Technologies Used by Societe Generale Bank
Societe Generale Bank used Eliot, a proprietary system for trading. Kerviel knew how to manipulate the system. He knew the timing for the reconciliation every night for the day trades. Hence, accordingly, he would delete his trades and re-enter these unauthorized transactions in Eliot without being detected. The bank used Zantaz, a system for e-discovery and archiving software. The compliance team used RISQ/CMC, a trade-tracking dashboard which uses Accurate NXG (a reconciliation, exception management and workflow software package).
(Reference 13)What should Societe Generale do in the future to prevent this? According to Diamond Management & Technology Consultants, this fraud was due to a deficiency in Societe Generale's operational risk management. To avoid this situation, Societe Generale needs to have automated processes, an internal controls culture and strong IT access controls in place. (Reference 14) Internal controls and risk management are key Organizations must improve and strengthen their internal controls and risk management procedures. Banks and financial institutions need to build an internal controls culture which spans the business from top to bottom and also extends across businesses. They need to improve their controls for cancelled or modified transactions, their controls for transactions over certain limits and their procedures to act on alerts. Banks can use an ERP solution such as SAP, which is a leader in the banking industry. Among the 30 largest banks of the world, 21 are SAP customers. The SAP for Banking portfolio includes compliance and risk management solutions. (Reference 15) SAP's partner, realtime North America, provides a biometric system, bioLock. This requires biometric authentication for users of the SAP system. bioLock is currently the only certified biometric solution for SAP R/3. One of the co-authors of this article has interviewed at a central bank that is using bioLock, and has received positive feedback about its simplicity and effectiveness.
There were 75 warnings regarding Kerviel's rogue trading. Yet the authorities failed to detect Kerviel's rogue trading until it escalated to such a high level.