tag:blogger.com,1999:blog-61153089207455140952024-02-19T08:53:26.811-08:00Technology in Banking and FinanceViews, vision, opinions, articles, research and papersPrashanth Bhathttp://www.blogger.com/profile/03977904575563831164noreply@blogger.comBlogger16125tag:blogger.com,1999:blog-6115308920745514095.post-24310048689578247882018-04-22T11:24:00.003-07:002018-04-22T11:24:28.771-07:00Game of roulette: Software development effort estimation - II,How ‘knowing software effort estimation is more about biases and human misjudgment’ can help Part 2: Authority & Availability Bias <div dir="ltr" style="text-align: left;" trbidi="on">
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<span style="color: black; font-kerning: none;"><b>Earlier</b> i</span><span style="font-kerning: none;">n <a href="https://medium.com/@BANKFIT/game-of-roulette-software-development-effort-estimation-58861d7353c5"><span style="-webkit-font-kerning: none;">Part 1</span></a> I talked about Anchor bias at play in bid management, Agile poker planning and a sales situation. In part II of this series I share my opinion on Authority and Availability bias at play in estimations.</span></div>
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<span style="font-kerning: none; text-decoration: underline;"><a href="https://en.wikipedia.org/wiki/Authority_bias">Authority bias</a></span><span style="font-kerning: none;"> is the tendency to attribute greater accuracy to the opinion of an authority figure (unrelated to its content) and be more influenced by that opinion. It is a conditioned bias that make us ‘believe’ individuals dressed as doctors talking about a particular toothpaste brand, people seeming like police, lawyers or government authorities talking about law, Senior or management though non-technical make better technology or project choices ! In order to make short cuts & make easier choices as humans we implicitly follow authority. </span></div>
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<span style="font-kerning: none;">Have you seen the technology choices and solution direction changed because the management wanted Jack to review the solution ? ‘Mr Jack of all ‘ lacks mastery of the specific subject, but the CEO of the private company trusts Mr Jack. I am sure you would have heard ‘because I said so’ line if you are in the software industry for few years ! </span></div>
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<span style="font-kerning: none;">Authority bias can influence people to some really irrational acts like in the example of the famous <a href="https://effectiviology.com/authority-bias-the-milgram-obedience-experiment/"><span style="-webkit-font-kerning: none; color: #5c432b;">milgram experiment</span></a>. Here the test subjects under the influence of authority were willing to administer 450 V electric shock their victims. In software estimations when estimates are under the influence of Authority and estimated numbers anchored to the whims of the authority the estimations become highly irrational.</span></div>
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<span style="font-kerning: none;"><b><i>Mitigating Authority Bias</i></b></span></div>
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<span style="font-kerning: none;">Authority bias is actually a useful human shortcut when used to our advantage. ‘There is no point re inventing the wheel' it makes sense to follow the direction of individuals who have built trust mastering a specific topic within an organisation. This helps improving quality and time for taking key decisions. The problem usually is when we succumb to the bias in situation that is not to our advantage. Building trust with individuals and within organisation is a way to mitigate authority bias.</span></div>
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<span style="font-kerning: none;"><b>Availability Bias</b></span></div>
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<span style="font-kerning: none;">The <a href="https://en.wikipedia.org/wiki/Availability_heuristic"><span style="-webkit-font-kerning: none; color: #5c432b;">availability heuristic</span></a></span><span style="-webkit-font-kerning: none; -webkit-text-stroke-color: rgb(106, 106, 106); color: #6a6a6a;"><b> </b></span><span style="font-kerning: none;">is a mental shortcut that relies on immediate examples that come to a given person's mind when evaluating a specific topic, concept, method or decision.</span></div>
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<span style="font-kerning: none;">When was the estimation sheet used in your organisation created or updated ? Chances are high you are using the standardised estimation sheet created 5 years back. Availability and organisation acceptability makes it easier to re use the grand father. The fact that various estimations were done using the same sheet, lesser questions will be asked by stakeholders/management on the sheet makes the case for the sheet to become more acceptable. </span></div>
