DEFINITIONS AND MEANING

Definition

The most general definition of technique is the application of science or

knowledge to commerce and industry. Many fields of science have benefited
from technology, as well as commerce and industry over the many centuries
of human history. Perhaps the earliest known use of technology was in the
Stone Age when the first knife or shovel was made from a piece of stone or
obsidian. Technology has obviously come a long way since then.

Meaning

Techniques is the usage and knowledge of tools, techniques, crafts, systems

or methods of organization in order to solve a problem or serve some
purpose. The word technology comes from the Greek technología
(τεχνολογία) — téchnē (τέχνη), an "art", "skill" or "craft" and -logía (-λογία),
the study of something, or the branch of knowledge of a discipline. [1] The
term can either be applied generally or to specific areas: examples include
construction technology, medical technology, and information technology.
NEED OF TECHNIQUES

1). Various Techniques adopted by banks have opened up new markets, new
products, new services and efficient delivery channels for the banking
industry. Online electronics banking, mobile banking and internet banking
are just a few examples.

2). New Techniques has also provided banking industry with the
wherewithal to deal with the challenges the new economy poses.
Information technology has been the cornerstone of recent financial sector
reforms aimed at increasing the speed and reliability of financial operations
and of initiatives to strengthen the banking sector.

3). The revolution of various techniques has set the stage for unprecedented
increase in financial activity across the globe. The progress of technology
and the development of world wide networks have significantly reduced the
cost of global funds transfer.

4). It is uses of advanced techniques which enables banks in meeting such

high expectations of the customers who are more demanding and are also
more techno-savvy compared to their counterparts of the yester years. They
demand instant, anytime and anywhere banking facilities.

5).Various techniques has been providing solutions to banks to take care of

their accounting and back office requirements. This has, however, now given
way to large scale usage in services aimed at the customer of the banks. IT
also facilitates the introduction of new delivery channels - in the form of
Automated Teller Machines, Net Banking, Mobile Banking and the like.
Further, IT deployment has assumed such high levels that it is no longer
possible for banks to manage their IT implementations on a stand alone basis
with IT revolution, banks are increasingly interconnecting their computer
systems not only across branches in a city but also to other geographic
locations with high-speed network infrastructure, and setting up local area
and wide area networks and connecting them to the Internet. As a result,
information systems and networks are now exposed to a growing number.
 TECHNIQUES USED BY BANKS

1) Credit Analysis
2) Placement Techniques
3) Phising
4) Data mining
5) Risk Mangement

CREDIT ANALYSIS

Credit analysis is the method by which one calculates the creditworthiness

of a business or organization. The audited financial statements of a large
company might be analyzed when it issues or has issued bonds. Or, a bank
may analyze the financial statements of a small business before making or
renewing a commercial loan. The term refers to either case, whether the
business is large or small.

Credit analysis involves a wide variety of financial analysis techniques,

including ratio and trend analysis as well as the creation of projections and a
detailed analysis of cash flows. Credit analysis also includes an examination
of collateral and other sources of repayment as well as credit history and
management ability.

Before approving a commercial loan, a bank will look at all of these factors
with the primary emphasis being the cash flow of the borrower. A typical
measurement of repayment ability is the debt service coverage ratio. A credit
analyst at a bank will measure the cash generated by a business (before
interest expense and excluding depreciation and any other non-cash or
extraordinary expenses). The debt service coverage ratio divides this cash
flow amount by the debt service (both principal and interest payments on all
loans) that will be required to be met. Commercial Bankers like to see debt
service coverage of at least 120 percent. In other words, the debt service
coverage ratio should be 1.2 or higher to show that an extra cushion exists
and that the business can afford its debt requirements

Typical education credentials often require a bachelor degree in business (to

include an emphasis in accounting, finance or economics). An MBA is not
required however is increasingly being held or pursued by analyst, often to
become more competitive for advancement opportunities. Commercial
Bankers also undergo intense credit training provided by their Bank or a
third-party company.

PLACEMENT TECHNIQUES

Whether it is hundreds of thousands or millions of dollars that the criminal

has to hide, government regulations which require the reporting of large cash
transactions force them to either stockpile the cash generated, then spend it
in dribs and drabs, or be creative in legitimizing and accounting for it so they
can purchase huge mansions and luxury yachts without concern.

Smurfing

If the criminal only needs to move a few million dollars a year, the simplest
way to launder cash without detection is "smurfing "— having people
deposit random amounts of less than $10,000 into variously named accounts
at many different banks. They will also buy bank drafts from various
financial institutions to circumvent thresholds for transaction reporting.
Then a middleman can ship the compact negotiables for deposit elsewhere.
Due diligence rarely catches this activity. Laundering of accounts held by
relatives or friends is also popular.

One smalltime drug trafficker had his wholesalers deposit money into his
account using the "Interac" bank tellers. He then withdrew the money to
purchase money orders in U.S. funds which he sent out of the country both
to purchase more drugs and for safekeeping.

This first hurdle is bypassed by customers paying by certified cheque,

money order or credit card as opposed to the more prominent use of cash in
drug sales.

A currency structuring charge stems from attempts to make bank

transactions in such a way as to evade notice by the federal government,
which requires banks to report transactions of more than $10,000.

Shipping Money Abroad

Sometimes they have to resort to shipping the money abroad in bulk cash
then arrange to get it back. Someone might smuggle cash to Mexico, deposit
it in a United States dollar account, draw out a draft, mail or carry it back
into the U.S., deposit or cash it in a bank, with no requirement for the bank
to report the transaction.
Sometimes less bulky items are purchased domestically such as diamonds,
gold or even precious stamps and other collectibles. The criterion is that they
be of high value in relation to bulk, making them physically easy to smuggle
as well as relatively easy to reconvert into cash at the point of destination.

Commonly, the proceeds will be wire transferred to accounts back in the

U.S.. Enforcement officials believe that as much as $10 billion in Mexican
bank drafts is laundered through such schemes each year in Panama alone.

The currency of choice for illegal transactions is the U.S. dollar, which
circulates widely outside of the borders of the United States. Indeed, of the
$400 billion in U.S. currency in circulation, $300 billion is in circulation
outside the United States.

Placement Through Banks

Banks and other financial institutions may unwittingly be used as

intermediaries for the transfer or deposit of money derived from criminal
activity.

One drug smuggler is believed to have laundered approximately $100

million (US) a year over a six year period through deposits into a branch of a
Canadian bank located in Nassau, Bahamas. Several accounts would be
used, all of them in the name of Nassau-registered corporations. The money
was then wired to the bank's Cayman Islands branch and into the account of
a company. From there the money was wired back to the U.S. into the bank's
New York City branch. It would then be dispersed among numerous
corporations owned by the individual in the U.S.
Use of "Pass Through" or "Payable Through" Accounts for Placement

Financial institutions must take care in opening accounts for foreign deposit-
taking institutions because a foreign bank may open a chequing account to
enable their clients, which the domestic bank may not have sufficient
knowledge of, to conduct financial transactions in Canada.

Placement Using Electronic Wire Transfers

Criminals are making extensive use of the electronic payment and message
systems for wire transfers. Modern financial systems permit criminals to
transfer instantly millions of dollars though personal computers and satellite
dishes. The rapid movement of funds between accounts in different
jurisdictions increases the complexity of investigating and tracing the source
of funds especially when non-customers and non-correspondent banks
transfer to equally unknown third parties.

