Italy’s SIA set to connect to New York as recovery plan bears fruit

Milan-based financial technology firm SIA is expanding its reach to New York later this year in a move that caps the latest-phase of a three-year recovery plan for the firm.

The extension of SIA’s Financial Ring to New York follows that activation of a hub in Frankfurt is the third cornerstone, after Milan and London, of the fibre optic, high speed and low latency network infrastructure providing direct access to connect banks and financial operators to stock markets. Currently it connects 16 trading venues and another four are scheduled to be added soon.

The expansion of the Financial Ring is one of several major projects SIA has underway, says Massimo Arrighetti, chief executive of the company, (right) who has been in charge since its main shareholders, including the major Italian banking groups, decided in 2010 to refocus it as a strategic asset and expand beyond the borders of Italy. “After recently activating the Frankfurt hub, we are completing the final tests in New York and expect to have customers connected in the summer. It’s a high-speed and low latency network infrastructure, based also on Milan and London cornerstone, accessing to 16 international trading venues and other 4 will be added this year,” he says.

“Projects that were on paper 12 months ago are now on the air, and despite the crisis it is probably the best year for SIA since it was born,” says Arrighetti.

Banking Technology spoke to Arrighetti as the company was about to release its financial results, and he could not give specific details, but said:“We have finally come back to growth in revenues, more than 4%, and at the same time we continue to invest in efficiency, so the profitability of the company is now up. A path of improvement for the third year has had a positive evolution; we can consider the turnaround and restructuring of the group complete – we are now back in the market with new offerings that are state-of-the-art.”

[The company reported revenues up 4.2%, net profit up 67.8% and return on investment  at 22% compared to the 16% forecast for the end of the three-year period. It also announced a shareholder dividend for the first time in four years , €25 million euros equivalent to 0.15 euro per share.]

The company is also involved in two high profile European level. One is the MyBank internet banking initiative, which Arrighetti says “is still in a preliminary phase”.

The second is as one of the providers in partnership with Colt , along with Swift, for the access network to the Target2-Securities project.

“On T2S, we are in the process of talking to all of the CSDs across Europe, but it is still some way away,” he says. “It will take some months before the CSDs have made their decisions, but we are confident that some will evaluate and consider our new initiative.”

Another strategic project that Arrighetti says will have more visibility is its TSM m-payments hub for NFC payments services, developed with telcos and banks. “We have a unique solution that has had a big success in Italy, and we will now be expanding outside Italy. So far most of the initiatives have been one-to-one, between one bank and one telco to install its own card with a very rigid framework. The solution we have put in place is a very open solution: no matter what provider you have, you simply upload details of your credit, debit or pre-paid card on your smartphone and you’re ready to pay at any NFC point-of-sale.”

So far pilot projects have been started with two telcos – Vodafone and 3 Italy –and two banks, BNL, part of the BNP Paribas Group, and UBI Banca. Others are scheduled to be announced later this month.

“We have started to introduce the concept elsewhere – the telco companies as Vodafone and 3 Italy are enthusiastic because it allows them to set up with any bank through a single connection to SIA, through with we manage all the technical aspects,” says Arrighetti.

Part of the recovery plan was to expand beyond Italy, and this too is proceeding apace. Germany is one of the target countryies where SIA is looking to extend its presence.

The Middle East is also a good market: “We are working in four countries and bidding in a fifth,” says Arrighetti. “We can provide what we call a country package that consists of an RTGS system for the central bank, a clearing and settlement system for both the central and commercial bank to manage credit and debit transfers and we have a fixed income trading and post trade platform, so we can provide a turnkey financial infrastructure for a country that can run on our platform in Milan, or we can build and operate it directly in the country.”

The system that the company put in for Palestine is, says Arrighetti, the only one of its kind that can operate in four currencies simultaneously, but other parts of the region have different issues. “Bidding in Syria and Afghanistan is not without some issues,” he says. “We’ve won in some cases but we’re waiting to start the installations because we can’t put our staff at risk.””