October 28, 2016

Why India is a poster child for global banking models

Posted by Puneet Chhahira (View Profile | View All Posts) at 9:56 AM

Digital disruption is paving the way for newer, more agile banking models and India is becoming the poster child for banks all over the world. Between the innovations in mobile and social banking, and progressive regulations, India has managed to leapfrog the legacy systems and processes that burden most banks in the world.  One of the most recent technology led revolutions in the banking front in India, was the launch of Unified Payments Interface (UPI), by the National Payments Corporation of India (NPCI). The UPI has the promise to be a game changer in the era of cashless payments. Imagine a scenario where you don't have to jump through all the hoops to make a payment, and just need a unique ID, similar to an email ID, to make a payment. Imagine a cashless transaction, that doesn't require you to type out your credit or debit card details.

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October 30, 2014

The evolution of banking channels in India - II

Posted by Anuradha Mallya (View Profile | View All Posts) at 12:48 PM

In my last post, I briefly discussed the historic evolution of non-branch banking channels in the Indian context. Almost every channel has a tremendous potential for growth, albeit from a small base. Going forward, banks will have to focus as much on the distinct financial needs of vast swathes of the population as on technology and innovation in order to accelerate the uptake of alternative and digital channels.

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October 15, 2014

IT Solutions Moving Forward

Posted by Reghunathan Sukumara Pillai (View Profile | View All Posts) at 8:23 AM


IT vendors assisting banks in front- and back end processes and accounting either through a branch- or centralized core database developed several software solutions. They also built compliant solutions enabling banks to follow regulations and processes, reduce manual labor, errors and omissions and increase automation. These solutions were mostly utilized for streamlining operations and improving customer service. This set of solutions may be treated as first generation IT in the banking and financial sector.

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August 22, 2014

Optimizing Training Costs in Core Banking Transformation

Posted by Balwant C Surti (View Profile | View All Posts) at 11:38 AM

Core Banking transformation enforces change of such magnitude that it requires massive re-training of staff. Almost every user in the bank will be touched by it and therefore large budgets need to be set aside for training. In a budgetary crunch, when banks are looking at cutting costs everywhere, training is almost always a casualty. At the same time no one wants to cut corners in improving employee productivity.

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May 29, 2014

"Groupon" Banking

Posted by Balwant C Surti (View Profile | View All Posts) at 10:07 AM

Who does not love a deal? Companies, such as Groupon have made a global business around deals, local ones in particular. Combine that with social media, deliver deals on mobile and analyze the resultant Big Data, and we are talking about an interesting opportunity for banks.

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Banking Complexity - Root Cause

Posted by Rajashekara V. Maiya (View Profile | View All Posts) at 8:19 AM

Is complexity the natural byproduct of sophistication? Definitely not, if complexity drives up costs, drags down value and shuts out a potential 20% in profits. But that is exactly what complexity is doing to banking, a sector that ranks 6th on a global complexity index featuring 26 industries.

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May 28, 2014

Banking in OZ

Posted by Anuradha Mallya (View Profile | View All Posts) at 1:36 PM

After having emerged relatively unscathed from the Great Financial Crisis, Australia's banking sector has now been ranked as one of the five safest in the world. Even in the immediate aftermath of the crisis, the country's banks as well as the regulatory mechanism were touted as benchmarks for fiscal prudence, resilience and oversight.

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April 30, 2014

Specialized Solutions versus Core Banking Solutions

Posted by Reghunathan Sukumara Pillai (View Profile | View All Posts) at 6:34 AM

When banks across the globe are investing in specialized solutions for Front End Teller, Loans, Deposits, General Ledger, Payments, Cash Management, Trade Finance, Private Banking, Customer Data Management and so on, the role of the Core Banking Solution (CBS) needs to be reassessed. Initially,  the core banking solution was0020designed as an integrated solution providing a comprehensive functional offering in all areas of different lines of business, with transaction processing and accounting capability. The legacy software solutions used in banks developed by local vendors presented architectural, technical and functional constraints in scalability and performance, creating a demand for core banking solutions. Also, the maintenance and support of multiple solutions and vendors was a major issue for clients globally, making a core banking solution with integrated offerings the preferred choice.

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April 29, 2014

Functionality versus Process versus UI versus Regulation

Posted by Reghunathan Sukumara Pillai (View Profile | View All Posts) at 7:27 AM

The core banking solution was designed initially to centralize accounting in banks and enable their customers to transact from any of the branches or channels connected to the central database. Functionality and processes were built into the core banking solution, based on the software's country of origin. The primary design was based on the knowledge of local banking/domain experts in the product company. Though the solution catered to most banking needs of a particular country or region, in certain markets, it faced fitment challenges both on functionality and process compliance. Variations in the account opening, customer creation or loan approval process in different markets often required subtle or even major changes in the software solution. Customization was required to achieve process automation to meet market requirements.