Placement Using Insurance Products

A particular area where the life insurance industry is vulnerable is the single
premium product so they must now keep the client application form for
every purchase of an immediate or deferred annuity and any insurance
policy for which the client will pay $10,000 or more.

An individual who was convicted of stealing over $100,000 from two

charitable organizations was discovered to be the owner of a fully paid
annuity policy having a value of $140,000.
Unusual signs include:

a request by a client to purchase an insurance product where the source of

the funds to purchase the product is inconsistent with the customers financial
standing or is a third party cheque;
a client who does not wish to know about the performance of an investment
but is concerned only about the early cancellation provisions of a particular
product.

Placement Using Investment Related Transactions

Every person engaged in the "business of dealing in securities" must keep

appropriate client data and records. Unusual activity includes requests by
customers for investment management services (either foreign currency or
securities) where the source of the funds is inconsistent with the customer's
apparent standing, large or unusual settlements of securities in cash form and
buying and selling a security with no discernible purpose.

Placement Through Collusion of Financial Institution Employees and

Agents

Suspicious indications include changes in employee characteristics such as

lavish life styles or performance, remarkable or unexpected increase in
business volume of selling products for cash; consistently high levels of
single premium insurance business far in excess of any average company
expectation.
Placement Using Non-Bank Financial Services

There is a growing trend of money launderers moving away from the

banking sector to the non-bank financial institution sector where the use of
currency exchange houses and wire transfer companies to dispose of
criminal proceeds remain among the most often cited threats.
PHISHING TECHNIQUES

Phishers are targeting the customers of banks and online payment services.
E-mails, supposedly from the Internal Revenue Service, have been used to
glean sensitive data from U.S. taxpayers. While the first such examples were
sent indiscriminately in the expectation that some would be received by
customers of a given bank or service, recent research has shown that
phishers may in principle be able to determine which banks potential victims
use, and target bogus e-mails accordingly. Targeted versions of phishing
have been termed spear phishing. Several recent phishing attacks have been
directed specifically at senior executives and other high profile targets
within businesses, and the term whaling has been coined for these kinds of
attacks.

Social networking sites are now a prime target of phishing, since the
personal details in such sites can be used in identity theft;[20] in late 2006 a
computer worm took over pages on MySpace and altered links to direct
surfers to websites designed to steal login details.[2 Experiments show a
success rate of over 70% for phishing attacks on social networks.

The RapidShare file sharing site has been targeted by phishing to obtain a
premium account, which removes speed caps on downloads, auto-removal of
uploads, waits on downloads, and cooldown times between downloads.

Attackers who broke into TD Ameritrade's database (containing all 6.3

million customers' social security numbers, account numbers and email
addresses as well as their names, addresses, dates of birth, phone numbers
and trading activity) also wanted the account usernames and passwords, so
they launched a follow-up spear phishing attack.

Almost half of phishing thefts in 2006 were committed by groups operating

through the Russian Business Network based in St. Petersburg.[

Some people are being victimized by a Facebook Scam, the link being
hosted by T35 Web Hosting and people are losing their accounts.

There are anti-phishing websites which publish exact messages that have
been recently circulating the internet, such as FraudWatch International and
Millersmiles. Such sites often provide specific details about the particular
messages.

Link manipulation

Most methods of phishing use some form of technical deception designed to

make a link in an e-mail (and the spoofed website it leads to) appear to
belong to the spoofed organization. Misspelled URLs or the use of
subdomains are common tricks used by phishers. In the following example
URL, http://www.yourbank.example.com/, it appears as though the URL
will take you to the example section of the yourbank website; actually this
URL points to the "yourbank" (i.e. phishing) section of the example website.
Another common trick is to make the displayed text for a link (the text
between the <A> tags) suggest a reliable destination, when the link actually
goes to the phishers' site. The following example link,
http://en.wikipedia.org/wiki/Genuine, appears to take you to an article
entitled "Genuine"; clicking on it will in fact take you to the article entitled
"Deception". In the lower left hand corner of most browsers you can preview
and verify where the link is going to take you. Hovering your cursor over the
link for a couple of seconds will do a similar thing.

An old method of spoofing used links containing the '@' symbol, originally
intended as a way to include a username and password (contrary to the
standard).

A further problem with URLs has been found in the handling of

Internationalized domain names (IDN) in web browsers, that might allow
visually identical web addresses to lead to different, possibly malicious,
websites. Despite the publicity surrounding the flaw, known as IDN
spoofing[33] or homograph attack,[34] phishers have taken advantage of a
similar risk, using open URL redirectors on the websites of trusted
organizations to disguise malicious URLs with a trusted domain. Even
digital certificates do not solve this problem because it is quite possible for a
phisher to purchase a valid certificate and subsequently change content to
spoof a genuine website.

Filter evasion

Phishers have used images instead of text to make it harder for anti-phishing
filters to detect text commonly used in phishing e-mails.

Website forgery

Once a victim visits the phishing website the deception is not over. Some
phishing scams use JavaScript commands in order to alter the address bar
This is done either by placing a picture of a legitimate URL over the address
bar, or by closing the original address bar and opening a new one with the
legitimate URL.

An attacker can even use flaws in a trusted website's own scripts against the
victim. These types of attacks (known as cross-site scripting) are particularly
problematic, because they direct the user to sign in at their bank or service's
own web page, where everything from the web address to the security
certificates appears correct. In reality, the link to the website is crafted to
carry out the attack, making it very difficult to spot without specialist
knowledge. Just such a flaw was used in 2006 against PayPal.

A Universal Man-in-the-middle (MITM) Phishing Kit, discovered in 2007,

provides a simple-to-use interface that allows a phisher to convincingly
reproduce websites and capture log-in details entered at the fake site.

To avoid anti-phishing techniques that scan websites for phishing-related

text, phishers have begun to use Flash-based websites. These look much like
the real website, but hide the text in a multimedia object.

Phone phishing

Not all phishing attacks require a fake website. Messages that claimed to be
from a bank told users to dial a phone number regarding problems with their
bank accounts.[45] Once the phone number (owned by the phisher, and
provided by a Voice over IP service) was dialed, prompts told users to enter
their account numbers and PIN. Vishing (voice phishing) sometimes uses
fake caller-ID data to give the appearance that calls come from a trusted
organization.
Other techniques

• Another attack used successfully is to forward the client to a bank's

legitimate website, then to place a popup window requesting
credentials on top of the website in a way that it appears the bank is
requesting this sensitive information.

• One of the latest phishing techniques is tabnabbing. It takes advantage

of the multiple tabs that users use and silently redirects a user to the
affected site.

• Evil twins is a phishing technique that is hard to detect. A phisher

creates a fake wireless network that looks similar to a legitimate
public network that may be found in public places such as airports,
hotels or coffee shops. Whenever someone logs on to the bogus
network, fraudsters try to capture their passwords and/or credit card
information.

Damage caused by phishing

The damage caused by phishing ranges from denial of access to e-mail to

substantial financial loss. It is estimated that between May 2004 and May
2005, approximately 1.2 million computer users in the United States
suffered losses caused by phishing, totaling approximately US$929 million.
United States businesses lose an estimated US$2 billion per year as their
clients become victims. In 2007, phishing attacks escalated. 3.6 million
adults lost US$3.2 billion in the 12 months ending in August 2007.[49]
Microsoft claims these estimates are grossly exaggerated and puts the annual
phishing loss in the US at US$60 million.[ In the United Kingdom losses
from web banking fraud—mostly from phishing—almost doubled to
GB£23.2m in 2005, from GB£12.2m in 2004, while 1 in 20 computer users
claimed to have lost out to phishing in 2005.

