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  • The Future of Banking – successfully navigating towards the world beyond the pandemic

    Multiple financial and operational challenges await in the months ahead. Navigating towards success in a post-pandemic world requires banks to explore at least three routes.

    The Future of Banking - successfully navigating towards the world beyond the pandemic

    Experiencing the effects of the black swan that is the COVID-19 first hand, financial leaders and banks are witnessing a defining moment.

    At the time of this writing, of the over 6 million cases confirmed by the WHO worldwide, USA stands at the forefront of the pack, with two million reported cases. The pandemic has bared its fangs and has been leading the world towards an economic fallout.

    Amid these uncharted waters, US commercial and retail banks alike have strived to showcase immense financial and operational resilience. Learning from the market crash 12 years ago, financial institutions appear visibly stronger and better prepared.

    With higher capital and liquidity, US banks have moved quickly to protect their employees and customers.

    Current Scenario

    The effects on the markets so far are clear:
    1. U.S unemployment rates are on the rise, soaring to 19.8% in May 2020 from the original 14.7% in April. That is over 29.4 million jobs lost since the US markets began to shut down the non-essential businesses in March.
    2. Industries such as oil and gas, and automobile have been hit hard by the pandemic. It seems clear that these sectors will take a long time to recover.
    3. Near zero interest rates and increasing credit losses are creating projections which indicate a drastically reduced revenue for banks.
    Pre-coronavirus, US banks were already looking at digital banking to pave their way towards the future. The COVID-19, however, acted as an accelerant, forcefully changing the way consumers interacted with the banking ecosystem.

    The Future

    Through their Disaster recovery plans (DRPs), banks quickly transitioned to a remote working model. They ensured business continuity by proactively providing customers with a digital outreach for better payment flexibility and services.

    But going forward, it will become critical for regional, super-regional and national banks alike to showcase immense financial and operational resilience. These banks will need to approach the crisis with increasing discipline and work towards a re-imagined post-crisis future.

    At Go-Live Faster , we see three concurrent paths, which banks can traverse to ensure their survival and adapt to what will be the new ‘normal’.

    Months and years down the line, banks not just in the USA, but all over the world will be looking back at this period of time as a tipping point between the pre-COVID-19 period and the post pandemic new normal.

    Path 1 - Digitization in banking

    Before the outbreak, digital banking was:
    1. The rising star within the industry.
    2. The new and improved method with numerous advantages.
    3. A platform to offer a diverse set of services to the end consumer.
    4. Cost effective and less time consuming.
    Banks understood these benefits, but in reality less than 15% of the banks considered themselves as digital transformation leaders.

    And while consumer demand for digital has still not reached an unprecedented level, it is likely that banks, among other financial institutions, will have to make the switch to digital because of the foreseen changes in the global economy and the new public-health safety standards that involve social distancing.

    Branches may be seen as an additional cost. They may be permanently shut, resulting in a reduced number of banks per 100,000 adults like in the Canadian or the United Kingdom markets.

    With larger credit losses and lower revenues on the horizon, banks should be riding the wave of the digital revolution.

    Months down the line, when things prompt ways to resist the change, banks should look at the current scenario as an opportunity to make digital services an integral part of their service infrastructure. Additionally, digital banking will also serve as a cost effective method to scale overall productivity and cover more geographical ground. Undergoing a digital transformation could be especially beneficial for smaller commercial banks. Such banks could struggle less to tap into other state markets. Digital transformation could also provide an avenue to focus on specific population segments, segments such as the millenials and Gen Z, the two generations that are beginning to make up a majority of the population worldwide.

    To highlight our point, let’s take a look at the standard customer onboarding process for most US commercial banks.

    For most, this involves a five step process:
    1. Initial consultation initiated by the customer
    2. Documentation
    3. Approvals - legal, credit and compliance
    4. Customer training
    5. Go Live
    Greater digital collaboration on each of these processes will allow banks to address certain pain points at each level.

    Here is a re-imagined version of each phase of the onboarding process.
    1. At the first stage of the process, customers can showcase their interest in opening an account via an online portal. The portal can act as a gateway to reach out to the relevant teams through means like video consultations.
    2. The online platform can also be linked to a database housing customer documentation.
      • It will allow bank employees to identify any pre-existing customer relationships and search for already existing documentation.
      • Concurrently, the same portal can serve as a tool for customers to view and upload any remaining prerequisite documents.
      • This will reduce any redundancies in the communication process.
      • It will allow both the bank and the customer to check the status of the application throughout the approval process in real time.
      • Instant access to the documents will give other related teams the opportunity to parallely begin work on their tasks. This will reduce the time to completion for the entire workflow.
    3. The online portal can act as an all-in-one destination for the customer. This can potentially cut the onboarding process time by at least a tenth of the time currently required. Through the portal, the customer might be able to:
      • Interact with a relationship manager.
      • Get a video consultation.
      • Constantly get notified about updates and approvals.
      • Submit test transactions.
      • Go-live faster.
    A reimagined customer onboarding process for US commercial banks through digital collaboration  
    But to implement digitization at a broader level, it will still be necessary to educate the customer post implementation. However, the long term benefits arising from the simplicity and improved delivery time will ultimately better customer experience, increase productivity and reduce costs in a post COVID-19 environment.

    Path 2 - Agile Banking

    Working amid the pandemic has proved one thing. Banks had to make almost instant changes to their operating model and priorities. Having grown into tremendously complex structures, banks can look at agility as a way to simplify things. Agile banking can also create more accountability at all levels within each department.

    Research shows that employees are more motivated and therefore more productive when they are in a position to see the impact that their work creates on the company, society or the end consumer.

    Through the COVID-19, most employees have been working remotely. A research by Gartner suggests that 74% CFOs are planning to shift at least some employees to a permanent remote working environment.

    Faced with a prolonged period during which banks are ill-advised to host employees in smaller spaces, banks will choose to reorganize so as to ensure greater productivity.

    Agile banking will allow financial institutions to better address customer pain points and provide solutions quicker. With distributed leadership and digitally enabled teams, decision making power can be restructured for faster speeds, producing more nimble teams. The restructuring will allow banks to incorporate a remote working structure, simplify processes, digitize faster and welcome productivity benefits.