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February 27, 2014

New ways of branch banking

Posted by Tarun Kishore Sonwalkar (View Profile | View All Posts) at 6:16 AM

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The current pace of change in banking can be mind boggling for customers. Much of that change is due to the influence of the retail sector, and banks' implementation of "retail style" banking to cater to the new generation of customers.

To be sure, banks need to attract the younger demographic segments, as they are the source of future revenues. The younger generation is accustomed to retail-like consumption experience, such as the one provided by malls and interactive smart stores. These customers, being highly digitally driven, will expect to use digital channels like Internet and mobile for regular banking activity. But when it comes to more complex or significant transactions, these customers will feel the need to visit their bank branch to seek advice and guidance.  

That being said, bank branches cannot hope to cater to next generation customers in the age-old way. They should prepare strategies for making retail banking more customer-centric with the help of innovations based on smart banking technologies and best practices from around the world. This could well call for going the way of retail - with branches in supermarkets and malls, smart stores like those from Apple complete with touchscreens, self-serving kiosks, 'muzak', and live video help from banking specialists and advisors.

However, while looking to secure their future revenue streams, banks must not neglect the interests of their existing and traditional customers. This means that they must change branch banking in other ways too.

For instance, banks should effectively utilize smart banking technologies and practices to provide access to all the details of the customer relationship, such as credit scores, banking history, and other accounts held. This can be augmented by offering access to software that predicts customer preferences and future banking service requirements based on past behavior. All of these together would help the banks provide more personalized and suitable sales and service offerings in order to retain their existing customers.

February 19, 2014

Cloud: Clear Opportunity for Banking

Posted by Shabbir Mahesri (View Profile | View All Posts) at 9:56 AM

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The transformational possibilities of the cloud model have started to outweigh security and governance concerns in the banking sector. These concerns are increasingly being considered as challenges to be overcome, rather than impediments to cloud adoption.

Cloud empowered banks are integrating multiple technologies, from mobility to social to analytics, into banking strategy to redefine customer experience, engagement and choice. They are also changing traditional IT structures by delivering various functionalities as services to business users.   

Large banks, with the wherewithal for private clouds, have been able to simplify their infrastructure acquisition cycles by shifting to the IaaS model. The logical progression is towards PaaS, where business partners migrate their applications to the same platform that internal users access as a service. Banks will increasingly move towards a standardized multi-tiered solution, comprising a front end, middleware and database, as well as a platform integrating with their administrative and development solutions. 

IaaS and PaaS are also streamlining the procurement and delivery of infrastructure, applications and services. Infrastructure provisioning is much simpler and the resultant efficiency and transparency is changing organizational processes and structure. With the advantage of full visibility into self-service IT consumption, resource usage can now be instantly charged back to the appropriate functions, a process that earlier used to take weeks.  

Software upgrades in the cloud are seamless, automatic and frequent, which is in stark contrast to the long upgrade cycles in an on-premise environment. Imagine the implications for something as vital and large as core banking. That being said, banks and their technology partners are yet to resolve the challenge of delivering customized components of each bank's core banking software on top of the basic cloud solution. 

If there's a downside to the cloud, it is that the transition from on-premise to private to public IT infrastructure is also characterized by the loss of control over service providers. Smaller banks, without the encumbrances of legacy hierarchies and processes, are able to deal with this more easily. The larger banks just need to adapt their internal structures to the reality of multi-vendor IT environments. That's a small adjustment to make en route to huge opportunities in the cloud.

December 9, 2013

Is the time of Core Banking over - Time for Enterprise Solutions?

Posted by Tarun Kishore Sonwalkar (View Profile | View All Posts) at 7:40 AM

Here goes the life history of banks -

Banks were first created for handling all the financial needs of people and businesses with licenses to run their segregated operational world- designated masters of their turf.

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October 11, 2013

NPA (Non-Performing Assets) Restructuring and Core Banking Solution

Posted by Gaurav Gupta (View Profile | View All Posts) at 5:29 AM

Restructuring of Loans:

Debt Restructuring, a common practice globally, provides relief to distressed borrowers. The intent here is to support deserving businesses by extending loan tenures, putting interest payments on hold, converting debt into equity, issuing fresh term or working capital loans, waiving off the interest and so on.

