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  • The Customer Impact of Modernizing your Core Banking System Technology

    The journey of modernization can be a tad long, potentially taking several months if not years to be fully implemented. However, the benefits are not wait listed. They are gradually incremented to sustain a digital transformation. With consumer demands on the rise, user experience a priority and security being the ultimate test - a legacy core banking system might not fit the bill anymore.

    Legacy infrastructure creates a spaghetti of interlinked technologies, making it harder to maintain and customize, further raising IT costs. A bottom up digital transformation can only begin by shaking up the very foundations of your Banking System. Modernizing your Core Banking System by leveraging newer technologies such as cloud will offer improved speed, flexibility in adding features, and the ability to speedily drive projects and enhance customer experience.

    What is a Core Banking System?

    A Core Banking System is essentially the fulcrum upon which every Banking activity pivots. Activities such as transaction management, KYC, customer onboarding, and even calculating interest rates run right through it.

    Integral Core-Banking Services

    More precisely, however, it would be accurate to describe it as the back-end system that acts as a storehouse which facilitates the movement of these processes through multiple channels like automated machines, internet Banking and actual branches. With real time Banking facilities, a Core Banking System provides a cohesive structure to things running in ten different directions. A centralized model ensures efficient business activities and minimizes the need for manpower tremendously.

    What’s wrong with the legacy Core Banking system?

    Hindering an agile work model is only the tip of the iceberg. The legacy Core Banking System tends to suit slower lifestyles. One of its major tenets is reliability, but it is still falling short of some demands today. It lacks the ability and flexibility to respond to the rapid changes in consumer preferences and business needs.

    The legacy Core Banking System is now decades old. Its systemic models are often unequipped to handle newer volumes of data or match with the required speed. Legacy Core Banking Systems are also limited in their ability to interface with other systems, which puts them at a great disadvantage. Additionally, their complex and custom code arising from excessive undocumented customization also slows down upgrades and integration with third party applications.

    The over reliance on the legacy Core Banking System has also given birth to another problem - a dearth of the right talent. The technical personnel equipped with the know how to manage and maintain systems leveraging decades old technologies are a dying breed. With poor integration abilities, a legacy Core Banking System can actually restrict growth and M&A execution.

    What is a modern Core Banking System?

    A modern core is a next-generation system, which can be based on a cloud based micro-service architecture. Cloud computing removes the need to invest in specialized hardware or software. Moreover, a cloud system can respond quickly to changes in market or technological preferences. It can easily allow you to scale your platform depending on what the situation calls for. A modern core can also include a collection of products. For example, products such as Infosys Finacle, Nucleus FinnOne (for digtal lending) or even Oracle's Flexcube. Go-Live Faster can guide you in choosing the right product and correct cloud computing system for your data requirements and target segment. From providing feasible options to testing the appropriate fit, Go-Live Faster helps accelerate your system implementation and launch while managing costs and overcoming migration waves.

    What does modernization offer?

    A knee jerk reform can pose several risks and challenges. A bottom up approach cannot fit each Bank and its history. Interestingly, modernization can occur at various levels and can be more targeted. Rather than changing the core entirely, modernization can occur in steps. Whether it is minor tactical changes or re-scaling entirely, the lifespan of your Core Banking System is sure to increase at every step of the way. Altering your Core Banking System involves a complex strategic decision. It is a massive change with far reaching implications going beyond revenue impact. This is why it is critical for Banks to identify their complementary technologies and carefully integrate the same.

    For the best fit solution, choosing the right system is equally important to strategizing its usage. With Go-Live Faster’s readiness assessments and Go-Live Score models, your Bank will be able to predict and resolve defects, and identify the right solution to safely expedite the implementation of such a technological transformation.

    An application programming interface (API) is also easier to implement when Banks choose to modernize their core. APIs allow multiple applications and software to interact with and obtain data from each other. API offers a much simpler means to share data and is the basis of Open Banking. It also improves communication with third parties which can then quickly access the Bank’s database. With a more focused approach on specific components, sharing services, adding revenue streams and creating distribution channels can now minimize costs while also shaping a holistic system.

    A modern Core Banking System also accelerates communication between Banks and customers, allowing for greater awareness of relevant insights and notifications. Under normal circumstances, the consumer leaves once the point of interaction is closed. A modern Banking system, however, ensures a routine of communication. After analyzing each customer touch-point and flow, it is possible to understand how to meet the customers’ changing needs. This further stabilizes consumer retention and creates a loyal base.

    Is Modernization better for consumers?

    Banks are now expected to process real time transactions and launch products and features faster and more frequently.

    A growing number of consumers require a real time experience that benefits their overall everyday movements. They don’t just need Banks to store but offer much more. When it comes to data management and data security, a modern system has that covered too. A robust data management strategy is imperative across all Bank channels that manage and utilize consumer information effectively. Using this to give out personalized advice, promotions based on activity and frequent offers creates a solid bond between customers and their Banks.

    Benefits of a modern core banking system

    With the number of digitally active consumers increasing, online activities are mandating better user experience and personalization. Personalized messages, alerts and financial advice, and mobile apps are steps in that direction. A Bank leveraging innovative core technology to transform interactions is a Bank that thinks about its consumers. Moving money instantly or making quick-time payments are only a few things that make the lives of consumers much easier. Banks can adapt faster by collaborating with a fintech such as Go-Live Faster with a thorough understanding of the changing consumer needs and the multiple technologies that govern the BFSI industry. Through its domain expertise, Go-Live Faster can quickly help your Bank adapt, remodel and roll out new systems and features to enhance your digital customer experience.

    Conclusion

    To ensure the effectiveness of real time payments, better experience for users and fast data transfer, modernizing your Core Banking System is the change you need to implement. A modern Core Banking System also innovates and releases new products and services with simpler code changes and ease. Following a componential approach of systemizing, IT costs and budgets can also be dramatically minimized while implementing this Banking system.

    Additionally, a modern Core Banking System enhances integration abilities, agility and adaptability. It allows for easier collaboration with third party applications and systems. A Modern Core Banking System can future proof your Bank from the constantly evolving and changing consumer preferences, and Go-Live Faster’s BFSI industry veterans and domain experts are here to make that a reality. Through collaborations with multiple Banks, over the years, our experts have already accelerated their core modernization by making technology implementations more predictable.

    Connect with us if you are ready to take the next step in your digital transformation journey. Let's enhance your Bank’s business agility and customer experience with a modern Core Banking System.

    November 30, 2020
  • Is your Financial Institution ready for Data Migration? Take our quiz to find out!

    Technology may run on software, but software needs fuel. That fuel is data. And unless properly configured for a specific application, technology won't run very well.  Like putting the wrong gas in your car makes it run badly (or not at all), bad input means bad output. Input = data and that makes clean data migration really important to the success of your ETL (extract, transfer, load) project.

    The reality is that data migration is actually the last step in the process.  We've sat through hundreds of data-mapping sessions and validated thousands of datasets.  From that experience, we've learned a few things about data migration and its partner, data validation. In this post, we define the four big truths about data migration, but if you think you know them, skip to the Readiness Quiz and find out if your team is truly ready.

    Truth #1:  Begin at the Beginning:  Source Data

    Data migration begins by understanding the source data. What it represents? How is it generated? How is it used today? And what controls it?  A new technologically advanced system may not fall into the same DB storage or structure. So How much of Source Data is really of use? That needs to be migrated?

    Particularly if your shop is migrating off legacy technology, what many project managers find out is that Jane or Ron or Jeff are the only people who understand its data. Uh oh, Houston, we have a problem!

    Now you’re faced with new technology that needs its version of data, called target data. What happens when a new application with new programs and new configuration rules starts running? You’re about to find out and it might not be what you’d expect.  That’s where data profiling comes in.

