SYMBIOSIS INSTITUTE OF COMPUTER STUDIES AND RESEARCH

BANKING & FINANCIAL MARKETING-II

RETAIL BANKING

Group # 1
Submitted To: Mr. HIREN MALANI Date: 10th July 2010 Submitted By: ANKUR TIWARI (09030141001) NISHANT SHARMA (09030141014) DEBASHREE MANDAL (09030141027) RITESH NARKHEDE(09030141118)

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Introduction What is Bank What is a Retail Bank Types of Bank Business Model Potential For Retail Foreign Equivalent Types of Retail Banking SERVICES Advantages & Disadvantages CASE STUDY Market Trends Opportunities Challenges IT Solutions for retail banking Core banking solution Domain specific banking solutions Platform for IT Retail Banking FUTURE OF RETAIL BANKING

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RETAIL BANKING
Introduction
The market today gives Banking a challenge to provide multiple and innovative contemporary services to the customer through a consolidated window as so to ensure that the banks customer gets Uniformity and Consistency of service delivery across time and at every touch point across all channels. The pace of innovation is accelerating and security threat has become prime of all electronic transactions. High cost structure rendering mass-market servicing is prohibitively expensive. One such offering to the Retail Customers is the advent of Retail Banking.

What is a Bank?
A bank is a financial intermediary that accepts deposits and channels those deposits into lending activities, either directly or through capital markets. A bank connects customers with capital deficits to customers with capital surpluses. Banks act as payment agents by conducting checking or current accounts for customers, paying cheques drawn by customers on the bank, and collecting cheques deposited to customers' current accounts Banks borrow money by accepting funds deposited on current accounts, by accepting term deposits, and by issuing debt securities such as banknotes and bonds. Banks lend money by making advances to customers on current accounts, by making instalments loans, and by investing in marketable debt securities and other forms of money lending. Banks provide almost all payment services, and a bank account is considered indispensable by most businesses, individuals and governments.

What is Retail Banking?

Retail banks in laymans terms are the banks we most often see in cities on crowded intersections, the ones we probably use for our personal checking account. It refers to high-street banking, in which banks undergo transactions directly with consumers, rather than corporations or other banks. Retail banking is a type of banking in which banking institutions execute transactions directly with consumers, rather than corporations or other banks. Services offered include: savings and checking accounts, mortgages, personal loans, debit cards, credit cards, and so forth.

Typical mass-market banking in which individual customers use local branches of larger commercial banks. Services offered include savings and checking accounts, mortgages, personal loans, debit/credit cards and certificates of deposit (CDs). Basic Retail bank's services include: taking care of money, transferring money between accounts,
providing loans, foreign exchange services, savings, financial advice, insurance, mortgages, etc.

Retail banking aims to be the one-stop shop for as many financial services as possible on behalf of retail clients. Some retail banks have even made a push into investment services such as

wealth management, brokerage accounts, private banking and retirement planning. While some of these ancillary services are outsourced to third parties (often for regulatory reasons), they often intertwine with core retail banking accounts like checking and savings to allow for easier transfers and maintenance.

Types of other Banks to distinguish Retail Banking

Commercial Banking
Commercial bank can also refer to a bank or a division of a bank that mostly deals with deposits and loans from corporations or large businesses, as opposed to normal individual members of the public (retail banking). It is the most successful department of banking. Commercial banking is also known as business banking. Commercial banking may also be seen as distinct from retail banking, which involves the provision of financial services direct to consumers. Commercial banking can also refer to a bank or a division of a bank that mostly deals with deposits and loans from corporations or large businesses, as opposed to normal individual members of the public which is more commonly known as retail banking.

Investment Banking
Investment banking is a field of banking that aids companies in acquiring funds. In addition to the acquisition of new funds, investment banking also offers advice for a wide range of transactions a company might engage in The line between investment banking and other forms of banking has blurred in recent years, as deregulation allows banking institutions to take on more and more sectors. With the advent of mega-banks which operate at a number of levels, many of the services often associated with investment banking are being made available to clients who would otherwise be too small to make their business profitable. Through investment banking, an institution generates funds in two different ways. They may draw on public funds through the capital market by selling stock in their company, and they may also seek out venture capital or private equity in exchange for a stake in their company.

Wholesale Banking
Wholesale banking is the provision of services by banks to the like of large corporate clients, midsized companies, real estate developers and investors, international trade finance businesses, 5

institutional customers (such as pension funds and government entities/agencies), and services offered to other banks or other financial institutions. In essence, wholesale banking services usually involve high value transactions. Wholesale banking contrasts with retail banking, which is the provision of banking services to individuals. Wholesale finance means financial services, which are conducted between financial services companies and institutions such as banks, insurers, fund managers, and stockbrokers. Modern wholesale banks are engaged in: finance wholesaling, underwriting, market making, consultancy, mergers and acquisitions, fund management. Well-known banks offering wholesale banking services include ING and Standard Chartered.

Business Model
Present day tech-savvy bankers are now more looking at reduction in their operating costs by adopting scalable and secure technology thereby reducing the response time to their customers so as to improve their client base and economies of scale. The solution lies to market demands and challenges lies in innovation of new offering with minimum dependence on branches a multi-channel bank and to eliminate the disadvantage of an inadequate branch network. Generation of leads to cross sell and creating additional revenues with utmost customer satisfaction has become focal point worldwide for the success of a Bank. The business model is simple: receive money from depositors and the capital markets, and lend them out to borrowers(home loans, business and trade financing, at higher rates, thus earning the difference, or the spread. Like arbitraging, the spread is typically minute (1-2% of assets) and that's why banks are seen as one of the (if not the) most capital-intensive industries around. The business model can be summarised in equation form:

Interest income - Interest expense = Net interest income

--> Net interest income - provisions = Net profit from interest-related segment

Provisions (for bad debts, also known as non-performing loans or NPLs) are due to default of debtors, the primary risk of retail banking. Through diversifying their loan portfolio and pre6

empting credit quality problems (constant review of borrowers' credit ratings), banks reduce this risk. Singapore banks are typically conservative with about 5-10% NPL ratio (non-performing loans out of total loans); China banks of the other hand, have been said to have >50% NPL ratio just several years back --- huge black holes if there ever was any. That's why they're rushing to list these state banks and usher in foreign equity and management expertise. Non-Interest Income This segment is typically related to investment banking, which deals with activities on the capital mar kets. The income is dependent on fees and commissions from clients, and common activities involve underwriting stock and bond issues, advising on M&As (mergers and acquisitions), and asset management (unit trusts, private equity investing etc). Since this segment essentially relies on skilled professionals and builds on intangible assets (trust, reputation), it is especially attractive as a source of income for banks because it is not capital-intensive. The income from this segment is typically recorded as Fee and Commission Income on banks' financial statements. Conflicts of interest Given that retail banking serves general individuals while investment banking serves a more elite clientele as well as raising capital for companies, it is not difficult to see that there may arise a conflict of interest between a bank's retail banking operations and investment banking operations. For example, a bank may persuade individuals, against its better judgment, to take up the security issue that it is underwriting. It was for this reason that the Glass-Steagall Act was introduced in the US in the early 20th century to prevent banks from engaging in both commercial and investment banking (the act has since been repealed). No such laws govern the banks of Asia.

Understanding the Potential for Retail in India- IS SKY THE Limit

The Indian players are bullish on the Retail business and this is not totally unfounded. There are two main reasons behind this. Firstly, it is now undeniable that the face of the Indian consumer is changing. This is reflected in a change in the urban household income pattern. The direct fallout of such a change will be the consumption patterns and hence the banking habits of Indians, which will now be skewed towards Retail products. At the same time, India compares pretty poorly with the other economies of the world that are now becoming comparable in terms of spending patterns with the opening up of our economy. For instance, while the total outstanding Retail loans in Taiwan is around 41% of GDP, the figure in India stands at less than 5%. The comparison with the West is even more staggering. Another comparison that is natural when comparing Retail sectors is the use of credit cards. Here also, the potential lies in the fact that of all the consumer expenditure in India in 2001, less than 1% was through plastic, the corresponding US figure standing at 18%. Competition is fierce, particularly from local private banks such as HDFC and ICICI, in the business of home, car and consumer loans. There, precisely lie the pitfalls of such explosive growth. All banks are targeting the fluffiest segment i.e. the upwardly mobile urban salaried class. Although the players are spreading their operations into segments like self-employed and the semi-urban rich, it is an open secret that the big city Indian yuppies form the most profitable segment. Over-dependence on this segment is bound to bring in inflexibility in the business.

Comparative Study with Foreign Equivalents

The foreign banks have identified this problem but there are certain systematic risks involved in operating in the Retail market for them. These include regulatory restrictions that prevent them from expanding their branch network. One of the biggest impediments in foreign players leveraging the Indian markets is the absence of positive credit bureaus. In the west the risk profile can be easily mapped to things like SSNs and this information can be publicly traded. PAN is a step in this direction but lot more work need to be done. What has been a positive step towards this is a negative file sharing started by a consortium of 11 banks. On top of this, the spend-now-pay-later credit culture in India is just not picking up. A swift legal procedure against consumers creating bad debt is virtually nonexistent. Finally, the vast geographical and cultural diversity of the country makes credit policy formulation a tough job and it simply cannot be dictated from a Wall Street or a Singapore boardroom! All these add up to the unattractiveness of the Indian retail market to the foreign players.

TYPES OF RETAIL BANKING (GLOBAL)

Commercial bank: the term used for a normal bank to distinguish it from an investment bank. After the Great Depression, the U.S. Congress required that banks only engage in banking activities, whereas investment banks were limited to capital market activities. Since the two no longer have to be under separate ownership, some use the term "commercial bank" to refer to a bank or a division of a bank that mostly deals with deposits and loans from corporations or large businesses. Community development banks :Community banks are typically locally owned and operated. They tend to focus on the needs of the businesses and families where the bank holds branches and offices. Lending decisions are made by people who understand the local needs of families, businesses and farmers. Employees often reside within the communities they serve. They are locally operated financial institutions that empower employees to make local decisions to serve their customers and the partners. . Postal savings banks: Many nations' post offices operated, or continue to operate postal savings systems, to provide depositors who did not have access to banks a safe, convenient method to save money and to promote saving among the poor savings banks associated with national postal systems. Private banks: banks that manage the assets of high net worth individuals.

Offshore banks: An offshore bank is a bank located outside the country of residence of the depositor, typically in a low tax jurisdiction (or tax haven) that provides financial and legal advantages. These advantages typically include: greater privacy , low or no taxation, easy access to deposits (at least in terms of regulation), protection against local political or financial instability. Savings bank: Their original objective was to provide easily accessible savings products to all strata of the population. In some countries, savings banks were created on public initiative; in others, socially committed individuals created foundations to put in place the necessary infrastructure. Nowadays, European savings banks have kept their focus on retail banking: payments, savings products, credits and insurances for individuals or small and medium-sized enterprises. Apart from this retail focus, they also differ from commercial banks by their broadly decentralized distribution network, providing local and regional outreachand by their socially responsible approach to business and society. Building societies and Landesbanks: A building society is a financial institution, owned by its members, that offers banking and other financial services, especially mortgage lending. The term building society first arose in the 19th century, in the United Kingdom, from co-operative savings groups. Today building societies actively compete with banks for most personal banking services, especially mortgage lending and deposit accounts. Ethical banks: An ethical bank, also known as social, alternative, civic, or sustainable bank, is a bank concerned with the social and environmental impacts of its investments and loans. Ethical banks are part of a larger societal movement toward more social and environmental responsibility in the financial sector. This movement includes: ethical investment, socially responsible investment, corporate social responsibility, and is also related to such movements as the fair trade movement, ethical consumerism, boycotting, etc. These are banks that prioritize the transparency of all operations and make only what they consider to be socially-responsible investments.