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September 12, 2013

Managing costs through enterprise-class components

Posted by Amit Dua (View Profile | View All Posts) at 6:19 AM

In 2011, global banking ROE dropped to 7.6%, significantly below the average cost of equity.  Industry profitability is currently hovering at around 8%, down from the pre-crisis levels of 14-15%. Revenue growth continues to be weak, if not in decline, across most markets. The cost-to-income ratio, on the other hand, seems stuck at an unhealthy level of 60. 

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September 10, 2013

Simplify to stay agile

Posted by Venkatramana Gosavi (View Profile | View All Posts) at 6:06 AM

From a policy perspective, 'too big to fail' warns of the broader economic consequences of failures at large banks. But to banks that are up and running, there's another phrase that's raising red flags - 'too complex to compete'.  

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September 6, 2013

Simplicity as sophistication

Posted by Jaymalya Palit (View Profile | View All Posts) at 5:22 AM

Banking is an inherently complex industry. But for long the sector has been able to leverage technology to manage business complexity and to drive growth, profitability, customer experience and innovation.

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September 5, 2013

The cost of complexity

Posted by Rajashekara V. Maiya (View Profile | View All Posts) at 11:46 AM

Towards the end of last year, an IT trade body in the UK released a report calling for financial regulators to force banks to overhaul their technology infrastructure. This came on the heels of a massive tech outage at one of the country's largest banks that locked nearly 12 million customers out of their accounts for almost a week. 

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August 30, 2013

Presales Scoping of Core Banking Software Projects

Posted by Reghunathan Sukumara Pillai (View Profile | View All Posts) at 5:03 AM

Before a core banking project gets underway, it is vital to gather relevant information in order to achieve the desired end result. This "scoping" of requirement as part of presales is critical for successful implementation of a project. In a core banking context, project scope includes the identification of modular components like Trade Finance, Corporate Loans and so on, as well as optional features. Certain solutions, such as AML and Basel II/III are mandatory across banks worldwide regardless of whether or not they are explicitly mentioned in the requirement list.

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July 10, 2013

Scoping of Software Projects

Posted by Reghunathan Sukumara Pillai (View Profile | View All Posts) at 6:05 AM

Core banking transformation is a mammoth task involving huge investment, planning and strategizing. On procuring budgetary approval for the project, the next step would be to identify and engage an external consultant to aid the bank in the evaluation process. Having understood the bank's business strategy and requirements, the consultant then converts them into a formal Request for Proposal (RFP) covering functional, technical and implementation aspects. It is crucial for the bank's project management team, comprising its business heads, to engage in continual dialogue with the consultant to ensure that all facets are adequately covered in this document.

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July 5, 2013

Rationalized Software Cost

Posted by Reghunathan Sukumara Pillai (View Profile | View All Posts) at 11:25 AM

Banks investing in core banking software have to be cognizant of the various costs involved in procuring and implementing the same, such as:

a) Licensing
b) Implementation
c) Maintenance and Support

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April 25, 2013

Future-proof Banking Solutions

Posted by Reghunathan Sukumara Pillai (View Profile | View All Posts) at 9:21 AM


Industry requirements often outpace technology solutions and there is a continuing need to plug this gap. This is especially true of the banking sector. Software companies have to be somewhat intuitive in terms of product design and development, in order to cater to the emerging trends and to stay in line with market dynamics.

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April 4, 2013

A Core Solution to Banking Fraud

Posted by Gaurav Gupta (View Profile | View All Posts) at 8:31 AM


"Where there is a will, I want to be in it." This popular Paraprosdokian is a lighthearted take on the irresistible lure to make a fast buck. Fraud, on the other hand, is a serious matter.In 2011-12 alone, Indian banks reported 5,569 cases of fraud, involving a staggering Rs. 4,448 crores.

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March 21, 2013

Risk Management and the Role of Core Banking Systems

Posted by Raman Preet Kaur (View Profile | View All Posts) at 10:31 AM

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It's all about future-proofing the bank's risk and compliance. The recent credit crisis has underscored the importance of proactive risk mitigation for banks. Banks need to first effectively and efficiently identify the potential risks associated with each and every banking process and then measure the same. Every process, operation and service performed at the bank needs to run through the 'X-Ray machine' of the risk department so that every possible transactional risk becomes known. Doing so can mitigate risks well before they turn viral.

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February 26, 2013

Prevention of bypass surgery or heart attacks for core banking

Posted by Reghunathan Sukumara Pillai (View Profile | View All Posts) at 5:42 AM

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Core banking systems were originally envisaged with the singular aim of maintaining customer account data in a centralized system accessible across the bank's network of branches. Account aggregation into assets and liabilities for general ledger consolidation was inherent in the core. To ably assist front office operations, the system comprised simple processes. Higher value transactions were often routed through multiple approval levels within the core, with a defined workflow.

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