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<span style="font-kerning: none;">Some of the other human biases that are commonly seen in software effort estimation situations are complexity bias, survivorship bias, wishful thinking & planning fallacy. Being aware about these biases helps us individuals not succumb to it blindly & hence improve decision making. </span></div>
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Prashanth Bhathttp://www.blogger.com/profile/03977904575563831164noreply@blogger.com0tag:blogger.com,1999:blog-6115308920745514095.post-77351741355894557192018-04-14T12:15:00.001-07:002018-04-14T12:15:25.174-07:00<div dir="ltr" style="text-align: left;" trbidi="on">
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<span style="font-kerning: none;">Game of roulette: Software development effort estimation </span></div>
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<span style="font-kerning: none;">- Part I -</span></div>
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<span style="-webkit-font-kerning: none; -webkit-text-stroke-color: rgb(0, 0, 0); color: black; font-size: 14.7px; font-stretch: normal; line-height: normal;"><i>‘K</i></span><span style="font-kerning: none;"><i>nowing software effort estimation is more about biases and human misjudgment’ can help us make better decisions </i></span></div>
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<span style="font-kerning: none;">Software effort estimation is by definition ‘mapping the unknown’, an approximation game. There are various techniques to estimations including processes like WBS, analogy based estimation, poker planning, models like expert estimations, group estimations etc. The consensus among industry practitioners is techniques, process and tools when used well and topped with right reviews should create reasonably accurate estimations. This is far from the truth !</span></div>
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<span style="font-kerning: none;">The role of human biases and influences on development effort estimations is accepted, but they are not widely discussed or accepted. Effort estimations are actually fertile grounds for human misjudgment. </span></div>
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<span style="font-kerning: none;"><i> "Man is not a rational animal, he is a rationalising animal” - Robert A. Heinlein</i></span></div>
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<span style="font-kerning: none;">For example, it is common to see larger estimated numbers when more people are involved in estimation vs a small team doing the estimates. The probability of a company’s bid being in the range in $1-2m [a number the company has been bidding for large deals] is higher than it is; say $5-10m. The estimations could vary widely based on which team is doing the estimation, the customer budget, size of sales the salesperson has done & the most recent project executed by the same team.</span></div>
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<span style="font-kerning: none;">In this series, I will cover <b>Anchoring or Price Anchoring Bias </b>in estimations<b>. </b>Anchoring refers to the cognitive bias or tendency to heavily rely on the first piece of information offered when making decisions. <a href="https://www.fs.blog/"><span style="-webkit-font-kerning: none; -webkit-text-stroke-color: rgb(0, 0, 255); color: blue; font-size: 14.7px; font-stretch: normal; line-height: normal;">Farnam Street</span></a><b> </b>explains <a href="https://www.fs.blog/2009/08/mental-model-anchoring/"><span style="-webkit-font-kerning: none; -webkit-text-stroke-color: rgb(0, 0, 255); color: blue; font-size: 14.7px; font-stretch: normal; line-height: normal;">Anchoring</span></a> with wide range of references and examples in our daily lives.</span></div>
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<span style="font-kerning: none;">Let us take an example of estimating for a product development. The Company has just delivered a software application with 5000 person hours successfully for Customer X and another application for 1000 person hours to customer Y. Customer X has shared a new requirements which is similar to what was delivered to Y for effort estimation. What are the chances that the effort estimated for the new requirements of customer X is closer to 5000 person hours than it is to 1000 per hours? Yes, chances of it being closer to 5000 person hours is very high. The fact that customer X is comfortable with efforts of 5000 hours act as an anchor; activities, deliverables and effort are rationalised to justify the numbers.</span></div>