Categorization of retail bank services:

Core services Payment services

Facilitating services Cash Foreign Currency Requirement Traveler Charges DD/ Bankers Cheque IT EFT ATM card Standing instructions from customers for making payments Inter branch/interbank transfer of funds Safety vault

Supporting services Making payments at door step Internet banking Telephone banking

Current account and savings account

Credit cards Debit cards Services to senior citizens Telephone banking Internet banking Conversion of excess balance to Time deposits Delivery of loan at promised time period Interest rate option: Fixed/floating Flexibility in pre-payment of loan Counseling on Real-estate markets Legal services for documentation ECS for payment of loan installments Additional insurance facility for family members Counseling on post retirement savings

Loan products: Consumer loans, personal loans, housing loans, educational loans

Current account Savings account Time deposit account

Insurance products: Life insurance, pension schemes

Current account Savings account Time deposits Safety vaults

OTHER SERVICES
1. 2. 3. 4. 5. 6. 7. Saving Bank accounts Fixed Deposit schemes Current Accounts Corporate Salary Accounts Automated Teller Machines Internet Banking Services De-mat Services 10

8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18.

Inter Branch Banking 24- hour Loan Banking Bill Pay Safe Deposit Lockers Debit Cards, Credit Cards and Charge Cards Easy Loan Free Investment Advisory Service Banking through Mobile Phone Free Home Services Bank assurance Kid e Bank

ADVANTAGES AND DISADVANTAGES OF RETAIL BANKING

ADVANTAGES Retail banking has inherent advantages outweighing certain disadvantages. Advantages are analyzed from the resource angle and asset angle.

RESOURCE SIDE

Retail deposits are stable and constitute core deposits. They are interest insensitive and less bargaining for additional interest. They constitute low cost funds for the banks. Effective customer relationship management with the retail customers built a strong customer base.

Retail banking increases the subsidiary business of the banks.

ASSETS SIDE

Retail banking results in better yield and improved bottom line for a bank. Retail segment is a good avenue for funds deployment. Consumer loans are presumed to be of lower risk and NPA perception. Helps economic revival of the nation through increased production activity. Improves lifestyle and fulfils aspirations of the people through affordable credit. Innovative product development credit. Retail banking involves minimum marketing efforts in a demand driven economy.

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Diversified portfolio due to huge customer base enables bank to reduce their dependence on few or single borrower

Banks can earn good profits by providing non fund based or fee based services without deploying their funds.

DISADVANTAGES

Designing own and new financial products is very costly and time consuming for the bank. Customers now-a-days prefer net banking to branch banking. The banks that are slow in introducing technology-based products, are finding it difficult to retain the customers who wish to opt for net banking.

Customers are attracted towards other financial products like mutual funds etc. Though banks are investing heavily in technology, they are not able to exploit the same to the full extent.

A major disadvantage is monitoring and follow up of huge volume of loan accounts inducing banks to spend heavily in human resource department.

Long term loans like housing loan due to its long repayment term in the absence of proper follow-up, can become NPAs.

The volume of amount borrowed by a single customer is very low as compared to wholesale banking. This does not allow banks to to exploit the advantage of earning huge profits from single customer as in case of wholesale banking.

Market Trends
Growing a retail banking business is becoming increasingly challenging. The yield curve is flattening, reducing banks net interest margin. Competition is intensifying, as new, non-traditional players enter the retail banking space. And consumer preferences for financial products, payment methods and distribution channels continue to evolve, providing revenue opportunities, but also
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introducing new operational challenges.

The changing dynamics of the retail banking business have significant implications for financial institutions. In order to successfully compete in this environment, banks must provide a distinctive customer experience and offer innovative product solutions in order to differentiate their value proposition in the marketplace.

This identifies five key trends that are shaping the future of retail banking and discusses the strategic implications that retail banks need to address now.

1. Bifurcation of the retail banking business 2. Lack of differentiation in retail financial services 3. Proliferation and growth of electronic payments 4. Continued growth of de novo branching 5. Increasing demand for ATM access

Trend #1: Bifurcation of the Retail Banking Business

Historically, local banks provided deposit and lending services to customers within the banks geographic footprint. Today, however, the market is bifurcating: deposit services and small business loans continue to be provided locally, while consumer lending businesses (e.g., credit cards, home equity loans, and mortgages) are becoming increasingly consolidated, with fewer national providers garnering an increasing share of the market.

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In many consumer lending businesses, the top ten players now represent 6090% of the market. For example, over the last seven years, the credit card industry has become highly consolidated, with the top ten players representing 89% of the market in 2009up from 62% in 2000. Similar trends are occurring in the home equity loan and mortgage lending businesses. The top ten players share of home equity loans has reached 66%up from 32% in 1998, and the top ten players share of mortgages is now 61%up from 31% in 1997. In contrast, the market for deposits and small business loans remains localand therefore fragmentedfor now.

Implications for Financial Institutions Whether the retail banking business will remain bifurcated in terms of local versus national services, or whether what are currently local, fragmented markets will become consolidated, is still to be determined. Retail banks have already ceded the credit card and other consumer lending businesses to national providersbut it is not too late to protect their share of the core deposit and small business lending markets. FIs starting to act now! The deposit market is attractive, with returns on equity averaging 40-50%, and it is already attracting attention from largescale lenders looking to lower their cost of funds by acquiring lower-cost deposits . Banks are acting now to protect their business from competitive threats made possible by ongoing technology advancements (e.g., remote deposit capture, Internet-based financial services), which will likely undermine the
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advantages of local banking going forward.

FIs are developing a stronger value proposition. Retail banks are thinking about their business in terms of the customer experience. As many brick-andmortar businesses have discovered, the advantage they have over remote or Internet retailers is a physical experience. Financial Institutions can float ideas like 7 days a week working for people who cannot reach the branch office due to their own work schedule. FIs are capitalizing on their local presence. Consumers continue to rely on branches for new account openingsa fact that financial institutions are using to their advantage. FIs are maximizing sales opportunities by exceeding new clients expectations during the account opening/fulfillment process and cross-selling additional products and services early in the customers relationship. FIs also have another physical asset: their ATM network. ATMs have become a primary customer touch point, and FIs complement their branch based sales initiatives by leveraging this self-service channelas well as their telephone and online banking channelsto increase customer awareness of their products and services and generate additional sales.

Trend #2: Lack of Differentiation in Retail Financial Services Many financial institutions are struggling to differentiate their value propositions in the retail banking market. Free checking is now offered by all or most financial institutions. Most institutions no longer charge for online banking or online bill payment. Extended branch hours are increasingly common in many markets, as banks seek to increase customer convenience.

Free checking and other services have increased value and convenience for customers, but they have not led to higher levels of customer commitment.
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Study says only 28% of customers are highly committed to their bank. Simply introducing a product or dropping a fee wont produce sustainable differentiation; when the point of differentiation is easily imitated, consumers loyalty incentive is diminished. Implications for Financial Institutions Being different in retail financial services means creating a sustainable, unique position; being different is not necessarily based on a single product, a fee or lack thereof, but on a cohesive strategy focused on increasing customer value, designed to help the FI stand out in the market. FIs are engineering for value. Banks have started to determine what their customers really value and focus future investments in those areas. Which products, services and features can have the greatest impact on loyalty and create customers for life? While the basics, such as maintaining a high level of ATM uptime or offering a competitive interest rate, are still important, doing them better than other institutions will not have the same impact on long-term customer loyalty as delivering greater value relative to the competition.

FIs are developing and institutionalising a service culture. Customer service is the most important lever of differentiation available to retail banks today. Banks are developing a customer service strategy for their retail business, starting with a vision of how the bank will deliver great customer service and how all employees in the organization can support the vision. By providing a superior experience, banks are significantly impact customer retention and generating additional sales opportunities. FIs are rewarding customer loyalty directly. Consumers are increasingly interested in earning rewards, as the success of credit card loyalty programs has demonstrated. Financial institutions are capitalizing upon this trend by implementing rewards programs for their deposit and loan customers. If properly designed, these programs can provide a strong incentive for clients to consolidate their account relationships and increase usage of bank products and services such as debit cards and online bill payment. These programs can also attract new customers and help differentiate the bank from other institutions, as Citibank is doing with its Thank You program and National City is hoping to do with its new points from National City program.
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Trend #3: Proliferation and Growth of Electronic Payments In the last 25 years, the range of payment methods available in the market has exploded. In addition to cash, checks, and credit cards, consumers can now use one of an expanding array of electronic payment options that includes debit cards, prepaid cards, online bill payment, automatic bill payment, and P2P services. Consumers adoption and use of these payments has increased significantly over time, often at the expense of more established payment methods, dramatically altering the payments landscape. According to the Federal Reserve, electronic payments accounted for only 5% of all non-cash payments in 2000. In the last 10 years, electronic payment methods share of wallet has increased, from 5% in 2000 to 11% in 2005 most recently reaching 21% in 2009. Consumers shift to electronic payments is being driven by increased use of debit and electronic bill payment. In stores, consumers are increasingly choosing PIN and signature debitand 33% of consumers report that debit is their most frequently used payment method at the point of sale. Even in the bill payment spacewhere checks have long held a dominant positiononline bill payment and automatic payments (e.g. ECS) are rapidly gaining ground.

