Dolce Conference Centre (La Hulpe), 17 October 2008
"Do you believe a CEO when he claims that this is not a crisis but an isolated event?" and "We need more regulation" were just a couple of provocative issues raised given during the final "assessment day" by the latest graduates of TransConstellation Academy. Thirty-one participants were split into six groups to present business cases covering everything from cross-border clearing and settlement, price transparency, off-shoring risk, creating a new TransConstellation website, adapting to and communicating in a crisis.
Paul Verdin of the Solvay Business School (SBS) steadied participant nerves and set the ground rules as the first group presented in front of a jury panel including representatives from SBS, SWIFT, Euroclear, The Bank of New York Mellon and Atos Worldline.
The first group was tasked with presenting a "Framework for effective risk management in offshoring projects." The group comprising Lucien Messens (Atos Worldline), Erik Van Laer (SWIFT), Estela Munoz (The Bank of New York Mellon), Laurent Fayet, Olivier Nijland and Michaël Olivier (all Euroclear), came up with the novel approach of creating a role-play scenario between the consultancy firm "Lighthouse Consultancy" and "Energy Trade" represented by CEO Estela Munoz. Lighthouse's role was to assess Energy Trade's risk appetite to offshore the development of an energy-trading settlement platform.
Erik Van Laer of SWIFT, who took on the role of CEO of Lighthouse Consultancy, explained how the team identified three critical aspects of an offshoring business case: "By applying weighting tables to our risk matrix, we were clearly able to see at the three core stages namely - pre-project, project and post-project - that our assessment of the risks did not tally with the risk-appetite profile of the customer. Thus, for this case our generic model told us that Energy Trade was not ready to take on this project at this stage in its maturity."
After the impressive presentation, handouts showed a very elaborate dashboard, in the form of a traffic-light system (green, orange and red), to assist executive management in making the right decisions based on a series of risk categories. In this specific instance it was the view that operational risk associated with staff in the offshore location was too high to continue with the offshoring venture.
Group 2, comprising Cédric Bayart, Olivier Lens and Thomas Plain (Euroclear), François Rousseau and Kris Vanholst (SWIFT) and Tiziana Chieca (The Bank of New York Mellon) had the daunting feat of covering "European cross-border cash payments and securities clearing and settlement: what can we learn from the private sector and public policy responses?" After a bold start in stating that more regulation was needed to fix our capital markets in these turbulent times, the group somewhat struggled to find a common conclusion on what kind of regulation was necessary. Speaking after the event, Tiziana Chieca stated: "We conducted a lot of in-depth debate around our topic within the group, in parallel to the research reading. This was time-consuming and, unfortunately, we didn't come to a watertight conclusion about what kind of regulatory action is actually required. However, the entire TransConstellation Academy has been a marvelous learning experience for me. For example, I now see how much more needs to be done by the public sector before we can speak of a true European single capital market."
Next up under the spotlight was the group consisting of Johan Rokegem (Atos Worldline), Barbara Vilian (Euroclear), Dirk Van Achter and Philippe Dhainaut (both SWIFT). This group took an interesting approach to the theme of "Price transparency of financial industry utilities as a means for clients to reduce their bills and for the utility to reduce costs". The group concluded that transparency of prices for services rendered by user-owned financial industry utilities is not optional, not an issue, and importantly not a direct way to reduce costs. They argued that while user-owned firms should publicize their tariffs, it is not necessarily a direct way to cut clients' bills. They saw competition as the main driver to force firms to reduce their clients' invoices. Barbara Vilain of Euroclear spoke to the TransConstellation reporter later in the afternoon.
"Personally, this topic was my third choice, but after initial reservations I was glad that we could work on price transparency and investigate pricing issues for our companies as a whole. This Academy is one of the best courses that I have followed so far, and despite the lengthy module on risk management, I've come away with a much clearer picture of how the financial firms involved in TransConstellation interact. I've already taken some of what I have learned to help my team with informal discussion forums as well as putting together starter packs for newcomers joining the division."
After a sumptuous buffet lunch, Group 6 covered "Possibilities and opportunities for setting-up a financial education / knowledge / learning centre in Brussels". Silvia Brouwers (Euroclear), Tsvetomir Vassilev (SWIFT), Bram Vanassche (Bain & Company), Sven Vandecraen and Carl Braems (both Atos Worldline) displayed a press clip from 2004 showing TransConstellation Chairman Ignace Combes on their first slide presenting Brussels as a centre of excellence for finance. Their point being that although much has evolved since 2004, with the Academy in particular, TransConstellation is still a little known initiative. They based this view on a general survey they conducted among 240 general public respondents. Only 10% had heard of "TransConstellation", and among the TransConstellation firms themselves, only a third of the polled staff were familiar with the brand.