    An agile mindset involves empowering teams to achieve desired outcomes. In the short term, this may not be achievable at a broader level. However, it might be worthwhile to start small.

    Involve leaders at all levels and explore this option with the teams that have fewer dependencies. Once defined and implemented within a department, scale vertically, and not horizontally, to streamline the entire process and overcome any potential hurdles along the way.

    Becoming agile in one value stream (and not as per specific job profiles) will make it easier to scale agility horizontally. It will allow banks to gradually transform into organizations that constitute a network of interdependent set of services.

    Advantages of Agile Banking   Simultaneously, a need for new skills among the workforce will be required to ensure smooth operations in the post-pandemic world. For example, increased cross-skilling in specific areas and training employees in skills such as empathy to handle distressed clients dealing with financial crunches, newer technology and digital tools are a must.

    As commercial and retail banks begin to introspect, they can take a look at their existing models of operation, analyze with a fresh perspective, identify gaps in processes and unnecessary expenses, and take a step forward to adapt to the new normal.

    Path 3 - Rapid Innovation in Banks

    A new approach towards customer interactions is necessary as we move towards the future. Now isn’t the time for banks to resist and wish for the old normal.

    Banks that can reinvent themselves will be able to reap maximum rewards and recover the fastest. And while the importance of customer experience will remain at an all time high, banks that are in a position to provide innovative solutions to what will be common economic problems for their customers in the near future (solutions such as quick financial advice) will be able to capture a larger share within what will be a fragmented market.

    The criticality of data was made relevant even before the pandemic hit us. Blindsided by the COVID-19, banks will realize that the traditional financial data at hand, however, will serve to be of little use when it comes to simulating risk models and guiding business decisions during the course of recovery.

    Financial institutions have to realize that the path to success lies not just in the data itself. It is in the way they approach and tap into this pool of information. Broader levels of data sharing and availability will create the opportunity to personalize offers.

    Considering each individual’s financial situation, banks, which can successfully tailor make offers and interactions in a way that accounts for the consumer’s unique dilemma, will be in a position to establish greater levels of trust and present themselves as the much needed potential solution providers in the midst of this crisis.

    Conclusion

    The existing market comprises thousands of banks and fintech companies. However, it seems likely that at least a third are unlikely to survive through the financial stress resulting from this global economic crisis. However, this will present an opportunity to those firms that will have managed to weather through this storm.

    If we have learnt anything from the market crash over a decade ago, it is that these stronger financial institutions within the industry will eventually be presented with the chance to acquire the weaker competition or take over fintech companies at lower or discounted prices.

    Financial institutions looking to traverse down the three paths highlighted above will need the increased capital strength and capabilities.

    In order to expand and meet the need for productivity gains, faster innovation and digital transformation, banks will need to tackle these challenges head on. US banks, however, can partner with a fintech company such as Go-Live Faster and leverage its capabilities to not only reduce project costs, but also achieve faster digital transformation.

    In the current circumstances, it is important for banks to communicate a believable purpose, provide an even better customer experience and establish trust capable of withstanding the tests of time.

    June 24, 2020
  • Predicting Banking Implementation Failure with the Duke

    We all remember John Wayne, fondly referred as the ‘Duke’, as a quintessential hard working, well intentioned cowboy, who seemed to overcome impossible odds through dogged determination and hard work in his movies. But given today’s dynamic and volatile banking technology environment would the same “cowboy ways” work? Banking tech teams, vendors and in-house personnel alike, are full of hard working, dedicated folks, but the track record for implementations seems to be getting worse.

    Want to know how the ’Duke’ would have gone about it and would he be successful…


    Fast tracked to today, John Wayne is now a corporate honcho who helps large Banks overcome Digital Implementations’ challenges. So, John Wayne has gradually settled down in today’s era, trading in his 6-shooter for an iPhone and is now a technologist who wants to innovate his organization to drive and maintain competitiveness.

    One day John was tasked with ensuring a banking technology implementation goes live on time with great quality while being under budget. And, this was so what the Duke loved, a difficult mission, fraught with danger, where the odds are stacked against him. Giving him a similar thrill of the Wild West, John assembled his posse and gave assurances that he will, once again, beat the odds.

    The Duke, wise and experienced, knew the threats he had to navigate… a disparate list of vendors and systems, demanding customer expectations, internal resource scarcity and a marauding band of regulators. After a few sleepless nights by the campfire and some significant contemplation in the saloon, John realized that he has to “change his approach to change the game”. Since a laptop had replaced his Winchester, the Duke realized that technology can predict where “bandits” and other dangers in his project lay, and could effectively allocate his posse to eliminate those threats proactively.

    To help him redirect his troops John laid down a structure to formulate a, simple yet effective, solution to evaluate if the implementation was headed for a failure. Upon pondering John chalked out the posse folks who were responsible for any implementation which typically included:

    -Line of business

    -IT (dev& Infrastructure)

    -Testing teams

    -PMO

    -Migration teams(users & relevant data)

    He thought, and rightly though, that tracking the process outcomes and deliverables closely will help monitor the implementation at every milestone. Moreover, while he was meeting some technology experts, he learned the impact of data analytics and applied it well to develop an algorithm to accurately predict success or failure. With the help of these go-live experts he made his “Readiness Lasso”, a single metric, which gave him control over implementation outlaws making it easier to cut implementation time and cost. He designed the lasso (readiness metric) with the primary objective to discipline and monitor the right aspects of 5 key teams at every milestone. In short, the idea was to effectively predict implementation success before go-live using a readiness metric.

    The ‘Duke’ had indeed stood up to the challenge of predicting Digital Banking implementations’ success and could now showcase the solution to the world.

    The story doesn’t end here. You only know ‘what’ he did. Drop us a line at [email protected] to know more about ‘how’ the Duke designed his ‘Readiness Lasso’ to reign in the bandits hiding in digital banking implementations.

    May 7, 2019
  • Same Day ACH: What You Need To Know

    On September 23, 2015, the Federal Reserve approved NACHA’s Same Day ACH solution. The move will help businesses and consumers move money faster through same day settlement for practically any ACH payment.