Implications for Financial Institutions Today, consumers have more choices when it comes to making payments than they ever have before. As a result, managing payments has become increasingly complexbanks need to develop strategies to grow their existing payments businesses and develop new revenue streams, while managing their processing capacity for declining check usage. FIs optimising their existing payments businesses. FIs are eliminating the silo mentality that often limits their ability to maximize payments-related revenue. FIs are organizing the business of payments and implement tactics to influence how customers choose to pay. Executing this strategy will result in a better-aligned payments business system and increased profitability of existing payment products. FIs need to develop new payments businesses. Banks are developing a better understanding of their customers payments needs. Having accomplished this, banks will be able to offer new payment products and services that provide greater value to customers, while also generating additional fee revenue and net interest margin. For example, Health Savings
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Accounts (HSAs) and payroll cards are relatively new payment methods that are gaining traction in the market, and that are projected to grow significantly over the next several years. Trend #4: Continued Growth in De Novo Branching Large banks are continuing to open a number of new branches, with the rate of expansion significantly exceeding population growth. Banks looking to expand their branch networks need to be concerned about several factors that may impact the long-term viability of de novo locations. Lower deposit growth: Retail and small business deposits are projected to grow 2-3% per year for the next several years, significantly less than the 56% annual growth seen several years ago. Market saturation: In some markets, branch growth has been significantly greater than deposit growth, thereby resulting in lower deposits per branch as market demand is spread over a larger number of locations. If net interest margins continue to tighten, this trend could contribute to lower profitability for new branch locations. Declining branch usage: Consumers and small businesses are increasingly using self-service channels and electronic payments, reducing their need to visit branches. Branch transactions will decline even further as businesses adopt remote deposit capture and consumers utilize ATM deposit check imaging. Implications for Financial Institutions Meeting or exceeding expectations for de novo locations will become increasingly difficult. Financial institutions need to refine their distribution strategies to ensure that new locations deliver their expected return on investment. FIs are evaluating their distribution strategy. Banks are implementing a rigorous, analytical methodology in developing their branch distribution strategy and determining where to open new branches and close or relocate existing offices. As recent research suggests, traditional factors such as household growth and branch density are poor predictors of de novo branch performance. Instead, FIs are evaluate same store sales growth of their
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branches, and focus on expansion in markets where their existing locations are performing well. At the same time, institutions are also reinvesting in their existing brick-and-mortar locations and determine how to improve same store sales of lower-performing locations. Banks are re-evaluating their branch format. Given the declining importance of branches for routine transactions, FIs are repositioning branches as sales centers, as institutions. Branch designs are increasing customer awareness of the banks full range of products and services in order to capture additional sales opportunities, while also creating an environment that facilitates greater interaction between customers and branch personnel. Of course, for leading banks, branch distribution and format go hand in hand, with smaller, lower cost spoke branches complementing and re-enforcing the effectiveness of traditional hub branches.

Trend #5: Increasing Demand for ATM Access With around 1,20,000 ATMs in the India consumers can almost always find an ATMthe question is whether or not they can find a free one. As surcharge fees and foreign fees increase, consumers are becoming increasingly averse to using a different deployers ATM, and are increasingly demanding free access to ATMs. This demand places pressure on financial institutions to expand their ATM networks to meet customer needs for convenience. At the same time, however, per-ATM transaction volumes have decreased, as deployment growth has outpaced transaction growth, placing downward pressure on ATM network profitabilitywhich, in turn, has made the business case for new off-premise ATMs less attractive. In response to these trends, FIs are pursuing alternative ways to expand their customers ATM access at a lower cost. Surcharge-free alliances: Alliances such as Allpoint provide member institutions the ability to provide customers with surcharge-free access at a larger number of ATMs. ATM branding: FIs are partnering with independent ATM deployers to place their brand names on third-party ATMs, enabling banks to quickly expand free ATM access for their customers at a lower cost than deploying their own ATMs.
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Implications for Financial Institutions ATM convenience is a very important factor in a customers decision to select a financial institution. Banks need to develop strategies to enhance ATM access and banks that choose to invest in ATMs as a strategic delivery channel should focus on increasing the channels value as a vehicle for enhancing customer relationships. FIs are developing a comprehensive ATM access strategy. FIs are determining how many ATMs are needed in their footprint to meet customer needs and remain competitive. FIs are evaluating different deployment options and determine which approach best fits with their strategic and financial objectives. Some FIs want to focus on increasing the value of the ATM as a customers touch point. The ATM is now consumers primary channel for obtaining cashand to date, consumers are demonstrating little interest in non-financial functions at ATMs (withdrawals, deposits, transfers, and inquiries account for 98% of all ATM transaction volume). Rather than adding new functions, banks that have chosen to invest in their ATMs as a strategic channel should focus on improving and personalizing the ATM customer experience. As ATM technology is becoming more flexible, banks are having more freedom to customize messages and promotions via the ATM. Given the frequency of ATM usage, deployers need to determine how to best leverage the ATM as a sales channelparticularly as fewer customers are exposed to branch sales messaging. Opportunities Retail banking has immense opportunities in a growing economy like India. As the growth story gets unfolded in India, retail banking is going to emerge a major driver. How does the world view us? A. T. Kearney, a global management consulting firm, recently identified India as the "second most attractive retail destination" of 30 emergent markets. The rise of the Indian middle class is an important contributory factor in this regard. The percentage of middle to high income Indian households is expected to continue rising. The younger population not perhaps more comfortable than previous generations. Improving consumer purchasing power, coupled with
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more liberal attitudes toward personal debt, is contributing to India's retail banking segment. The combination of the above factors promises substantial growth in the retail sector, which at present is in the nascent stage. Due to bundling of services and delivery channels, the areas of potential conflicts of interest tend to increase in universal banks and financial conglomerates. Some of the key policy issues relevant to the retail banking sector are: financial inclusion, responsible lending, access to finance, long-term savings, financial capability, consumer protection, regulation and financial crime prevention.

CHALLENGES TO RETAIL BANKING IN INDIA The issue of money laundering is very important in retail banking. This compels all the banks to consider seriously all the documents which they accept while approving the loans. The issue of outsourcing has become very important in recent past because various core activities such as hardware and software maintenance, entire ATM set up and operation (including cash, refilling) etc., are being outsourced by Indian banks. Banks are expected to take utmost care to retain the ongoing trust of the public. Customer service should be at the end all in retail banking. Someone has rightly said, It takes months to find a good customer but only seconds to lose one. Thus, strategy of Knowing Your Customer (KYC) is important. So the banks are required to adopt innovative strategies to meet customers needs and requirements in terms of services/products etc. Retail lending is often regarded as a low risk area for money laundering because of the perception of the sums involved. However, competition for clients may also lead to KYC procedures being waived in the bid for new business. Banks must also consider seriously the type of identification documents they will accept and other processes to be completed. The Reserve Bank has issued details guidelines on application of KYC norms in November 2004. The dependency on technology has brought IT departments additional responsibilities and challenges in managing, maintaining and optimising the performance of retail banking networks. It is equally important that banks should maintain security to the advance level to keep the faith of the customer.
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 The efficiency of operations would provide the competitive edge for the success in retail banking in coming years. The customer retention is of paramount important for the profitability if retail banking business, so banks need to retain their customer in order to increase the market share. According to a research by Reichheld and Sasser in the Harvard Business Review, 5 per cent increase in customer retention can increase profitability by 35 per cent in banking business, 50 per cent in insurance and brokerage, and 125 per cent in the consumer credit card market. Thus, banks need to emphasise retaining customers and increasing market share. One of the crucial impediments for the growth of this sector is the acute shortage of manpower talent of this specific nature, a modern banking professional, for a modern banking sector. If all these challenges are faced by the banks with utmost care and deliberation, the retail banking is expected to play a very important role in coming years, as in case of other nations. Rising indebtedness could turn out to be a cause for concern in the future. India's position, of course, is not comparable to that of the developed world where household debt as a proportion of disposable income is much higher. Such a scenario creates high uncertainty. Expressing concerns about the high growth witnessed in the consumer credit segments the Reserve Bank has, as a temporary measure, put in place risk containment measures and increased the risk weight from 100 per cent to 125 per cent in the case of consumer credit including personal loans and credit cards (Mid-term Review of Annual Policy, 2004-05). Even with ATM machines and Internet Banking, many consumers still prefer the personal touch of their neighbourhood branch bank. Technology has made it possible to deliver services throughout the branch bank network, providing instant updates to checking accounts and rapid movement of money for stock transfers. However, this dependency on the network has brought IT departments additional responsibilities and challenges in managing, maintaining and optimising the performance of retail banking networks. Illustratively, ensuring that all bank products and services are available, at all times, and across the entire organization is essential for todays retails banks to generate revenues and remain competitive. Besides, there are network management challenges, whereby keeping these complex, distributed networks and applications operating properly in support of business objectives becomes essential. Specific
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challenges include ensuring that account transaction applications run efficiently between the branch offices and data centres. Conclusion Success in retail banking will require the development and execution of new strategies that provide compelling value for customers and better leverage bank resources. In particular, senior management needs to take a more holistic view of delivery channels and payments businesses in order to better meet customer needs and improve financial performance. By acting now, financial institutions will be well-prepared for the future of retail banking.

IT SOLUTIONS FOR RETAIL BANKING: CASE STUDIES:

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1. IDBI Bank- Technology Enabled Agile Banking 2.ICICI BANK- Investment In Technology Yielding Rich Dividends Today 3. ABN AMRO Bank, Technology led Excellence 4.INVESIT SOLUTION-BY HCL

IDBI Bank Technology Enabled Agile Banking

Bank Profile Industrial Development Bank of India (IDBI), a leading development and financial institution of India, promoted IDBI Bank to mark the formal foray of IDBI into commercial Banking. This initiative has blossomed into a success story with IDBI Bank achieving a front ranking position in the Indian Banking Industry. IDBI Bank has been rated as the fastest growing company in the country by Business World, India. The bank which began with an equity capital base of Rs.1000 million (20 M USD) in November 1995, today has 155 branches and over 350 ATM's spread across 95 cities. Key Business Drivers In January 2001, following a change in the top management of the bank, the strategy of the bank was redrawn. The bank felt a strong need to upgrade the technology platform, which would enable the bank to transform itself to meet the challenges of the future. Renewed thrust on Retail Banking Initiatives IDBI Bank had started operations as a bank catering primarily to corporate clientele. This strategy was redrawn in early 2001 to focus on the exciting arena of Retail Banking. Seen in this light, 53 branches and 79 ATM's (Automated Teller Machines) nationwide just didn't seem enough. The need of the hour was to have a technology platform that would seamlessly scale up and at the same time enable IDBI Bank to reach out to its customers through multiple delivery channels. Scalability was important because of the expected explosion in transaction volumes, customer accounts, etc. that accompany consumer banking business and seamless offering of delivery channels was important because
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customers need and demand not just access but also unified view of their interactions with the bank through multiple delivery channels. In short the need was to have a completely integrated solution, which would cater to consumer banking requirements while providing comprehensive business banking functionalities to cater to the bank's corporate customers. Legacy systems IDBI Bank was earlier using a centralized system from Kindle. However, to meet its new strategic initiatives and specific thrust on retail banking, this core banking system needed to be replaced. Business Agility and Time-to-market IDBI Bank wanted to have a solution that would not only be quick and easy to deploy but also provide the bank the flexibility to launch new products and services easily. Being fully aware that typical core banking implementations lasted 12-18 months, the bank was keen to choose a solution that gave it a timeto-market advantage. They needed to choose a technology partner who had a track record of deploying core banking solutions significantly faster. Furthermore, along with the speed of implementation, an extremely robust solution was required. Achieving technology driven business agility was one of the key drivers for the bank.

Solution Overview After a detailed and rigorous evaluation, Finacle was deployed at IDBI Bank to power its retail and corporate banking, trade finance, as well as consumer and business e-banking operations. The core banking solution runs on high availability Unix based servers from Sun Microsystems and interfaces seamlessly with the banks other applications such as ATM's, Telebanking solution, internet banking, etc. Another feather in Infosys cap was to deploy Finacle core banking solution in a record time frame of 5 months across the entire bank. In fact the core banking roll out at the branches started on 2 May, 2001 and was completed on 18 June, 2001, without a single extension to the agreed project time lines.

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Going live with Finacle in record time has gained IDBI Bank critical time-to market advantage and the ability to roll-out products much faster than ever before. For example, IDBI Bank introduced the concept of Welcome Kit in Indian Banking, consisting of all the deliverables customer expects on day one like cheque book, Internet and Phone banking access details etc. This has enabled IDBI Bank to open accounts on the fly unlike other banks where the customer needs to wait for a week or more to get these.