The stance adopted by the UK banking body APACS is that "customers

must also take sensible precautions ... so that they are not vulnerable to the
criminal."] Similarly, when the first spate of phishing attacks hit the Irish
Republic's banking sector in September 2006, the Bank of Ireland initially
refused to cover losses suffered by its customers (and it still insists that its
policy is not to do so]), although losses to the tune of €11,300 were made
good.

Anti-phishing

There are several different techniques to combat phishing, including

legislation and technology created specifically to protect against phishing.
Most new internet browsers come with anti-phishing software.

Social responses

One strategy for combating phishing is to train people to recognize phishing

attempts, and to deal with them. Education can be effective, especially
where training provides direct feedback.[56] One newer phishing tactic, which
uses phishing e-mails targeted at a specific company, known as spear
phishing, has been harnessed to train individuals at various locations,
including United States Military Academy at West Point, NY. In a June
2004 experiment with spear phishing, 80% of 500 West Point cadets who
were sent a fake e-mail were tricked into revealing personal information
DATA MINING

What is data mining

Simply put data mining is finding knowledge from a large amount of raw
data whic is also referred to as knowledge discovery or KDD. According to
Han and Kamber there are 7 separate steps in data mining:

Data cleaning

• This stage removes noise and inconsistent data.

Data Integration

• Here different data sources may be combined.

Data Selection

• In this stage only data that is relevant to the analysis are

identified and retrieved.

Data transformation

• Data is transformed into form that is appropriate for the mining

process for example the data can be summarized or aggregated

Data mining

• In this process the actual intelligent methods are applied to

extract data patterns
Pattern evaluation

• To identify the truly interesting/valid/useful patterns

representing knowledge base on some interesting measures.

Knowledge presentation

• Here the mined knowledge is presented to the user in an

optimal way

Data mining is often confused with data warehousing and OLAP (On Line
Analytical Processing). According to Han and Kamber the general
difference between these is their ability to handle data, and also these are all
in principle evolutions of the previous. But the fundamental underlying
technology in these is data warehousing techniques.

1. Data warehousing (information processing) is by definition data

processing which supports simple predefined data queries, basic

statistical analysis and reporting using crosstabs, tables, charts, or
graphs.

2. OLAP operations include slice-and-dice, drill down, roll up, and

pivoting. The difference to traditional information processing

techniques is the ability to perform multidimensional analysis of data
warehouse data.
 3. Data mining supports knowledge discovery by finding hidden

patterns and associations, constructing analytical models, performing

classification and prediction, and presenting the mining results using
visualization tools. Also with data mining techniques transactional,
spatial, textual, and multimedia data can be analyzed that is otherwise
hard to model with modern multidimensional database technology.

Different applications for data mining in the banking sector

What questions could be asked, and answered, in this industry

In the banking sector there are various different useful applications for data
mining. These can be divided into three traditional categories:

1. CRM, or marketing promotion and classification of customers.

2. Forecasting levels of bad loans and investments.

3. Detection of financial crimes such as fraud and money laundering.

The word traditional before refers to the so called non Internet era. Since the
online banking sector has been expanding in the late 1990s this has provided
totally new applications of data mining usage in the retail banking sector.
This subject will be discussed more thoroughly in the future developments
section of this paper.
Given the type of data that can be collected and made available?

Financial data collected in the banking and financial are often relatively
complex, reliable, and of high quality, which facilitates systematic data
analysis and data mining.(Han)

There are a few different types of data that can be collected on different
retail banking clients:

1. Normal transactions and information concerning these.

2. Customer behavior (services consumed, intensity of use of services).
3. Customer demographics concerning money and wealth.
4. Loan payment aptitude

These can be analyzed with the use of simple predefined data warehousing
queries individually. But to find interesting/ conclusive patterns it is
necessary to combine all of the different types of data collected, which is
where data mining tools come into action. Since retail banking is very
closely related to other financial services. We will look into some other
related issues as well, such as fraud detection techniques. Since there are
many different applications of data mining in the retail banking sector we
shall discuss the most used tools that are applied in the industry. (Johnston)

What tools, algorithms, and methods might be more useful and

which ones less?

Data Mining Tools

Since there are many different applications in the retail banking sector we
shall look at the different data mining tools employed. Here we will first
discuss the different tools that are used, after what we will give more
practical examples in the Applications section. In principle there are two
different types of tools used in data mining which are classification and
prediction.

Data Classification

Classification tools tend to segment data into different segments. In the

banking sector these can be things like categorizing a bank loan application
as either safe or risky. The process of classification starts with a
classification algorithm. Which is applied to a set of so called training data,
which is historical data for example of a bank customers age, income, and
credit rating. The training data is fed through the classification algorithm
which will produce generic classification based on the customers data such
as:

Data Prediction

The most extensively used tools in prediction are linear and multiple
regression. Linear regression is the simplest form of regression analysis
where there is only one predictor variable. Where as multiple regression is a
more complex regression analysis where there are two or more predictor
variables. Also non linear regression is used in cases where there are no
linear relationships with data. Basically this is called polynomial regression
where a non linear relationship is transformed into a linear relationship by
transforming a polynomial regression model into a linear regression model.
With predictive techniques lots of different questions can be tackled, such as
what sales of a product will be with different prices and other effecting
variables. Regression analysis is mainly used in CRM related tasks in the
retail banking industry. In other parts of the banking industry there
numerous uses for regression and prediction tools such as the prediction of
stock prices and evaluation of land and real-estate prices.

Applications

Historically the banking sector has gathered extensive amounts of data on

different aspects of their operations. This is especially true in analysis of
customer behavior (Johnston). The banking industry is one of the first
industries to really incorporate data mining techniques. This has been due to
the readily available and extensive amounts of data. Also since the banking
industry has traditionally been one of the drivers for new information and
communication technologies; as soon as different applications such as data-
warehousing and data mining have been available they have been used
extensively in the retail banking sector.

CRM

Data-mining applications provide transparent links to all of a bank's

databases and add easy-to-use client-server applications to let bank
personnel quickly capture a view of a customer. That allows bank employees
to provide better service to customers. Equally important, data mining lets
banks cross-sell other bank services, increasing the profitability of each
employee contact with each customer.(Johnston)

According to the Ernst & Young 45 of the top 100 U.S. banks have a data-
mining application in use and more than 50 of these are either planning or
testing data mining implementation.
Prediction/Forecasting

In the retail banking sector this mainly refers to what the probability is of a
customer to default on their loan payments. The forecasting can be made on
historical as well as concurrent data. The data mining system can determine
based on a customers income, age, historical credit information, house
ownership with a very high certainty whether a customer will be able to pay
off their loans or mortgages. This is done by basically comparing the current
customer information onto historical data. In other words the system can
segment the customer into a specific customer segment for loan payments.
Thus decreasing risk for the bank and also the bank is able to give a better
interest since their inherent risk might be lower with some segments.