    For several years, the industry has been interested in improving ACH settlement and processing. A similar such same day proposal by NACHA was voted down in 2012 due to lack of sufficient business rationale. Over the next three years, NACHA engaged with the industry and came up with a revised proposal with ten distinct business cases to support same day payments. This time around, Same Day ACH meets the needs of customers for uses cases such as payroll, bill payment, urgent claims, invoices and taxes amongst others. It’s an example of how the industry is perceptive towards its consumers’ needs and is working towards providing them with the payments speed they deserve.

    Same Day payments will be rolled out in three phases over the next two years so that financial institutions and businesses have sufficient time to adapt their processes and operations for same day settlement. Same Day ACH payments will be an option provided in addition to the existing ACH schedules.  A fee will be imposed on Same Day ACH transactions to help receiving financial institutions recover the costs of supporting Same Day ACH.

    The date when Phase 1 of Same Day ACH rolls out is looming ahead of us – September 23, 2016. In Phase 1, only ACH credits will be processed on the same day.  Phase 1 will focus on supporting use cases such as hourly payroll, person-to-person payments and same-day bill payments. Same Day ACH debits will be rolled out in Phase 2 which is proposed to begin in September 15, 2017. Phase 2 will support a wider range of consumer bill payment use cases such as credit card, utility, mortgage and loan payments.

    For both Phase 1 and Phase 2, two new clearing windows will be provided by the ACH Operators to allow originating financial institutions to submit Same Day ACH Payments files viz.:

    • 30 a.m. ET with settlement at 1.00 p.m.

    • 45 p.m. ET with settlement at 5.00 p.m.

    In Phase 3, which is scheduled for March 16, 2018, receiving financial institutions will be required to make funds available to customers by 5.00 pm local time for same day credit entries.

    Other than international transactions and transactions exceeding $25000, all types of monetary and non-monetary ACH payments (credits and debits) except ENR (Automated Enrollment entry) will be eligible for same day processing.While Same Day ACH origination is optional, it is mandatory for participating ACH financial institutions to process incoming Same Day ACH items.

    Same Day ACH will definitely have an impact on day-to-day operations and financial institutions will have to consider the following as outlined by NACHA:

    ODFI (Originating Depository Financial Institute)

    • Figure out the new file submission and delivery schedule with their ACH operators

    • Revise internal processing schedules and procedures to accommodate new windows for Same Day Entries

    • Review applications and systems that may be impacted by Same Day Entries

    • Gather information from the ACH Operator regarding collection of Same Day Entry fees

    • Create a procedure to hold payment entries that are received from an Originator in the same day window but that is not the Originator’s desire

    • Indentify customers and business models to offer Same Day

    • Discuss eligibility requirements for Same Day Entries

    • Discuss proper use of the Effective Entry Date and impacts of improper Effective Entry Dates.

    RDFI (Receiving Depository Financial Institute)

    • Figure out the new file submission and delivery schedule with their ACH operators

    • Revise internal processing schedules and procedures to accommodate new windows for Same Day Entries

    • Processing entries based on the Settlement Date provided by the ACH Operator

    • RDFIs do not need to determine same day eligibility for processing

    • In Phase 1 RDFIs will only receive credit entries as same day entries. Beginning in Phase 2, RDFIs should be prepared to also receive debit entries as same day entries

    • Phase 3 will require RDFIs to provide funds availability at 5:00 pm local time for same day credit entries

    • Decide on whether to use the new same-day processing windows to send returns and NOCs

    • Getting information from ACH Operator regarding collection of the Same Day Entry fees

    Ultimately, Same Day ACH will make ACH processing only 12 hours faster than the standard next day ACH settlement. Same Day ACH is just a step towards the ultimate goal of immediate/real time and secure payments. However, it does offer every bank an opportunity to revisit the services they provide to their customers. Same Day ACH can help financial institutions modernize their payments systems for the time being and lay down a foundation for real time payments in the future.

            

    August 1, 2016

If you are looking for someone who can help you accelerate your time to market on product releases look no further. Get in touch with us today to explore our scientific and analytical reports derived from our proprietary technology!

Our Blog
Category

  • The Future of Banking – successfully navigating towards the world beyond the pandemic

    Multiple financial and operational challenges await in the months ahead. Navigating towards success in a post-pandemic world requires banks to explore at least three routes.

    The Future of Banking - successfully navigating towards the world beyond the pandemic

    Experiencing the effects of the black swan that is the COVID-19 first hand, financial leaders and banks are witnessing a defining moment.

    At the time of this writing, of the over 6 million cases confirmed by the WHO worldwide, USA stands at the forefront of the pack, with two million reported cases. The pandemic has bared its fangs and has been leading the world towards an economic fallout.

    Amid these uncharted waters, US commercial and retail banks alike have strived to showcase immense financial and operational resilience. Learning from the market crash 12 years ago, financial institutions appear visibly stronger and better prepared.

    With higher capital and liquidity, US banks have moved quickly to protect their employees and customers.

    Current Scenario

    The effects on the markets so far are clear:
    1. U.S unemployment rates are on the rise, soaring to 19.8% in May 2020 from the original 14.7% in April. That is over 29.4 million jobs lost since the US markets began to shut down the non-essential businesses in March.
    2. Industries such as oil and gas, and automobile have been hit hard by the pandemic. It seems clear that these sectors will take a long time to recover.
    3. Near zero interest rates and increasing credit losses are creating projections which indicate a drastically reduced revenue for banks.
    Pre-coronavirus, US banks were already looking at digital banking to pave their way towards the future. The COVID-19, however, acted as an accelerant, forcefully changing the way consumers interacted with the banking ecosystem.

    The Future

    Through their Disaster recovery plans (DRPs), banks quickly transitioned to a remote working model. They ensured business continuity by proactively providing customers with a digital outreach for better payment flexibility and services.

    But going forward, it will become critical for regional, super-regional and national banks alike to showcase immense financial and operational resilience. These banks will need to approach the crisis with increasing discipline and work towards a re-imagined post-crisis future.

    At Go-Live Faster , we see three concurrent paths, which banks can traverse to ensure their survival and adapt to what will be the new ‘normal’.

