Piloting Fund Transfers on the Road to STP
The much-anticipated Fund Transfers (FTR) service is in full-throttle pilot phase. The newest post-issue service in DTCC’s family of Insurance Services provides automated processing of a fund reallocation within a variable insurance product, a function that addresses regulators’ concerns about unethical business practices in broker-initiated transfers of funds. It enables distributors to monitor rep-initiated transfers and reduces the risk of unauthorized transactions.
Collaborative testing
Pilot testing of new services involves the collaboration between DTCC and its customers to bring a solution to market. Each pilot initiative combines the efforts of the DTCC project team and the firms that volunteer to participate. The pilot testers for Fund Transfers are carriers Genworth Financial, ING and Pacific Life, and broker/dealers Merrill Lynch and Smith Barney.
“The commitment of the pilot firms to work through the process with us is critical to the success of the service,” said Craig Gurien, product manager, DTCC. “They help us fine tune the business, technological and operational procedures.”
The pilot process is painstaking and detailed so that when the launch date arrives, concerns have already been addressed and adjustments made to the original product design and functionality. The pilot firms test all the elements of the product, reporting on results and providing valuable feedback and suggestions to the project team. When the product launches, it is fully ready for general use.
The pilot firms receive a startup pricing benefit and additional development support. “They also have an active voice in the development and refinement of the product specifications, and get the opportunity to shape its capabilities,” Gurien added.
A unique challenge
Testing begins by establishing connectivity between DTCC and the test firms. Fund Transfers presents a unique challenge in that it is Insurance Service’s first product offering in a Web services platform instead of the traditional data-track, mainframe environment. Once connectivity issues have been resolved, the distributors send to the carriers “test scripts” — sample transactions of fund transfers — that involve “perfect case” scenarios or “reject” scenarios.
The reject scenarios will contain errors in the form of missing data fields and improper data formats that would be identified by DTCC. They may also contain information that must be evaluated by the carrier, such as a request for a transfer of funds that exceed the amount available in an account. Fund Transfers automates the entire process of submission and acceptance or rejection.
“We are learning a great deal about the new Web services environment which will benefit our collective efforts in future development initiatives,” said Gurien. “We are proud that Fund Transfers is also our first of several services being developed to use ACORD XML standard data messaging in a real time environment.”