By Will Towning and Carlos León
Every Financial System needs a Digital Twin.
For decades, industries like healthcare, engineering, defence, construction and transportation have harnessed the benefits of digital twins to experiment, design, and test before building the real-world equivalent.
Payment and settlement ecosystems are no different. They require constant modification and modernization to accommodate advances in policy, technology, behaviours and functionalities. Implementing these changes is often a very difficult, costly and risky exercise due to the known and unknown complexities of the multiple, tangled agents, systems and behaviours involved.
The only way to understand the true (known and unknown) complexity is to construct a digital twin of the payment ecosystem and learn through simulation.
What is a digital twin?
FNA’s Digital Twin solution builds a replica of any payment or settlement system and then activates it with real, historical transactional data, or with synthetic data. The result is a hyper-realistic virtual model of the payment system or ecosystem, able to iterate and test based on normal and stress scenarios .
By creating digital twins, Central Banks, FMIs & financial institutions can simulate how their systems would perform under different designs, conditions or scenarios without disrupting the real-world system.
The Digital Twin approach to complex ssystems is about learning-by-simulating instead of learning-by-doing. Learning-by-simulating not only avoids the difficulties, costs and risks related to learning-by-doing on real-world systems but allows for flexible and comprehensive iteration and testing to achieve a reliable plan.
What can a digital twin be used for?
A digital twin is the only way to analyse complex systems. Simulation allows organisations to:
- Evaluate design options and features to reduce risk or optimise performance
- Quantify the business case and communicate with stakeholders
- Quantify the macro-impacts of system changes, such as financial stability and economic implications.
- Quantify liquidity, operational and cyber risks to inform decisions and communication
- Stress testing to ensure the safe functioning of the system against bespoke scenarios
What are the benefits of using a digital twin?
De-risk the build: Learning by simulation is a cost-effective means to address the same question and challenges they would otherwise face during the implementation and build phase.
Reduce costs and accelerate build: By learning through simulation early on in the process, organisations can more accurately plan the project, including producing a Request for Proposal. This reduces the uncertainties that drive up proposal costing and accelerates the build time.
Improve performance through benchmarking: By configuring the perfect operational environment within the digital twin and running it in parallel to the real system, organisations can analyse whether the system is performing according to how it is supposed to. Alternatively, organisations can benchmark themselves against a digital twin of the past or those of other systems.
Maintain safe and efficient functioning: Monitor the digital twin with live data and anomaly detection-driven alerts, as well as stress testing against bespoke scenarios.
FNA’s Digital Twin has delivered tangible outcomes for our clients
“The FNA Platform is unique in the marketplace as it allows us to design, stress test and monitor a complex system such as our upcoming Lynx interbank payment system.”
Neville Arjani, Director of Research, Payments Canada
“Using the FNA Platform, we have been able to simulate the transformational effects which Fnality will be bringing to the industry and therefore determine the significant liquidity benefits of the proposed service. This insight has enabled us to prepare, design and communicate exactly how our service will work.”
Rhomaios Ram, CEO of Fnality
“FNA’s simulation technology has enabled RTGS.global to produce analytics, using synthetic data, that will play a key part in our regulatory engagements, as well as to substantiate the systemic importance of our system”
Dave Sissens, CEO of RTGS.global
Learn more about FNA’s Digital Twin Solution here >