Fraud Detection

Why data mining is so important in fraud detection is the nature of the data
which is always true or real. The problem is in finding which ones of the
transactions are not ones that the user would be doing. So the mining system
usually checks which ones of the transactions do not fit into a specific
category or are not standard repeat transactions. Also since credit cards can
be used all over the world the data concerning for example credit card
transactions have to be consolidated in real time globally. For example, the
system should detect two purchases in Sidney and Reykjavik
simultaneously, and process their validity in the intelligent data mining
systems.(Pressler)
Future trends in data mining in the retail banking sector

Since data mining is a very young discipline there are developments

happening annually. One of the key developments in the data mining sector,
over all, is that efforts are made to standardize the data mining languages.
(Han)

As for the banking sector there are new consumer trend analysis tools that
can be used. This is especially true when considering the transformation
from the traditional retail banking sector to the online banking. When people
start to utilize online banking extensively there are whole new areas where
data mining techniques can be employed. These can be security issues
online, customer behavior (CRM), product development etc. (Lange). Since
online use is conducted through a digital medium the users actions can be
monitored more easily than traditional means of consuming retail banking
services. Leading to faster data gathering which will lead to faster data
mining and knowledge extraction. Most of the new possibilities are closely
related to online consuming where, for example mining path traversal
patterns are important ways of understanding customers (Han).
RISK MANAGEMENT

Risk is anything that will have an adverse effect on profitability. Banks have
to accept the fact that risks are part of their business and subsequently
manage those risks. Risk management is not minimizing risk. It involves
analyzing and comparing risk to the trade-off of taking the risk. Banks need
to examine and measure any activity which affects their risk profile and
closely monitor accompanying conditions.

Loans

Loans are one of the biggest areas of risk to a bank. To effectively manage
credit risk is crucial to a bank's total approach to risk management. Before
loaning money, the bank must evaluate the risk profile of the transaction.
This includes the purpose of the loan and how it will be repaid, the
repayment history of the borrower, the capacity of the borrower to repay the
loan and the value of collateral. Collateral is used more as a buffer which
provides protection in case of default.

Limit Setting

Limit setting is a major component of risk management. The size of limits is

based on credit, need for credit and economic conditions. Sometimes a bank
will set certain limits for specific products, activities or industries. These
credit limits need to be reviewed, at a minimum, once a year. Careful
examination is needed for any requests to raise credit limits. Also, the bank
must have guidelines in place on the roles and responsibilities of anyone
involved in credit management.

Contingency Funding Plan

A Contingency Funding Plan (CFP) is essential in risk management. This

type of plan allows banks to meet their funding needs in a timely manner
and at reasonable cost. It projects future cash flow and funding resources. A
good CFP should address normal cash flow and any internal or external
crises that can negatively impact this cash flow. Evaluating the plan is an on-
going process, with adjustments made to it as deemed necessary. When
unexpected events occur, the bank needs to be ready to spring into action.
Therefore, there needs to be excellent communication on all level
 CASE STUDIES

Today’s savvy clients have come to showcase a sense of Value for Time with
regard to their banking choices. More so, Clients have grown intolerant of
the volume and irrelevant information with regard to content of marketing
methods. Mass advertising encourages churn not loyalty. There is a greater
demand for a packaged one-stop solution for their varied banking needs,
including both tangible and intangible products from a single or a reduced
number of banking partners. While this desire speaks of possible limitation
with regard to fewer customers overall, the potential revenue gains that
banks can realize from these finite relationships have never been greater.

At the same time, however, the financial implications related to a shrinking

and shifting client pool means banks have much to lose if they fail to modify
their methods for growing new and retaining existing relationships. This
speaks of an integrated approach for development of sales personnel,
marketing program support, customer relations, market performance, and
contribution to profits. To win their trust and business, banks need to move
from traditional methods of communications to a more informative,
integrated-product based approach. This also includes exploring the online
webspace for establishing a more personal relationship with its customers.
Banks need to shift away from a product-centric culture toward a customer
centric model to better position them to maintain client loyalty and grow
their bottom lines. Furthermore, with availability of several different
products at a single institution customers are much less likely to switch
banks. For customers of today, communicating about their commoditized
products, banks can create unique value. For example, Wells Fargo, a
leading bank in US shifted from product-centric marketing toward customer-
centric tactics. Strategies include using more personal-communication
methods such as e-mails with relevant content to respond to their customers’
increasing need for on-demand strategic business intelligence.

Citibank Direct proves a huge hit with US consumers – Direct Banking

Source: Bank Marketing International - Issue 190

Citibank’s new direct banking operation, launched just two months ago, has
proved to be a huge success for the US financial giant. Citibank Direct has
raised some $3 billion in deposits over the first eight weeks, two-thirds of
which is new money. Citibank Direct forms part of a growth oriented
restructuring of Citigroup’s operations, which includes expanding its branch
and electronic distribution networks, significantly growing its international
business and concentrating on cross-selling through better divisional
integration and more efficient marketing. Customers who sign up to
Citibank Direct must have both a deposit and a transactional account with
Citibank already. Citibank Direct account holders are able to access their
account at Citibank’s near 1,000 branches and over 3,000 ATMs. It was
ranked last month by comScore as the US online bank with the best cross-
sell ratio. Some 40 percent of customers who open accounts via their website
live outside of the bank’s branch network areas. Through its new internet
bank, the bank said, it hopes to reach many more customers.
UK consumers return to traditional financial service providers – Direct
Banking
Source: Bank Marketing International - Issue 190

Online financial service providers in the UK are losing ground in the savings
market, according to research conducted by market research group GfK
NOP. For the first time in five years, more online savings accounts were
opened with traditional providers (69 percent) than purely online providers
(31 percent) during 2005.GfK NOP’s findings suggest that a narrowing of
price differences has resulted in consumers taking comfort in the benefits of
the multichannel approach – reinforcing the trend for the massive branch
building programmes many banks are now undertaking. Additionally, the
research revealed that 39 percent of the 3 million consumers who conduct
their financial services online say that the internet is not their preferred
method, but that they tolerate an online service in order to receive a cheaper
product. An additional 500,000 people are even more skeptical, stating that
while they actively bank online, they are unhappy doing so. GfK NOP
asserts that these savings market trends provide lessons for the rest of the
financial services market. Its findings suggest that consumers who are less
willing to engage in online financial services are prepared to overcome their
resistance to the channel if it means a better return on their money.

Merchandising Campaign

One leading regional player in the United States launched a merchandising

campaign on the facades of its branches to draw customers into them for a
“five-minute financial checkup” and an opportunity to win a prize.
Customers and non-customers took a “swipe and win” leaflet from a
merchandising display or a member of the staff and then swiped it at a
terminal inside the branch. Only after completing a brief interactive financial
review on the terminal did they learn whether they had won. The campaign
was highly successful, leading, on average, to a 10 percent increase in
current-account openings across all participating branches (and an almost 20
percent increase at the highest-traffic locations).

Self Service Channels

One major European bank, which had grown by acquiring many smaller
community institutions, set out simultaneously to increase the migration of
customers to self-service channels and to step up it’s cross-selling to existing
customers. In the branches, the bank deployed a digital-marketing platform
(using interactive screens) with content that included not only standard
product information but also migration tips, community news, generic sports
and weather information, and online customer satisfaction surveys.
Customers were encouraged to interact with the staff for more information.
The impact was significant: more than 80 percent of branch visitors noticed
the screens, almost 50 percent followed the messages, and around 3 percent
asked for more information. The initiative generated roughly 100 leads
(requests for information) a month, which the bank deemed an excellent
return on its investment.
Word-of-mouth marketing

TD bank in Umpqua, Canada provided 10$ initial capital for children of

small-business owners for 2100 lemonade stands. The message conveyed
was “No business is too small for the bank”. The output was creation of
1000 new customers, 2331 new accounts and 113 mn$ new deposits. The
same bank (TD Bank) also created a lot of buzz in Portland, when they tied
up with Paulie Pizzeria for free pizza to customers in TD bank branded
boxes. They ended up delivering 20000 free pizzas. The idea behind this
campaign was to generate Word of mouth publicity through one-to-one flow
of information as well communication channels like blogs and networking
sites rather than the traditional marketing tools.