View From the Top

"One of the key differentiators that IDBI Bank found in Finacle universal banking solution was its new generation technology and its use of the web paradigm. With features like Straight-Through-Processing, 24x7 banking, e-Xtensibility tool kit, Finacle has indeed proved to be the right choice. With Finacle powering our core banking operations, we have been able to bring down our End of Day processing time by more than 80%."

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Investment In Technology Yielding Rich Dividends Today

Bank Profile Established in 1994, ICICI Bank is today the second largest bank in India and among the top 150 in the world. In less than a decade, the bank has become a universal bank offering a well diversified portfolio of financial services. It currently has assets of over US$ 79 billion and a market capitalization of US$ 9 billion and services over 14 million customers through a network of about 950 branches, 3300 ATM's and a 3200 seat call center (as of 2007). The hallmark of this exponential growth is ICICI Banks unwavering focus on technology. Key Business Drivers ICICI Bank was set up when the process of deregulation and liberalization had just begun in India and the Reserve Bank of India (Indias central bank) had paved the way for private players in the banking sector, which at that time was dominated by state-owned and foreign banks. Serving the majority of the countrys populace, state owned banks had a large branch network, with minimal or no automation and little focus on service. Foreign banks, on the other hand, deployed high-end technology, had innovative product offerings, but had a very small branch network that serviced only corporate's and individuals with high net-worth. Sensing an untapped opportunity, ICICI Bank decided to target Indias burgeoning middle class and corporate's by offering a high level of customer service and efficiency that rivaled the foreign banks, on a much larger scale, at a lower cost. A crucial aspect of this strategy was the emphasis on technology. ICICI Bank positioned itself as technology-savvy customer friendly bank. To support its technology focused strategy, ICICI Bank needed a robust technology platform that would help it achieve its business goals. After an intense evaluation of several global vendors, ICICI Bank identified Infosys as its technology partner and selected Finacle, the universal banking solution from Infosys, as its core banking platform. An open systems approach and low TCO (Total Cost of Ownership) were some of the key benefits Finacle offered the bank. Unlike most banks of that era, ICICI Bank was automated from day one, when its first branch opened in the city of Chennai. Some of the reasons cited by the bank for its decision to select Finacle include Finacles future-proof
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technology, best-of-breed retail and corporate banking features, scalable architecture and proven implementation track record. Solution Overview One of the biggest challenges for Finacle was ensuring straight through processing (STP) of most of the financial transactions. With the ICICI group having several companies under its umbrella, Finacle needed to seamlessly integrate with multiple applications such as credit cards, mutual funds, brokerage, call center and data warehousing systems. Another key challenge was managing transaction volumes. ICICI Bank underwent a phase of organic and inorganic growth, first by acquiring Bank of Madura followed by a reverse merger of the bank with its parent organization, ICICI Limited. The scalable and open systems based architecture, enabled Finacle to successfully manage the resultant increase in transaction levels from 400,000 transactions a day in 2000 to nearly 2.1 million by 2005 with an associated growth in peak volumes by 5.5 times. With Finacle, the bank currently has the ability to process 0.27 million cheques per day and manage 7000 concurrent users.

Over the years, the strategic partnership between ICICI Bank and Infosys that started in 1994 has grown stronger and the close collaboration has resulted in many innovations. For instance, in 1997, it was the first bank in India to offer Internet banking with Finacles e-banking solution and established itself as a leader in the Internet and eCommerce space. The bank followed it up with offering several e-Commerce services like Bill Payments, Funds Transfers and Corporate Banking over the net. The internet is a critical element of ICICI Banks award winning multi-channel strategy that is one of the main engines of growth for the bank. Between 2000 and 2004, the bank has been able to successfully move over 70 percent of routine banking transactions from the branch to the other delivery channels, thus increasing overall efficiency.
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Currently, only 25 percent of all transactions take place through branches and 75 percent through other delivery channels. This reduction in routine transactions through the branch has enabled ICICI Bank to aggressively use its branch network as customer acquisition units. On an average, ICICI Bank adds 300,000 customers a month, which is among the highest in the world.

Channels Branches ATM's Internet & Mobile Call Centers

Share of Transactions March 2000

Share of Transactions March 2004

25 %

94 %

3%

43 %

2%

21 %

1%

11 %

Reaping The Benefits A powerful, scalable and flexible technology platform is essential for banks to manage growth and compete successfully. And Finacle provides just the right platform to ICICI Bank thus fueling its growth. The bank has successfully leveraged the power of Finacle and has deployed the solution in the areas of core banking, consumer e-banking, corporate e-banking and CRM. With Finacle, ICICI Bank has also gained the flexibility to easily develop new products targeted at specific segments such as ICICI Bank Young Stars- a product targeting children, Women's Account addressing working women and Bank@campus targeting students. ICICI Bank is today recognized as a clear leader in the region and has won numerous accolades worldwide for its technology-driven initiatives. In 2003, the bank received the best multi-channel strategy award from The Banker magazine and this year it was rated as the 2nd best retail bank in Asia by The Asian Banker Journal. The bank has effectively used technology as a strategic differentiator, thus not only redefining the rules of banking in India, but also showcasing how technology can help in transforming a banks business.

ABN AMRO Bank, Technology led Excellence

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Bank Profile ABN AMRO Bank is a prominent international bank, its origins going back to 1824. It ranks 8th in Europe and 12th in the world, based on tier 1 capital. The bank has 4,000 branches in more than 53 countries, a staff of about 99,000 fulltime equivalents and total assets of EUR 1,120.1 billion (as on 1st Nov. 2007). ABN AMRO Bank is listed on several stock exchanges, including Euronext and the New York Stock Exchange (NYSE). In India, ABN AMRO Bank set up base 81 years ago. The bank is today poised for tremendous growth with a rapidly growing customer base being serviced across branches in nine major Indian cities, using various new-age delivery channels such as ATM's, Internet, Mobiles, Call Centers, in addition to the branch network Key Business Drivers
ABN AMRO Bank started its India operations and like other foreign multinational banks, focused primarily on wholesale banking, to service top-tier corporate clients. This changed in the 1990s, when strategic business imperatives and an increased level of competition both from domestic and multinational banks in India led the bank to look at retail banking as a key area for growth. In an effort to strengthen its retail banking presence, ABN AMRO acquired Bank of Americas retail banking operations in India. As part of the acquisition, the bank migrated to Bank of Americas technology infrastructure, which was based on ICBS solution from Fiserv, running on an IBM AS/400 platform. However, the existing solution was not flexible enough to meet the requirements of a competitive consumer banking environment, where offering a range of products and services to customers across multiple delivery channels is critical. With frequent maintenance requirements, the platform was also proving to be a drain on the banks resources. At the same time, the focus at the bank was on reduction of TCO (Total Cost of Ownership) and therefore, a mere upgrade to a newer version of the existing, aging system would not have met the objective. As a result, the bank decided to replace the legacy system with a new generation, robust core banking solution. The cornerstone of a successful consumer banking strategy is to have a technology platform that can offer anytime, anywhere banking through multiple delivery channels like the Internet, ATM, mobiles and call centers. ABN AMRO Bank required a platform that could easily support existing delivery channels and add new ones, while seamlessly integrating them to provide a relationship view of customers interactions across all delivery channels. Being a multinational bank, ABN AMRO Bank was also keen to adopt best practices being followed in other countries, such as the ability to roll out new products and services in line with domestic market requirements. Equally important was the need to roll out these
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customizations rapidly so as to gain critical time-to-market advantage. This could only be achieved by deploying a platform that was flexible and easily extensible. After intense discussions and evaluation, ABN AMRO chose Finacle, the new-generation universal banking solution from Infosys, to address its needs in core banking and consumer e-banking spaces.

Solution Overview Some of the key features that Finacle offered were: True 24x7 banking
Finacle enabled zero downtime at both the central and branch level server, ensuring that ABN AMRO was up and running on a 24x7 basis, across electronic delivery channels and branches. Finacles architecture also enabled offering of basic consumer banking services to customers, either during the planned End of Day (EOD) black out windows, unscheduled outages of the central data center of the bank or during disruptions in branch network connectivity. Leveraging Straight-Through-Processing (STP) Finacle provided an interoperable and open architecture that ensured tight integration with all delivery channels using standard message protocols. The powerful STP feature ensured that several transactions were completed end-to-end, without manual intervention. Turnaround times have drastically reduced for issuing cheque books and account statements, thereby enhancing productivity and customer satisfaction.

Unique extensibility features Finacles unique Extensibility tool kit comprising Scripting Engine, Workflow, and Remote Application Interface (RAI) provided the much needed flexibility to ABN AMRO Bank, enabling it to easily and rapidly add new business rules, launch new products, and modify processes. Using this tool kit, ABN AMRO developed a loyalty reward program for its customers wherein, the bank offered incentives like charge free demand drafts based on certain business rules like maintaining specified minimum balances. Such programs have helped the bank reap the twin benefits of customer retention and an increase in low cost funds. Some of the modules that have been quickly rolled out by ABN AMRO are: (DSA's) of the bank and have customized commission computation logic for the DSA's based on predefined parameters like product type, geography and hierarchy. complaints without manual intervention and assign priority, based on customer profile and severity of request, by seeking reference from the Finacle core banking database.
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acts as a focal point in various events relating to cards, like issue, reissue and maintenance. An additional feature of this module is the ability to communicate on an online basis for activities like hot carding a card, activation/deactivation of cards, etc. Reaping The Benefits For ABN AMRO Bank, the choice of an enterprise banking platform hinged on factors like flexibility translating into ease of customization, availability of an integration infrastructure with multiple delivery channels and reduced TCO. Finacle has delivered on all of these points along with giving crucial time-to-market advantage and business agility to the bank, thus helping script a retail banking success story.

InvesIT-Banking Solution By HCL

Client: A Fortune 50 global investment bank Problem: The client's research division generated research content from multiple geographies working on disparate systems. There was a need to streamline the process of content creation and integrate the work environment. Solution: The research management suite was implemented for the client to support the entire research cycle, from authoring through component-based templates to final distribution of research reports. It enabled standardization of creation and distribution of research content across multiple geographies, and streamlined the content creation through automation and controlled workflows. Result: The research product suite enables greater efficiency and faster time-to-market in a fully integrated research environment. Today, more than 1300 research analysts use the platform to create and dispatch research content in multiple languages across the world. Technology at work for you The InvesIT suite of component-based modules provides a comprehensive solution to the research report production process. From using templates, through authoring and analysis, to final distribution; the suite enables a highly streamlined, efficient and process oriented approach to a wide variety of report creation.

Authoring and workflow At the heart of InvesIT lies the authoring module that offers maximum reusability and comfort to the research analyst through -Use of standard, tightly managed templates -Easy retrieval and management of documents -Customizable yet controlled document and number workflows -Superior charting and graphing engine
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- Usability through Microsoft Word and Excel for authoring and review Subscription management InvesIT's subscription management module enables the capturing and storing of client details and assigning distribution preferences for research documents. Subscription configuration can be created for Company, Analyst, Sector, Region, Strategy. Subscriptions can be based on Research type, Delivery type, Language, Delivery Frequency and many more.