    Months and years down the line, banks not just in the USA, but all over the world will be looking back at this period of time as a tipping point between the pre-COVID-19 period and the post pandemic new normal.

    Path 1 - Digitization in banking

    Before the outbreak, digital banking was:
    1. The rising star within the industry.
    2. The new and improved method with numerous advantages.
    3. A platform to offer a diverse set of services to the end consumer.
    4. Cost effective and less time consuming.
    Banks understood these benefits, but in reality less than 15% of the banks considered themselves as digital transformation leaders.

    And while consumer demand for digital has still not reached an unprecedented level, it is likely that banks, among other financial institutions, will have to make the switch to digital because of the foreseen changes in the global economy and the new public-health safety standards that involve social distancing.

    Branches may be seen as an additional cost. They may be permanently shut, resulting in a reduced number of banks per 100,000 adults like in the Canadian or the United Kingdom markets.

    With larger credit losses and lower revenues on the horizon, banks should be riding the wave of the digital revolution.

    Months down the line, when things prompt ways to resist the change, banks should look at the current scenario as an opportunity to make digital services an integral part of their service infrastructure. Additionally, digital banking will also serve as a cost effective method to scale overall productivity and cover more geographical ground. Undergoing a digital transformation could be especially beneficial for smaller commercial banks. Such banks could struggle less to tap into other state markets. Digital transformation could also provide an avenue to focus on specific population segments, segments such as the millenials and Gen Z, the two generations that are beginning to make up a majority of the population worldwide.

    To highlight our point, let’s take a look at the standard customer onboarding process for most US commercial banks.

    For most, this involves a five step process:
    1. Initial consultation initiated by the customer
    2. Documentation
    3. Approvals - legal, credit and compliance
    4. Customer training
    5. Go Live
    Greater digital collaboration on each of these processes will allow banks to address certain pain points at each level.

    Here is a re-imagined version of each phase of the onboarding process.
    1. At the first stage of the process, customers can showcase their interest in opening an account via an online portal. The portal can act as a gateway to reach out to the relevant teams through means like video consultations.
    2. The online platform can also be linked to a database housing customer documentation.
      • It will allow bank employees to identify any pre-existing customer relationships and search for already existing documentation.
      • Concurrently, the same portal can serve as a tool for customers to view and upload any remaining prerequisite documents.
      • This will reduce any redundancies in the communication process.
      • It will allow both the bank and the customer to check the status of the application throughout the approval process in real time.
      • Instant access to the documents will give other related teams the opportunity to parallely begin work on their tasks. This will reduce the time to completion for the entire workflow.
    3. The online portal can act as an all-in-one destination for the customer. This can potentially cut the onboarding process time by at least a tenth of the time currently required. Through the portal, the customer might be able to:
      • Interact with a relationship manager.
      • Get a video consultation.
      • Constantly get notified about updates and approvals.
      • Submit test transactions.
      • Go-live faster.
    A reimagined customer onboarding process for US commercial banks through digital collaboration  
    But to implement digitization at a broader level, it will still be necessary to educate the customer post implementation. However, the long term benefits arising from the simplicity and improved delivery time will ultimately better customer experience, increase productivity and reduce costs in a post COVID-19 environment.

    Path 2 - Agile Banking

    Working amid the pandemic has proved one thing. Banks had to make almost instant changes to their operating model and priorities. Having grown into tremendously complex structures, banks can look at agility as a way to simplify things. Agile banking can also create more accountability at all levels within each department.

    Research shows that employees are more motivated and therefore more productive when they are in a position to see the impact that their work creates on the company, society or the end consumer.

    Through the COVID-19, most employees have been working remotely. A research by Gartner suggests that 74% CFOs are planning to shift at least some employees to a permanent remote working environment.

    Faced with a prolonged period during which banks are ill-advised to host employees in smaller spaces, banks will choose to reorganize so as to ensure greater productivity.

    Agile banking will allow financial institutions to better address customer pain points and provide solutions quicker. With distributed leadership and digitally enabled teams, decision making power can be restructured for faster speeds, producing more nimble teams. The restructuring will allow banks to incorporate a remote working structure, simplify processes, digitize faster and welcome productivity benefits.

    An agile mindset involves empowering teams to achieve desired outcomes. In the short term, this may not be achievable at a broader level. However, it might be worthwhile to start small.

    Involve leaders at all levels and explore this option with the teams that have fewer dependencies. Once defined and implemented within a department, scale vertically, and not horizontally, to streamline the entire process and overcome any potential hurdles along the way.

    Becoming agile in one value stream (and not as per specific job profiles) will make it easier to scale agility horizontally. It will allow banks to gradually transform into organizations that constitute a network of interdependent set of services.

    Advantages of Agile Banking   Simultaneously, a need for new skills among the workforce will be required to ensure smooth operations in the post-pandemic world. For example, increased cross-skilling in specific areas and training employees in skills such as empathy to handle distressed clients dealing with financial crunches, newer technology and digital tools are a must.

    As commercial and retail banks begin to introspect, they can take a look at their existing models of operation, analyze with a fresh perspective, identify gaps in processes and unnecessary expenses, and take a step forward to adapt to the new normal.

    Path 3 - Rapid Innovation in Banks

    A new approach towards customer interactions is necessary as we move towards the future. Now isn’t the time for banks to resist and wish for the old normal.

    Banks that can reinvent themselves will be able to reap maximum rewards and recover the fastest. And while the importance of customer experience will remain at an all time high, banks that are in a position to provide innovative solutions to what will be common economic problems for their customers in the near future (solutions such as quick financial advice) will be able to capture a larger share within what will be a fragmented market.

    The criticality of data was made relevant even before the pandemic hit us. Blindsided by the COVID-19, banks will realize that the traditional financial data at hand, however, will serve to be of little use when it comes to simulating risk models and guiding business decisions during the course of recovery.

    Financial institutions have to realize that the path to success lies not just in the data itself. It is in the way they approach and tap into this pool of information. Broader levels of data sharing and availability will create the opportunity to personalize offers.

