Model Behaviour

The financial sector needs to redefine and renew its use of IT, Martin Knook, general manager of SecondFloor tells Future Banking, with an approach he describes as ‘business process modelling’.

SecondFloor was founded as an IT specialist in the area of cards and payments, and also develops and implements solutions for scaling, risk diversification and simulation, as well as in-house designed front-end solutions for process control and reporting. The firm’s stated mission is to hand control over business processes back to the business owner, with the help of new frameworks and more mature code generation.

Martin Knook, general manager of SecondFloor, says a proper IT implementation always starts with the business process analysis and desired improvements clearly defined. ‘We’re seeing several projects where IT is taking over business process improvement,’ he claims. ‘Our intention in coming years is to contribute to that change, and there are lots of developments and tools coming along now that will help to support us.’

Knook says the demand for SecondFloor’s services is driven mainly by developments like application fraud and credit risk, and admits that the financial institutes among its current stable of customers are experiencing difficulty making hoped-for improvements because of the complexity of their IT landscape. ‘Solvency II, IFRS Phase II accountancy requirements, SOX compliancy and BASEL II create a wall of standards that must be complied with. Sooner or later everybody understands it’s preferable to be a little ahead of the deadlines,’ he says.

SecondFloor’s experience in compliance led to a deal last August with Allianz, which saw it taking centre-stage in an ambitious project to develop a risk management platform for the German group. The custom-built solution provides Allianz with auditable, automated, centralised and SOX compliant risk calculations on the basis of a new replication portfolio approach. The Dutch firm will be responsible for analysis, information architecture, server based implementation, testing, deployment and support.

Knook says prospective clients often ask if there is a single complete solution to address SOX compliance. ‘If that’s your approach, you’re looking at huge IT investments and projects. The known suppliers worldwide are happy to take you up on that, but in our view it’s preferable to implement new, modern technology that is more closely aligned with your likely future enterprise architecture.’

Product development and process improvement are slowed down by the missing holistic view on how business and IT relate to each other, says Knook. ‘Technology is moving fast, but the improvement in financial products is beginning to lose pace. I’m aware, like many others that barely anything has changed in my mortgage offering from the bankers.’

Data management
SecondFloor’s solution is to document, formalise and understand inputs and outputs. In sales it analyses needs and identifies possible improvements, making tight, clear commitments on requirements to be implemented, with fixed prices and a fixed date proposition. Its risk management solution ECAPS, built with Algorithmics for ING and winner of last year’s prestigious Banking & Finance ICT Innovation Award, was put together in just nine months.

In SecondFloor’s view, big changes are afoot in the IT industry. ‘In the 1970s and 1980s the programmer was the master of an IT system – the person with the source code, input, output, and configurations.’ Knook believes emerging technology will enable the business owner to take that position. ‘We’re dreaming of a world where the owner can configure his business process, with the IT architecture ensuring that interference from an IT specialist is not required.’

But Knook points out that this needn’t make the role of the IT specialist completely redundant. ‘I like drawing analogies with car maintenance,’ he says. ‘As the auto industry matured, parts became more standardised, then you had the arrival of do-it-yourself car maintenance manuals. You still need a mechanic for complex work, but there’s now a lot you can handle yourself. Likewise, owners of enterprise software will increasingly find themselves in the driving seat in the years to come.’