indigenerasi

Imran Adeel Haider

Pakistan has seen many banks will find new core banking solutions in the recent past. The best performing companies are the following: 1. Temenos T24 (Seven banks) 2. Sungard SYMBOLS (three banks) 3. Misys (two banks) and Pakistan is not the only country in the world is for such solutions. Banks in the Middle East have also bought the same core banking solutions to provide a wide range of services to their clients, using integrated information systems newly built. Using existing systems, it was a distant dream. consumer financing, based on the rapidly increasing number of rich and middle class, forcing banks to opt for better systems and not rely on their existing legacy applications – rather an archipelago of applications. Enter the new applications – or their new versions, and business people have been enamored of these applications from the outset. There are not many sellers and implementation of these solutions, so we can be sure they would be very very tight for delivery. There are tons of things that need to be changed in the basic retractable CD / DVD. For an Islamic country, things like deducting Zakat (mandatory alms yearly. 2 5%) are not available, and systems must be modified. These changes are usually from local suppliers, which is implementing the solution to the bank. And then you start to see problems. Lack of knowledge about the property TechnologyImplementing people are not aware of the application and its underlying technology: they try to run things on what they learned in college, using C # or Java. Most core banking solutions do not use one of these tools and platforms. Lack of knowledge about the property SystemImplementers were not there when the application was built / engineering. So they have no idea of things under the hood. This lack of knowledge constitutes a major threat. Although the application vendor trains its implementing partners, it is obvious they can not train a large number of engineers of the company implementation. In addition, suppliers are themselves the broader application delivery, and can not spend much time away from being implemented and the development of future releases / patches / patch application. No ProcessDue QA strict deadlines and overexploited resources, developers can not find it worthwhile to have a quality assurance process to ensure delivery by the standard, assuming that there were standards set for all . Scope creep occurs CreepScope among business users of banks, as they have no idea how much the new application, and they are used for the older application. When they see what is happening is when they realize they did not want it that way. This brings us to the next point. Customization to users can actually SystemBusiness previous published the new system, feel and act like the old system. Worse yet, they can do it completely unconscious. Therefore, this question must be asked time and again, so they double-check everything before asking. Timelines unrealistic BanksBanks may set overly ambitious deadlines for the completion of the project. We have seen projects in many years of delay due to one of the reasons we’re discussing. In a way, each bank thinks he has assessed the timeline right, and it can handle things. But as we know in the IT world, it’s late or it does not work. Timelines unrealistic ImplementersTo beat the competition and win the order, the supplier of banking solutions also agree with the aggressive schedule and realistic – the time that even they know can not answer. The lack of implementation resources (functional and technical) Lack of hits suppliers / implementation very difficult. There are many banks are going for such solutions, both locally and internationally. This brings the workforce exposed to offers from all over the world. In the case of T24, we saw offers being extended to those not even mention the word T24 in their LinkedIn profile. And since the banks in Singapore, Hong Kong and the Middle East pay in USD or AED, people from Pakistan and India is very attractive to opt for such missions. Local employers mitigate this risk by requiring employees to sign bonds for three years with their staff before the train, but that does not help much, the new employer are happily willing to pay the wages of their time remaining at their current employer, after all, they must put their faces in front of their bank customer (s) who would pay much higher than a bank in Pakistan to be a local director. Terms of subjugating Consultants / EngineersConsequently, director imposes restrictive conditions to his people that many feel angry and mistrust. They give the chance to get out of there, and they usually take too. Cash burnout due to high SalariesTo counter the brain drain, the performer, and offers higher wages to keep people on board. These earnings are close or equal to what the employer will provide the Middle East or the Far East. This obviously strains of profitability and cash flows of the company implementation and management loses interest in the project. This exacerbates the cycle of the project. To be concluded. . . This blog is also available at http://www. sapphireconsultingservices. com / scsblog / blogs and http://imranadeel. WordPress. com

