...thousand and odd miles....

...that one travels provides perspectives to things that different, difficult, that enlighten and some times demonstrate the insignificance of a grandeur against the massive vastness of the unknown.

Somebody was telling me yesterday about how nomads delivery their children. They are always on their move on their thousands of miles of journey and when the time for delivery comes, they stop only for a while and move on with the new born when it is done...

As we become more civilized we provide better care, better hygiene and show let us say better culture but in the end sum we are the same as the nomads, we achieve the same result sometimes worse and glorify what otherwise is insignificant and routine for a grass root society. Within our respective societies we are just as well placed as we deserve. The civilized as we describe a section are now a laughing stock of who we call as nomads and tribals, the only things that they may not have is perhaps a car for their journey....

Is our destination pre-defined. Is it that despite our thousands of miles of travails we are destined to return to our roots. What is it that we should count for air miles - the thousands of odd miles or as the crow flies record that we are back to where we were born from......

Banking Products and Companies

This is my fourth job. I have spent more than 4 years in two of the last three and about 2 in another, this is a new job for me. All my employers have been companies that have some hand in developing applications for the Banking Industry.

There are lot of similarities and an even higher disparities in the way these companies operate. The differences are wide and varying.  In terms of the technology used - some prefers open platform and industry standards, some proprietary infrastructure, some are less adaptive to technology some work on support from partner applications. There are differences in the way the solution is approached some offer products and let somebody else pick up the incremental bits, some have the aspirations of becoming a systems integrator along with the product and offer loads of services, some refuse to accept that the market is changing. Even the deployment architecture changes depending on what else the product and the company offers. As companies, the way they manage people are also different including how they deploy people on job and at Banks. Of course some are more professional than the others. I thought Banking would remain the same and I am glad to report that it is the same. While one may use a different term and have different approach to solving a problem, the problem remains the same.

I can visualize the problems that banks, their CIOs and Business Users have in selecting the products. They are concerned that some of these companies and products may change, some may advance and become unaffordable, some may collapse, may bring in complexities, force costs for upgrades and maintenance, refuse to change and what and all. There are industry consultants and market watchers who survey the industry and provide data. These data are at industry level. A bench mark or a yard stick depends on defining the standards that could be accepted.

I do not however see such a common process being defined that is accepted by the industry, like say in the ERP industry which I should also indicate has multiple vendors of different sizes. There are some standards being defined for interoperability between banks but not while defining the processes for operations within the bank. Perhaps the answer lies in education, I don't see Banking Processes being taught in MBA schools, for most Banking is the same as accounting. Accounting may have got standardized but I don't think Banking has.

I have seen Product Managers, Analysts, Consultants, Developers and others creating scenarios on their own. In fact, I have seen Bankers not agreeing to a process that has been implemented in a similar bank for a common product perhaps because of the history of incremental development of the IT process.

If it is the banks that are driving the IT market then it is high time that this standardization emerges from them for their own cost benefits. If it is left to IT companies, they will do it in their way, perhaps each in an optimum way but none the less their way. If it is the latter then we would have to wait for one vendor to take a significant leadership role and market share before this standardization kicks in. Till that time services in Banking will remain as a major revenue earners for Banking companies.

A benevolent Dictator

Please don't take me wrong. I am not speaking of those absolute rulers who claim to be good to their citizens nor those benevolent kings who are written about. It is not the iron fist that I am taking about, it is the iron will. It is these people with 'Iron Will' that will shape destiny either of their own or that of the society or the nation that they decide to own. These are the ones that change the course of history, move mountains and define the contours of life and living in a society.
Why is this Iron Will required, is democracy not a suitable tool, isn't consensus the right way. The answer is yes but consensus will require to be built by a strong mind after convincing the many to enforce democracy, if not what would come out would be a jigsaw with no purpose that no body can solve nor can be solved. One would require a strong, sharp, stable, experienced and honest mind that would assimilate the aspirations of one and all  to convince, apply and complete without having the need to be overtly verbose or unnecessarily subservient.
There are in many cases genuine divergence of thoughts and perceptions of the situations. There divergences and indeed contradictions are often due to cross purposes of the objectives of the concerned parties in many cases to the extent of being detrimental to others needs. These diversities will require to be addressed by the leader to create a framework, perhaps at costs to some in the short term but for the good of all.
Mahatma Gandhi had it in him to be Iron Willed, he never ruled but had his way. He changed the course of India, he imposed his views and in most cases got his way, better than those tyrannical dictators.
Does Anna Hazare have it in him to do that good to us which the Mahatma did to our nation 6 decades ago. Let us hope he has for our own good.
http://my1000oddmiles.blogspot.com/

Payments and Account Reconciliation

The latest RBI notification released to Banks in India partipating in RTGS and NEFT notified over the week end on Aug 13, 2010(RBI /2010 - 11/169), seeks to define standards for account reconciliation for return instructions of RTGS and NEFT transactions in India. This is another one in the series of regulations deviced to provide clear information on payment and payment status to the end customers. This notification deals with relating a returned instruction to the initial instruction and to reflect the same on account statement. A similar notification released a few months ago for NEFT created a new message for sending confirmation to the originating bank on the successful credit of a transaction at the beneficiary. This information has to be communicated to the originating party by e-mail or SMS if available.