CORE BANKING PRODUCTS:

FINACLE FROM INFOSYS: The dramatically changed world of finance and business today, is building up pressure for banks to explore new possibilities by abandoning the familiar and embracing the unconventional. Competition, too, is compelling banks to be agile and innovate everyday. In this milieu, what really enables banks to build a lasting competitive advantage is the ability to continuously innovate, achieve differentiation and respond quickly to dynamic business challenges. There is no doubt that an efficient and adaptive core banking solution is integral to the business strategy of a bank geared to meet the challenges posed by the changed and dynamic environment. Finacle core banking solution is a comprehensive, integrated yet modular business solution that effectively addresses the strategic and day-to-day challenges faced by banks. It is highly parameterizable providing that much-needed flexibility to innovate and adapt to a dynamic environment. The solution has an integrated CRM module enabling banks to offer a rich and differentiated value proposition to customers. The layered Service Oriented Architecture (SOA), STP capabilities, Web-enabled technology and 24X7 operations ensure multi-channel, multicountry and multi-currency implementations. The functionality-rich modules in the solution provide banks with a varied palette of features to continuously innovate on their product
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and service offerings. From the services innovation perspective, Finacle offers a comprehensive and unified customer repository with capabilities to educate and empower customers. With Finacle core banking solution, banks can meet the challenges of managing change, competition, compliance and customer demands effectively.

Key Modules Enterprise Customer Information Finacle provides a comprehensive solution to leverage customer information and create differentiated customer experience through the Enterprise Customer Information File (CIF). It empowers banks to manage the various life-cycle stages in their relationship with the customer. Comprehensive segmentation information, including demographics, psychographics, financials and product preferences, is captured and presented through a unified view. This view presents information on products and services availed within the core banking solution and across multiple back-end systems. Inquiry, creation and maintenance of the CIF are enabled through flexible and user-definable templates while supporting compliance KYC and AML mandates. Consumer Banking Finacle core banking solution empowers banks to define simple and comprehensive products through its flexible product definition capability. Parameterization of product features is enabled for reuse of components, resulting in faster rollout of new products. Each product can be associated with a wide range of properties to help banks create innovative products. In addition to the standard product offerings, consumer banking products that can be configured include multi-currency accounts, structured deposits, top up deposits, master term deposits, top up loans, revolving loans, loans with flexible repayment schedules, offset products, mortgages and securitization. Wealth Management Finacle core banking solution enables banks to offer a wide range of wealth management products to cater to its affluent and high net worth customer base. The wealth management
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module supports rule-based definition. It also supports configuration of f e a t u re s , s t r u c t u re , commission , redemptions, relationship pricing, customer communication and a wide range of related properties and entities for structured products, distribution of insurance products and distribution of mutual funds. The module is tightly integrated with the core banking and CRM solutions, ensuring unique customer definition, unified customer portfolio view and seamless transaction processing.

Corporate Banking Finacle core banking solution presents a powerful range of offerings for corporate banking from simple products such as overdrafts and cash term loans to complex ones such as secur i t i zat ion and syndication. The commercial lending module is rich in functionalities such as multi -currency disbursements and repayments, flexible and varied interest rate set up , commitment fee set up , crystallization, amortization and debt consolidation. The centralized limits and collateral function is multi-currency and hierarchy enabled thus empowering banks to support collateral based lending and online exposure monitoring. Trade Finance The trade finance module is integrated seamlessly with the core banking solution to give an end-to-end perspective to the trade finance needs of a bank. Fully integrated with the payment system and exchange rate setup, the module supports multicurrency processing of trade products such as: Documentary credit Forward contract Import and export financing Letter of guarantee Reusable Business Components Finacle core banking solution supports the following business enabler functions that can be defined by the bank and reused across various cross-functional solutions: Interest feature with support for definition of differential and slab-based interest rates Rule-based Signature Verification System (SVS) Exchange rate structure with multitiered definition facility Infrastructure 24 X 7 capabilities to operate round-theclock through branches and channels even during batch job execution and day-end operations
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 Integrated, secure and scalable reporting infrastructure to meet various reporting needs Ease of integration with industry standard-based framework to integrate with existing and external systems

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DOMAIN SPECIFIC BANKING PRODUCTS: 1.CARD MANAGEMENT SOLUTIONS-BY SUNGARD(AMBIT BANKING SOLUTION) 2.TRADING SOLUTION-BY IMAGINE 3.STOCK MANAGEMENT SOLUTION-BY SUNGARD (ADMINI STAR) 4.ATM MANAGEMENT SOLUTION-BY ARIUS SOLUTIONS 5.CHEQUE PROCESSING SOLUTION-BY ACCUITY 6.LEASING SOLUTION-BY HEXAWARE 7.INSURANCE SOLUTION-BY HEXAWARE

AMBIT BANKING SOLUTION BY SUNGARD Ambit Core Banking is one of the leading core banking solutions in the world today. It covers the entire spectrum of your banks core business from retail to commercial banking.

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FEATURES: Delivered as a Bank in a Box, Ambit Core Banking for Islamic Banking aims to provide you with: A leading core banking solution used by some of the biggest regional banks in Eastern Europe, Middle East and Asia-Pacific A localized Islamic core banking solution that supports local language, currency, payments/ settlement interfaces, and regulatory reporting with built-in international best practices that you can immediately adopt Minimal customization requirements that allows you to go live quickly at competitive prices Local resources and support that gives you the confi dence that business will run smoothly after successful core banking transformation A trusted long-term partnership with SunGard, one of the leading solutions providers to financial services organizations worldwide. AMBIT CARD MANAGEMENT Credit cards are a major source of income for conventional banks. Sizeable revenues can be collected from card membership fees, transaction fees, merchant discounts, penalties for overdue payments, and especially from compound interest earned when cardholders maintain an outstanding balance.

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FEATURES: Comprehensive and Flexible Ambit System Access CardPro for Banking is a comprehensive and modular solution that can grow with your business. You can choose to start with a basic card system and then add new modules and features later on. As your business grows, you can easily expand your card offerings to include a wider range of cards such as credit, debit, stored value and privatelabel cards.

Customer-Centric Sales and Marketing

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The wide range of parameter-driven choices provided by Ambit System Access CardPro for Islamic Banking enables you to quickly launch new products with innovative features. Ambit System Access CardPro for Islamic Banking supports tiered rates in computation of monthly fees and delinquency charges, variable administration fees, cost-sharing based calculation of fees, transaction pricing based on merchant or Merchant Category Code (MCC) and payment methods such as installments and recurring payments.

Highly Secure Card Transactions Real-time and scalable validation of transactions based on user-defined credit and fraud control parameters allows for fast and secure transactions processing. Ambit System Access CardPro for Banking also provides online interfaces to various payment associations such as Visas and MasterCards authorization systems for real-time 24-hour authorizations. Ambit System Access CardPro for Banking includes a switch that links your card system to all external systems such as call centers, IVRs, Point-of-Sales (POS) terminals, ATMs, international and country-specific payment networks, and to your core banking system. Ambit System Access CardPro for Bankings multi-bank features enable your card center to process card transactions for multiple financial institutions (i.e., member banks). This gives you the facilities needed for a lucrative business in card acquiring.

Imagine Trading System Featured on these product lists ASP / SaaS Alternative Investment Solutions Capital Markets Solutions
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Derivatives - Trading Systems Derivatives Software Equities Systems Fixed Income Systems Front and Middle Office Futures & Options Systems GRC / ERM Hedge Fund Systems Market Risk Middle and Back Office Solutions Portfolio / Fund Management Systems Portfolio Analytics Pricing / Analytics Risk Analytics Risk Databases Risk Management Solutions Structured Finance Solutions Wealth Management / Family Office

Overview Since 1993, Imagine Software has been a leading provider of investment management solutions for the global financial industry. Its award-winning enterprise product, the Imagine Trading Systemand its on-demand ASP version, Derivatives.comis a real-time integrated trading, portfolio, and risk management solution employed by thousands of buy-side and sell-side end-users across the globe. Imagine Softwares reputation of delivering competitive advantage is based upon its long track record of delivering institutional-grade functionality, broad cross-asset instrument support, and the ability to handle any trading strategy. The firm consistently satisfies the diverse portfolio and risk processing, market data, regulatory, and reporting requirements of the largest global hedge funds, fund-of-funds, pension funds, asset management companies, and major brokerage firms and banks. Imagine provides users with everything they need for their day-to-day operations: advanced software functionality, comprehensive data management (consisting of the myriad live market, credit, static data, and other elements necessary for real-time trading in today's global markets), and end-of-day and start-of-day processing services.

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Key Benefits Maximizing Investment Returns and Managing Risk: Investment decision-makers reap immediate benefits with Imagines robust, real-time portfolio and risk management functionality, which supports their activities across all trading strategies and asset classes. Key portfolio functionality includes unlimited portfolio drilldowns, real-time pricing, limits monitoring and control, plus live views of P&L values and greeks, and securities tracking. Risk functionality spans stress testing and historical Monte Carlo, plus intra-day portfolio VaR, factor analysis, and much more. Users can easily examine exposure to shifting market prices, interest rates, volatility, yield-curve assumptions and other risks. Achieve Transparency: Imagines status as a trusted industry-standard provider of risk and portfolio reporting capabilities make it a must have resource for a wide array of financial businesses ranging from institutional investment firms to start-up hedge funds. Superior reporting capabilities plus complete historical data archiving enables the transparency todays investors and regulator agencies demand. Gain Operational Efficiencies: Derivatives.com clients concentrate solely on managing assets because the critical components underpinning their business processessoftware, market data, global security masters, corporate actions, etc.are managed efficiently at Imagines secure, high-performance data center. The operational risk and cost benefits of fast implementation, automation of manual processes, seamless integration with other thirdparty systems, and elimination of IT support requirements are undeniable

SunGards AdminiStar system provides a fully integrated, Web-based solution for administering stock and option plans. It offers secure access to equity compensation plan data by both plan administrators and participants. Plan administrators and participants can access plan data at any time without the need for special software. Additionally, AdminiStar offers trade automation for straight-through processing, which enables employees to initiate real-time trade orders through the Internet Features:
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Produces documentation online for easy access Utilizes straight-through processing to a broker of choice for online exercise or share sale requests Delivers advanced FAS123R accounting for accurate financial reporting Generates What-if tax modeling to explore possibilities

Benefits:

Helps free administrators from time-consuming employee communication tasks Minimizes trading errors by eliminating manual tasks Calculates and reports tax liabilities automatically for share exercises and sales Provides flexible settings for payment, issuance, handling and rounding methods Provides employees with self-service access to plan data Allows participants to do online trading using their own brokers

ATM MANAGEMENT SYSTEM Arius Solutions : Having full flexibility, due to its own software products and alliances, Arius is empowered to be an architect of the modern payment solutions. We design and build innovative payment systems with ease. Arius is pioneer in design of products for emerging markets to suit the needs of un-banked customers and the banks striving to spread the channels over the territory with very poor infrastructure. ASOFT CMS ASOFT MP Card Management System Main Processing ASOFT MTopUp Mobile Top Up ASOFT CMSRetail Card Management System Retail/Loyalty