    Data profiling is a process used to define source data.  It’s comprised of three definitional components:

    1.  Accuracy
    2. Completeness
    3. Validity

    Data Profiling components

    We believe this first step is essential to ensure a high quality ETL process.  For example, to address identified quality issues, you might need to modify the conversion code. Another example is the opportunity data profiling offers to cleanse your files of incorrect or unused data. Particularly if you’re migrating from a legacy system in place for many years, there could be thousands of errors in the data that will bog down the schedule with testing errors.

    Manually performing this kind of data profiling is possible, but bringing in a data migration expert will accelerate your ability to pinpoint data issues through the use of sophisticated query tools.  In addition, expert data profiling ensures that you’ve captured the most important data issues, especially those that might put your organization at risk post-conversion.

    Correct profiling will filter out unnecessary data, extra validations and legacy data linkages, dependencies.

    Truth #2:  How Good is Your Data?

    Data is generally considered high quality if it is fit for use.  "Data cleansing" is the process to improve data quality.

    Data cleansing represents both small changes, like ensuring dates are in the correct format, and complex changes, such as de-duping records. Data cleansing is often seen as an opportunity by organizations, to clean up files before a technology conversion.  However, defining, prioritizing, and executing against it can be a real challenge.

    Here’s some of the questions to guide your data migration team’s analysis:

    • How much of your existing data is accurate & inaccurate?
    • What are the data update intervals and which process(es) update the data?
    • Is your data compliant with current regulations?
    • Are data attributes consistent across all datasets?
    • Should you convert all data, regardless if the original use case still exists?
    • Are data formats consistent across all datasets ? (for e.g. Date Format, Currency Decimal places etc.)

    Truth #3:  The False Promise of Lift and Shift

    Can you imagine plugged in, turned on, and ready to go business technologies? That’s just not ever going to happen.  Then why do we believe data can be lifted and shifted?

    Lift and Shift is a just myth and if anyone guarantees that data migration from source to target will work by L & S method is simply telling a lie. The truth is that successful data validation requires a thorough output mapping between the  source and target systems. Ensuring your team has a deep understanding of its new technology, either through vendor training or working with a third-party expert can be a critical factor to a successful conversion. Once completed, a comparison between the source and target system outputs is defined, variances noted, and rank ordered.

    Now, armed with real information, your organization can better define its data validation scope. In our experience, time spent testing data unnecessarily, without prioritizing data migration risk, is one of the major causes of implementation delays. This causes coding, implementation delays, additional regression testing cycles, and increases the likelihood the product launch schedule will be interrupted.

    Truth #4:  Testing is Subjective

    The truth is that it may not be possible to completely test a new application. You are going to end up going live with some degree of errors.  We understand the dynamics of financial institutions and the desire for an error-free implementation. These demands often result in over-testing where every single field, attribute, and condition is a test case. This kind of approach is not just inefficient, but also time consuming and does little to improve implementation quality.

    The question is then, is how do you decide what to test? This is where all the previous activities bear fruit. With a proper understanding of your source system data, assurance of data quality, and effective output-mapping, you’ll be ready to make these decisions with confidence. However, at this point in the process, if you still lack confidence, consider the following:

    • If the target system is mature, consider presuming that all core functionality works as defined and focus on any customization or areas of high processing complexity.
    • If the target system is immature, consider running the source and target systems in parallel for some period in order to focus testing on variances between the two.
    • At a minimum, clean the source system data of inaccuracies, unused fields, and inactive records.
    • Consider bringing in an outside domain expert to work in partnership with your team.

    Are You Ready?  Take the Quiz and Find Out

    This is our Readiness Quiz.  It will help you determine how closely your perception of readiness is to your actual readiness.  The way to use it is to rate your readiness on a scale of Very Ready to Not Ready.  Once completed, it will help you to see more clearly the strengths and weaknesses of your organization relative to its ETL plan.

    Feel free to cut this quiz out and share it with your planning/steering committees.  It’s based on our decades-long experience of guiding organizations to better understand their readiness for the big work ahead of them.

    Data-migration-blog_GLF_Table

    In Summary

    The four truths about data migration/validation are:

    Data-migration-blog_GLF_4

    Organizations undertake data migrations for any number of reasons. These include everything from an entire system upgrade to establishing a new data warehouse to merging new data from an acquisition.

    In today’s competitive environment, data is not only the fuel that drives your processes, but it’s the key to unlocking the value in new technologies. The question to ask yourselves is this: are you ready?

    In our experience, we’ve found that organizations often under-estimate the effort to effectively migrate data and minimize data validation risks.  This is usually the case because rigorous data quality protocols were either not put in place or have degraded over time.   Another challenge is ensuring your team has access to knowledgeable domain and application experts that can effectively put data into its proper context for analysis.

    Our Readiness Quiz should give you a better picture of how well your organization understands its source data and how prepared you are for the ETL.  If you’d like to discuss its results with our team of experts, we’re here to help make sense of it all.

    October 28, 2020
  • 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

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  • The Customer Impact of Modernizing your Core Banking System Technology

    The journey of modernization can be a tad long, potentially taking several months if not years to be fully implemented. However, the benefits are not wait listed. They are gradually incremented to sustain a digital transformation. With consumer demands on the rise, user experience a priority and security being the ultimate test - a legacy core banking system might not fit the bill anymore.

    Legacy infrastructure creates a spaghetti of interlinked technologies, making it harder to maintain and customize, further raising IT costs. A bottom up digital transformation can only begin by shaking up the very foundations of your Banking System. Modernizing your Core Banking System by leveraging newer technologies such as cloud will offer improved speed, flexibility in adding features, and the ability to speedily drive projects and enhance customer experience.

    What is a Core Banking System?

    A Core Banking System is essentially the fulcrum upon which every Banking activity pivots. Activities such as transaction management, KYC, customer onboarding, and even calculating interest rates run right through it.

    Integral Core-Banking Services

    More precisely, however, it would be accurate to describe it as the back-end system that acts as a storehouse which facilitates the movement of these processes through multiple channels like automated machines, internet Banking and actual branches. With real time Banking facilities, a Core Banking System provides a cohesive structure to things running in ten different directions. A centralized model ensures efficient business activities and minimizes the need for manpower tremendously.

    What’s wrong with the legacy Core Banking system?

    Hindering an agile work model is only the tip of the iceberg. The legacy Core Banking System tends to suit slower lifestyles. One of its major tenets is reliability, but it is still falling short of some demands today. It lacks the ability and flexibility to respond to the rapid changes in consumer preferences and business needs.

    The legacy Core Banking System is now decades old. Its systemic models are often unequipped to handle newer volumes of data or match with the required speed. Legacy Core Banking Systems are also limited in their ability to interface with other systems, which puts them at a great disadvantage. Additionally, their complex and custom code arising from excessive undocumented customization also slows down upgrades and integration with third party applications.

    The over reliance on the legacy Core Banking System has also given birth to another problem - a dearth of the right talent. The technical personnel equipped with the know how to manage and maintain systems leveraging decades old technologies are a dying breed. With poor integration abilities, a legacy Core Banking System can actually restrict growth and M&A execution.

    What is a modern Core Banking System?

    A modern core is a next-generation system, which can be based on a cloud based micro-service architecture. Cloud computing removes the need to invest in specialized hardware or software. Moreover, a cloud system can respond quickly to changes in market or technological preferences. It can easily allow you to scale your platform depending on what the situation calls for. A modern core can also include a collection of products. For example, products such as Infosys Finacle, Nucleus FinnOne (for digtal lending) or even Oracle's Flexcube. Go-Live Faster can guide you in choosing the right product and correct cloud computing system for your data requirements and target segment. From providing feasible options to testing the appropriate fit, Go-Live Faster helps accelerate your system implementation and launch while managing costs and overcoming migration waves.

    What does modernization offer?

    A knee jerk reform can pose several risks and challenges. A bottom up approach cannot fit each Bank and its history. Interestingly, modernization can occur at various levels and can be more targeted. Rather than changing the core entirely, modernization can occur in steps. Whether it is minor tactical changes or re-scaling entirely, the lifespan of your Core Banking System is sure to increase at every step of the way. Altering your Core Banking System involves a complex strategic decision. It is a massive change with far reaching implications going beyond revenue impact. This is why it is critical for Banks to identify their complementary technologies and carefully integrate the same.