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<span style="font-kerning: none;">Let us look at Anchor bias at play in an agile product development: An agile team is poker-planning stories. A developer P has been struggling to deliver 8-point stories in the last two sprints. Another developer Q has delivered multiple 3-point stories comfortably in last two sprints. Assuming all are clear about the requirement, what is the probability that developer P would estimate the new story with 8 points and developer Q would estimate the same story less ? As I have seen in my experience, this is ‘very likely’.</span></div>
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<span style="font-kerning: none;">Prof. Dan Ariely, author of ‘<a href="https://www.amazon.in/dp/B002RI9QJE/ref=dp-kindle-redirect?_encoding=UTF8&btkr=1"><span style="-webkit-font-kerning: none; -webkit-text-stroke-color: rgb(0, 0, 255); color: blue; font-size: 14.7px; font-stretch: normal; line-height: normal;">predictably irrational</span></a>’ introduced me to this bias with his <a href="http://danariely.com/2008/11/30/shhh-don%E2%80%99t-say-%E2%80%98recession%E2%80%99/"><span style="-webkit-font-kerning: none; -webkit-text-stroke-color: rgb(0, 0, 255); color: blue; font-size: 14.7px; font-stretch: normal; line-height: normal;">wine pricing experiment</span></a>, during an online course on behavioural economics I attended.</span></div>
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<span style="font-kerning: none;">Let us also look at price anchoring at play in a sales situation. A product company is trying to sell its software product into a new emerging market. </span></div>
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<span style="font-kerning: none;">We all know what happens next, <b>product version B</b> <b>never works</b> in the new market! The problem is the customer expects to have the exact same product but at a price anchored lower ! Do you remember Apple iPhone 5C, the lower priced models launched in India? 5c never succeeded. </span></div>
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<span style="font-kerning: none;">I have seen these patterns repeat over and over again in various situations. Deliverables, dependencies and risk are managed, rationalised to match the estimations with the anchor figure. </span></div>
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<span style="font-kerning: none;">So, what’s the big deal, why is anchoring important? In effort estimations, Anchoring bias in combination with authority bias can throw rationale out of the window! I will cover more about new bias in part 2 of the series.</span></div>
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Prashanth Bhathttp://www.blogger.com/profile/03977904575563831164noreply@blogger.com0tag:blogger.com,1999:blog-6115308920745514095.post-84475052108563319762018-04-09T11:51:00.002-07:002018-04-09T11:51:43.393-07:00Girlfriend experience expectation syndrome : How IT service provider relationships often suffers from biases<div dir="ltr" style="text-align: left;" trbidi="on">
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<span style="-webkit-text-stroke-width: initial;">[Mental models and its application for better product management decisions]</span></div>
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<span style="-webkit-text-stroke-width: initial;">It is very common that companies who outsource product development to external IT service providers expect that they help the company reduce product development uncertainties by being true partners i.e. charter unknowns technology landscape by taking risks alongside, understanding unknown technical choices, trying them out and recommending what would work best in the project. In IT services parlance, this concept is sold to the customers using fancy terms like skin in the game, extended arm of customers, true partners, etc etc. </span></div>
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<span style="font-kerning: none;">Most often this arrangement never works, we almost always hear the disappointment from the product managers that a particular service provider is not adding value, they just are not up the curve to be able to provide the right technical choices to be made and at best they execute what is being told to them and thats about it. <span class="Apple-tab-span" style="white-space: pre;"> </span></span></div>