TS provides the essential ATM & Cash Handling machine - a compact full fledge ATM, designed for limited floor space, high capacity and high performance. An optimised solution; the machine primarily supports cash dispensing and note bunch deposits, combined with a range of options for coin dispensing, passbook updating, printouts, foreign exchange, bill
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payments via automatic bar-code scanning and excellent means for marketing. Some features are: Finance Products

Notes and coins dispensing Note bunch deposits (up to 5,000 notes in storage) Recessed keyboard and card reader for maximum customer privacy Clear-cut usability EMV certified Full industry standard software support

Forming the basis for the most compact full fledge ATM available in the market, the ITS ATM and Cash Handling machine is modular, and utilises up to 5 cassettes for notes and media dispensing and facilitates bunched deposits up to 100 notes in mixed denominations. The machine is designed to ensure the customer maximum security, privacy and comfort, and the PIN keyboard and the card reader are recessed to offer full control through a session. A large screen for guidance and marketing and well as an optional logolight will lead the users to the right ATM. Offering note-dispensing versatility, the ITS ATM and Cash handling machine utilizes stateof-the-art friction feed dispensing mechanism, with up to 5 denominations and 15,000 notes in total. Self-calibrating sensors and double detect minimises the need for preventive maintenance. When it comes to cash deposits, the bunch deposit unit allows a customer to deposit up to 100 notes per bunch. Notes are stored in a large lockable cashbox. By combining this with the bar-code reader, the machine may also be used for cash-based bill payments. For cash-based bill payments and for foreign exchange, coins may also be offered as change. Pass book updating is provided in the top compartment by an integrated version of software. Passbooks are of various sizes and equipped with a magnetic stripe or a bar-code for identification of the passbook handled. Automatic forward and backward page turning is supplied as well as optional book retracting. Finally, encoded bill payments are scanned by a bar-code reader, for bi-directional scanning of the information concerned, and a visible beam from the reader ensures fast and easy operation. All in all, ITS offers the latest and simplest in ATM technology easy to use, easy to maintain, and above all, secure for both bank customers and the banks themselves

CHEQUE PROCESSING SYSTEM Routing and Transit Number File (RTN) by Accuity

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This comprehensive data file verifies payment transaction instructions, expedites automatic payments and simplifies the handling of repairs, returns and exception items. Available in three components: > Base File contains data on over 100,000 financial institutions head and branch offices including institution names, contact and mailing information and ABA routing numbers. > Check Processing File supplements the Base File and provides comprehensive check processing data for each record including contact telephone numbers for exception items and same-day settlement instructions. > Retired Routing Number File contains specific information for all routing numbers that have been retired since 1987. ITS Point of Sale (POS) Solution. In todays fast-expanding business climate, the demand for fast, user-friendly POS terminals is always increasing. On par with the best POS applications the world over, ITS terminal offerings - part of the complete solutions ITS offers covering applications and bank devices in bank device technology - is sure to provide banks with exactly the terminal application they need. The main features of ITS standard POS terminal includes a faster 32-bit processor which provides extraordinary performance for payment and value added application, including data-intensive, EMV smart card transactions. The attractive, clean design of the terminal incorporates a built-in thermal printer with drop-in, clam shell paper loading to virtually eliminate paper jams. A bright backlit display, ATM-style interface, and on-screen prompts with four useful function keys make ITS standard terminal anything but standard a snap to learn and use while minimizing costly human errors. And the remarkably small footprint will take up less counter space. Whats more, the ITS; standard POS terminal offers the latest security protection to ensure that everything runs smoothly.

ITS Point of Sale (POS) Solution.

ITS also offers a less traditional form of terminal wireless and battery-powered, the point of payment can be almost anywhere. Its a great solution to instantly open an extra lane or support and outdoor market. Powered by a 32-bit processor, the all-in-one terminal eliminates the need for dongles and charging bases. The terminal swiftly handles even the most complex mad-stripe or smart card transactions, using a choice of the latest wireless technologies, such as GPRS, CDMA, and Wi-Fi. And the modular design provides true investment protection, allowing modules to be easily swapped should new versions of a technology emerge. The terminals intuitive ATM-style interface and ergonomic design provide a familiar experience for users, while the platform and terminal software allow you to leverage existing applications without rewriting code or recertifying. This simplifies the implementation process and minimizes your help desk costs. The terminal also incorporates
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the latest protections against fraud and tampering, and the dual modern design wireless and dial offers added dependability.

Customer Accounts Software industry has seen many significant changes in the last decade and quality concerns have propelled testing services to the level of important verticals of the IT industry. Industries seeking IT services have realised the significance of QA services and testing being an imperative component of QA has grown significantly. Hexaware with its extensive capability in testing and domain expertise in Retail Banking, backed by over 800 consultants, has well established IP for Testing in Retail Banking. This service exclusively caters to all testing requirements for any IT initiative in Retail Banking solutions aim at enhancing IT value by optimizing business-IT alignment. Out testing product suite has competencies in providing Testing solutions that helps in prevention of unplanned down time, improved software quality, optimized testing costs and reduced lifecycle cost Scope The IP has been specifically developed for Banks, Financial Institutions using Retail Banking Solutions, investment and Wealth Management organizations. Hexaware offers flexible and customised testing solutions in various business areas of retail banking with key focus on:

Credit Investments Customer Relationships Teller Back Office Call Center Legal Compliance Savings Accounts Checking Accounts Cards Deposits

Key differentiators

A comprehensive set of Test scenarios for entire retail banking suite of application Ready made scenarios which provide completeness to a retail bank Systems Provides a Platform to develop detailed test cases specific to Banking products Creates a jumpstart to your testing activity by providing the necessary base and traceability to your functional requirements
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Caters to key business areas of retail banking Structured Scenario planning done using Mercury Quality Center Customizable to suite the individual business processes of Banks and Financial institutions

Value Proposition Comprehensive Coverage

Comprises of comprehensive testing scenarios that helps in providing end to end testing process for retail banking Created by the testing competency unit specialized in delivering Functional & Product Integration Testing services across all business areas of Retail Banking Evolved from the Test Engineering Principles and the best practices observed & implemented by our talented resource pool of experienced Test Managers and Test Leads in Banking and Financial Services Industry

Effective Cost Advantage

Pre-defined scenarios focuses on reducing time to market Significant reduction in Business Users time towards addressing requirements Potential reduction of around 20-40% of time and effort on Test Planning and Test Design

Packaged Testing Solution

Testing solution achieves highest granularity level of the functional analysis of the application that helps in optimizing alignment of IT with organizational goals Test cases focuses at improving the functionality & performance of the business processes of the applications

E-COMMERCE SOLUTIONS
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Caplin Xaqua Featured on these product lists Electronic Commerce Solutions Pricing / Analytics Overview Caplin Xaqua is a single-dealer platform (SDP) framework that enables you to deliver multiproduct trading direct to client desktops. It provides a comprehensive set of APIs to support connection to banks' internal systems (via Caplin DataSource+) using C, C++, Java, and .NET, and to client applications (via Caplin StreamLink+) using Ajax, Adobe Flex, Silverlight, Java, and .NET. Caplin Xaqua provides an abstraction layer allowing multiple trading systems and data sources to be connected to multiple client applications while isolating both client and server from the impact of changes to the other.Caplin Xaqua offers rapid time to market, low cost, and low risk compared to implementations that are developed from scratch while providing a comprehensive set of interfaces and a set of pre-built DataSource+ connectors

Finacle CRM Solution Finacle CRM solution is a modular, multilingual, web-based customer-centric application that enables banks to leverage ready-to-deploy CRM functionality for competitive differentiation. Integrated with Finacle core banking solution, Finacle CRM solution offers end-to-end functionality to effectively address the needs of the complete cycle of marketing, sales and service for banking products. Facilitating a unified 360 view of the customer across product lines and multiple back-end systems, it enables banks to improve customer experience across channels and empowers them with a robust platform for cross-sell opportunities. It also arms banks with the technology muscle to increase reach through effective marketing campaigns. Finacle CRM solutions proven scalability further ensures that it can meet the needs of growing banks, and their call centers. LEASING SOLUTIONS: HEXAWARE The leasing eco-system has gone global. Leasing players, whether pure play or bank owned, are impacted heavily by accelerated globalization of markets and services and are increasingly looking at acquiring overseas clientele. As more and more lessees are demanding global solutions to their finance needs, regulatory environment is also forcing lessors to provide deeper insight into their customer base. The role of IT systems in enabling globalization has never been more critical than it is today, as Lessors need to move quickly in order to implement end-to-end global IT systems to gain competitive advantage in the new era. .
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Gaining Competitive Advantage and Operational Efficiencies through Unified Systems Hexawares end-to-end business IT solutions for Lessors bring the following benefits:

Single database solution: End-to-end solutions using a single master database through technologies that support multilingual, multi currency requirements Simplistic integration model which allows for better visibility to client details, risks, asset concentration Better business processes and scalability of functionality in future Use of a single vendor and offshore model to enable significant reduction in investment required for transforming IT systems, at a time when need ROI is becoming increasingly important and managing multiple vendors is becoming more complex and costly Ability to leverage existing infrastructure of the parent company in case of a captive, or if independent, deploy one/more module(s) of the leasing solution to strengthen select process areas, which need to be streamlined

Leasing Solutions from Hexaware Hexaware provides end-to-end leasing solutions for lessors of all types and sizes. With rich experience gained from developing a 'Unified' leasing solution for one of the largest leasing companies in Europe, Hexaware offer leasing solutions such as all or part of the following systems:

Customer Management, Channel Partner Management Lease Origination systems o Offer systems, Product Configuration systems Core Contract Management systems o Offer systems, Product Configuration systems o Refinancing, Accounting Asset Management

Value Proposition

Only Indian IT company offering end-to-end solutions for the Leasing sector Successfully executed the single largest legacy reengineering project to be deployed by an Indian IT company from offshore: 3000 legacy programs translating into 8 million lines of code 3 year old Leasing practice Several experienced Leasing domain experts, with knowledge of international leasing practices Capability in offering end-to-end leasing solutions Capabilities in multiple technologies Mainframe, internet technologies, ERP/CRM/Business Analytics

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TRADE SOLUTIONS-HEXAWARE Trade Finance requires financial institutions to effortlessly address the various challenges involved in each of the trade finance lifecycle stages, simultaneously complying with pertinent regulatory processing standards such as UCPDC 500 and URC-525. Hexawares Trade Finance solutions aim to eliminate manual processes for faster and secure exchange of documents. Our solutions reduce operational expenses and allow banks better risk management, ensuring better service to clients through faster/safer transfer of money/documents. Solution Framework

L/C Management: Facilitates opening of an L/C and processing it on a web-based application in accordance with Government rules & regulations addressing all the terms & conditions agreed by buyers/sellers Payments/Collections: Ensures proper and safer presentation of invoices/documents and facilitates proper payments and collections under international regulation Trade Document Management: Builds document inventory and efficiently manages operations like document production, storage and distribution in a central secure location Imp/Exp Finance: Empowers banks operations to execute finance operations for importers and exporters Trade Financing: Provides collaborative platform for banks, buyers and sellers and facilitates arrangement of trade financing Arbitration: Manages issues related to discrepancies leading to arbitration under International Chamber of Commerce (ICC) Document Examination: Verifies terms and conditions mentioned on Letters of Credit and other trade-related documents by electronic check of document

BASEL2 The Banking and Financial Services industry has undergone significant transformation in various critical business processes like risk management practices, supervisory approaches, and capital requirement assessments. Since the introduction of Basel II Accord, Consolidation, Advanced Risk Management techniques, Data Management and Reporting models have evolved as a major concern.
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Pillar III of Basel II Accord complements the minimum capital requirements (Pillar I) and the supervisory review process (Pillar II). It features Market Discipline that requires banks to disclose essential information regarding their capital allocation and the risks they take beyond current financial reporting guidelines. . Services Pillar III encourages banks to develop urbane proficiencies in analyzing risk, aligning regulatory requirements more closely with internal methodologies and improving operations in general. This involves developing a set of disclosure requirements allowing market participants to assess key information on the scope of applications, capital, risk exposures, risk assessment processes, and capital adequacy of the institution.