    For the best fit solution, choosing the right system is equally important to strategizing its usage. With Go-Live Faster’s readiness assessments and Go-Live Score models, your Bank will be able to predict and resolve defects, and identify the right solution to safely expedite the implementation of such a technological transformation.

    An application programming interface (API) is also easier to implement when Banks choose to modernize their core. APIs allow multiple applications and software to interact with and obtain data from each other. API offers a much simpler means to share data and is the basis of Open Banking. It also improves communication with third parties which can then quickly access the Bank’s database. With a more focused approach on specific components, sharing services, adding revenue streams and creating distribution channels can now minimize costs while also shaping a holistic system.

    A modern Core Banking System also accelerates communication between Banks and customers, allowing for greater awareness of relevant insights and notifications. Under normal circumstances, the consumer leaves once the point of interaction is closed. A modern Banking system, however, ensures a routine of communication. After analyzing each customer touch-point and flow, it is possible to understand how to meet the customers’ changing needs. This further stabilizes consumer retention and creates a loyal base.

    Is Modernization better for consumers?

    Banks are now expected to process real time transactions and launch products and features faster and more frequently.

    A growing number of consumers require a real time experience that benefits their overall everyday movements. They don’t just need Banks to store but offer much more. When it comes to data management and data security, a modern system has that covered too. A robust data management strategy is imperative across all Bank channels that manage and utilize consumer information effectively. Using this to give out personalized advice, promotions based on activity and frequent offers creates a solid bond between customers and their Banks.

    Benefits of a modern core banking system

    With the number of digitally active consumers increasing, online activities are mandating better user experience and personalization. Personalized messages, alerts and financial advice, and mobile apps are steps in that direction. A Bank leveraging innovative core technology to transform interactions is a Bank that thinks about its consumers. Moving money instantly or making quick-time payments are only a few things that make the lives of consumers much easier. Banks can adapt faster by collaborating with a fintech such as Go-Live Faster with a thorough understanding of the changing consumer needs and the multiple technologies that govern the BFSI industry. Through its domain expertise, Go-Live Faster can quickly help your Bank adapt, remodel and roll out new systems and features to enhance your digital customer experience.

    Conclusion

    To ensure the effectiveness of real time payments, better experience for users and fast data transfer, modernizing your Core Banking System is the change you need to implement. A modern Core Banking System also innovates and releases new products and services with simpler code changes and ease. Following a componential approach of systemizing, IT costs and budgets can also be dramatically minimized while implementing this Banking system.

    Additionally, a modern Core Banking System enhances integration abilities, agility and adaptability. It allows for easier collaboration with third party applications and systems. A Modern Core Banking System can future proof your Bank from the constantly evolving and changing consumer preferences, and Go-Live Faster’s BFSI industry veterans and domain experts are here to make that a reality. Through collaborations with multiple Banks, over the years, our experts have already accelerated their core modernization by making technology implementations more predictable.

    Connect with us if you are ready to take the next step in your digital transformation journey. Let's enhance your Bank’s business agility and customer experience with a modern Core Banking System.

    November 30, 2020
  • Is your Financial Institution ready for Data Migration? Take our quiz to find out!

    Technology may run on software, but software needs fuel. That fuel is data. And unless properly configured for a specific application, technology won't run very well.  Like putting the wrong gas in your car makes it run badly (or not at all), bad input means bad output. Input = data and that makes clean data migration really important to the success of your ETL (extract, transfer, load) project.

    The reality is that data migration is actually the last step in the process.  We've sat through hundreds of data-mapping sessions and validated thousands of datasets.  From that experience, we've learned a few things about data migration and its partner, data validation. In this post, we define the four big truths about data migration, but if you think you know them, skip to the Readiness Quiz and find out if your team is truly ready.

    Truth #1:  Begin at the Beginning:  Source Data

    Data migration begins by understanding the source data. What it represents? How is it generated? How is it used today? And what controls it?  A new technologically advanced system may not fall into the same DB storage or structure. So How much of Source Data is really of use? That needs to be migrated?

    Particularly if your shop is migrating off legacy technology, what many project managers find out is that Jane or Ron or Jeff are the only people who understand its data. Uh oh, Houston, we have a problem!

    Now you’re faced with new technology that needs its version of data, called target data. What happens when a new application with new programs and new configuration rules starts running? You’re about to find out and it might not be what you’d expect.  That’s where data profiling comes in.

    Data profiling is a process used to define source data.  It’s comprised of three definitional components:

    1.  Accuracy
    2. Completeness
    3. Validity

    Data Profiling components

    We believe this first step is essential to ensure a high quality ETL process.  For example, to address identified quality issues, you might need to modify the conversion code. Another example is the opportunity data profiling offers to cleanse your files of incorrect or unused data. Particularly if you’re migrating from a legacy system in place for many years, there could be thousands of errors in the data that will bog down the schedule with testing errors.

    Manually performing this kind of data profiling is possible, but bringing in a data migration expert will accelerate your ability to pinpoint data issues through the use of sophisticated query tools.  In addition, expert data profiling ensures that you’ve captured the most important data issues, especially those that might put your organization at risk post-conversion.

    Correct profiling will filter out unnecessary data, extra validations and legacy data linkages, dependencies.

    Truth #2:  How Good is Your Data?

    Data is generally considered high quality if it is fit for use.  "Data cleansing" is the process to improve data quality.

    Data cleansing represents both small changes, like ensuring dates are in the correct format, and complex changes, such as de-duping records. Data cleansing is often seen as an opportunity by organizations, to clean up files before a technology conversion.  However, defining, prioritizing, and executing against it can be a real challenge.

    Here’s some of the questions to guide your data migration team’s analysis:

    • How much of your existing data is accurate & inaccurate?
    • What are the data update intervals and which process(es) update the data?
    • Is your data compliant with current regulations?
    • Are data attributes consistent across all datasets?
    • Should you convert all data, regardless if the original use case still exists?
    • Are data formats consistent across all datasets ? (for e.g. Date Format, Currency Decimal places etc.)

    Truth #3:  The False Promise of Lift and Shift

    Can you imagine plugged in, turned on, and ready to go business technologies? That’s just not ever going to happen.  Then why do we believe data can be lifted and shifted?

    Lift and Shift is a just myth and if anyone guarantees that data migration from source to target will work by L & S method is simply telling a lie. The truth is that successful data validation requires a thorough output mapping between the  source and target systems. Ensuring your team has a deep understanding of its new technology, either through vendor training or working with a third-party expert can be a critical factor to a successful conversion. Once completed, a comparison between the source and target system outputs is defined, variances noted, and rank ordered.

    Now, armed with real information, your organization can better define its data validation scope. In our experience, time spent testing data unnecessarily, without prioritizing data migration risk, is one of the major causes of implementation delays. This causes coding, implementation delays, additional regression testing cycles, and increases the likelihood the product launch schedule will be interrupted.

    Truth #4:  Testing is Subjective

    The truth is that it may not be possible to completely test a new application. You are going to end up going live with some degree of errors.  We understand the dynamics of financial institutions and the desire for an error-free implementation. These demands often result in over-testing where every single field, attribute, and condition is a test case. This kind of approach is not just inefficient, but also time consuming and does little to improve implementation quality.

    The question is then, is how do you decide what to test? This is where all the previous activities bear fruit. With a proper understanding of your source system data, assurance of data quality, and effective output-mapping, you’ll be ready to make these decisions with confidence. However, at this point in the process, if you still lack confidence, consider the following:

    • If the target system is mature, consider presuming that all core functionality works as defined and focus on any customization or areas of high processing complexity.
    • If the target system is immature, consider running the source and target systems in parallel for some period in order to focus testing on variances between the two.
    • At a minimum, clean the source system data of inaccuracies, unused fields, and inactive records.
    • Consider bringing in an outside domain expert to work in partnership with your team.

