk in the supply chain for financial institutions and unlocking new revenue opportunities.  

In the context of their ongoing partnership, IBM and SAP have helped hundreds of companies digitize their operations using an open, hybrid cloud approach. SAP intends to join IBM's ecosystem to deliver finance risk, operations, and total spend management offerings on the IBM Cloud for Financial Services. When onboarded, SAP's planned offerings on the IBM Cloud for Financial Services will provide financial services institutions, their partners and fintechs with the following:

  • SAP's intelligent suite, including SAP S/4HANA solutions: With its intelligent enterprise framework, SAP provides integrated applications, intelligent technologies, and a digital platform designed to enable banks to better serve current customers.
  • SAP's solutions for strategic data management, including SAP Adaptive Server Enterprise, and SAP IQ software: Combining the strength of in-memory technology with these solutions, SAP says it offers a data platform to achieve business agility.


Facevalue launches pan-European online factoring solution

Dutch fintech Facevalue has introduced an accounts receivable finance solution for European SMEs that it says challenges traditional factoring. The solution offers complete flexibility to users to determine which receivables they want to sell and charge no fixed fees. In a statement, Facevalue said that most factoring solutions to SMEs require that the business sell all their outstanding accounts receivables to the financier for a fixed period, usually two years, which includes high fixed costs.

"The banking landscape has changed so much over the past decade that it has become a real challenge for most businesses to present their business case to lenders," said Neels Bornman, chief executive of Facevalue. "There is often no one to receive their application, let alone understand the dynamics in their business and by the time the application is assessed, it is already dated. Facevalue has built a secure online platform that extracts invoice data, handle the mapping and conversion of data formats and lists all our clients’ outstanding accounts receivables in a ledger from where they can configure rules, or choose manually which receivables they would like to sell immediately and without recourse."

Facevalue acts as a market platform between businesses and investors. The company has developed the capability required to scale using advanced technology to address what is one of the biggest business finance opportunities in the world today. Accounts receivable finance is a vital tool for markets to recover. It is expected that the global transaction value will eclipse pre-pandemic levels and continue its meteoric rise and still it only accounts for an approximate 10% adoption.

According to the industry body FCI, accounts receivable finance has grown at an annual compounded growth rate of 7% over the last twenty years from €600bn at the turn of the millennium to €2.7 trillion today. The market declined 7% worldwide during the pandemic, but the Netherlands still managed to grow by 1.4%. Europe accounts for 68% of worldwide accounts receivable finance, dominated by France, Germany, UK, Italy and Spain which account for 70% of the European market.

To sell a receivable to Facevalue, clients email the invoice directly from an accounting system to a dedicated email address created by the firm. The platform uses a combination of optical character recognition (OCR) and artificial intelligence (AI) to convert a PDF invoice to a Peppol compliant structured electronic invoice. New clients can immediately sell their top priority receivables while Facevalue performs a credit assessment, after which a facility of up to €5m can be approved for SMEs across the European Economic Area and the UK.


EBA consults on new guidelines on the role of AML/CFT compliance officers

The European Banking Authority (EBA) has launched a public consultation on new guidelines on the role, tasks and responsibilities of anti-money laundering and countering the financing of terrorism (AML/CFT) compliance officers. The Guidelines also include provisions on the wider AML/CFT governance set-up, including at the level of the group. Once adopted, these Guidelines will apply to all financial sector operators that are within the scope of the AML Directive. This consultation runs until 2 November 2021.

The draft guidelines comprehensively address, for the first time at the level of the EU, the whole AML/CFT governance set-up. They set clear expectations of the role, tasks and responsibilities of the AML/CFT compliance officer and the management body and how they interact, including at group level. AML/CFT compliance officers need to have a sufficient level of seniority, which entails the powers to propose, on their own initiative, all necessary or appropriate measures to ensure the compliance and effectiveness of the internal AML/CFT measures to the management body in its supervisory and management function.

Without prejudice to the overall and collective responsibility of the management body, the draft Guidelines also specify the tasks and role of the member of the management board, or the senior manager where no management board exists, who are in charge of AML/CFT overall, and on the role of group AML/CFT compliance officers. As information reaching the management body needs to be sufficiently comprehensive to enable informed decision-making, the draft Guidelines set out which information should be at least included in the activity report of the AML/CFT compliance officer to the management body.

Where a financial services operator is part of a group, the draft guidelines provide that a Group AML/CFT compliance officer in the parent company should be appointed to ensure the establishment and implementation of effective group-wide AML/CFT policies and procedures and to ensure that any shortcomings in the AML/CFT framework affecting the entire group or a large part of the group are addressed effectively.

Provisions in the draft Guidelines are designed to be applied in a proportionate manner, taking into account the diversity of financial sector operators that are within the scope of the AML Directive. They are also in line with existing ESA guidelines, in particular: the revised Guidelines on internal governance under the capital requirements Directive (CRD); the revised Joint ESMA and EBA Guidelines on the assessment of the suitability of members of the management body; the draft Guidelines on the authorisation of credit institutions; and the draft Guidelines for common procedures and methodologies for the supervisory review and evaluation process (SREP) and supervisory stress testing.


ICC and Finastra bring trade funding marketplace pilot to Ecuador

The International Chamber of Commerce (ICC) and Finastra have announced Ecuador as the first market in which they will run the pilot for their trade funding marketplace, which was announced earlier this year. The ICC TRADECOMM marketplace, powered by Finastra, aims to reduce trade finance barriers for SMEs and enable all parties to benefit from improvements in matching supply and demand, ultimately decreasing the global US$1.5 trillion dollar trade finance gap.

During the pilot, bank and non-bank financers are given the opportunity to finance local SME invoices via a risk-based approach. The focus will be on engaging with early adopters in region to support local platform development, with the goal being to bring the solution to all SMEs and financers there.

"We are so excited to be able to support this essential initiative to help towards reducing the growing trade finance gap for SMEs in our country and around the world," commented Carlos Zaldumbide, general secretary of ICC Ecuador. "Ecuador is well placed for the pilot as we have a growing economy supported by a strong SME backbone. We are already in the process of bringing important e-invoicing initiatives to our country and this will be a tremendous complementary initiative that could really make a difference."

New markets for additional pilots have already been identified and will be revealed soon.

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