Hexaware Basel II Reporting Solution Hexaware offers an integrated solution that encompasses a single technology framework, a common middle layer and a common presentation layer. Our Pillar III solution addresses disclosure requirements that meet regulatory expectations based on qualitative and quantitative approaches. We aggregate the risk system with well-informed and integrated data management and reporting models. We offer Technology Consulting, Development and implementation and Support for Basel II

INSURANCE-HEXAWARE Hexawares extensive experience in providing software solutions to Insurance world-wide helps our customers to maintain their edge in this increasingly competitive, yet tightly regulated market. We strongly believe in the partnership model of operation and continuously strive to deliver value additions and innovations that help our clients to secure cost savings on IT maintenance and to gain improvements in operational efficiencies. Domain Consulting New Business & Underwriting Policy administration Claims administration Agency Compensation

Technology Consulting
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Application Systems Implementation & Support Legacy Modernization Auto-updating Documentation Solutions Quality Assurance & Testing Enterprise Solutions (ERPs) Enterprise Content Management Document Output Management

Back office and Process optimization

Process Consulting Claims pre-processing & Adjudication Manual Policy Data Migration Electronic Contract Management Solutions Outputs Document Design

Management Decision Support Services

Business Intelligence / Data warehousing solutions Business Rule Engine Services

PLATFORM FOR IT ENABLED RETAIL BANKING

FINACLE Finacle, the new generation core banking solution from Infosys, is a centralized, fully integrated retail, corporate and trade finance solution that is designed to extend the bank's reach to the entire enterprise in a seamless manner - from the front office to the back office. This solution leverages Web
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technology to enable the bank to integrate with surround Web applications, thus creating a powerful banker's desktop. It is multi-currency, multi-lingual, multi-platform and workflow enabled.

Intellect Universal Banking Intellect Universal Banking (IUB) is an integrated, scalable, flexible, secure and customer-centric core banking platform. IUB is 24/7, web-enabled, with multi-currency and multi-lingual capabilities that allows banks to serve markets all over the world through multiple channels. IUB integrates effortlessly with existing legacy applications, and is built on a SOA backbone with contemporary J2EE-based technology. It is designed with re-usable components, which makes it highly modular and flexible. Intellect Universal Banking can serve a bank's customers across retail, small-to-medium size enterprises (SME), and commercial and corporate segments. It has the capability to provide a single view of the customer for effective relationship management and tracking of global limits for effective risk management. Intellect Universal Banking is functionally rich and covers the following domains: Core Banking Loans & Mortgages Trade Finance Treasury Internet Banking Back Office and Shared Services The entire platform comes with a fees-and-charges module, which allows greater flexibility in levying service charges or rewarding customers automatically based on a combination of customer segment, product, account, transaction and channel characteristics. It also includes Credit Limit Monitoring which helps track customer limit utilization across multiple products in real time. It has a collateral management system across various business lines and product processors. The solution has an identity management system, which stores signatures & photos for verification as well as robust reconciliation and reporting engines.

5 Key Differentiators of Intellect Universal Banking Solution

Intellect enables you to create and launch new Products in less time than it takes to perform a cash transaction.
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Intellects Transaction Processing and Risk Management framework lets you use one of several customer, transaction, and product attributes to control risk and enhance productivity of your transaction processing system. Intellect enables cross-selling and up-selling by its versatile Single customer view and helps tellers to perform 'smart service' and thereby increase the Net Asset Value of the customer Intellects rich functionality helps any bank to 'build as it grows.' Real-time processing with high performance--using the power of J2EE technology and SOA, Intellect UBS processes and renders information on a real-time basis; processes batch jobs using a powerful read once, process many times design called B-LINE and plugs easily into any landscape through use of ESB-like services provided by Intellect Integrator.

Technical Specifications

Designed on an open architecture, modeled on J2EE framework Conforms to 7-layer SOA architecture and is built with re-usable Business Applications and Components Web-based, thin-client solution Supports multiple platforms - IBM, HP, Sun Supports mulitple operating systems-- Solaris, Linux, AIX,HP-UX, Redhat Linux User Interface IE and all major bowsers App/Web Server Web Logic 8.1, Web Sphere 6.1, iPlanet 6.1 Database Oracle 10g Integration/Messaging Intellect Integrator (built-in) Authentication/Authorization/SSO Intellect Armor (built-in)

Functional Architecture

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FUTURISTIC VIEW OF RETAIL BANKING 1. REAL-TIME ALERTS I have just returned from a very enjoyable holiday which was unfortunately marred by the number of marketing calls from my bank. The Wired Consumer We all remember the times when the newspaper alone provided information on events. Today, we can access the Web and get updates of events as they unfold across the globe. The strides taken by television broadcasting particularly in the area of sports coverage, is phenomenal. Technology has enabled the consumer to get information on demand. With a proliferation of channels and their increasing use, banks need to ensure that a satisfying multi-channel integration is accomplished. Alerts, as the name suggests, is one such technology. These are essentially notifications or messages, sent to customers on the occurrence of an event. The alerts are delivered across a wide variety of channels and devices including email, mobile phones, PDAs, fax etc.

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Alerting technology is still nascent in usage by banks, but one that is expected to be more frequented, particularly as customers realize the control it allows.

Drivers for Implementing Alerts Our traditional interaction with the bank has been a customer-asks, bank responds model. Customers may ask in a variety of ways, when they visit their branch; speak with the agent at the call center or when they send an email query. The banks in turn respond across a variety of channels. However, alerting technology promises to take this interaction to another level. The fundamental difference arises that the customer enjoys the control of determining when she would like to receive what kind of an alert and through which medium. In doing so, customers would be expected to make a distinction between call-to-action alerts and just for- information alerts. There can be the typically routine for your information alert, say on a salary being credited. However, if the customer is planning to sell some stock above a particular price point, then the brokerage department would alert the customer as the stock hits that particular price. Another significant difference is that while alerts traditionally used to be delivered by email, now the trend clearly is towards a multi-channel delivery mechanism. Experts believe emails will give way to voice based alerts, delivered to handheld devices. From the banks view, this offers them a great opportunity to focus on the sales and service aspect of a customer relationship. Customers can now keep in touch with their bank. From the banks point of view, this offers them a much cheaper option of servicing the customer than the more commonly used agent-based model. Alerts have much to offer in the area of sales, by outbound marketing alerts on product promotions. This can vary from information of the type that TowerGroup refers to as highly perishable and on which customers must act quickly such as changes in existing interest rates, to the launch of a new product with a time-bound attractive offer. If alerting technology is to be successful it needs to support a multi-channel delivery mechanism. Then will this move from a customer-asks, bank responds model to a more proactive customer service model.

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as demonstrated in Fig 1. A word of caution, alerts should only be sent to customers who opt for it. Otherwise, it can be a source of irritation.

What Next? The convergence of technologies offers alerts great hope, despite the slow adaptation. Banks need to pay attention to a few issues: 1. Even amongst banks which have introduced alerts, its utilization amongst customers has been low as the content and form of the delivery has not been customer friendly. 2. The challenge is to bring in some form of intelligence in the alerting system, so the interaction with the customer is more meaningful. Figure 2 highlights the way to go: 3. While selecting the type of alerting technology, banks should recognize that it facilitates deployment if a single solution is used across all channels and devices.

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4. The potential of alerting technology will be diluted if the solution is not fully integrated with the rest of the technology infrastructure within the bank. 5. Banks need to approach the deployment of alerting solutions with a conscious multichannel strategy and a strong business case to justify its investment. On the revenue side, there is an opportunity for banks to substantially increase sales, through targeted outbound marketing,

Conclusion Alerting technology offers banks an opportunity to take a giant, cost-effective, step in refining their customer relationship management strategy. With the investment that vendors are making, future versions of the solutions will focus extensively on customer demographics and customer lifestyles.
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My banks alert solution now has a Do Not Disturb feature which allows me to go to their website and specify the kind of alerts that I wish to receive. I am about to reach out to access that feature, as I am leaving for another holiday!

2. MOBILE PAYMENTS

Mobile payment initiatives are percolating on a global basis. More pilots are being launched in developed countries. In emerging markets (For e.g.,India, Kenya, South Africa, Serbia, the Philippines), mobile payments are exploding by providing new payment-based services for users.

Background The first step in our analysis is focused on what constitutes a mobile payment. The corollary to that answer also defines what is not considered a mobile payment. Understanding both sets of answers is essential to determining where mobile payments presents a real opportunity or where it is destined to fail or, at best, deliver a marginal, niche benefit to mobile customers and providers (i.e., telco carriers, banks, and payment processors). Mobile payments is a system for authorizing the transfer of funds between two parties that is confirmed in real time, using at least one portable wireless communications device, through a wireless data network. This definition fits well with the payment methods that are
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used to authorize payment for the purchase of digital content from a third party, transfer funds from one person to another through a service such as PayPal Mobile or Obopay, or as an interface to authorize bill payments to third party payees. Within this definition, banking transactions such as checking balances and transferring funds from one account to another (with the same ownership) are not considered mobile payments. The scheme proposed for linking contactless payments to the mobile phone does not constitute a mobile payment. For example, near-field communication (NFC) technologies that are being embedded into the mobile phone are a substitute transaction device, much like the NFC chip that is being loaded onto credit or debit cards for contactless payment processing at a retail POS device. Recently, another wave of mobile payments pilots has popped up in the United States, Canada, and across Western Europe. In the United States, the Financial Services Technology Consortium (FSTC) plans to launch a mobile payments project that will identify and document technology-based opportunities for banks in the mobile arena. Coincidentally, rapid adoption of mobile payments is occurring in emerging markets such as Kenya, South Africa, Serbia, and the Philippines. Other countries targeted for mobile payments initiatives include Egypt, Jordan, Senegal, and the Ivory Coast. The interested mobile payments participants fall into these main camps: telco carriers, banks, payment processors, and vendors (For example, Visa, MasterCard, Western Union, Monitise, mFoundry). Sorting out the opportunities, forging a plan to participate, and doing it successfully leaves many questions to be answered, particularly for bankers. One of the questions facing all stakeholders is whether to compete or collaborate with each other. Understanding the real market potential in a given country and the factors driving a solid opportunity are also important. Essential to this issue is the utility of electronic money for sender and receiver, and the access points to receive cash. Finally, understanding where mobile payments are not destined to succeed or will only achieve a tiny share of the payments volume can save time and money in spite of the forecasting hype for rapid adoption in markets such as the United States, Canada, or Western Europe. The timing Mobile payment debates will probably continue on over the next 10 years. The United Statesbased FSTC study was launched in April 2008, initially to study the mobile payments landscape. The ultimate goal is to ensure that banks will be on an equal footing when it comes to offering mobile payments services. This project envisions more than one phase, so a timeline for actionable conclusions is not yet defined. Since the United States is the epitome of mature payments alternatives, if banks move too slowly, it will currently be considered a low market risk.