    Are You Ready?  Take the Quiz and Find Out

    This is our Readiness Quiz.  It will help you determine how closely your perception of readiness is to your actual readiness.  The way to use it is to rate your readiness on a scale of Very Ready to Not Ready.  Once completed, it will help you to see more clearly the strengths and weaknesses of your organization relative to its ETL plan.

    Feel free to cut this quiz out and share it with your planning/steering committees.  It’s based on our decades-long experience of guiding organizations to better understand their readiness for the big work ahead of them.

    Data-migration-blog_GLF_Table

    In Summary

    The four truths about data migration/validation are:

    Data-migration-blog_GLF_4

    Organizations undertake data migrations for any number of reasons. These include everything from an entire system upgrade to establishing a new data warehouse to merging new data from an acquisition.

    In today’s competitive environment, data is not only the fuel that drives your processes, but it’s the key to unlocking the value in new technologies. The question to ask yourselves is this: are you ready?

    In our experience, we’ve found that organizations often under-estimate the effort to effectively migrate data and minimize data validation risks.  This is usually the case because rigorous data quality protocols were either not put in place or have degraded over time.   Another challenge is ensuring your team has access to knowledgeable domain and application experts that can effectively put data into its proper context for analysis.

    Our Readiness Quiz should give you a better picture of how well your organization understands its source data and how prepared you are for the ETL.  If you’d like to discuss its results with our team of experts, we’re here to help make sense of it all.

    October 28, 2020
  • 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

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  • The Customer Impact of Modernizing your Core Banking System Technology

    The journey of modernization can be a tad long, potentially taking several months if not years to be fully implemented. However, the benefits are not wait listed. They are gradually incremented to sustain a digital transformation. With consumer demands on the rise, user experience a priority and security being the ultimate test - a legacy core banking system might not fit the bill anymore.

    Legacy infrastructure creates a spaghetti of interlinked technologies, making it harder to maintain and customize, further raising IT costs. A bottom up digital transformation can only begin by shaking up the very foundations of your Banking System. Modernizing your Core Banking System by leveraging newer technologies such as cloud will offer improved speed, flexibility in adding features, and the ability to speedily drive projects and enhance customer experience.

    What is a Core Banking System?

    A Core Banking System is essentially the fulcrum upon which every Banking activity pivots. Activities such as transaction management, KYC, customer onboarding, and even calculating interest rates run right through it.

    Integral Core-Banking Services

    More precisely, however, it would be accurate to describe it as the back-end system that acts as a storehouse which facilitates the movement of these processes through multiple channels like automated machines, internet Banking and actual branches. With real time Banking facilities, a Core Banking System provides a cohesive structure to things running in ten different directions. A centralized model ensures efficient business activities and minimizes the need for manpower tremendously.

    What’s wrong with the legacy Core Banking system?

    Hindering an agile work model is only the tip of the iceberg. The legacy Core Banking System tends to suit slower lifestyles. One of its major tenets is reliability, but it is still falling short of some demands today. It lacks the ability and flexibility to respond to the rapid changes in consumer preferences and business needs.

    The legacy Core Banking System is now decades old. Its systemic models are often unequipped to handle newer volumes of data or match with the required speed. Legacy Core Banking Systems are also limited in their ability to interface with other systems, which puts them at a great disadvantage. Additionally, their complex and custom code arising from excessive undocumented customization also slows down upgrades and integration with third party applications.

    The over reliance on the legacy Core Banking System has also given birth to another problem - a dearth of the right talent. The technical personnel equipped with the know how to manage and maintain systems leveraging decades old technologies are a dying breed. With poor integration abilities, a legacy Core Banking System can actually restrict growth and M&A execution.

    What is a modern Core Banking System?

    A modern core is a next-generation system, which can be based on a cloud based micro-service architecture. Cloud computing removes the need to invest in specialized hardware or software. Moreover, a cloud system can respond quickly to changes in market or technological preferences. It can easily allow you to scale your platform depending on what the situation calls for. A modern core can also include a collection of products. For example, products such as Infosys Finacle, Nucleus FinnOne (for digtal lending) or even Oracle's Flexcube. Go-Live Faster can guide you in choosing the right product and correct cloud computing system for your data requirements and target segment. From providing feasible options to testing the appropriate fit, Go-Live Faster helps accelerate your system implementation and launch while managing costs and overcoming migration waves.

    What does modernization offer?

    A knee jerk reform can pose several risks and challenges. A bottom up approach cannot fit each Bank and its history. Interestingly, modernization can occur at various levels and can be more targeted. Rather than changing the core entirely, modernization can occur in steps. Whether it is minor tactical changes or re-scaling entirely, the lifespan of your Core Banking System is sure to increase at every step of the way. Altering your Core Banking System involves a complex strategic decision. It is a massive change with far reaching implications going beyond revenue impact. This is why it is critical for Banks to identify their complementary technologies and carefully integrate the same.

    For the best fit solution, choosing the right system is equally important to strategizing its usage. With Go-Live Faster’s readiness assessments and Go-Live Score models, your Bank will be able to predict and resolve defects, and identify the right solution to safely expedite the implementation of such a technological transformation.

    An application programming interface (API) is also easier to implement when Banks choose to modernize their core. APIs allow multiple applications and software to interact with and obtain data from each other. API offers a much simpler means to share data and is the basis of Open Banking. It also improves communication with third parties which can then quickly access the Bank’s database. With a more focused approach on specific components, sharing services, adding revenue streams and creating distribution channels can now minimize costs while also shaping a holistic system.

    A modern Core Banking System also accelerates communication between Banks and customers, allowing for greater awareness of relevant insights and notifications. Under normal circumstances, the consumer leaves once the point of interaction is closed. A modern Banking system, however, ensures a routine of communication. After analyzing each customer touch-point and flow, it is possible to understand how to meet the customers’ changing needs. This further stabilizes consumer retention and creates a loyal base.

    Is Modernization better for consumers?

    Banks are now expected to process real time transactions and launch products and features faster and more frequently.

    A growing number of consumers require a real time experience that benefits their overall everyday movements. They don’t just need Banks to store but offer much more. When it comes to data management and data security, a modern system has that covered too. A robust data management strategy is imperative across all Bank channels that manage and utilize consumer information effectively. Using this to give out personalized advice, promotions based on activity and frequent offers creates a solid bond between customers and their Banks.

    Benefits of a modern core banking system

    With the number of digitally active consumers increasing, online activities are mandating better user experience and personalization. Personalized messages, alerts and financial advice, and mobile apps are steps in that direction. A Bank leveraging innovative core technology to transform interactions is a Bank that thinks about its consumers. Moving money instantly or making quick-time payments are only a few things that make the lives of consumers much easier. Banks can adapt faster by collaborating with a fintech such as Go-Live Faster with a thorough understanding of the changing consumer needs and the multiple technologies that govern the BFSI industry. Through its domain expertise, Go-Live Faster can quickly help your Bank adapt, remodel and roll out new systems and features to enhance your digital customer experience.

    Conclusion

    To ensure the effectiveness of real time payments, better experience for users and fast data transfer, modernizing your Core Banking System is the change you need to implement. A modern Core Banking System also innovates and releases new products and services with simpler code changes and ease. Following a componential approach of systemizing, IT costs and budgets can also be dramatically minimized while implementing this Banking system.

    Additionally, a modern Core Banking System enhances integration abilities, agility and adaptability. It allows for easier collaboration with third party applications and systems. A Modern Core Banking System can future proof your Bank from the constantly evolving and changing consumer preferences, and Go-Live Faster’s BFSI industry veterans and domain experts are here to make that a reality. Through collaborations with multiple Banks, over the years, our experts have already accelerated their core modernization by making technology implementations more predictable.