    Considering each individual’s financial situation, banks, which can successfully tailor make offers and interactions in a way that accounts for the consumer’s unique dilemma, will be in a position to establish greater levels of trust and present themselves as the much needed potential solution providers in the midst of this crisis.

    Conclusion

    The existing market comprises thousands of banks and fintech companies. However, it seems likely that at least a third are unlikely to survive through the financial stress resulting from this global economic crisis. However, this will present an opportunity to those firms that will have managed to weather through this storm.

    If we have learnt anything from the market crash over a decade ago, it is that these stronger financial institutions within the industry will eventually be presented with the chance to acquire the weaker competition or take over fintech companies at lower or discounted prices.

    Financial institutions looking to traverse down the three paths highlighted above will need the increased capital strength and capabilities.

    In order to expand and meet the need for productivity gains, faster innovation and digital transformation, banks will need to tackle these challenges head on. US banks, however, can partner with a fintech company such as Go-Live Faster and leverage its capabilities to not only reduce project costs, but also achieve faster digital transformation.

    In the current circumstances, it is important for banks to communicate a believable purpose, provide an even better customer experience and establish trust capable of withstanding the tests of time.

    June 24, 2020
  • Predicting Banking Implementation Failure with the Duke

    We all remember John Wayne, fondly referred as the ‘Duke’, as a quintessential hard working, well intentioned cowboy, who seemed to overcome impossible odds through dogged determination and hard work in his movies. But given today’s dynamic and volatile banking technology environment would the same “cowboy ways” work? Banking tech teams, vendors and in-house personnel alike, are full of hard working, dedicated folks, but the track record for implementations seems to be getting worse.

    Want to know how the ’Duke’ would have gone about it and would he be successful…


    Fast tracked to today, John Wayne is now a corporate honcho who helps large Banks overcome Digital Implementations’ challenges. So, John Wayne has gradually settled down in today’s era, trading in his 6-shooter for an iPhone and is now a technologist who wants to innovate his organization to drive and maintain competitiveness.

    One day John was tasked with ensuring a banking technology implementation goes live on time with great quality while being under budget. And, this was so what the Duke loved, a difficult mission, fraught with danger, where the odds are stacked against him. Giving him a similar thrill of the Wild West, John assembled his posse and gave assurances that he will, once again, beat the odds.

    The Duke, wise and experienced, knew the threats he had to navigate… a disparate list of vendors and systems, demanding customer expectations, internal resource scarcity and a marauding band of regulators. After a few sleepless nights by the campfire and some significant contemplation in the saloon, John realized that he has to “change his approach to change the game”. Since a laptop had replaced his Winchester, the Duke realized that technology can predict where “bandits” and other dangers in his project lay, and could effectively allocate his posse to eliminate those threats proactively.

    To help him redirect his troops John laid down a structure to formulate a, simple yet effective, solution to evaluate if the implementation was headed for a failure. Upon pondering John chalked out the posse folks who were responsible for any implementation which typically included:

    -Line of business

    -IT (dev& Infrastructure)

    -Testing teams

    -PMO

    -Migration teams(users & relevant data)

    He thought, and rightly though, that tracking the process outcomes and deliverables closely will help monitor the implementation at every milestone. Moreover, while he was meeting some technology experts, he learned the impact of data analytics and applied it well to develop an algorithm to accurately predict success or failure. With the help of these go-live experts he made his “Readiness Lasso”, a single metric, which gave him control over implementation outlaws making it easier to cut implementation time and cost. He designed the lasso (readiness metric) with the primary objective to discipline and monitor the right aspects of 5 key teams at every milestone. In short, the idea was to effectively predict implementation success before go-live using a readiness metric.

    The ‘Duke’ had indeed stood up to the challenge of predicting Digital Banking implementations’ success and could now showcase the solution to the world.

    The story doesn’t end here. You only know ‘what’ he did. Drop us a line at [email protected] to know more about ‘how’ the Duke designed his ‘Readiness Lasso’ to reign in the bandits hiding in digital banking implementations.

    May 7, 2019
  • Same Day ACH: What You Need To Know

    On September 23, 2015, the Federal Reserve approved NACHA’s Same Day ACH solution. The move will help businesses and consumers move money faster through same day settlement for practically any ACH payment.

    For several years, the industry has been interested in improving ACH settlement and processing. A similar such same day proposal by NACHA was voted down in 2012 due to lack of sufficient business rationale. Over the next three years, NACHA engaged with the industry and came up with a revised proposal with ten distinct business cases to support same day payments. This time around, Same Day ACH meets the needs of customers for uses cases such as payroll, bill payment, urgent claims, invoices and taxes amongst others. It’s an example of how the industry is perceptive towards its consumers’ needs and is working towards providing them with the payments speed they deserve.

    Same Day payments will be rolled out in three phases over the next two years so that financial institutions and businesses have sufficient time to adapt their processes and operations for same day settlement. Same Day ACH payments will be an option provided in addition to the existing ACH schedules.  A fee will be imposed on Same Day ACH transactions to help receiving financial institutions recover the costs of supporting Same Day ACH.

    The date when Phase 1 of Same Day ACH rolls out is looming ahead of us – September 23, 2016. In Phase 1, only ACH credits will be processed on the same day.  Phase 1 will focus on supporting use cases such as hourly payroll, person-to-person payments and same-day bill payments. Same Day ACH debits will be rolled out in Phase 2 which is proposed to begin in September 15, 2017. Phase 2 will support a wider range of consumer bill payment use cases such as credit card, utility, mortgage and loan payments.

    For both Phase 1 and Phase 2, two new clearing windows will be provided by the ACH Operators to allow originating financial institutions to submit Same Day ACH Payments files viz.:

    • 30 a.m. ET with settlement at 1.00 p.m.

    • 45 p.m. ET with settlement at 5.00 p.m.

    In Phase 3, which is scheduled for March 16, 2018, receiving financial institutions will be required to make funds available to customers by 5.00 pm local time for same day credit entries.

    Other than international transactions and transactions exceeding $25000, all types of monetary and non-monetary ACH payments (credits and debits) except ENR (Automated Enrollment entry) will be eligible for same day processing.While Same Day ACH origination is optional, it is mandatory for participating ACH financial institutions to process incoming Same Day ACH items.