ICICI innovation in marketing

The Kamdhenu campaign was launched with the aim of generating

awareness about loans for cattle purchase and cattle insurance in rural areas.
A short film was screened, which ran for 150 days across 5 states touching
10000 potential customers. Another successful innovation was Harry Potter
Initiative by ICICI Prudential: Children going to watch Harry Potter movie
were invited to don Potter-like caps and pose before cameras installed by
ICICI Prudential Life Insurance Company. A similar exercise was also
conducted in schools across eight metros. A few weeks later, customized
mailers with the child's photograph were sent to 4,500 homes informing their
parents about ICICI Prudential's Smart-Kid education insurance plan. The
response to this marketing initiative was unprecedented. Usually reluctant to
meet with insurance agents, over 75 per cent of the 4,500 parents who
received the mailers agreed to meet the company's representative and find
out more about the Smart-Kid plan. Of these, nearly 10 per cent of the
people actually took the insurance policy, compared with 1-2 per cent that
usually responds to general marketing campaign. A marketing initiative that
cost just Rs 2 lakh had generated business in double-digit multiples for
ICICI Prudential.

SBI Tiny – Rural Campaign

SBI started a rural campaign by introducing SBI Tiny accounts, which are
no frills saving accounts where account-holders can maintain zero balance
and start with a deposit of Rs. 5. The idea is to build a relationship with
villagers and then create assets by providing credit and other products like
insurance. They are tying up with some companies to create such rural
specific products. The biometric identification enabled Tiny cards are also
being seen as the bank’s answer to the challenge of financial inclusion of
100000 villages in the country. SBI has already rolled out 3 million Tiny
cards and planning to roll out another 3 million by the end of this year.
Among other benefits, the cards are currently being used as a means of
payment of government benefits directly to the poor persons, such as
pension payments and wages under the rural employment guarantee
programme.
 INSIGHT: CUSTOMER – CENTRIC APPROACH

In the process of devising a proper marketing strategy, it becomes important

that the banking institution understands their customers and channelize their
resources to devise products to meet the various banking demands of their
customers.

Methodology: Positioning yourself

For devising a successful marketing strategy, it becomes important for us to

understand the following factors.

 Size of the bank is no more the key winning criteria, online and Tele-
banking has given a big completion to branch based banking.

 Marketing through credentials doesn’t stand out (Size, age and

experience)

 Banks should focus and integrate non-banking products in the

package they offer.

 Measuring Marketing Initiatives is always important and crucial for

any marketing strategy.
Understanding the Customers

The key is a successful strategy is to positively forecast the needs of the

clients and devise products accordingly. The following few aspects needs to
be studied for a better strategy:

1. Banks should look for new insights from the existing customer data.
Most financial-services companies either don’t mine their data enough
or don’t do it in a way that allows the information to reach product
development (Psychographic Segmentation, Conjoint Analysis)

1. It is important to understand the evolving needs and attitude of

customers. Knowledge and demands of customers are constantly
evolving along with their sources of income and their financial
complexities. It becomes important that we as a bank, need to
understand their attitude and their economic patterns to offer the most
suited banking solution.

1. Priority Listing of Customers is an essential ingredient for the right

strategy mix. Since we are talking about establishing a more client
specific business relationship, it is always important to understand
how to make the choice in regard to spacing their demands in regard
to our business perspective.
Innovation : Customer Service

Innovation is a key for Banking: Focus on innovations doesn’t matter how

small they are, every small innovation is a liftoff for a bank.

 Offering based innovation: Addressing one real need, no matter how

small, we have lift-off. For example, Octopus which enables users to
ride public transportation without having to buy tickets or swipe a
turnstile is a big hit.

 Customer Service Based Innovation: Citibank linked its customer

service performance to sales success. They created an incredible
incentive to address clients’ concern — and then to sell, it can also
give the bank’s marketers greater insight into consumer needs than
they ever had before

 Innovation in Senior Management Approach: Best practices from

across the industry in customer care and satisfaction can go long way
in making your customer happy. Most offerings of the banks are too
complex for the average consumer to understand. If you look at some
consumer products where there is a complexity dimension, such as
washing machine. Typically the company will have a sales force to
explain the different features. Banks’ products are currently more like
washing machines — really hard to sell. But banks have no sales
forces to deal with customers. We need to educate consumers.
  Marketing Based Innovation: Bring customers in by offering a special
on CDs, one day only, where customers who bring in $1000 for
deposit in a 12 month period CD get an extra 0.5%. Furthermore, it
would get the staff excited and working towards a goal. This would
work in many ways. ING has a great referral program, where current
customers get $10 for emailing their friends to sign up, and their
friend gets $25.

 Product specific Innovation: The systems and procedures need to be

geared towards speedy delivery of service to customers. For example,
banks send out credit cards to customers automatically when their old
ones have expired.

Think Different

1. Don't just focus on building smart products, but Build smart business
models, new ways to create, deliver, and capture value.

2. Think in terms of platforms and pipelines and not as a single product.

A platform based products can be re-launched with modifications –
leading to faster turnaround time and economical product launches.

3. Take a portfolio approach, i.e. decide on a bunch of products for a

category and not a standalone product.
CRM Systems Implementation

1. Build small, usable databases. Systematic but simple checks should be

implemented on the database to identify omissions and errors early
on. This does not take a long time and has been implemented even in
2 weeks by some companies.

2. Start pushing pilot campaigns quickly testing different hypotheses

quickly like 8-10 campaigns in first 2-3 months.

3. Setup a call center to roll out and inform about successful campaigns.

4. Every campaign, whether successful or not, needs to be analyzed

thoroughly for continuous improvements in the process.
 EVALUATION: MONITORING AND REVIEW

Effective evaluation methodology to monitor and review performance of a

strategy is essential. Banks should supplement their traditional sales-
and transaction-oriented metrics by increasing their use of activity-
based branch-level metrics, such as the number of visits, the purpose of
those visits (for instance, service or sales), the flow of customers within
branches, and rates of conversion into leads or sales sessions.

Advantages

The marketing strategy should consider the product mix suited for the
Customer needs on the above points discussed. Customer centric approach
speaks of various possible advantages. Following are few of them.

1. Customer Loyalty: Establishing the institution as a one stop shop for

all banking needs, it becomes easy to gain customer loyalty. With the
possibility of having a single banking partner for his/her banking
clients, customers will be more willing to share their needs, thus
helping the bank to better modify their services.

2. Word-of-mouth Marketing: Loyalty of Customers and customer focus

initiatives will create a greater sphere of marketing space through
existing customers.
 3. Lesser lead time with advanced planning and immediate product
delivery – A consequence of better customer understanding will cut
down the lead time and help us on immediate product delivery. For
example, approval for loans, credit card services etc.

4. With better understanding of customers, partnerships with other

institutions for product design become easy and also mutually
beneficial. Creating new products and offering non-banking services
for customers will see tap on potential industrial clients.

5. Lesser Cost of Operation: Better understanding of clients and a more

reliable forecasting methods will result in less management overhead,
lower capital requirements, and potentially quicker timelines.