    Connect with us if you are ready to take the next step in your digital transformation journey. Let's enhance your Bank’s business agility and customer experience with a modern Core Banking System.

    November 30, 2020
  • Is your Financial Institution ready for Data Migration? Take our quiz to find out!

    Technology may run on software, but software needs fuel. That fuel is data. And unless properly configured for a specific application, technology won't run very well.  Like putting the wrong gas in your car makes it run badly (or not at all), bad input means bad output. Input = data and that makes clean data migration really important to the success of your ETL (extract, transfer, load) project.

    The reality is that data migration is actually the last step in the process.  We've sat through hundreds of data-mapping sessions and validated thousands of datasets.  From that experience, we've learned a few things about data migration and its partner, data validation. In this post, we define the four big truths about data migration, but if you think you know them, skip to the Readiness Quiz and find out if your team is truly ready.

    Truth #1:  Begin at the Beginning:  Source Data

    Data migration begins by understanding the source data. What it represents? How is it generated? How is it used today? And what controls it?  A new technologically advanced system may not fall into the same DB storage or structure. So How much of Source Data is really of use? That needs to be migrated?

    Particularly if your shop is migrating off legacy technology, what many project managers find out is that Jane or Ron or Jeff are the only people who understand its data. Uh oh, Houston, we have a problem!

    Now you’re faced with new technology that needs its version of data, called target data. What happens when a new application with new programs and new configuration rules starts running? You’re about to find out and it might not be what you’d expect.  That’s where data profiling comes in.

    Data profiling is a process used to define source data.  It’s comprised of three definitional components:

    1.  Accuracy
    2. Completeness
    3. Validity

    Data Profiling components

    We believe this first step is essential to ensure a high quality ETL process.  For example, to address identified quality issues, you might need to modify the conversion code. Another example is the opportunity data profiling offers to cleanse your files of incorrect or unused data. Particularly if you’re migrating from a legacy system in place for many years, there could be thousands of errors in the data that will bog down the schedule with testing errors.

    Manually performing this kind of data profiling is possible, but bringing in a data migration expert will accelerate your ability to pinpoint data issues through the use of sophisticated query tools.  In addition, expert data profiling ensures that you’ve captured the most important data issues, especially those that might put your organization at risk post-conversion.

    Correct profiling will filter out unnecessary data, extra validations and legacy data linkages, dependencies.

    Truth #2:  How Good is Your Data?

    Data is generally considered high quality if it is fit for use.  "Data cleansing" is the process to improve data quality.

    Data cleansing represents both small changes, like ensuring dates are in the correct format, and complex changes, such as de-duping records. Data cleansing is often seen as an opportunity by organizations, to clean up files before a technology conversion.  However, defining, prioritizing, and executing against it can be a real challenge.

    Here’s some of the questions to guide your data migration team’s analysis:

    • How much of your existing data is accurate & inaccurate?
    • What are the data update intervals and which process(es) update the data?
    • Is your data compliant with current regulations?
    • Are data attributes consistent across all datasets?
    • Should you convert all data, regardless if the original use case still exists?
    • Are data formats consistent across all datasets ? (for e.g. Date Format, Currency Decimal places etc.)

    Truth #3:  The False Promise of Lift and Shift

    Can you imagine plugged in, turned on, and ready to go business technologies? That’s just not ever going to happen.  Then why do we believe data can be lifted and shifted?

    Lift and Shift is a just myth and if anyone guarantees that data migration from source to target will work by L & S method is simply telling a lie. The truth is that successful data validation requires a thorough output mapping between the  source and target systems. Ensuring your team has a deep understanding of its new technology, either through vendor training or working with a third-party expert can be a critical factor to a successful conversion. Once completed, a comparison between the source and target system outputs is defined, variances noted, and rank ordered.

    Now, armed with real information, your organization can better define its data validation scope. In our experience, time spent testing data unnecessarily, without prioritizing data migration risk, is one of the major causes of implementation delays. This causes coding, implementation delays, additional regression testing cycles, and increases the likelihood the product launch schedule will be interrupted.

    Truth #4:  Testing is Subjective

    The truth is that it may not be possible to completely test a new application. You are going to end up going live with some degree of errors.  We understand the dynamics of financial institutions and the desire for an error-free implementation. These demands often result in over-testing where every single field, attribute, and condition is a test case. This kind of approach is not just inefficient, but also time consuming and does little to improve implementation quality.

    The question is then, is how do you decide what to test? This is where all the previous activities bear fruit. With a proper understanding of your source system data, assurance of data quality, and effective output-mapping, you’ll be ready to make these decisions with confidence. However, at this point in the process, if you still lack confidence, consider the following:

    • If the target system is mature, consider presuming that all core functionality works as defined and focus on any customization or areas of high processing complexity.
    • If the target system is immature, consider running the source and target systems in parallel for some period in order to focus testing on variances between the two.
    • At a minimum, clean the source system data of inaccuracies, unused fields, and inactive records.
    • Consider bringing in an outside domain expert to work in partnership with your team.

    Are You Ready?  Take the Quiz and Find Out

    This is our Readiness Quiz.  It will help you determine how closely your perception of readiness is to your actual readiness.  The way to use it is to rate your readiness on a scale of Very Ready to Not Ready.  Once completed, it will help you to see more clearly the strengths and weaknesses of your organization relative to its ETL plan.

    Feel free to cut this quiz out and share it with your planning/steering committees.  It’s based on our decades-long experience of guiding organizations to better understand their readiness for the big work ahead of them.

    Data-migration-blog_GLF_Table

    In Summary

    The four truths about data migration/validation are:

    Data-migration-blog_GLF_4

    Organizations undertake data migrations for any number of reasons. These include everything from an entire system upgrade to establishing a new data warehouse to merging new data from an acquisition.

    In today’s competitive environment, data is not only the fuel that drives your processes, but it’s the key to unlocking the value in new technologies. The question to ask yourselves is this: are you ready?

    In our experience, we’ve found that organizations often under-estimate the effort to effectively migrate data and minimize data validation risks.  This is usually the case because rigorous data quality protocols were either not put in place or have degraded over time.   Another challenge is ensuring your team has access to knowledgeable domain and application experts that can effectively put data into its proper context for analysis.

    Our Readiness Quiz should give you a better picture of how well your organization understands its source data and how prepared you are for the ETL.  If you’d like to discuss its results with our team of experts, we’re here to help make sense of it all.

    October 28, 2020
  • 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

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  • The Customer Impact of Modernizing your Core Banking System Technology

    The journey of modernization can be a tad long, potentially taking several months if not years to be fully implemented. However, the benefits are not wait listed. They are gradually incremented to sustain a digital transformation. With consumer demands on the rise, user experience a priority and security being the ultimate test - a legacy core banking system might not fit the bill anymore.

    Legacy infrastructure creates a spaghetti of interlinked technologies, making it harder to maintain and customize, further raising IT costs. A bottom up digital transformation can only begin by shaking up the very foundations of your Banking System. Modernizing your Core Banking System by leveraging newer technologies such as cloud will offer improved speed, flexibility in adding features, and the ability to speedily drive projects and enhance customer experience.

    What is a Core Banking System?

    A Core Banking System is essentially the fulcrum upon which every Banking activity pivots. Activities such as transaction management, KYC, customer onboarding, and even calculating interest rates run right through it.

    Integral Core-Banking Services

    More precisely, however, it would be accurate to describe it as the back-end system that acts as a storehouse which facilitates the movement of these processes through multiple channels like automated machines, internet Banking and actual branches. With real time Banking facilities, a Core Banking System provides a cohesive structure to things running in ten different directions. A centralized model ensures efficient business activities and minimizes the need for manpower tremendously.

    What’s wrong with the legacy Core Banking system?

    Hindering an agile work model is only the tip of the iceberg. The legacy Core Banking System tends to suit slower lifestyles. One of its major tenets is reliability, but it is still falling short of some demands today. It lacks the ability and flexibility to respond to the rapid changes in consumer preferences and business needs.