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<span style="font-kerning: none;">Expecting an outsourcing IT service provider to be a true partner is like expecting a stripper or a hooker to provide a girlfriend experience. The reason that does not work is due to incentives. The incentives of a professional hooker are in the hours of employment and not in sharing your happiness or problems in life, she has enough troubles of her own. A wife or girlfriend’s incentive on the other hand are in same life goals hence sharing risks work. '<a href="https://www.fs.blog/2016/03/distorting-power-of-incentives/"><span style="-webkit-font-kerning: none; -webkit-text-stroke-color: rgb(0, 0, 255); color: blue;">Incentive caused Bias</span></a>', a powerful cognitive bias in Behavioural sciences explains this. People do what they perceive is in their best interest and are </span><span style="-webkit-font-kerning: none; -webkit-text-stroke-color: rgb(106, 106, 106); color: #6a6a6a;"><b>biased</b></span><span style="font-kerning: none;"> by </span><span style="-webkit-font-kerning: none; -webkit-text-stroke-color: rgb(106, 106, 106); color: #6a6a6a;"><b>incentives.</b></span></div>
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<span style="-webkit-font-kerning: none; font-size: 12px; font-stretch: normal; line-height: normal;"> </span><span style="-webkit-font-kerning: none; font-size: 14px; font-stretch: normal; line-height: normal;"> </span><span style="font-kerning: none;"><i>‘Show me the incentive and I will show you the outcome’ – Charlie Munger </i></span></div>
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<span style="font-kerning: none;">There is no reward for the IT service provider in making risky technical choices. Contracts make the vendors accountable for lost productivity or fixed deliverables. All contracts - body shopping, T&M, capped T&M, Fixed bid, fixed capacity, value based etc follow a similar structure without any provisions for shared risks and rewards. The mismatch in expectations vs incentives and topped with the fear of being branded with failure prevent the IT service providers from taking risks. </span></div>
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<span style="font-kerning: none;">The behavioural differences due to incentive bias are also apparent in relationships between individual employee vs external contractor, Strategy manager vs management consulting firm, company sales Vs outsourced sales agencies, etc. The differences often leads to the ‘<a href="https://en.wikipedia.org/wiki/Principal%E2%80%93agent_problem"><span style="-webkit-font-kerning: none; -webkit-text-stroke-color: rgb(0, 0, 255); color: blue;">Agency problem</span></a>’. The </span><span style="-webkit-font-kerning: none; -webkit-text-stroke-color: rgb(106, 106, 106); color: #6a6a6a;"><b>agency problem</b></span><span style="font-kerning: none;"> is a conflict of interest inherent in any relationship where one party is expected to act in another's best interests</span></div>
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<span style="font-kerning: none;"><i>“The rabbit runs faster than the fox, because the rabbit is running for his life while the fox is only running for his dinner.” — R. Dawkins</i></span></div>
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<span style="font-kerning: none;"><b>So what works ? </b></span></div>
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<span style="font-kerning: none;">If you are very clear on the output from the IT service provider, It would be reasonable to expect that they deliver the output with high quality, within committed time & budget. With clear and shared expectations on engagement, delivery, technical approach, processes etc. it becomes easier to work together and manage costs. Key decisions like choice of technology, tools, changing requirements are best decided by the company on time and communicated to the service provider. Quality execution is a reasonable expectation from the service providers. What IT services firms generally do well are building a cost effective execution team, build and retain knowledge of client environments, replacing non-performers, Manage time and budget on fixed deliveries etc. </span></div>
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<span style="font-kerning: none;">For expectations of shared risks, taking decisions on the unknown, the contract should provide for such an expectation. Perhaps a reward of building a competency on project cost. I have not come across many successful working examples of such models. For now, I just do not know for sure if that works!</span></div>
