Keeping pace with changing Technology

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Keeping pace with changing Technology Challenge
s for the Financial Services industry
R Suresha
CAIB conference St. Lucia
Nov.17, 2004
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Agenda

• Objective of Todays session
• Overview of Emerging Technologies
• Practical Implications/Impediments
• Open house
• Q A

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• Keeping pace with changing Technology
• - Challenges for the Financial Services industry

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Banking and financial services industry has seen
a significant change recently

• Globalisation and consolidation of the financial
  services industry
• Compliance and regulatory requirements
• Outsourcing
• Pressure on firms to cut costs and deliver
  increased value
• Large multinational banks are considering
  centralisation of back-office functions into
  Shared Operations Centres, Personal Credit
  Offices
• Improving economic environment

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Consolidation and M As

• Mergers to bring significant savings in long term
  technology expenditure through economies of scale
• Multi country Universal banks may emerge
• Securities firms may scale up to international
  operations
• Consolidation of back office, clearing,
  securities operations to bring significant
  reduction in costs

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The global banking regulatory framework is
undergoing important changes
Risk Management
Anti-Money Laundering
Corporate Governance
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Outsourcing is increasingly being adopted
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Improvement in the Economic Environment

• Resilience to environmental changes
• Healthy but volatile capital markets
• Marginal growth in economy
• Continued low interest rate
• Higher consumer spending
• Overall...a positive outlook

US Economy has made the transition from a period
of sub par growth to one of more-vigorous
expansion Source Monetary Policy Report of US FED
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In the current business scenario, Efficiency and
returns are the mantra for success
What surprises does competition have for me ?
How will the war affect my bank?
Are there positive or negative trends in customer
satisfaction?
Will there be an increase in bank deposits ?
Have I forecasted the right portfolio?
INVESTORS
CUSTOMERS
BALANCE SHEET
STOCK MARKET
Will IT help me manage my business ?
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Our view of Key business drivers .
Transaction Volume
Technology Framework
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lessons from our global footprints...
Europe Strong move towards core banking, BI
solutions, Basel analytics
USA AI, EAI, RTD, BI compliance related
solutions, replacement of legacy core banking
solutions
Asia Replacement of current core banking
solutions
Africa Core Banking Introduction on new channels
Latin America Moving towards Core banking and
Compliance solutions
Australia EAI, BI and compliance solutions
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.resulting in enhanced product and service
offerings

• Traditional Cash Management offering were
  enhanced to include electronic bill presentment
• Account Aggregation services are being combined
  with advisory services
• Deployment of B2E applications
• Budgeting, Strategic Planning, Human Capital
  Management, etc
• Investing in customer processes that leverage
  customer data
• Specialized offerings to the customer
• FX trading, Online LCs for companies into global
  trading

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The past few years have seen a significant
increase in adoption of new channels

• Alternate channels usage is slowly displacing the
  branch traffic
• The internal cost of running business through new
  delivery channels such as internet, call center,
  ATM has been lower than the branch
• The new channels provide various advantages from
  convenience to efficient low cost delivery to
  increase in transaction volume
• Extension of customer relationship through new
  areas such as online trading, self managed
  retirement plans, etc
• And more banks are joining the race

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There is now a greater stress on building a
stronger back-end infrastructure

• Integrated channel management
• Intelligent middleware
• Support for multi-channel access
• Consistent Customer Information System
• Demand for a flexible gateway architecture to
  plug and play across channels
• Stress on providing a common face regardless of
  channel used by the customer

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The focus is on setting the Back Office
applications in place

• More banks are moving towards improving their
  back-office applications
• Vendors are working towards improving their
  product offering, to provide full service
  back-office applications
• Banks believe this would lead to less manual
  effort, and more automated processing
• Smaller banks have been more proactive in the
  changes
• Some banks are taking a piecemeal approach
• Large banks have found this to be self-funding
• Reduced system maintenance and upgrade expenses

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Countries in the Region
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Region Data
There are over 550 banks, including the branches
and local representations of international banks.
Most of the banks in the Caribbean are small and
medium.
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Banking Financial Services a competitive
landscape

• Strong niche players continue to emerge
• The fight for the consumer continues
• New and evolving distribution channels
• Strong compliance measures
• Removal of entry barriers
• New channels like Internet make banking
  borderless

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Broad market segmentation
REGIONAL GLOBAL BANKS
CREDIT UNIONS
MERCHANT BANKS
BROKERAGE HOUSES
INSURANCE OTHER NON BANKING COMPANIES
CENTRAL BANKS
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Regional imperatives
Human Resources
Enhancing Technology Applications
Processes
PRODUCTS
CUSTOMER
New channels
BPR/AML/BASEL
CORE BANKING/DR ,COB,IM systems
Cost Reduction
Consumer has been and will continue to be the
growth engine
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How to meet the emerging challenges ?
Industry Trends, Challenges,
Optimal Solution to meet customer expectation
improve profitability
Technology team
Business team
Product Features Functions
Application vendors, Consultants and Solution
Architects
Customer Requirements
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Technology investments are increasingly being
viewed in business value and ROI context

• Map IT investment decisions to business goals and
  objectives
• Business goals may need to be prioritized, when
  trading off on projects
• IT vision should be tangible
• Use objective criteria for selecting IT
  investments
• Have a realistic assessment of ability to execute
• Consider the overall technology framework before
  initiating smaller projects
• Define a technology road-map

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Important Design Criteria to define the
Technology Road Map
Re-usable, standardarchitectural components
Scalable and global Technology
Distributed developmentof customer functionality
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Other consideration

• Establish regional technology forum for
  exchanging ideas and sharing experiences
• Explore ways of pooling resources shared ATM
  network, shared DR site, shared communication
  lines
• Small banks can explore ASP to move to latest
  technology without huge investments.
• Form a core advisory team to carefully watch the
  development in the global banking scene
• Attempt to remove spaghetti in your current
  architecture

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Thank You
For further details please contact R
Suresha r.suresha_at_iflexsolutions.com Principal
Consultant Certified AML Specialist
(ACAMS-USA) i-flex Solutions Limited Millennium
Towers Bangalore 560037 INDIA