Possible Challenges

Any Marketing Strategy is not without challenges. Few of the possible

challenges are discussed as follows:

1. Reach: As service is extended to additional areas, devising a

marketing strategy for a larger and more complicated organization
from an administrative and resource standpoint is a challenge that will
continue to grow. This also includes achieving profitability in all areas
of operations through the marketing strategy will pose a challenge.
2. Technology Support: Choosing the appropriate technology to suit the
product need and client’s ease of operation is another challenge. It
might be possible that we have to strike a tradeoff between these
factors to optimize our performance, resulting in growth with
utilization constraints.

3. Cost Effective Methods: Switching costs associated with the

introduction of new technology. As new and better technologies are
available in the market, it becomes crucial to reach out and introduce
services through the same. There are tradeoffs to consider given costs
associated with adopting new standards and products as well as the
timing of adoption.

4. It becomes important to develop communication solutions for easier

sharing of knowledge about products to enable greater client
interaction and participation.

5. Overcoming the scarcity of skilled labor with the appropriate skills

and knowledge (often requiring relocation of qualified candidates)
 IT IN BANKING

IT is central to banking. It has moved from being just a business enabler to

being a business driver. In a manner the banking and financial services
sector—being the early adopters of any new technology—defines the
roadmap for future technology adoption.

As it is clear for the previous story, banks are focused on three areas: meet
customer's service expectations, cut costs, and manage competition. For this
banks are exploring new financial products and service options that would
help them grow without losing existing customers. And any new financial
product or service that a bank offers will be intrinsically related to
technology.

Automation is key

Automation is the basic thing that banks need to have in place. It involves a
combination of centralized networks, operations, and a core banking
application. Automation enables banks to offer 24x7x365 service using
lesser manpower.

But to be really competitive, banks need to think beyond just basic

automation.

Says V Chandrasekhar, GM (Chief Technology Officer), Bank of Baroda,

"IT has changed the way a bank reaches out to its customers. Gone are the
days where IT was deployed for automating accounting/back office
functions to remove drudgery of employees. It is now massively being
deployed for customer interfacing/interaction."

A better way to understand the technologies that would define the future of
banking would be to start in the past.

Evolution

The Rangarajan Committee report in early 1980s was the first step towards
computerization of banks. Banks started exploring the idea of 'Total Bank
Automation (TBA)'. Although titled 'Total Bank Automation,' TBA was in
most cases confined to branch automation.

It was only in the early 1990s that banks started thinking about tying-up
disparate branches together to facilitate information sharing.

At the same time, private banks entered the banking arena with radically
different strategies. Given the huge IT budgets at their disposal and with
almost no legacy IT equipment to worry about; private banks hastened the
adoption of technology. The philosophy for private banks was very clear: to
provide a whole new range of financial products and services at minimal
costs. And technology made this possible.

Says K.N.C. Nair, Head (IT), Federal Bank,"The new generation banks
showed the way and others had no option but to follow the tech infusion to
retain and attract profitable customers."
The improved connectivity and falling costs offered by leased lines and
VSATs provided a booster to inter-branch automation.

Confirms Naresh Wadhwa, Vice President-West, Cisco Systems (India),

"With the improved services and lowered costs of service providers such as
DoT and VSNL, it became more feasible for banks to network their
branches. This gave banks an impetus to network all the branches and set up
centralized databases. With these developments it became possible for
operations such as MIS to be truly automated and centralized."

With centralized infrastructure and numerous connectivity options, banks

started exploring multiple delivery channels like ATM, Net-banking, mobile
banking, and Tele-banking thus driving down cost per transaction.

The need for centralized infrastructure

In the early days of banking technology, the network/backend infrastructure

used to be decentralized. This meant that each branch had its own server(s),
banking applications, database(s), and other such assorted
hardware/software.

Decentralized networks had their own set of problems in terms of the cost
and management fronts. The decentralized model involves huge capital
expenditure and resources (trained manpower, hardware, etc). In the
decentralized model, there is no coordination or one central control point.
"We had problems with updating applications, troubleshooting, etc before
we opted for centralization. Technology representatives had to be present at
each branch to provide support," says P.K.Vohra, General Manager, ICICI
Bank.

This was an acceptable scenario till multi-channel came into the picture.
With these concepts came the need for a centralized database. The database
had to be updated instantaneously irrespective of the branch or channel the
customer used. The networks had to be run and managed with lesser costs.

Although data centers were being used by some of the banking majors, they
were never considered as being capable of being a central operations hub.
Things changed when banks realized the cost benefits of swapping the
decentralized model to a centralized datacenter architecture.

"When one or two private sector banks showed that it can be done
efficiently, other banks began to show an interest—they also began
consolidating their databases into a single large database," says V.K.
Ramani, President (IT), UTI Bank.

Says P.K. Vohra, "Centralization using a data centre has helped a lot in
improving and simplifying the network from the operations, user, and
administration perspectives. From a cost perspective, centralization has been
very effective."

It is not just the datacenter which contributed to centralization. The network

has also evolved into a unified IP network. Says Naresh Wadhwa, Vice
President-West, Cisco Systems (India), "Older day banking networks used to
be a potpourri of several older protocols. There used to be one network for
data traffic, another for telephony, and so on. Today, irrespective of whether
its data, voice or videoconferencing, ATMs or mobile banking, just a single
IP based network is used."

Core matters

After the turn of consolidated databases and networks come core banking
applications. Core banking applications help provide complete front and
backend automation of banks.

These applications also help banks achieve centralized processing and

provide 24-hour customer service. "Core banking applications provide
anywhere, anytime 24 by 7 non-stop services, which is not possible with
traditional localized branch automation systems that are available only
between 10 am to 2 pm," says V. Chandrasekhar.

Core banking applications help integrate the enterprise to existing in-house

applications to offer a single customer view. These applications provide
automation across multiple delivery channels.

Adds Joseph John, Head, Banking Products Division, i-flex solutions:

"Banks are increasingly adopting core-banking solutions for retaining
customers and lowering service costs to the customer."
Banks are reinventing themselves as marketing agencies by selling products
like life insurance, RBI bonds, credit cards, etc. Core banking applications
are able to support this.

Risk management is another area where core banking applications can help.
These systems take care of the risk monitoring and reporting requirements.
Loyalty programs can also be monitored and managed using a core banking
application.

A happy customer

Managing customers is one of the main issues that banks face in today's
hypercompetitive environment. If the service levels are not up to customer
expectations, in all likelihood the customer might take his business
elsewhere. This is where Customer Relationship Management (CRM)
practices (most important) and software (on the technology side) play an
important role. Before banks go for a CRM solution, they need to ask
themselves one question: How well do they know their customer?

For that matter how many customers have moved in the past? Or how
existing customers use various services that the bank provides.

"In banking, being the first to market alone is not enough since products can
be copied very fast. It is the customer service levels which matter," says
Neeraj Bhai, CTO, IDBI Bank.
This is where CRM techniques and tools come into place. While a foremost
part of CRM strategy is all about treating your customer right, technology
does make a major difference. "CRM is a tool that allows you to emote and
relate with your customers. Increasingly, all banks will require it as they get
centralized," says P. K. Vohra.

CRM Tools

CRM tools can be broadly classified into two categories: Operational and
Analytical.

Operational CRM provides the software support for businesses that require
customer contact. These tools are largely workflow based to provide
information to employees and document customer interactions. This
includes collaborative CRM type of tools used to provide
enterprise/customer interaction across all contact channels such as face-to-
face, telephonic, electronic, and wireless. Operational CRM types are the
major CRM tools being used nowadays for customer support in India. For
example, say a premium customer dials your call center from his home.
Operational CRM can alert the call center executive of his account status
and other details by his home telephone. This will help the employee in
extending him the kind of service extended to a premium customer.