    Same Day ACH will definitely have an impact on day-to-day operations and financial institutions will have to consider the following as outlined by NACHA:

    ODFI (Originating Depository Financial Institute)

    • Figure out the new file submission and delivery schedule with their ACH operators

    • Revise internal processing schedules and procedures to accommodate new windows for Same Day Entries

    • Review applications and systems that may be impacted by Same Day Entries

    • Gather information from the ACH Operator regarding collection of Same Day Entry fees

    • Create a procedure to hold payment entries that are received from an Originator in the same day window but that is not the Originator’s desire

    • Indentify customers and business models to offer Same Day

    • Discuss eligibility requirements for Same Day Entries

    • Discuss proper use of the Effective Entry Date and impacts of improper Effective Entry Dates.

    RDFI (Receiving Depository Financial Institute)

    • Figure out the new file submission and delivery schedule with their ACH operators

    • Revise internal processing schedules and procedures to accommodate new windows for Same Day Entries

    • Processing entries based on the Settlement Date provided by the ACH Operator

    • RDFIs do not need to determine same day eligibility for processing

    • In Phase 1 RDFIs will only receive credit entries as same day entries. Beginning in Phase 2, RDFIs should be prepared to also receive debit entries as same day entries

    • Phase 3 will require RDFIs to provide funds availability at 5:00 pm local time for same day credit entries

    • Decide on whether to use the new same-day processing windows to send returns and NOCs

    • Getting information from ACH Operator regarding collection of the Same Day Entry fees

    Ultimately, Same Day ACH will make ACH processing only 12 hours faster than the standard next day ACH settlement. Same Day ACH is just a step towards the ultimate goal of immediate/real time and secure payments. However, it does offer every bank an opportunity to revisit the services they provide to their customers. Same Day ACH can help financial institutions modernize their payments systems for the time being and lay down a foundation for real time payments in the future.

            

    August 1, 2016

If you are looking for someone who can help you accelerate your time to market on product releases look no further. Get in touch with us today to explore our scientific and analytical reports derived from our proprietary technology!

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  • The Future of Banking – successfully navigating towards the world beyond the pandemic

    Multiple financial and operational challenges await in the months ahead. Navigating towards success in a post-pandemic world requires banks to explore at least three routes.

    The Future of Banking - successfully navigating towards the world beyond the pandemic

    Experiencing the effects of the black swan that is the COVID-19 first hand, financial leaders and banks are witnessing a defining moment.

    At the time of this writing, of the over 6 million cases confirmed by the WHO worldwide, USA stands at the forefront of the pack, with two million reported cases. The pandemic has bared its fangs and has been leading the world towards an economic fallout.

    Amid these uncharted waters, US commercial and retail banks alike have strived to showcase immense financial and operational resilience. Learning from the market crash 12 years ago, financial institutions appear visibly stronger and better prepared.

    With higher capital and liquidity, US banks have moved quickly to protect their employees and customers.

    Current Scenario

    The effects on the markets so far are clear:
    1. U.S unemployment rates are on the rise, soaring to 19.8% in May 2020 from the original 14.7% in April. That is over 29.4 million jobs lost since the US markets began to shut down the non-essential businesses in March.
    2. Industries such as oil and gas, and automobile have been hit hard by the pandemic. It seems clear that these sectors will take a long time to recover.
    3. Near zero interest rates and increasing credit losses are creating projections which indicate a drastically reduced revenue for banks.
    Pre-coronavirus, US banks were already looking at digital banking to pave their way towards the future. The COVID-19, however, acted as an accelerant, forcefully changing the way consumers interacted with the banking ecosystem.

    The Future

    Through their Disaster recovery plans (DRPs), banks quickly transitioned to a remote working model. They ensured business continuity by proactively providing customers with a digital outreach for better payment flexibility and services.

    But going forward, it will become critical for regional, super-regional and national banks alike to showcase immense financial and operational resilience. These banks will need to approach the crisis with increasing discipline and work towards a re-imagined post-crisis future.

    At Go-Live Faster , we see three concurrent paths, which banks can traverse to ensure their survival and adapt to what will be the new ‘normal’.

    Months and years down the line, banks not just in the USA, but all over the world will be looking back at this period of time as a tipping point between the pre-COVID-19 period and the post pandemic new normal.

    Path 1 - Digitization in banking

    Before the outbreak, digital banking was:
    1. The rising star within the industry.
    2. The new and improved method with numerous advantages.
    3. A platform to offer a diverse set of services to the end consumer.
    4. Cost effective and less time consuming.
    Banks understood these benefits, but in reality less than 15% of the banks considered themselves as digital transformation leaders.

    And while consumer demand for digital has still not reached an unprecedented level, it is likely that banks, among other financial institutions, will have to make the switch to digital because of the foreseen changes in the global economy and the new public-health safety standards that involve social distancing.

    Branches may be seen as an additional cost. They may be permanently shut, resulting in a reduced number of banks per 100,000 adults like in the Canadian or the United Kingdom markets.

    With larger credit losses and lower revenues on the horizon, banks should be riding the wave of the digital revolution.

    Months down the line, when things prompt ways to resist the change, banks should look at the current scenario as an opportunity to make digital services an integral part of their service infrastructure. Additionally, digital banking will also serve as a cost effective method to scale overall productivity and cover more geographical ground. Undergoing a digital transformation could be especially beneficial for smaller commercial banks. Such banks could struggle less to tap into other state markets. Digital transformation could also provide an avenue to focus on specific population segments, segments such as the millenials and Gen Z, the two generations that are beginning to make up a majority of the population worldwide.

    To highlight our point, let’s take a look at the standard customer onboarding process for most US commercial banks.

    For most, this involves a five step process:
    1. Initial consultation initiated by the customer
    2. Documentation
    3. Approvals - legal, credit and compliance
    4. Customer training
    5. Go Live
    Greater digital collaboration on each of these processes will allow banks to address certain pain points at each level.