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This is a sequel to my previous entry, entitled “Challenges to Core Banking Solutions Project Implementation – 1.” Continuing on the problems encountered in the planning of core banking solution implementation , see other problems. The lack of IT resources with BanksUsually the core banking solution vendors claim to offer less overhead, high-tech, lower maintenance costs, etc. After all, such claims win customers and especially their Finance staff, as they see it as a major cost center rather than a strategic asset. Vendors are also aware that banks calculate a minimum of five years the total cost of Ownership (TCO) before taking any decision on a vendor and its solution. If the system needs a lot of computing resources, it will affect the TCO sheet. They would not recommend to banks rental team adequate computer companies. Even if they are honest about it, banks can not take seriously the idea that, and try to negotiate that number. In addition, banks are not so great informatics and trends in software, such as Agile methodology and other object-oriented frameworks. They can not, or coming to appreciate the role of the user experience, documentation, quality control and assurance quality engineers. Ironic, is not it? During negotiations with application providers, managers of the bank as guarantor to create their own team to manage the solution during and after the implementation . They are asking vendors to train their teams on the technology and features so that the bank could reduce dependence on the external provider. However, they do not hire enough people. In my experience, I did not heard of one bank to get ISO 9001:2000 compliance. But do not be misaken here: a number of banks are very active in computer security and service delivery. Although this is a good trend that shows IT managers of banks are waking up to security threats and provide services, they are not informed of the progress of software development. The lack of experienced project managers a bank changes its core banking system once since decades. the Panel even if for any other IT solution that purchses bank, such as credit, risk management, middleware and loves them. In addition, these projects are so large that it is difficult to find project managers in the market with experience of similar projects companies. The project manager should provide insight, expertise, communication and foresight to steer the project in the right direction. If a project manager can make and communication skills, if not the banking arena, foresight, risk management and insight will be absent. A newly inducted project manager will also be faced with problems in taking control of things because he / she is a newcomer. Missing comprehensive training programs This problem affects both performers and banks, at a time, and just as difficult. The way banks and performers lose their workforce IT, there is almost always an urgent need to hire people “yesterday.” New bugs are observed, unused or untested features are brought to the operating requirements evolve, and new faces are being place in the team that the older leave or have already left. continuous training of employees should have a fresh high priority in such cases. We have seen that from happening. Batches are formed, probably, but not in how they should be. Application vendors and performers are too tight to move their consultants from clients on training labs. With pressure banks to deliver and expand their feature set in the same time, and application engineers / consultants by taking on other occasions, managers implementation does not do what they need: training, training and more training. QCI No have not seen much banks with QA people, honestly. And even those who have a QA staff have up to two people. How can two people possibly do a quality check of the entire banking system? In Furthermore, it is likely that people are QC supported by the general IT industry, which means they may not have experience in the banking environment and applications. They do not know or understand fully the requirements of a user. In addition, it is possible that QC personnel are hired after the needs analysis is completed. At this moment it is too late. I do not claim the human capacity to learn and act, QC engineers can still pick things up, but it is a subset of what they should, and within a very short time. Ultimately, you’d see people QC control application for accidents and errors related to the interface for most. No Stress or automatic application testing is supposed to bank a large number of users. Add to that the users of Internet banking, and you see a number dramatically over eight hours of normal business. Because applications are built with older technologies or proprietary, the choice of tools for stress and load testing of applications is very thin . If the application has a web interface, or if it is developed using Oracle Developer, you have several options. But because of the timing difficult, and no time for testing load testing, also remains under the radar . Noting the end of the process, banks find it convenient to buy more hardware horsepower. There is little calculation is the evaluation of material resources. Thus, the limits of available equipment are never evaluated. Also Do not use an automated tool makes users and staff QC test every newly developed or fixed function. And when an update / fix / patch is received from the application vendor, people have to test everything again. This is a huge investment of time and resources, which is avoidable by using an automated testing tool. For web application, we used IBM Rational Performance Tester, Rational Functional Tester and WebLoad. Creation scripts requires some programming as well. To be concluded… This blog is also available at http://www. sapphireconsultingservices. com / scsblog / blogs and http://imranadeel. WordPress. com

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THE CHALLENGES AHEAD OF BANKS

                                                                     *G. JAYALAKSHMI. , Ph. D Research Scholar

  

INTRODUCTION

           

 

Banking in India is at a crossroads. Proof of everyone suggests that a sound and evolution of the banking system is necessary for sustainable economic development. India has a better system of storage banks vis a vis other developing countries, but there are several issues to be resolved.

           

A strong performance in the current year, strengthening the positive trends of the past, will certainly improve the perception of risk in the short term, but the emphasis must be based on key structural changes that must occur if the Indian bank is to be a positive force and not a drag on the rest of the economy.