Analytical CRM helps you make sense of the information. It helps you
target customers and utilize their potential to the maximum. For example,
say an account holder withdraws Rs 10,000 every month from his account
and deposits it in another bank as EMI for a loan. Analytical CRM tools can
help you track this activity. Techniques such as data warehousing and data
mining are prominent tools used for this. Your bank could offer a loan to the
customer at a lower rate than what the other bank offers. This will keep the
customer happy since he knows that you are giving him better service. This
translates to gains for your bank as well.

Banks tend to forget one important aspect about CRM; it is more than just a
technology implementation, it has to be a clearly defined process with
appropriate customer service levels. This is exactly the reason why CRM
implementations meet with limited success.

Adds K. N. C. Nair: "e-transformation should not be at the expense of the

personal touch in service. This will differentiate a bank from its competitors
when the technology is available to all sooner or later."
Mining for intelligence

Another important issue banks face is in proper analysis of financial data to

identify business potential. This helps a bank identify cross- sell and up-sell
potentials. Technologies such as data warehousing/mining come into play
here.

Says Ramani, "If you have an operational CRM, it streamlines your delivery
channels. If you have CRM backed with your data warehouse solution, it not
only streamlines the channels, but also tells you where to move. It tells you
which customer to focus on."
A data warehouse can help the bank get a single view of its data across
disparate systems. This comes in handy since most banks have data spread
over several disparate, sometimes legacy systems. If the data is spread across
different systems, a transaction done on one system will not be reflected in
the other. This is not a very desirable situation when it comes to multi-
channel banking.

Data warehousing solves these by integrating all the data into a common
warehouse (usually an RDBMS). The multiple data coming in from different
systems is converted into a common format using the ETL (Extraction,
Transformation, Loading) process. This provides a single repository from
which you can view or use information when required.

So you have the information in place with the warehouse but how do you
make sense out of it? This is where data mining steps in. Data mining can
help you recognize patterns in the data you have. For example, how many of
your customers have a two wheeler and earn more than Rs 15,000 a month?
The answer to this question will give you a list of prospective customers to
whom you can offer a car loan. Just give the query you have to the data
mining tool and you will have the answer in a jiffy. "Data mining and data
warehousing can help banks identify the right customer for a particular
promotion. They also help in cross sell and up sell of services to customers,"
says George Varghese, Head - Marketing, SAS India.
Store it

Storage is an ever-increasing proposition. Consider this: The very nature of

financial data involves large amount of information generated by the minute.
Add to this the RBI regulations for banks and financial institutions to store
over the past seven years of financial transactions and you have one big
mess up your sleeve.

This brings us to two main issues about storage: storing all the information
and managing it. Banks, especially the private and the MNCs, are
increasingly going in for SANs.

Says Neeraj Bhai, "The moment you grow beyond a certain size you either
go in for disparate systems or integrate them into SAN/NAS."

Waves of change

The first wave in banking technology began with the use of Advanced
Ledger Posting Machines (ALPM) in the 1980s. The RBI advised all banks
to go in for massive computerization at the branch level.

There were two options: automate the front office or back office. Many
banks opted for automating the front office ALPM in the first phase. Banks
like State Bank of India concentrated on the back office automation at the
branch level. The Rangarajan committee report of 1985 ensured that banks
had to get computerized.
With the second wave of development in late 1980s came Total Bank
Automation (TBA). This automated both the front-end and back-end
operations within the same branch. TBA comprised of total automation of a
particular branch with its own database.

In the third wave, the new private sector banks entered the field. These
banks opted for a different model of having a single centralized database
instead of having multiple databases for all their branches. This was possible
due to the availability of good network infrastructure. In the beginning of the
1990s, leased line costs were coming down. The DoT expanded its capacity
and new technologies were being implemented.

Earlier, banks were not confident of running the whole operation through a
single datacenter. However, when a couple of private sector banks showed
that it can be done efficiently, other banks began to show an interest, and
they also began consolidating their databases into a single database. Banks
followed up on this move by choosing suitable application software that
would support centralized operations.

The fourth wave started with the evolution of the ATM delivery channel.
This was the first stage of empowerment of the customer for his own
transactions.

The second stage was the Suvidha experiment in Bangalore. This showed
the power of technology and how the reach can be increased phenomenally
at a great pace. Seeing these, all the banks started revamping their retail
delivery channels. Their core focus became the number of customers they
can service at lower cost. The main channels for these were channels such as
Internet Banking and mobile banking. After this came alliances for payment
through various gateways.

The third important development happening now is the real-time gross

settlement system of the RBI. Once this is in place, transactions between
banks can be done through the settlement system, online, electronically. So
the collections will become very fast.

Outsourced security

Given the very nature of financial transactions, information security plays a

critical role in banking. Most banks have a clearly defined security policy
with access rights determined by the role an employee plays in an
organization. Banking is one sector where CIOs are focused on the core
security processes and operations than just implementing security products.
In addition to investing in the usual security tools and solutions like anti-
virus, firewalls, intrusion detection systems (IDS), and PKI, many banks are
now outsourcing their security requirements. This way they can focus on
their core business competencies than managing their backend security.

As C.N. Ram, Head-Information Technology, HDFC Bank says, "It is not

enough to take care of security from just the hardware/software perspective
one needs to have security policies in place. At HDFC Bank we have a
mechanism in place where a third party is hired to manage our entire
security. This third-party is constantly onsite looking at the logs, making the
required changes as there are patches and upgrades being constantly released
and it is imperative to incorporate all of these."

Re-engineered success

For every successful IT implementation, you will hear about four that failed
to make the grade. One of the biggest problems behind this is that most
organizations expect software to adapt to their needs without any
compromise from their part. The technical issues can be sorted out in every
implementation, but this lack of process re-engineering cannot be.

While it is necessary that core processes remain the same as far as possible,
it's not always the case. Many a time an existing process might have to be
modified to get the best out of the implementation. This is where a change of
mindset needs to come in. The goal is to have improved benefits at the end
of the day. "The business process changes required for implementing core
banking or centralization needs support and buy-in at all level.

HP India.

On the technical side, most of the problems occur on the interfacing part.
Different platforms using different standards/protocols require diverse
interfacing needs. Since many core banking applications make use of
modules for operation, special care has to be taken on this front. Most of the
banks have legacy applications running side by side. If the interfacing is not
done properly and efficiently, the implementation is bound to be a failure.
 FINDINGS

Many financial institutions and their corporate clients are investing huge
amounts in new systems while failing to address simple changes which
could double executive productivity at almost zero cost. The aim is also to
increase availability to global clients across different time zones while also
protecting quality of life.

1. Typing speed increase - What is the point of installing a knowledge

management system or an upgrade to e-mail handling for a team that

can hardly manage to type 15 words a minute with two fingers? Most
people who claim information overload, handling up to 100 e-mails a
day, are in fact suffering from their inability to reply quickly to simple
messages. Simple keyboard training produces dramatic improvements,
especially when a robot is used to analyse common errors for practice.
Speech recognition is now effective at up to 140 words a minute, with
98% accuracy but does require the user to be disciplined in the way
they speak and also to train the computer. However, typing is still
necessary for redrafting. If people type slowly they tend to use the
phone more but the phone is very inefficient - 100 words per minute
of communication without any written record. Most executives can
scan a 1,000 word e-mail in less than a minute - so that means phone
can reduce the productivity of the listener by 90%, just so the speaker
can improve their own productivity by avoiding the pain of typing.
 The lesson is that recieiving a well-written e-mail saves a huge
amount of time on the phone.