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Prashanth Bhathttp://www.blogger.com/profile/03977904575563831164noreply@blogger.com0tag:blogger.com,1999:blog-6115308920745514095.post-16068358693027711552010-04-24T22:34:00.000-07:002010-04-24T23:56:05.719-07:00Views: Banking at the bottom of the pyramid: EKO Financial servicesWhen i wrote about the need for banking for a common man in poor Indian villages in February 2009 little did i know that just about the same time elsewhere a start-up was working on this idea. Yesterday this start-up was featured in the Times of India. <br /><span class="fullpost"><br />The company i am talking about is EKO financial services started by Abhishek sinha and Anubhav sinha. This start-up tied up with SBI to offer no frills account to the people representing the bottom of the pyramid. A common man can walk to a store, similar to buying a Sim card on furnishing identity documents can open an account within 10 minutes. And similar to recharging his mobile currency can deposit money into his account by handing over cash to the shop keeper who acts as a customer service point of EKO. Money transfers can be through the phone. I am immensely happy to see this innovation happening at the grass root levels and also very optimistic about the future of this goldmine. All the best to EKO team.<br /><br />The following video shows the working of this concept.<br />http://www.youtube.com/watch?v=xUJnbtqG6Z0<br /></span>Prashanth Bhathttp://www.blogger.com/profile/03977904575563831164noreply@blogger.com2tag:blogger.com,1999:blog-6115308920745514095.post-1248333360330538702010-03-02T22:09:00.000-08:002010-03-02T22:26:21.174-08:00Paper Series: Incrementally rewarding your customers based on profitability<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiFBK4jHF0Zg8FnUYivF9l1nvBVKz15Rz7X5LUOGymPVHeHvWyoFD9VCYoWkszibg5ffXeqN-tgyXQSGjZ3h2E6JvcEQw4XC84IceBE-MSQosJEm5xiyAIU9iR8oWGwG_xqNi9SWf3qSXU/s1600-h/incremental.jpg"><img style="float:left; margin:0 10px 10px 0;cursor:pointer; cursor:hand;width: 320px; height: 262px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiFBK4jHF0Zg8FnUYivF9l1nvBVKz15Rz7X5LUOGymPVHeHvWyoFD9VCYoWkszibg5ffXeqN-tgyXQSGjZ3h2E6JvcEQw4XC84IceBE-MSQosJEm5xiyAIU9iR8oWGwG_xqNi9SWf3qSXU/s320/incremental.jpg" border="0" alt=""id="BLOGGER_PHOTO_ID_5444288930066349730" /></a><br /><span style="font-weight:bold;">Publications:</span> <a href="http://www.cfo.com/whitepapers/index.cfm/displaywhitepaper/14480177 ">CFO</a>,<a href="http://www.rfpconnect.com/Content/userfiles/SunTec_Reward-Your-Customers-Incrementally_White-paper.pdf">Rfpconnect</a> <br />Volume based incremental or tiered pricing is not new to most of the banks. Banks use this technique to incrementally drive revenues from existing customers by giving him volume pricing or discounts. Depending on the capability of the product system, banks may decide to keep the competitive price definition inside or outside the system. The challenge is in building in tremendous flexibility by parametrization of the solution. A white paper co authored by me is published in <a href="http://www.cfo.com/whitepapers/index.cfm/displaywhitepaper/14480177 ">CFO.COM</a> and <a href="http://www.rfpconnect.com/Content/userfiles/SunTec_Reward-Your-Customers-Incrementally_White-paper.pdf">RFPCONNECT.COM</a> <br /><span class="fullpost"><br /></span>Prashanth Bhathttp://www.blogger.com/profile/03977904575563831164noreply@blogger.com0tag:blogger.com,1999:blog-6115308920745514095.post-17101691592979321112010-01-18T05:34:00.000-08:002010-01-18T06:12:05.408-08:00Views: Islamic Banking<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiXA81lmiDTNphygiA-ljE1U4QmZOpx4Gg8GbrT5UeeHNhwnJ3fDk1iTMubLEM1zoRaq1OjT4nghv4EXXKr-7_XZZ8zyDv10UZGaynutanfvNO4aQMM4xbRoq5Lyf1I8ldSK-enLQ-tSQo/s1600-h/1-24-Islamic-Banking.jpg"><img style="float:left; margin:0 10px 10px 0;cursor:pointer; cursor:hand;width: 320px; height: 218px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiXA81lmiDTNphygiA-ljE1U4QmZOpx4Gg8GbrT5UeeHNhwnJ3fDk1iTMubLEM1zoRaq1OjT4nghv4EXXKr-7_XZZ8zyDv10UZGaynutanfvNO4aQMM4xbRoq5Lyf1I8ldSK-enLQ-tSQo/s320/1-24-Islamic-Banking.jpg" border="0" alt=""id="BLOGGER_PHOTO_ID_5428074055670229042" /></a><br />I wanted to write the first blog of the year about a banking practice that is based on ethics. About 8 years back I had first heard about Islamic banking from Mr. Srinivasan, then the vice president at i-flex. He described Islamic banking as 'Allah gives and Allah takes', an interest free banking practice. <span class="fullpost"> For a long time it stayed in my mind as a funny cultural and unsustainable practice that was funded by the crazy oil rich Middle Eastern states. But, since my interactions with banks in Saudi Arabia, UAE and Bahrain, etc I started to better understand the underlying principles of Islamic banking. According to the holy Koran, the Shariah is what is acceptable to Islam. There are a set of Islamic values that are in general applicable to all practices of trade and also applied to the banking practices. Shariah prohibits interest or a time value for money. Money as such is not a marketable commodity, but an instrument that can be only put into productive use based on the values of shared risks and benefits. Therefore most Islamic banking products are structured on the concepts of trade with profit sharing agreements. These ethical values make so much sense today after the global meltdown where billions of dollars were pumped into unproductive assets in the secondary markets. Traditionally Islamic