    Here is a re-imagined version of each phase of the onboarding process.
    1. At the first stage of the process, customers can showcase their interest in opening an account via an online portal. The portal can act as a gateway to reach out to the relevant teams through means like video consultations.
    2. The online platform can also be linked to a database housing customer documentation.
      • It will allow bank employees to identify any pre-existing customer relationships and search for already existing documentation.
      • Concurrently, the same portal can serve as a tool for customers to view and upload any remaining prerequisite documents.
      • This will reduce any redundancies in the communication process.
      • It will allow both the bank and the customer to check the status of the application throughout the approval process in real time.
      • Instant access to the documents will give other related teams the opportunity to parallely begin work on their tasks. This will reduce the time to completion for the entire workflow.
    3. The online portal can act as an all-in-one destination for the customer. This can potentially cut the onboarding process time by at least a tenth of the time currently required. Through the portal, the customer might be able to:
      • Interact with a relationship manager.
      • Get a video consultation.
      • Constantly get notified about updates and approvals.
      • Submit test transactions.
      • Go-live faster.
    A reimagined customer onboarding process for US commercial banks through digital collaboration  
    But to implement digitization at a broader level, it will still be necessary to educate the customer post implementation. However, the long term benefits arising from the simplicity and improved delivery time will ultimately better customer experience, increase productivity and reduce costs in a post COVID-19 environment.

    Path 2 - Agile Banking

    Working amid the pandemic has proved one thing. Banks had to make almost instant changes to their operating model and priorities. Having grown into tremendously complex structures, banks can look at agility as a way to simplify things. Agile banking can also create more accountability at all levels within each department.

    Research shows that employees are more motivated and therefore more productive when they are in a position to see the impact that their work creates on the company, society or the end consumer.

    Through the COVID-19, most employees have been working remotely. A research by Gartner suggests that 74% CFOs are planning to shift at least some employees to a permanent remote working environment.

    Faced with a prolonged period during which banks are ill-advised to host employees in smaller spaces, banks will choose to reorganize so as to ensure greater productivity.

    Agile banking will allow financial institutions to better address customer pain points and provide solutions quicker. With distributed leadership and digitally enabled teams, decision making power can be restructured for faster speeds, producing more nimble teams. The restructuring will allow banks to incorporate a remote working structure, simplify processes, digitize faster and welcome productivity benefits.

    An agile mindset involves empowering teams to achieve desired outcomes. In the short term, this may not be achievable at a broader level. However, it might be worthwhile to start small.

    Involve leaders at all levels and explore this option with the teams that have fewer dependencies. Once defined and implemented within a department, scale vertically, and not horizontally, to streamline the entire process and overcome any potential hurdles along the way.

    Becoming agile in one value stream (and not as per specific job profiles) will make it easier to scale agility horizontally. It will allow banks to gradually transform into organizations that constitute a network of interdependent set of services.

    Advantages of Agile Banking   Simultaneously, a need for new skills among the workforce will be required to ensure smooth operations in the post-pandemic world. For example, increased cross-skilling in specific areas and training employees in skills such as empathy to handle distressed clients dealing with financial crunches, newer technology and digital tools are a must.

    As commercial and retail banks begin to introspect, they can take a look at their existing models of operation, analyze with a fresh perspective, identify gaps in processes and unnecessary expenses, and take a step forward to adapt to the new normal.

    Path 3 - Rapid Innovation in Banks

    A new approach towards customer interactions is necessary as we move towards the future. Now isn’t the time for banks to resist and wish for the old normal.

    Banks that can reinvent themselves will be able to reap maximum rewards and recover the fastest. And while the importance of customer experience will remain at an all time high, banks that are in a position to provide innovative solutions to what will be common economic problems for their customers in the near future (solutions such as quick financial advice) will be able to capture a larger share within what will be a fragmented market.

    The criticality of data was made relevant even before the pandemic hit us. Blindsided by the COVID-19, banks will realize that the traditional financial data at hand, however, will serve to be of little use when it comes to simulating risk models and guiding business decisions during the course of recovery.

    Financial institutions have to realize that the path to success lies not just in the data itself. It is in the way they approach and tap into this pool of information. Broader levels of data sharing and availability will create the opportunity to personalize offers.

    Considering each individual’s financial situation, banks, which can successfully tailor make offers and interactions in a way that accounts for the consumer’s unique dilemma, will be in a position to establish greater levels of trust and present themselves as the much needed potential solution providers in the midst of this crisis.

    Conclusion

    The existing market comprises thousands of banks and fintech companies. However, it seems likely that at least a third are unlikely to survive through the financial stress resulting from this global economic crisis. However, this will present an opportunity to those firms that will have managed to weather through this storm.

    If we have learnt anything from the market crash over a decade ago, it is that these stronger financial institutions within the industry will eventually be presented with the chance to acquire the weaker competition or take over fintech companies at lower or discounted prices.

    Financial institutions looking to traverse down the three paths highlighted above will need the increased capital strength and capabilities.

    In order to expand and meet the need for productivity gains, faster innovation and digital transformation, banks will need to tackle these challenges head on. US banks, however, can partner with a fintech company such as Go-Live Faster and leverage its capabilities to not only reduce project costs, but also achieve faster digital transformation.

    In the current circumstances, it is important for banks to communicate a believable purpose, provide an even better customer experience and establish trust capable of withstanding the tests of time.

    June 24, 2020
  • Predicting Banking Implementation Failure with the Duke

    We all remember John Wayne, fondly referred as the ‘Duke’, as a quintessential hard working, well intentioned cowboy, who seemed to overcome impossible odds through dogged determination and hard work in his movies. But given today’s dynamic and volatile banking technology environment would the same “cowboy ways” work? Banking tech teams, vendors and in-house personnel alike, are full of hard working, dedicated folks, but the track record for implementations seems to be getting worse.

    Want to know how the ’Duke’ would have gone about it and would he be successful…


    Fast tracked to today, John Wayne is now a corporate honcho who helps large Banks overcome Digital Implementations’ challenges. So, John Wayne has gradually settled down in today’s era, trading in his 6-shooter for an iPhone and is now a technologist who wants to innovate his organization to drive and maintain competitiveness.

    One day John was tasked with ensuring a banking technology implementation goes live on time with great quality while being under budget. And, this was so what the Duke loved, a difficult mission, fraught with danger, where the odds are stacked against him. Giving him a similar thrill of the Wild West, John assembled his posse and gave assurances that he will, once again, beat the odds.