           

He met and overcome many challenges over the last decade. But bigger challenges lie ahead. In this paper, we try to examine the challenges that the banking sector in India faces.

 

Interest rate risk

           

The first challenge and most obvious will come from rising interest rates. The common perception is that interest rates have stopped falling and are likely to remain stable, but if demand for resources that picks companies begin to invest in new capacity and conditions of boom in demand for consumption fuel, then there mai a tightening of liquidity and upward pressure on interest rates.

 

Risk of interest rate can be defined as the exposure of net interest income bank of adverse movements in interest rates. Bank balance sheet consists primarily of assets and liabilities rupee. Any movement of domestic interest rate is the main source of risk of interest rates.

           

In recent years the treasury departments of banks have been responsible for a substantial part of profits earned by banks.

 

Now that yields are increasing (with rising inflation, bond yields rise and bond prices fall when the debt market starts factoring a possible rise in interest rates), banks must set aside funds the opportunity to market their investments. Thus, it will be difficult to show huge profits from treasury operations. This concern becomes much stronger, because a substantial percentage of bank deposits are invested in bonds.

           

Banking in recent years has been reduced to an operation of securities trading public. These past months have shown a rise in bond yields has led to profit from treasury operations down. The latest quarterly reports of banks clearly show several banks losses on their treasury operations. If higher yields continues banks could end up posting huge losses on their trading portfolios. Given these facts, the banks should consider alternative sources of investment.

 

 

 

Non-performing Assets

           

The best indicator of the health of the banking sector in a country is its level of NPAs. Given this fact, Indian banks seem better placed than they were in the past. Some banks have even managed to reduce their NPAs to net less than one percent (before the merger of Global Trust Bank with Oriental Bank of Commerce, OBC is a zero NPA bank). But as bond yields begin to increase chances are the net NPAs will also begin to rise.

 

This will happen because the banks made huge provisions against money they made on their bond portfolios in a scenario where bond yields were falling.

 

Reduce NPAs generally gives the impression that banks have strengthened their processes credit reporting over the years. This does not seem to be the case. With bond yields rising, income and cash will fall if banks want to make large provisions, the money will come from their interest income, which in turn lowers the profitability of banks.

 

Capital adequacy standards

           

A third and a key challenge will be the introduction of capital standards of Basel II. This will make two on the banks.

 

They will measure the risks they bear much better. To do this they need to reform their systems of management information so they have a clear and quantifiable risks.

 

They will then have to find capital to support this venture and eventually earn enough to maintain capital. R Ravimohan, CEO of Crisil, said that the future is all about technology and risk.

 

There is enormous potential for assessing the risks associated with using the technology. It is imperative for banks to increase, but the key issue is to decide where and how.

 

New ways or risk management and asset-liability mismatches, such as asset securitization, which frees resources and risk margins are likely to be increasingly used.

 

Competition in retail banking

           

The entry of new generation banks in the private sector has changed the entire scenario. At the beginning of the households had savings in banks and banks then lent money to businesses. Now they have to sell bank. The retail segment, which was previously ignored, is now the biggest lot with the banks to jump over one another to provide loans.

 

The consumer has never been so lucky with so many banks offering so many products to choose from. With a portfolio that far exceeds demand, it was a race to the bottom, with banks undercutting each other. Many foreign banks have already burnt their fingers in the game retail and decided to leave some segments of retail altogether.

 

Feet agile new generation banks in the private sector have taken a lead on this front and the public sector banks are trying to play catch up. PSBs have been losing business to private sector banks in this segment. PSBs need to understand how to generate profitable business in this sector in the coming days.

 

Conclusion

           

In recent years, interest rates falling, banks have given very little incentive to lend to projects that return does not compensate for the risk. This has led to banks to get into the retail segment big time. It has also led to many banks take no risk and putting in most of the deposits they collected in government bonds.

 

Now, with the use of bonds and in bond yields from rising, banks should focus on their primary loans.

           

The banking sector in India faces these challenges with success to continue our growth and strengthen the financial system of India.

 

In addition, the central government interference with the functioning of PSBs should stop. An autonomy plan costs for public sector banks is in the offing. The package aims to provide a high degree of freedom of PSBs on operational matters. This seems to be the way to PSBs.

 

The growth of the banking sector will be one of the most important inputs that go into ensuring that India is progressing and becoming a global economic super power.