    The legacy Core Banking System is now decades old. Its systemic models are often unequipped to handle newer volumes of data or match with the required speed. Legacy Core Banking Systems are also limited in their ability to interface with other systems, which puts them at a great disadvantage. Additionally, their complex and custom code arising from excessive undocumented customization also slows down upgrades and integration with third party applications.

    The over reliance on the legacy Core Banking System has also given birth to another problem - a dearth of the right talent. The technical personnel equipped with the know how to manage and maintain systems leveraging decades old technologies are a dying breed. With poor integration abilities, a legacy Core Banking System can actually restrict growth and M&A execution.

    What is a modern Core Banking System?

    A modern core is a next-generation system, which can be based on a cloud based micro-service architecture. Cloud computing removes the need to invest in specialized hardware or software. Moreover, a cloud system can respond quickly to changes in market or technological preferences. It can easily allow you to scale your platform depending on what the situation calls for. A modern core can also include a collection of products. For example, products such as Infosys Finacle, Nucleus FinnOne (for digtal lending) or even Oracle's Flexcube. Go-Live Faster can guide you in choosing the right product and correct cloud computing system for your data requirements and target segment. From providing feasible options to testing the appropriate fit, Go-Live Faster helps accelerate your system implementation and launch while managing costs and overcoming migration waves.

    What does modernization offer?

    A knee jerk reform can pose several risks and challenges. A bottom up approach cannot fit each Bank and its history. Interestingly, modernization can occur at various levels and can be more targeted. Rather than changing the core entirely, modernization can occur in steps. Whether it is minor tactical changes or re-scaling entirely, the lifespan of your Core Banking System is sure to increase at every step of the way. Altering your Core Banking System involves a complex strategic decision. It is a massive change with far reaching implications going beyond revenue impact. This is why it is critical for Banks to identify their complementary technologies and carefully integrate the same.

    For the best fit solution, choosing the right system is equally important to strategizing its usage. With Go-Live Faster’s readiness assessments and Go-Live Score models, your Bank will be able to predict and resolve defects, and identify the right solution to safely expedite the implementation of such a technological transformation.

    An application programming interface (API) is also easier to implement when Banks choose to modernize their core. APIs allow multiple applications and software to interact with and obtain data from each other. API offers a much simpler means to share data and is the basis of Open Banking. It also improves communication with third parties which can then quickly access the Bank’s database. With a more focused approach on specific components, sharing services, adding revenue streams and creating distribution channels can now minimize costs while also shaping a holistic system.

    A modern Core Banking System also accelerates communication between Banks and customers, allowing for greater awareness of relevant insights and notifications. Under normal circumstances, the consumer leaves once the point of interaction is closed. A modern Banking system, however, ensures a routine of communication. After analyzing each customer touch-point and flow, it is possible to understand how to meet the customers’ changing needs. This further stabilizes consumer retention and creates a loyal base.

    Is Modernization better for consumers?

    Banks are now expected to process real time transactions and launch products and features faster and more frequently.

    A growing number of consumers require a real time experience that benefits their overall everyday movements. They don’t just need Banks to store but offer much more. When it comes to data management and data security, a modern system has that covered too. A robust data management strategy is imperative across all Bank channels that manage and utilize consumer information effectively. Using this to give out personalized advice, promotions based on activity and frequent offers creates a solid bond between customers and their Banks.

    Benefits of a modern core banking system

    With the number of digitally active consumers increasing, online activities are mandating better user experience and personalization. Personalized messages, alerts and financial advice, and mobile apps are steps in that direction. A Bank leveraging innovative core technology to transform interactions is a Bank that thinks about its consumers. Moving money instantly or making quick-time payments are only a few things that make the lives of consumers much easier. Banks can adapt faster by collaborating with a fintech such as Go-Live Faster with a thorough understanding of the changing consumer needs and the multiple technologies that govern the BFSI industry. Through its domain expertise, Go-Live Faster can quickly help your Bank adapt, remodel and roll out new systems and features to enhance your digital customer experience.

    Conclusion

    To ensure the effectiveness of real time payments, better experience for users and fast data transfer, modernizing your Core Banking System is the change you need to implement. A modern Core Banking System also innovates and releases new products and services with simpler code changes and ease. Following a componential approach of systemizing, IT costs and budgets can also be dramatically minimized while implementing this Banking system.

    Additionally, a modern Core Banking System enhances integration abilities, agility and adaptability. It allows for easier collaboration with third party applications and systems. A Modern Core Banking System can future proof your Bank from the constantly evolving and changing consumer preferences, and Go-Live Faster’s BFSI industry veterans and domain experts are here to make that a reality. Through collaborations with multiple Banks, over the years, our experts have already accelerated their core modernization by making technology implementations more predictable.

    Connect with us if you are ready to take the next step in your digital transformation journey. Let's enhance your Bank’s business agility and customer experience with a modern Core Banking System.

    November 30, 2020
  • Is your Financial Institution ready for Data Migration? Take our quiz to find out!

    Technology may run on software, but software needs fuel. That fuel is data. And unless properly configured for a specific application, technology won't run very well.  Like putting the wrong gas in your car makes it run badly (or not at all), bad input means bad output. Input = data and that makes clean data migration really important to the success of your ETL (extract, transfer, load) project.

    The reality is that data migration is actually the last step in the process.  We've sat through hundreds of data-mapping sessions and validated thousands of datasets.  From that experience, we've learned a few things about data migration and its partner, data validation. In this post, we define the four big truths about data migration, but if you think you know them, skip to the Readiness Quiz and find out if your team is truly ready.

    Truth #1:  Begin at the Beginning:  Source Data

    Data migration begins by understanding the source data. What it represents? How is it generated? How is it used today? And what controls it?  A new technologically advanced system may not fall into the same DB storage or structure. So How much of Source Data is really of use? That needs to be migrated?

    Particularly if your shop is migrating off legacy technology, what many project managers find out is that Jane or Ron or Jeff are the only people who understand its data. Uh oh, Houston, we have a problem!

    Now you’re faced with new technology that needs its version of data, called target data. What happens when a new application with new programs and new configuration rules starts running? You’re about to find out and it might not be what you’d expect.  That’s where data profiling comes in.

    Data profiling is a process used to define source data.  It’s comprised of three definitional components:

    1.  Accuracy
    2. Completeness
    3. Validity

    Data Profiling components

    We believe this first step is essential to ensure a high quality ETL process.  For example, to address identified quality issues, you might need to modify the conversion code. Another example is the opportunity data profiling offers to cleanse your files of incorrect or unused data. Particularly if you’re migrating from a legacy system in place for many years, there could be thousands of errors in the data that will bog down the schedule with testing errors.

    Manually performing this kind of data profiling is possible, but bringing in a data migration expert will accelerate your ability to pinpoint data issues through the use of sophisticated query tools.  In addition, expert data profiling ensures that you’ve captured the most important data issues, especially those that might put your organization at risk post-conversion.

    Correct profiling will filter out unnecessary data, extra validations and legacy data linkages, dependencies.

    Truth #2:  How Good is Your Data?

    Data is generally considered high quality if it is fit for use.  "Data cleansing" is the process to improve data quality.

    Data cleansing represents both small changes, like ensuring dates are in the correct format, and complex changes, such as de-duping records. Data cleansing is often seen as an opportunity by organizations, to clean up files before a technology conversion.  However, defining, prioritizing, and executing against it can be a real challenge.

    Here’s some of the questions to guide your data migration team’s analysis:

    • How much of your existing data is accurate & inaccurate?
    • What are the data update intervals and which process(es) update the data?
    • Is your data compliant with current regulations?
    • Are data attributes consistent across all datasets?
    • Should you convert all data, regardless if the original use case still exists?
    • Are data formats consistent across all datasets ? (for e.g. Date Format, Currency Decimal places etc.)

    Truth #3:  The False Promise of Lift and Shift

    Can you imagine plugged in, turned on, and ready to go business technologies? That’s just not ever going to happen.  Then why do we believe data can be lifted and shifted?