    The Duke, wise and experienced, knew the threats he had to navigate… a disparate list of vendors and systems, demanding customer expectations, internal resource scarcity and a marauding band of regulators. After a few sleepless nights by the campfire and some significant contemplation in the saloon, John realized that he has to “change his approach to change the game”. Since a laptop had replaced his Winchester, the Duke realized that technology can predict where “bandits” and other dangers in his project lay, and could effectively allocate his posse to eliminate those threats proactively.

    To help him redirect his troops John laid down a structure to formulate a, simple yet effective, solution to evaluate if the implementation was headed for a failure. Upon pondering John chalked out the posse folks who were responsible for any implementation which typically included:

    -Line of business

    -IT (dev& Infrastructure)

    -Testing teams

    -PMO

    -Migration teams(users & relevant data)

    He thought, and rightly though, that tracking the process outcomes and deliverables closely will help monitor the implementation at every milestone. Moreover, while he was meeting some technology experts, he learned the impact of data analytics and applied it well to develop an algorithm to accurately predict success or failure. With the help of these go-live experts he made his “Readiness Lasso”, a single metric, which gave him control over implementation outlaws making it easier to cut implementation time and cost. He designed the lasso (readiness metric) with the primary objective to discipline and monitor the right aspects of 5 key teams at every milestone. In short, the idea was to effectively predict implementation success before go-live using a readiness metric.

    The ‘Duke’ had indeed stood up to the challenge of predicting Digital Banking implementations’ success and could now showcase the solution to the world.

    The story doesn’t end here. You only know ‘what’ he did. Drop us a line at [email protected] to know more about ‘how’ the Duke designed his ‘Readiness Lasso’ to reign in the bandits hiding in digital banking implementations.

    May 7, 2019
  • Same Day ACH: What You Need To Know

    On September 23, 2015, the Federal Reserve approved NACHA’s Same Day ACH solution. The move will help businesses and consumers move money faster through same day settlement for practically any ACH payment.

    For several years, the industry has been interested in improving ACH settlement and processing. A similar such same day proposal by NACHA was voted down in 2012 due to lack of sufficient business rationale. Over the next three years, NACHA engaged with the industry and came up with a revised proposal with ten distinct business cases to support same day payments. This time around, Same Day ACH meets the needs of customers for uses cases such as payroll, bill payment, urgent claims, invoices and taxes amongst others. It’s an example of how the industry is perceptive towards its consumers’ needs and is working towards providing them with the payments speed they deserve.

    Same Day payments will be rolled out in three phases over the next two years so that financial institutions and businesses have sufficient time to adapt their processes and operations for same day settlement. Same Day ACH payments will be an option provided in addition to the existing ACH schedules.  A fee will be imposed on Same Day ACH transactions to help receiving financial institutions recover the costs of supporting Same Day ACH.

    The date when Phase 1 of Same Day ACH rolls out is looming ahead of us – September 23, 2016. In Phase 1, only ACH credits will be processed on the same day.  Phase 1 will focus on supporting use cases such as hourly payroll, person-to-person payments and same-day bill payments. Same Day ACH debits will be rolled out in Phase 2 which is proposed to begin in September 15, 2017. Phase 2 will support a wider range of consumer bill payment use cases such as credit card, utility, mortgage and loan payments.

    For both Phase 1 and Phase 2, two new clearing windows will be provided by the ACH Operators to allow originating financial institutions to submit Same Day ACH Payments files viz.:

    • 30 a.m. ET with settlement at 1.00 p.m.

    • 45 p.m. ET with settlement at 5.00 p.m.

    In Phase 3, which is scheduled for March 16, 2018, receiving financial institutions will be required to make funds available to customers by 5.00 pm local time for same day credit entries.

    Other than international transactions and transactions exceeding $25000, all types of monetary and non-monetary ACH payments (credits and debits) except ENR (Automated Enrollment entry) will be eligible for same day processing.While Same Day ACH origination is optional, it is mandatory for participating ACH financial institutions to process incoming Same Day ACH items.

    Same Day ACH will definitely have an impact on day-to-day operations and financial institutions will have to consider the following as outlined by NACHA:

    ODFI (Originating Depository Financial Institute)

    • Figure out the new file submission and delivery schedule with their ACH operators

    • Revise internal processing schedules and procedures to accommodate new windows for Same Day Entries

    • Review applications and systems that may be impacted by Same Day Entries

    • Gather information from the ACH Operator regarding collection of Same Day Entry fees

    • Create a procedure to hold payment entries that are received from an Originator in the same day window but that is not the Originator’s desire

    • Indentify customers and business models to offer Same Day

    • Discuss eligibility requirements for Same Day Entries

    • Discuss proper use of the Effective Entry Date and impacts of improper Effective Entry Dates.

    RDFI (Receiving Depository Financial Institute)

    • Figure out the new file submission and delivery schedule with their ACH operators

    • Revise internal processing schedules and procedures to accommodate new windows for Same Day Entries

    • Processing entries based on the Settlement Date provided by the ACH Operator

    • RDFIs do not need to determine same day eligibility for processing

    • In Phase 1 RDFIs will only receive credit entries as same day entries. Beginning in Phase 2, RDFIs should be prepared to also receive debit entries as same day entries

    • Phase 3 will require RDFIs to provide funds availability at 5:00 pm local time for same day credit entries

    • Decide on whether to use the new same-day processing windows to send returns and NOCs

    • Getting information from ACH Operator regarding collection of the Same Day Entry fees

    Ultimately, Same Day ACH will make ACH processing only 12 hours faster than the standard next day ACH settlement. Same Day ACH is just a step towards the ultimate goal of immediate/real time and secure payments. However, it does offer every bank an opportunity to revisit the services they provide to their customers. Same Day ACH can help financial institutions modernize their payments systems for the time being and lay down a foundation for real time payments in the future.

            

    August 1, 2016

If you are looking for someone who can help you accelerate your time to market on product releases look no further. Get in touch with us today to explore our scientific and analytical reports derived from our proprietary technology!

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