Finacle Blog

It is sometimes frustrating, in this era of electronic banking, when you think of the compulsion to visit a bank branch, to make a check deposit. Some European nations are already looking at doing away with checks while most parts of the world including the US have still not defined a clear roadmap to go with paperless checks. This indicates that the paper checks era will continue for some more years and there is a need to strengthen check truncation and imaging processes with some legal teeth. Here is a thought on easing the check deposit and reducing costs involved in imaging.
US Banks started with the check scanning capability at ATM's a few years back and nearly one in four,  bank owned ATMs were targeted to be enabled with check scanning feature by 2010 (Tower report). This not only adds to customer convenience but it also more than justifies the US $ 10,000-15,000 investment, by saving banks the labor cost of handling, processing, storing, archiving and reconciling check images.

With today's advancement of mobile banking, it is possible to go one step further. High end phones like the iPhone, Androids and blackberries are being supported with check imaging solutions.  Software vendors can easily extend a similar solution to all other low end sets, thereby enhancing a camera-equipped mobile phone to alternate as a handheld check reader. Customers can then email a scanned image of a check to their bank for onward processing. The bank would need to integrate this image with their existing remote check deposit platforms. This should be coupled with legal ratifications alongside treating the check images on par with the physical instruments.

Mobile check deposit would obviously be welcomed by customers, as it would enable them to deposit checks anywhere, anytime without the hassle of visiting a branch or ATM. Besides improving customer satisfaction, this facility would enhance a bank's online/mobile banking offering. The bank would also be able to process checks in multiple batches, at its convenience, at remote locations, at advantageous time zones, rather than take them all at one go at the close of clearing. Last but not least, the reduction in manual effort could improve productivity and allow staff to focus on other critical areas.

What's more, capturing a check at the earliest point of presentment and processing it through the banking system within minutes can improve cash flow for customers and float funds for the bank. Not just banks, other financial institutions including brokerages and insurance companies, the public sector, transportation companies and any other business collecting paper checks from remote locations can benefit from this service. Going forward, this facility can be extended to full-page documents as well, making it that much easier for banks and banking customers to manage their financial affairs. What we need for this to happen is a laid down process from Banks, development from software vendors and support from central Banks.

Posted by Venkataramana R at 7:35 AM | Permalink | Comments (0) | TrackBacks (0)

Recent research clarifies that the Cloud build-up is poised for growth through 2014, when Cloud services revenue is projected to reach USD 148 billion. Another notable survey states that 46% of CIOs indicate that more than half of their infrastructure will operate in the Cloud by 2015. This mood is prevalent in the banking business as well. 'Cloud' has long since evolved into more than just a buzz word. I believe the power of Cloud is the next big wave of transformation to bring in the flexibility and the ease of technology operations that banks need. The business value is simple - by leveraging infrastructure, services and applications on the Cloud - banks can focus on their core competencies and leave IT, and the challenges of managing it, to the experts.


Today, the case is most compelling for co-operative banks, community banks and credit unions worldwide looking to leverage a robust technology platform. To succeed, these banks must adopt strategies and solutions that enable them to efficiently manage operational challenges while also meeting aggressive growth targets.  A pre-configured, ready-to-deploy core banking solution delivered through a flexible business model that mandates minimal capital outlay will empower these banks to remain competitive, grow and expand business, bring in new capabilities, offer differentiated experience to customers across multiple channels while optimizing resource utilization. And the answer may well lie in the Cloud!

And there's more to it all. Far from being a uni-dimensional ecosystem - it can be enriched with layers for customer insight, advanced security and surround applications as value enhancers. After all, if it's the Cloud, the sky is the limit indeed...

Posted by Venkatramana Gosavi at 5:22 AM | Permalink | Comments (0) | TrackBacks (0)

"Facebook me", says a character succinctly in the film "The Social Network". 

Is there greater proof than social-media-sites-turned-verbs of the size of this phenomenon? Still, I'll throw in a few facts:
• 1 out of 8 online minutes is spent on Facebook
• People spend an average 1.8 hours a week shopping; 2.3 hours browsing; 4.4 hours on email; and a whopping 4.6 hours doing social stuff.
• And social networking has caught on faster than any other technology in the history of mankind.

And yet there are people who think this is hype! I ask what could be more real.

In fact, 'social' has even made inroads into the conservative financial services space. There are at least 1,430 banks from 70 countries using Twitter to prove it. And they're putting their money where their mouth is - a survey of 166 executives working in financial services says that by 2015, not a single firm will be without a social media marketing budget, however small.

The fact is that these firms have little or no choice, but to go the social way. Already, banks and financial advisors are ceding their influence over customers to social communities. The online behavior of uber-connected Gen Y is driving many banks to consider placing a virtual entity within social networks which can connect consumers directly to the bank from a social site. This means that someday in future, banking transactions will not only occur in traditional channels but also through ubiquitous exchanges, of which social sites will be a major part.

Banks are also discovering that social media can work as a catalyst for innovation and co-create products. So, they're spreading financial literacy in virtual worlds like Wells Fargo's Stagecoach Island; or like DBS Bank, announcing contests to crowdsource design ideas for a Gen Y branch; or improving their processes by benchmarking against social media.

Those that have taken the lead in this manner have managed to acquire customers, strengthen service and relationship, and differentiate themselves in a crowded marketplace.

Did someone just say 'hype'?

Posted by Arunnima B S at 11:06 AM | Permalink | Comments (0) | TrackBacks (0)

A board member of the Co-operative Financial Services, U.K. and the leader of their core banking transformation initiative made a very interesting comment about their transformation experience. He said that they could see the signs, which told them that it was the right time to transform.

Indeed, when is the right time for transformation?

While there's no simple answer to that, the outer time limit for transformation is when:
• The cost of maintaining legacy systems becomes untenable for the bank
• The legacy systems' lack of capability seriously hampers growth, performance and competitiveness or the bank's ability to fulfill new demands

Everything else is determined by circumstances. For instance, quite some years ago, a research firm reported that European banks were focused on achieving greater efficiency through core transformation; American institutions were more concerned with functionality and time to market; For Asia, 'scalability' and 'cost considerations' are driving the core replacements. Whereas for Latin America, banks are being driven by their multinational parent banks' agenda of cross-border standardization.

Obviously, geography isn't the only factor.

In good times, banks look to strengthen capability and growth - so their core transformation purpose is all about adding channels and scale. In tough times - as we've seen through the last crisis - the focus shifts to efficiency and creating competitive edge through better service and experience. M&A gives acquiring banks a solid motive for transformation, namely, integrating the systems of acquired banks with their own.

There's also the question of when to replace rather than merely renew. Renewal is tempting because it mitigates the considerable risks and cost of transformation. But, as legacy applications get more tangled, their maintenance cost goes through the roof. Also, beyond a point, it is not possible to 'work-around' the limitations of the system. Hence, sooner or a later a bank is left with no choice but to replace its systems.

That decision has become easier because core banking packages have evolved substantially to reduce replacement risk. However, once again, the bank is faced with a couple of questions - whether to move to the new system at one go or do it in phases. While going all out is risky, it costs less than phased replacement, and hence might be a better option for banks with limited resources. Sometimes, when the old systems are impossibly snarled, it's also the only way.

Big banks, however, will almost always take the phased route. But once again, they have to decide between several approaches. In your experience, which ones work best for them?

 

Posted by Balwant C Surti at 8:41 AM | Permalink | Comments (0) | TrackBacks (0)