    Lift and Shift is a just myth and if anyone guarantees that data migration from source to target will work by L & S method is simply telling a lie. The truth is that successful data validation requires a thorough output mapping between the  source and target systems. Ensuring your team has a deep understanding of its new technology, either through vendor training or working with a third-party expert can be a critical factor to a successful conversion. Once completed, a comparison between the source and target system outputs is defined, variances noted, and rank ordered.

    Now, armed with real information, your organization can better define its data validation scope. In our experience, time spent testing data unnecessarily, without prioritizing data migration risk, is one of the major causes of implementation delays. This causes coding, implementation delays, additional regression testing cycles, and increases the likelihood the product launch schedule will be interrupted.

    Truth #4:  Testing is Subjective

    The truth is that it may not be possible to completely test a new application. You are going to end up going live with some degree of errors.  We understand the dynamics of financial institutions and the desire for an error-free implementation. These demands often result in over-testing where every single field, attribute, and condition is a test case. This kind of approach is not just inefficient, but also time consuming and does little to improve implementation quality.

    The question is then, is how do you decide what to test? This is where all the previous activities bear fruit. With a proper understanding of your source system data, assurance of data quality, and effective output-mapping, you’ll be ready to make these decisions with confidence. However, at this point in the process, if you still lack confidence, consider the following:

    • If the target system is mature, consider presuming that all core functionality works as defined and focus on any customization or areas of high processing complexity.
    • If the target system is immature, consider running the source and target systems in parallel for some period in order to focus testing on variances between the two.
    • At a minimum, clean the source system data of inaccuracies, unused fields, and inactive records.
    • Consider bringing in an outside domain expert to work in partnership with your team.

    Are You Ready?  Take the Quiz and Find Out

    This is our Readiness Quiz.  It will help you determine how closely your perception of readiness is to your actual readiness.  The way to use it is to rate your readiness on a scale of Very Ready to Not Ready.  Once completed, it will help you to see more clearly the strengths and weaknesses of your organization relative to its ETL plan.

    Feel free to cut this quiz out and share it with your planning/steering committees.  It’s based on our decades-long experience of guiding organizations to better understand their readiness for the big work ahead of them.

    Data-migration-blog_GLF_Table

    In Summary

    The four truths about data migration/validation are:

    Data-migration-blog_GLF_4

    Organizations undertake data migrations for any number of reasons. These include everything from an entire system upgrade to establishing a new data warehouse to merging new data from an acquisition.

    In today’s competitive environment, data is not only the fuel that drives your processes, but it’s the key to unlocking the value in new technologies. The question to ask yourselves is this: are you ready?

    In our experience, we’ve found that organizations often under-estimate the effort to effectively migrate data and minimize data validation risks.  This is usually the case because rigorous data quality protocols were either not put in place or have degraded over time.   Another challenge is ensuring your team has access to knowledgeable domain and application experts that can effectively put data into its proper context for analysis.

    Our Readiness Quiz should give you a better picture of how well your organization understands its source data and how prepared you are for the ETL.  If you’d like to discuss its results with our team of experts, we’re here to help make sense of it all.

    October 28, 2020
  • 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

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  • The Customer Impact of Modernizing your Core Banking System Technology

    The journey of modernization can be a tad long, potentially taking several months if not years to be fully implemented. However, the benefits are not wait listed. They are gradually incremented to sustain a digital transformation. With consumer demands on the rise, user experience a priority and security being the ultimate test - a legacy core banking system might not fit the bill anymore.

    Legacy infrastructure creates a spaghetti of interlinked technologies, making it harder to maintain and customize, further raising IT costs. A bottom up digital transformation can only begin by shaking up the very foundations of your Banking System. Modernizing your Core Banking System by leveraging newer technologies such as cloud will offer improved speed, flexibility in adding features, and the ability to speedily drive projects and enhance customer experience.

    What is a Core Banking System?

    A Core Banking System is essentially the fulcrum upon which every Banking activity pivots. Activities such as transaction management, KYC, customer onboarding, and even calculating interest rates run right through it.

    Integral Core-Banking Services

    More precisely, however, it would be accurate to describe it as the back-end system that acts as a storehouse which facilitates the movement of these processes through multiple channels like automated machines, internet Banking and actual branches. With real time Banking facilities, a Core Banking System provides a cohesive structure to things running in ten different directions. A centralized model ensures efficient business activities and minimizes the need for manpower tremendously.

    What’s wrong with the legacy Core Banking system?

    Hindering an agile work model is only the tip of the iceberg. The legacy Core Banking System tends to suit slower lifestyles. One of its major tenets is reliability, but it is still falling short of some demands today. It lacks the ability and flexibility to respond to the rapid changes in consumer preferences and business needs.

    The legacy Core Banking System is now decades old. Its systemic models are often unequipped to handle newer volumes of data or match with the required speed. Legacy Core Banking Systems are also limited in their ability to interface with other systems, which puts them at a great disadvantage. Additionally, their complex and custom code arising from excessive undocumented customization also slows down upgrades and integration with third party applications.

    The over reliance on the legacy Core Banking System has also given birth to another problem - a dearth of the right talent. The technical personnel equipped with the know how to manage and maintain systems leveraging decades old technologies are a dying breed. With poor integration abilities, a legacy Core Banking System can actually restrict growth and M&A execution.

    What is a modern Core Banking System?

    A modern core is a next-generation system, which can be based on a cloud based micro-service architecture. Cloud computing removes the need to invest in specialized hardware or software. Moreover, a cloud system can respond quickly to changes in market or technological preferences. It can easily allow you to scale your platform depending on what the situation calls for. A modern core can also include a collection of products. For example, products such as Infosys Finacle, Nucleus FinnOne (for digtal lending) or even Oracle's Flexcube. Go-Live Faster can guide you in choosing the right product and correct cloud computing system for your data requirements and target segment. From providing feasible options to testing the appropriate fit, Go-Live Faster helps accelerate your system implementation and launch while managing costs and overcoming migration waves.

    What does modernization offer?

    A knee jerk reform can pose several risks and challenges. A bottom up approach cannot fit each Bank and its history. Interestingly, modernization can occur at various levels and can be more targeted. Rather than changing the core entirely, modernization can occur in steps. Whether it is minor tactical changes or re-scaling entirely, the lifespan of your Core Banking System is sure to increase at every step of the way. Altering your Core Banking System involves a complex strategic decision. It is a massive change with far reaching implications going beyond revenue impact. This is why it is critical for Banks to identify their complementary technologies and carefully integrate the same.

    For the best fit solution, choosing the right system is equally important to strategizing its usage. With Go-Live Faster’s readiness assessments and Go-Live Score models, your Bank will be able to predict and resolve defects, and identify the right solution to safely expedite the implementation of such a technological transformation.

    An application programming interface (API) is also easier to implement when Banks choose to modernize their core. APIs allow multiple applications and software to interact with and obtain data from each other. API offers a much simpler means to share data and is the basis of Open Banking. It also improves communication with third parties which can then quickly access the Bank’s database. With a more focused approach on specific components, sharing services, adding revenue streams and creating distribution channels can now minimize costs while also shaping a holistic system.

    A modern Core Banking System also accelerates communication between Banks and customers, allowing for greater awareness of relevant insights and notifications. Under normal circumstances, the consumer leaves once the point of interaction is closed. A modern Banking system, however, ensures a routine of communication. After analyzing each customer touch-point and flow, it is possible to understand how to meet the customers’ changing needs. This further stabilizes consumer retention and creates a loyal base.

    Is Modernization better for consumers?

    Banks are now expected to process real time transactions and launch products and features faster and more frequently.

    A growing number of consumers require a real time experience that benefits their overall everyday movements. They don’t just need Banks to store but offer much more. When it comes to data management and data security, a modern system has that covered too. A robust data management strategy is imperative across all Bank channels that manage and utilize consumer information effectively. Using this to give out personalized advice, promotions based on activity and frequent offers creates a solid bond between customers and their Banks.