2. e-mail discipline - Ban all attachments unless absolutely necessary. In

the time it takes to open one Word attachement, you can read and
delete twenty other emails. Attachments are a dangerous source of
viruses and also slow down access using devices such as mobile
phones, because an attachment is often up to 50 times the size of the
same message as an ordinary e-mail. For speed, also insist on a
summary of every message in the header, and a slightly longer
summary in the first two sentences if the message is long.

3. Stop using voice-mail - In a typical break from a meeting, executives

rush out to check their voice-mail. This process takes an average of a

minute per message. Since some messages require an immediate call,
the executive often has to re-enter a meeting without having been able
to get to the end of the messages, after wasting considerable time
listening to messages that turned out to be unimportant. In a fast-
moving digital world this is no way to manage important
relationships. A better alternative is to divert callers to a message
service where each call is answered by an assistant who gives a
personalised greeting, and asks for your message. This is then typed
and arrives in your mobile phone a couple of seconds later as a short
text message (SMS), a permanent record, so that you are constantly
aware of who has been calling and are able the moment you are free to
prioritise who to call back first. Unlike your office, the service never
sleeps, which is vital when travelling globally and when managing
 relationships across several time zones. And the service costs almost
nothing.

4. Use e-mail more and phone less - except to build trust, clarify issues

and where the other person's preference dictates it. Most executives
can scan text at 5,000 words a minute, but can only understand human
speech at 100 words a minute. That means I experience a 50 times
productivity gain when reading an e-mail than when someone is
explaining exactly the same thing to me over the phone. But if the
sender can only type 25 words a minute, then he or she experiences a
four-fold productivity fall when writing me an e-mail, because it is so
much slower than speaking. We conclude that bad typists will always
tend to use the phone, and in doing so, they slow down the efficiency
dramatically of the people they are talking to.

5. Use telephone conferencing more - Telephone conferencing is greatly

underused yet is a powerful low-cost tool to bring several people into
a discussion.

6. Use videoconferencing more - Many executives tell me they have

travelled more in the last twelve months than in the previous two
years. Some are already spending more than six weeks a year at
35,000 feet. What happens next year? Many financial institutions are
about to reach a ceiling regarding their ability to expand further,
because they are continuing to use last-century management models to
manage in a globalised world. Every time there is a new merger or
acquisition the usual behaviour is to visit again and again, in the
 process of integration. This is unsustainable. We have to find other
ways to work. A complete videoconferencing system can be installed
for less than the cost of a return business class fare from Europe to
New York. If broadband internet connections are used such as ADSL,
then there are no call charges and centres can be linked with sound
and picture 365 days a year, for less than $150 a month, with each
office displayed across an entire wall using a data-projector. Even if
conventional ISDN lines are used, the call charges are far less than an
air fare, and bureaux can be used to link up to ten different sites very
efficiently in the same videolink. If your clients or other offices don't
have the equipment - give it to them.

7. End all travel budgets - The only reason to travel is to communicate,

so travel budgets should be re-labelled communication budgets, with

executives given the option as to how they spend, whether on air
fares, taxis, hotels and restaurants, or on videoconference equipment
and call charges, personal technologies and other devices.

8. Encourage home-working across time-zones - When many of your

most important relationships are across different time zones it makes

no sense to regard the office as the centre of activity. For a start it
makes no sense from the geographic point of view. It also makes no
sense from the time point of view. If I have to make calls to the
Middle East at 6am and more calls to San Francisco in the evening up
until midnight, what is the point of going to work?
 SUGGESTIONS

With the internet out there in most homes and businesses throughout the
globe, it’s understandable that customers are offered with many
opportunities akin to on-line banking and even on-line shopping. In the
United Kingdom,tens of millions of people at the moment are utilizing the
internet in accessing their bank accounts and hundreds of thousands are also
commonly doing their purchasing online. But however, most of these
individuals are nonetheless concerned concerning the safety of their
accounts every time they entry it on the internet. Using a pc is said to be the
most secure approach in both banking or purchasing, however additionally it
is advised to not let your guards down while you are making transactions
online.

The probabilities of becoming a sufferer of on-line banking fraudulence are

mentioned to be very low,and on-line banks committed themselves in
holding it this way, because most online bank’s techniques proved that they
may not be simply attacked, as an alternative most criminals turned most of
their attention in gathering many of the information directly from online
banking customers. Most often, these criminals are utilizing Phishing where
in they send e-mails at random, as if they have appear to be despatched by a
genuine online bank.

That is the try they make as a way to convince customer to disclose their
personal security data, a ,methodology seen extra on websites run by rip-off
artists. There are some usueful suggestions, nevertheless, on conducting
protected banking transactions, the first being to know who you might be
dealing with. Always bear in mind to sort the financial institution’s web
tackle into your browser. By no means go to the location through a hyperlink
from an email. By no means disclose private information requested through
an email. Your bank wouldn’t ask for this information.

In case you’re unsure, try contacting the bank or the building society by
dialing the given contact number. All the time keep your passwords and PIN
numbers safe. Be extremely cautious of unsolicited emails or telephone calls
asking you to provide any info concerning your private details or card
numbers. Always hold this information a secret and be cautious of giving
your information to somebody whom you don’t know.

Your on-line bank would by no means call or contact you simply to ask you
relating to your passwords, PINs, or any personal information. Third is all
the time maintain a maintain of your money. Don’t be fooled by certain
convincing e-mails that offer you the chance of constructing simple money.
If an e-mail seems too good to be true, the likelihood for it to be fraud is
there, and it is troublesome to show that the sender is who they say they are.
And lastly all the time examine your online financial institution’s website. If
you are in doubt, verify your on-line bank’s web site since it is a good place
so that you can get help and steerage on each transaction on the internet that
you simply make in a most secure way. Also usually look for particular data
and guidance concerning on the best way to shield your PC and also your
self while making online transactions.
An important thing to do with a view to make your on-line banking
transactions safe is by maintaining your computer safe, because it’s the most
important device in making your on-line banking transactions. Most web
safety software program is available for download or buy on the internet, or
chances are you’ll purchase them at your native pc store. This is another and
probably the most effective methods so that you can shield your pc, your
transactions, and also yourselves.
 CONCLUSIONS

In conclusion, every aspect of banking will be transformed by new

technology. The products, how they are sold, and the nature of client
relalationships will all come under pressure. The most successful institutions
will be those who combine visionary technology and very competitive
pricing with strong relationships and brands built on trust and previous in-
depth experience of the client business.

Size will continue to be very important when offering global support to

multinationals, and will also be essential to create the power-base for large-
scale institutional relationships and transactions. We will see further rapid
integration at the top end, at the same time as the emergence of many new
niche players and trading platforms offering an ever widening spectrum of
products and services in ways that few would have foreseen five to ten years
ago.

Just as many financial institutions have run away from retail banking
towards premium or private banking and institutional banking, so we will
also see severe competitive pressures on the bottom end of corporate
banking and a constant trend to seek higher margins in more complex
business deals.The greatest changes will not happen overnight, but should be
planned for now because it will take financial institutions many years to
adapt and be prepared. For many, the process is already too late, and their
best hope is to continue to remain profitable in declining areas of business,
until they are taken over.
 BIBLIOGRAPHY

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