Based around four pillars - "know", "like", "want" and "act" - the group decided that the first step to raise TransConstellation awareness would be to create a new website. In a highly advanced presentation, the group's new site would include news, a library of useful publications and relevant links, a blog where the Chairman would answer questions interactively, and a common way of getting new recruits interested in working in financial-transaction processing. Branded "TransConstellation 2.0", the creation of this site would cost an estimated 70,000 - 100,000 euros to build and take 6 - 10 months to develop.
Bram Vanassche (Bain) elaborated: "During our group discussions we kept coming back to the fact that in order to reach our different target groups, we needed to raise awareness of TransConstellation and the financial-transaction processing industry. While there are many great ideas within the initiative, like a transaction-processing museum, if too few people on the outside are aware then no-one will visit such an attraction. I agree that funding is a cause for concern, but the Academy itself also cost a lot to set up and sustain. I feel that it is up to the member firms to establish their levels of commitment for future TransConstellation developments. On a personal note, I found this experience to be greatly enriching. I've met a lot of very interesting people and this is definitely a fantastic channel to build lasting relationships."
The penultimate group comprising Ester Van Tol and Olivier Goffard (both Euroclear), Jean Mawhin and Stein Naten (both The Bank of New York Mellon) and Christian Vega (SWIFT) tasked themselves with explaining how firms need "Adaptability in the Financial Markets Turmoil." For this highly topical subject, the group concluded that the most adaptable, rather than the strongest, will survive in these turbulent economic conditions. Achieving this is likeliest by those that have firm risk-mitigation mechanisms in place, as well as a transparent and open communication philosophy.
Stein Naten spoke to the TransConstellation reporter over lunch. "The topic was both challenging and interesting. And with all of the events that have unfolded since September, it has been tough to keep up with what has happened to individual banks and how some of the financial bail-out plans have worked. But what the whole world has learned, post-Lehmans, is that even big firms can fail. Given my experience in collateral management, I've lived through a counterparty default scheme earlier in my career, and this experience was useful to share with the team. I'm glad that my time at the Academy is on the final stretch now, so that I can get back to work and devote more time on the home front in preparation for my first child. I will leave here with fond memories and an even stronger network of colleagues."
Last but by no means least, the final team presented "Communication in Crisis Situations". Three from SWIFT - Suzanne Lai, Johan Limborgh and Antony Riems - were joined by Thomas Teheux (The Bank of New York Mellon) and Max Richard (Atos Worldline). Max Richard spoke at length about how financial firms must be vigilant to the quality of their internal and external communication. The group imparted on the audience the importance of having a structured solution for continuous communication improvement. During the presentation, the team sought to prove the binary impact of communication on a company's stock price. Fortis were the unlucky guinea pig.
According to Max Richard of Atos Worldline: "Certainly, there is a correlation between bad communication and negative stock movements. But, obviously this was not the only factor to the crash in Fortis' share price. Our team was fortunate to have the highly attentive help of Project Sponsor Olivier Nagelmackers for guidance and support throughout. The fact that he works just down the hall from me was an added bonus. I'd also like to thank Suzanne, Johan, Antony and Thomas for contributions that made the end result one of the better presentations. I'm also immensely grateful for the opportunity to hear from some of the leading lights in our industry. But it was actually the motivational coach for the Belgian national hockey team that left the biggest impression on me - he stressed that the right balance between hard work, team spirit and discipline are the ingredients to success."
And then there was the winner to decide...This was unveiled at a thoroughly deserved lavish meal at Belga Queen in downtown Brussels. Champagne corks were popped and chocolate given to the winning group - "Framework for effective risk management in offshoring projects" with joint runners-up awards going to "Communication in Crisis Situations" and "TransConstellation website 2.0".
Laurent Fayet of Euroclear commended his team on the accolade: "I'm delighted for Lucien, Estela, Erik, Olivier and Michaël - our teamwork and individual areas of expertise have shone through. I think that by getting prepared and organised early in February we gave ourselves valuable time to do the necessary research and leverage our own areas of competence. For example, I am very familiar with how consultants operate, as this is part of my day-to-day project management duties, hence the idea to create a consultancy firm. Estela covered financial regulation and Erik was our dedicated IT person. Michaël and Lucien did a lot of overall groundwork and Olivier added value with his risk management background. I'm happy that the Academy is now over, but am glad to have expanded my network. Thanks to all of the other participants, my employer and the Solvay Business School for organising this."