    Benefits of a modern core banking system

    With the number of digitally active consumers increasing, online activities are mandating better user experience and personalization. Personalized messages, alerts and financial advice, and mobile apps are steps in that direction. A Bank leveraging innovative core technology to transform interactions is a Bank that thinks about its consumers. Moving money instantly or making quick-time payments are only a few things that make the lives of consumers much easier. Banks can adapt faster by collaborating with a fintech such as Go-Live Faster with a thorough understanding of the changing consumer needs and the multiple technologies that govern the BFSI industry. Through its domain expertise, Go-Live Faster can quickly help your Bank adapt, remodel and roll out new systems and features to enhance your digital customer experience.

    Conclusion

    To ensure the effectiveness of real time payments, better experience for users and fast data transfer, modernizing your Core Banking System is the change you need to implement. A modern Core Banking System also innovates and releases new products and services with simpler code changes and ease. Following a componential approach of systemizing, IT costs and budgets can also be dramatically minimized while implementing this Banking system.

    Additionally, a modern Core Banking System enhances integration abilities, agility and adaptability. It allows for easier collaboration with third party applications and systems. A Modern Core Banking System can future proof your Bank from the constantly evolving and changing consumer preferences, and Go-Live Faster’s BFSI industry veterans and domain experts are here to make that a reality. Through collaborations with multiple Banks, over the years, our experts have already accelerated their core modernization by making technology implementations more predictable.

    Connect with us if you are ready to take the next step in your digital transformation journey. Let's enhance your Bank’s business agility and customer experience with a modern Core Banking System.

    November 30, 2020
  • Is your Financial Institution ready for Data Migration? Take our quiz to find out!

    Technology may run on software, but software needs fuel. That fuel is data. And unless properly configured for a specific application, technology won't run very well.  Like putting the wrong gas in your car makes it run badly (or not at all), bad input means bad output. Input = data and that makes clean data migration really important to the success of your ETL (extract, transfer, load) project.

    The reality is that data migration is actually the last step in the process.  We've sat through hundreds of data-mapping sessions and validated thousands of datasets.  From that experience, we've learned a few things about data migration and its partner, data validation. In this post, we define the four big truths about data migration, but if you think you know them, skip to the Readiness Quiz and find out if your team is truly ready.

    Truth #1:  Begin at the Beginning:  Source Data

    Data migration begins by understanding the source data. What it represents? How is it generated? How is it used today? And what controls it?  A new technologically advanced system may not fall into the same DB storage or structure. So How much of Source Data is really of use? That needs to be migrated?

    Particularly if your shop is migrating off legacy technology, what many project managers find out is that Jane or Ron or Jeff are the only people who understand its data. Uh oh, Houston, we have a problem!

    Now you’re faced with new technology that needs its version of data, called target data. What happens when a new application with new programs and new configuration rules starts running? You’re about to find out and it might not be what you’d expect.  That’s where data profiling comes in.

    Data profiling is a process used to define source data.  It’s comprised of three definitional components:

    1.  Accuracy
    2. Completeness
    3. Validity

    Data Profiling components

    We believe this first step is essential to ensure a high quality ETL process.  For example, to address identified quality issues, you might need to modify the conversion code. Another example is the opportunity data profiling offers to cleanse your files of incorrect or unused data. Particularly if you’re migrating from a legacy system in place for many years, there could be thousands of errors in the data that will bog down the schedule with testing errors.

    Manually performing this kind of data profiling is possible, but bringing in a data migration expert will accelerate your ability to pinpoint data issues through the use of sophisticated query tools.  In addition, expert data profiling ensures that you’ve captured the most important data issues, especially those that might put your organization at risk post-conversion.

    Correct profiling will filter out unnecessary data, extra validations and legacy data linkages, dependencies.

    Truth #2:  How Good is Your Data?

    Data is generally considered high quality if it is fit for use.  "Data cleansing" is the process to improve data quality.

    Data cleansing represents both small changes, like ensuring dates are in the correct format, and complex changes, such as de-duping records. Data cleansing is often seen as an opportunity by organizations, to clean up files before a technology conversion.  However, defining, prioritizing, and executing against it can be a real challenge.

    Here’s some of the questions to guide your data migration team’s analysis:

    • How much of your existing data is accurate & inaccurate?
    • What are the data update intervals and which process(es) update the data?
    • Is your data compliant with current regulations?
    • Are data attributes consistent across all datasets?
    • Should you convert all data, regardless if the original use case still exists?
    • Are data formats consistent across all datasets ? (for e.g. Date Format, Currency Decimal places etc.)

    Truth #3:  The False Promise of Lift and Shift

    Can you imagine plugged in, turned on, and ready to go business technologies? That’s just not ever going to happen.  Then why do we believe data can be lifted and shifted?

    Lift and Shift is a just myth and if anyone guarantees that data migration from source to target will work by L & S method is simply telling a lie. The truth is that successful data validation requires a thorough output mapping between the  source and target systems. Ensuring your team has a deep understanding of its new technology, either through vendor training or working with a third-party expert can be a critical factor to a successful conversion. Once completed, a comparison between the source and target system outputs is defined, variances noted, and rank ordered.

    Now, armed with real information, your organization can better define its data validation scope. In our experience, time spent testing data unnecessarily, without prioritizing data migration risk, is one of the major causes of implementation delays. This causes coding, implementation delays, additional regression testing cycles, and increases the likelihood the product launch schedule will be interrupted.

    Truth #4:  Testing is Subjective

    The truth is that it may not be possible to completely test a new application. You are going to end up going live with some degree of errors.  We understand the dynamics of financial institutions and the desire for an error-free implementation. These demands often result in over-testing where every single field, attribute, and condition is a test case. This kind of approach is not just inefficient, but also time consuming and does little to improve implementation quality.

    The question is then, is how do you decide what to test? This is where all the previous activities bear fruit. With a proper understanding of your source system data, assurance of data quality, and effective output-mapping, you’ll be ready to make these decisions with confidence. However, at this point in the process, if you still lack confidence, consider the following:

    • If the target system is mature, consider presuming that all core functionality works as defined and focus on any customization or areas of high processing complexity.
    • If the target system is immature, consider running the source and target systems in parallel for some period in order to focus testing on variances between the two.
    • At a minimum, clean the source system data of inaccuracies, unused fields, and inactive records.
    • Consider bringing in an outside domain expert to work in partnership with your team.

    Are You Ready?  Take the Quiz and Find Out

    This is our Readiness Quiz.  It will help you determine how closely your perception of readiness is to your actual readiness.  The way to use it is to rate your readiness on a scale of Very Ready to Not Ready.  Once completed, it will help you to see more clearly the strengths and weaknesses of your organization relative to its ETL plan.

    Feel free to cut this quiz out and share it with your planning/steering committees.  It’s based on our decades-long experience of guiding organizations to better understand their readiness for the big work ahead of them.

    Data-migration-blog_GLF_Table

    In Summary

    The four truths about data migration/validation are:

    Data-migration-blog_GLF_4

    Organizations undertake data migrations for any number of reasons. These include everything from an entire system upgrade to establishing a new data warehouse to merging new data from an acquisition.

    In today’s competitive environment, data is not only the fuel that drives your processes, but it’s the key to unlocking the value in new technologies. The question to ask yourselves is this: are you ready?

    In our experience, we’ve found that organizations often under-estimate the effort to effectively migrate data and minimize data validation risks.  This is usually the case because rigorous data quality protocols were either not put in place or have degraded over time.   Another challenge is ensuring your team has access to knowledgeable domain and application experts that can effectively put data into its proper context for analysis.

    Our Readiness Quiz should give you a better picture of how well your organization understands its source data and how prepared you are for the ETL.  If you’d like to discuss its results with our team of experts, we’re here to help make sense of it all.

    October 28, 2020
  • 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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