RBNZ introduce test automation for RTGS and CSD with XMLdation

Reserve Bank of New Zealand explains why they use XMLdation Simulator to address testing challenges during this period of considerable industry change.

Ben Waterreus is manager of Application Support & Technical Operations, in the Payment Services Directorate at Reserve Bank of New Zealand – Te Pūtea Matua. XMLdation posed him some questions.

What were the primary challenges or pain points RBNZ faced before implementing XMLdation solution?

The Reserve Bank of New Zealand – Te Pūtea Matua provides two payment and settlement systems for banks and key financial market participants. These systems are the Exchange Settlement Account System (ESAS) and NZClear which are systemically important to the robustness and efficiency of Aotearoa New Zealand’s financial markets and are regulated as such.

These systems protect and promote the stability of the financial system and support the smooth functioning of the economy. A safe and efficient payment system is critical to supporting day-today financial transactions in the economy.

The Reserve Bank supports New Zealand’s finance industry in providing innovative services while ensuring the payment and settlement systems are reliable and resilient. It also oversees the supporting infrastructure to ensure these systems are efficient, flexible and robust.

The two systems give their participants access to several interfaces to automate transactional activity removing the need for manual intervention by operators. Availability of the interfaces is critical to the operation of the systems.

Prior to working with XMLdation, the Reserve Bank relied on the availability of external systems to complete testing of the interfaces, and there are messaging costs it incurs with every test run.

The interface testing was largely done manually and required significant effort and time to setup and run. The testing relied on key SME resource being available and was more prone to error due to the manual nature of the testing.

In anticipation of a period of considerable industry change and development, the Reserve Bank investigated options to implement more robust, thorough, and reproducible testing practices and tools to ensure changes do not impact the availability and quality of the interfaces.

The objective was to reduce the effort, cost and risk associated with testing the core ESAS and NZClear interfaces through the introduction of automated testing.

When searching for a solution to solve these pain points, what went into RBNZ’s decision to pick the XMLdation solution?

A robust selection process was undertaken to select a provider. XMLdation was one of several companies which put forward a proposal for a solution to meet the Reserve Bank’s requirements for an automated testing tool. Its offering was the best one that met the requirements. The key decision factors were:

• having experience implementing similar solutions at peer central banks
• prior knowledge of messaging standards (both MT and ISO 20022)
• providing an out-of-the box solution capable of creating, processing, and validating MT and ISO 20022 messaging.

In addition, the initiative is aligned with the Reserve Bank’s goal to maintain high quality service and outputs for its customers and automate and streamline processes where possible.

How did the XMLdation solution address those challenges / contribute to customer objectives?

The XMLdation solution reduced the costs to the Reserve Bank of running large performance tests.

It reduces the operational effort and time required to complete interface testing against the ESAS and NZClear systems (both performance and regression testing), freeing up resources to focus on other work.

Removing the need for manual verification of messaging formats and standards against agreed specifications, also reduces the time it takes to identify and report defects.

The XMLdation solution future proofs the Reserve Bank testing practises, providing functionality over and above what the Reserve Bank has previously had. This includes having an easy to use user interface, meaning it could easily expand the number of team members who can complete performance and regression testing without lengthy training. It also supports API services.

The solution removes the reliance of external systems to complete testing (using its simulator functionality), provides consistency across test runs, and reduces the time to complete testing.

In terms of maintenance and support, XMLdation is experienced dealing with SWIFT messaging standards, and has a proactive maintenance and support service which includes security patching.

Are there any specific metrics, such as efficiency gains or reduced errors, that RBNZ can share without disclosing sensitive information?

The project concluded at the end of 2023, so it is too early to provide formal metrics as it has only recently come into Business-as-Usual.

What strategies or features of the XMLdation solution were most valuable to RBNZ’s operations?

The Reserve Bank’s preference was to acquire a tool used by other central banks or financial market infrastructures. It needed to be fully supported and maintained by vendors with knowledge of the SWIFT network and message types/standards, to meet the Reserve Bank’s current and future needs. It has been used by the RBNZ test team to manage regression testing and also for testing during the ISO 20022 migration.

The features the Reserve Bank has found most valuable are:

• the ability to automatically simulate external systems and processes
• automatic validation of message structures against the specified standards
• having the option to develop test runs via an easy to use UI or API

Can RBNZ provide high-level insights into the outcomes or improvements they experienced after using the XMLdation solution?

Anecdotally, when the Reserve Bank’s team started work on the project, benefits such as efficiency gains and smooth-running of testing were noticeable. Another aspect difficult to quantify is the confidence the payment services team quickly acquired in the XMLdation test tools to complete the required testing, given the systemic importance of the ESAS and NZClear applications.

What would you say to other companies that are thinking about using the XMLdation solution?

The Reserve Bank’s Payment Services project team had a positive experience working with XMLdation on the implementation of its Payment Simulations for enhanced testing processes. XMLdation have been professional and helpful throughout the project phase which augers well for a positive on-going working relationship.

About XMLdation Simulator - Simo®

XMLdation are specialists in financial messaging, delivering an out-of-the-box Simulator solution, Simo®. The product is designed for testing payment systems at banks and at Payment System Operators