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In other markets, the timing could be quite different for banks. In particular, emerging markets will not wait for the local banks, particularly where there are large segments of under-served consumers, which include India, China, and Africa. Figuring out the flow of funds and associated fees within the context of the telco carriers business model and transaction processing infrastructure may well be the critical path to rapid adoption of mobile payments. Mobilizing money transfers from developed economies to emerging markets is also likely to contribute to the adoption of mobile payments.

Assessing the impact Mobile payments have taken on many different forms from a variety of sponsors over the past 10 years. Market participants should evaluate the opportunity for mobile payments for each country by evaluating several key issues: Understand the key enabling and inhibiting factors for mobile payments and rigorously estimate the demand for mobile payments in each relevant market. Enabling factors can include a weak or limited land-based telecommunications infrastructure. It can entail a large percentage of unbanked or under-banked consumers and small business entrepreneurs. It could also include the need for more liquid, reliable, and certain payment schemes that facilitate a money-based transaction between two unrelated parties. Inhibiting factors can include the existence of mature, widely used telecommunications alternatives, mature banking and payments infrastructures, alternative payments schemes that facilitate a transaction between two unrelated parties, strong governmental oversight of banking and money (including cash) transactions, and existing fee structures for mobile usage and payments/money transfers. Security and compliance issues are now being examined by governmental agencies and cross-border task forces that are charged with curtailing money movement for terrorism funding and drug trafficking. How these agencies and task forces decide to combat under the radar money movement with evolving technology platforms (including mobile payments), could become a factor. Fraud and identity theft issues are also important because non-bank stakeholders are less equipped to address these types of risk. Interoperability issues seem to be important only within a country market. Cross-border regional standards for interoperability for mobile payments may eventually develop as cross-border trade or transaction processing develops for emerging markets. In developed markets such as the EU, the interoperability issue will likely track the establishment of cross-border payment processing via mobile payments. Interested parties will try to

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answer the question: Could a pan-regional mobile payments scheme leapfrog established bank and/or processor-controlled cross-border payments systems and standards.

3. Deploying BPM in Banks Banking is a process business. In a good bank efficient processes support all functions. Traditionally, banks have relied on documented procedures and training. As business becomes more dynamic, decision-making more crucial, and compliance mandatory, banks need to look for solutions without compromising on the quality of processes.

In the world of banking and technology, several emerging ideas catch the fancy of all concerned, but only a few make a lasting impact. In the last few years, Business Process Management (BPM) has been increasingly discussed in these circles. Recognizing the need to address operational efficiency, banks have tried to reengineer processes or automate various business functions. It is with the advent of various BPM tools that banks are now beginning to realize the opportunity to consider a pan-organization approach. This article attempts to explore some of the major issues that banks would need to consider in adopting BPM. we will focus on three issues: Where can BPM be used in a bank? Where will BPM fit within the underlying IT architecture in a bank? How can the bank justify this investment?

Issue 1: Where can BPM be used in a bank? While planning BPM deployment, banks must initially focus on the high-volume, low-value transactions, which inundate back offices, like clearing operations and payment processing. Focusing on such transactions will improve productivity and reduce costs. However to utilize full value of BPM banks could consider critical yet routine transactions in the front office, including account opening and administration, loan account opening etc. These account for fairly substantial volumes and in many banks they are dissimilar in execution as well. This could free time for Customer Service Officers (CSOs), who are under increased pressure of customer retention. The test for early adopters of BPM is their deployment beyond the routine back-office transactions; say in systems used by their outsourcing partners; or more complex set of transactions including credit and operational risk, or on other aspects of compliance.

Issue 2: Where will BPM fit within the underlying IT architecture in the bank? Banks know that the departments within the bank as well as the accompanying systems operate in silos. Even the accompanying processes are designed to cater to this situation,
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thereby leading to sub-optimal processes. As such banks are recognizing the utility of enterprise applications that cut across geographically dispersed businesses, across segments and lines of business. Increasingly, banks realize the need to conform to a breed of ServiceOriented Architecture (SOA) which is based on web services standards and enterprise applications. However, banks need to understand that flexibility and integration capabilities of these can be optimized if they align with the overall business purposes. This is where BPM comes into play from an architecture deployment perspective. BPM allows the bank to take a pan-organization view on business, and SOA and web services fully support that deployment. Actually, BPM, SOA and web services truly complement each other while on one hand, BPM facilitates the bank take a holistic view to streamline their processes from front to back and across departments, partners and channels, on the other hand, SOA and web services facilitate standard processes or services to be used and re-used while also allowing the dynamic movement of data from internal and external sources. Some examples where BPM, SOA and web services would complement each other by streamlining processes and opening up services for other partners or channels are: Transactions like account opening and loan origination, Credit approval facilities, Strengthening risk management practices. Banks must strategize to look beyond the silos within and adopt BPM to streamline processes while SOA and web services will facilitate the interoperability for such a deployment.

Issue 3: How can the bank justify an investment in BPM? New technology solutions for banks have in the past promised much but delivered little. At a time when fresh investment is difficult to come by, banks need to fully understand the following parameters to justify investment:

1. The cost factor: Banks would need to evaluate the cost element considering that BPM can achieve the following: Automate routine transactions, and facilitate handling of greater volumes, reduce long-term application maintenance, facilitate greater straight through processing by managing exceptions and centralizing business logic. 2. The business factor: Can it facilitate much greater time-to market through greater agility in new product development? Will the quality of service in the branches improve with greater automation? Can the reengineering of processes allow the bank to aggressively go after additional business?

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3. The regulatory factor: In most countries, the cost of non-compliance is very high. Will it improve the time to compliance? Will the bank be able to do whatever is required quickly and accurately? Conclusion Customer retention, the mantra for a banks profitability necessitates a consistent, enjoyable, customer experience. This drives banks to improve operational efficiency by an enterprise approach; BPM supports that end objective, through its ability to cut across silos and lines of business in standardizing processes. BPM is not just a business solution, nor is it the technology departments answer to addressing silos in a bank. It transcends both. A bank, whose enterprise architecture comprises BPM, web services and SOA, will attain operational efficiency and provide an enjoyable customer experience. That alone should be reason enough to pursue BPM.

NEW BANKING SERVICES TO BE STARTED IN COMING YEARS BY NPSBS Smart Cards Smart Cards based Electronic Payment System: Smart cards are receiving renewed attention as a mode of online payment. They are essentially credit card sized plastic cards with the memory chips and in some cases, with microprocessors embedded in them so as to serve as storage devices for much greater information than credit cards34 with inbuilt transaction processing capability (Chakrabarti and Kardile, (2002).

Figure 6: Smart Card Image This card also contains some kinds of an encrypted key that is compared to a secret key contained on the users processor. Some smart cards have provision to allow users to enter a personal identification number (PIN) code. Smart cards have been in use for well over the two decades now and have been widespread mostly in Europe and Asian Countries. Owing to their considerable flexibility, they have been used for a wide range of functions like highway toll payment, as prepaid telephone cards and as stored value debit cards. However, with the recent emergence of e-commerce, these devices are increasingly being viewed as a particularly appropriate method to execute online payment system with considerably greater level of security than credit cards. 28
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Compared with traditional electronic cash system, smart cards based electronic payment systems do not need to maintain a large real time database. They also have advantages, such as anonymity, transfer payment between individual parties, and low transactional handling cost of files. Smart cards are also better protected from misuse35 than, say conventional credit cards, because the smart card information is encrypted. Currently, the two smart cards based electronic payment system- Mondex36 and Visa Cash are incompatible in the smart cards and card reader specification. Not knowing which smart card system will become market leader; banks around the world are unwilling to adopt either system, let alone other smart card system. Therefore, establishing a standard smart card system, or making different system interoperable with one another is critical success factors for smart card based payment system. Kalakota and Whinston (1996), classified smart cards based electronic payment system as (1) relationship based smart cards and electronic purses. Electronic purses, which may replace money, are also known as debit card37. Further Diwan and Singh (2000) and Sharma and Diwan (2000), classified38 smart cards into four categories. These are: (1) memory cards: this card can be used to store password or pin number. Many telephone cards use these memory cards (2) shared key cards: it can store a private key such as those used in the public key cryptosystems. In this way, the user can plug in the card to a workstation and workstation can read the private key for encryption or decryption (3) signature carrying card: this card contains a set of pregenerated random numbers. These numbers can be used to generate electronic cash (4) signature carrying cards: these cards carry a co-processor that can be used to generate large random numbers. These random numbers can then be used for the assignment as serial numbers for the electronic cash.

Electronic Cheque Payment System: Electronic cheques16 address the electronic needs of millions of businesses, which today exchange traditional paper cheques with the other vendors, consumers and government. The e-cheque method17 was deliberately created to work in much the same way as conventional paper cheque. An account holder will issue an electronic document that contains the name of the financial institution, the payers account number, the name of payee and amount of cheque. Most of the information is in uncoded form. Like a paper cheques e-cheques also bear the digital equivalent of signature: a computed number that authenticates the cheque from the owner of the account. Digital chequing payment system seeks to extend the functionality of existing chequing accounts for use as online shopping payment tools. Electronic cheque system has many advantages: (1) they do not require consumers to reveal account information to other individuals when setting an auction (2) they do not require consumers to continually send sensitive financial information over the web (3) they are less expensive than credit cards and (4) they are much faster than paper based traditional cheque. But, this system of payment
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also has several disadvantages. The disadvantage of electronic cheque system includes their relatively high fixed costs, their limited use only in virtual world and the fact that they can protect the users anonymity. Therefore, it is not very suitable for the retail transactions by consumers, although useful for the government and B2B operations because the latter transactions do not require anonymity, and the amount of transactions is generally large enough to cover fixed processing cost. The process18 of electronic chequing system can be described using (figure 4) the following steps. . Step 1: a purchaser fills a purchase order form, attaches a payment advice (electronic cheque), signs it with his private key (using his signature hardware), attaches his public key certificate, encrypts it using his private key and sends it to the vendor. Step 2: the vendor decrypts the information using his private key, checks the purchasers certificates, signature and cheque, attaches his deposit slip, and endorses the deposit attaching his public key certificates. This is encrypted and sent to his bank. Step 3: the vendors bank checks the signatures and certificates and sends the cheque for clearance. The banks and clearing houses normally have a private secure data network. Step 4: when the cheque is cleared, the amount is credited to the vendors account and a credit advice is sent to him. Step 5: the purchaser gets a consolidated debit advice periodically.

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