When the payment system is designed, the people involved - the bank, software vendors, regulators and many others tend to ignore a key actor - the customer.

There are many such information that the customer needs to be aware of - the time when the payment will reach the beneficiary, the location where the payment currently is, cost, information of re-schedulement of a payment, time and date of actual delivery and more such. The information can be made available to the customer by default, by demand or on subscription. Rather than doing a piece meal deal, RBI can go the full length and standardize the communication requirements to the end customers of the bank.

This communication strategy is nothing new. There are standards defined as a part of PSD - The payments services directive in Europe that define among others information that has to be given to the customers. Payment Systems are vehicles that transport funds and are systemically important infrastructure for the economy. Defining certainty and transparency are crucial for transactions that these payments support.

Another issue to consider is the life of this information. One should not forget that this information could be required long after the transaction is completed. The account statement is perhaps the most important container of information to the customer. It is important to provide the customer significant handle on the account statement to address any subsequent query. Using the handle sufficient infrastructure should be provided to access further details.

For many in the software industry customer statements and advices are side players to the larger power horse being built. It may indeed be a by product of a process but for many this statement is the main actor and not just a bit player.

Payments - Centralized HUB- Regional Regulations

A payment hub has been a buzz word in the banking industry and in the corporate payment world for some time now. One of the objectives is to have a centralized location for defining payment processes, identifying cost due to scheme operators and for liquidity scenarios, regulatory compliance, identifying the best route among many others.

Banks and Corporates who have operations in multiple countries try to leverage their presence in different countries to save on costs incurred on international payments as also to streamline domestic payments and reconciliation. Banks in particular can create a central payment processors that route the payments to their operations in the countries in question for them to forward the payments further through the domestic networks to reach the end beneficiary.

It is none the less creates a very efficient mechanism for funds transfer but has the potential to fall foul of regulators who would want to track the source and purpose of funding, tracking imports, exports and remittances and ensure that the data of the citizens and their corresponding transactions do not reach unrelated hands.

Some of these regulatory requirements run in contraventions of the centralized processing that the banks and corporates would want. Apart from routing, centralization would include monitoring liquidity position of different entities and account along with different risk controls relating to non delivery and return of instructions.

There are different network topologies that can address these issues. Only the inter-bank accounting entries, a part of the complete payment can go to the processing hub or in some cases just the sufficient data for routing. The central hub can revert back with the confirmation of settlement or the route based on the bare bone structure to the source who can route the complete instruction to the intended recipient of the instruction.

The settlement can be effected by the central switch or can be a bilateral settlement depending on the nature of relationship between the banks or parties involved.

Bring Clarity first

When we were working on creating a solution architecture for a mid-sized regional bank we faced a fundamental problem. The various departments had been purchasing software based on their individual needs. Many of these departments were customer facing and almost every one of them had reports to produce that were regulatory in nature. There were different types of loans that were supported by different applications. We had fundamental issues to solve which application to migrate, how to bring about a uniform customer experience from among the variety of applications, how do we bring in the synergy between the personnel using the different applications. We finally managed to get a final list. The bankers had to again sit and work out a synergy between the products that they were offering and sit down and create a reporting and communication strategy. In the end the project was worth it - but the requirement phase extended and the project was delayed. There needed a lot of personal maturity in handling the situations.

I see such confusions in some IT firms too. A decision is centralized but the source of information is not. The end result is defined but the path is let to others to discover. While personal commitment will carry the projects to successful completion the journey will be tedious and at the expense of time that could have been utilized better.

A journey has to be planned when a goal is defined. A goal has milestones and has to be sponsored and measured on scientific numbers. For the starters we should bring in clarity on what we have and what is wrong. Get the data and problem right and then solve them. Don't solve the wrong problem.

IT Transformation - Simplifly

I was reading 'Simplifly' Capt. Gopinath's biography/autobiography. The issues that he faced with Deccan Airway's IT infrastructure caught the eye.

The speed with which the decision was taken to transform the platform and the execution associated with it is something that I have not seen in Banking that is as mission critical as Airlines that Capt. Gopinath is in.

IT investment is for a long haul. Migration to a platform has to address many issues. The migration in question itself could be due to the obsolescence of the platform or technology, loss of value for the changing Business requirements, expensive maintenance, issues with scalability, churning of vendors among many others. A migration should ensure the same issues should not recur post the activity over a projected period over which the return on investment is to be recovered.

A migration of an IT system is sometimes like child birth - the result is a new life and changes to all involved. The organization will have to re-invent itself, it's processes, organization structure, accounting and control structure, relation ship with end customers and many others. These are not small issues and requires thorough brainstorming and laying out. The plan has to be meticulous and despite the fact that too many people are involved all the people have to be consulted. A sponsor with a personal stake should take the ownership of the transformation and lay out the rules and take and assign responsibilities.

It is possible for a smooth migration to take place in the IT infrastructure. It requires building a check list, ensuring that nothing is consciously ignored. deliberate communication to stakeholders, explicit solicitation and confirmation of commitment, leadership, planned investment and execution, availability of experts and primarily assignment of responsibilities and tracking.