products mostly were consumed by the government sectors and Islamic businesses houses. But today the popularity of these products has been growing not only in the Middle Eastern countries but also in parts of south East Asia and Europe. There also are non Muslim retail consumers increasingly signing on to these products. <br /><br />Most banking products have an equivalent Islamic banking counterpart across retail, commercial banking, trade finance etc. The products are structured based on the trade concepts of Mudharabah(profit sharing), Musharakah(joint venture), Murabaha(cost plus), Ijarah(leasing), ujr(fee), Kafalah (guarantee), Takaful(Islamic insurance) etc, etc. Every islamic bank is mandated to have a Shariah board that overseas the product management, product development and operations. The Shariah Board periodically reviews, reports and vets on the various pricing, product structures, revenues, etc. Globally there are only a handful of dedicated solutions for Islamic banking practices. Most Islamic banking software solutions are adapted applications at best. I am writing a paper on the challenges existing in these banks today and how technology solutions could help to address those.<br /></span>Prashanth Bhathttp://www.blogger.com/profile/03977904575563831164noreply@blogger.com7tag:blogger.com,1999:blog-6115308920745514095.post-77775384869034009612009-08-19T03:08:00.000-07:002009-08-19T03:39:08.380-07:00Research: Costing in transaction banking services and cost based pricing<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjNoUqgs_d5mMXMFGaDbc1oOuMBnEi6MXaw4CWxJy1W5fPmBk_AoofQSu8wwZq8hFLGubm6LK3GjRA7Yt0lfPFDpGtJUecizSn1WJ2tgpHvoLDO2Ko2Q2BAjU-wk_0aBan5DJ6lenpX3JY/s1600-h/financial.jpg"><img style="float:left; margin:0 10px 10px 0;cursor:pointer; cursor:hand;width: 320px; height: 235px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjNoUqgs_d5mMXMFGaDbc1oOuMBnEi6MXaw4CWxJy1W5fPmBk_AoofQSu8wwZq8hFLGubm6LK3GjRA7Yt0lfPFDpGtJUecizSn1WJ2tgpHvoLDO2Ko2Q2BAjU-wk_0aBan5DJ6lenpX3JY/s320/financial.jpg" border="0" alt=""id="BLOGGER_PHOTO_ID_5371618252280338114" /></a><br />One of the casualties of a recessionary environment is the luxury of not changing the way businesses price their products and services. In order to keep up their top lines, most organization have started innovating their pricing strategies moving it closer to the transaction based model, factoring in the risk and cost. Knowing the cost at various levels is relevant for price optimization, capacity utilization and operational efficiency. <br /><span class="fullpost"><br />As there is a growing importance to measure the productivity and profitability of service delivery channels like ATM, Internet payment gateways, branches, etc Banks need to implement costing practices at various departments. Today costing is generally a grey area in banks. This is because most banks do not know what exactly the cost of an individual transaction level is. Unlike manufacturing industries where cost at an individual unit can be arrived easily, banks product cost cannot be fully arrived at until it is consumed, and the costs are distributed across multiple departments which vary from customer to customer depending on the service needs. So the cost that is computed may be always be far from the right figure.<br /><br />Popular among the costing methods are full absorption costing, capacity based costing and activity based costing. In practice full absorption and capacity based costing are most common. These are traditional methods that are simpler to implement and answers most of the profitability related questions. But, where they find inadequate is to answer detailed questions on process efficiencies, indirect cost allocations, etc which banks would like to investigate to bring in operational efficiencies. Activity based costing (ABC) methodology can help this cause. Many banks have tried to implement ABC as a strategic initiative at organization level. Since ABC is relatively more complex to implement and highly dependent on the quality and level of details the bank is willing to incorporate into, it has found low levels of success. It is difficult to say any one costing method is an ideal one since the application varies from bank to bank. I have researched on this subject with an interest to know more from other industry veterans. I hope to put my research on this blog soon after its publication.<br /></span>Prashanth Bhathttp://www.blogger.com/profile/03977904575563831164noreply@blogger.com1tag:blogger.com,1999:blog-6115308920745514095.post-65748248360440088552009-07-01T05:17:00.000-07:002009-07-01T05:33:10.986-07:00Views: Believing in what you have done, Patience and just sitting back<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi7ZoRiAPiQ8DIIv41k7stOq87fAExroWr43vezbG-1uuVuFmtP9bb3MFF9MKgZfbTKvEkXKvukg_r7XWvOJ1_TumFBIM0pPtZD8mIyvh0Vz_RDzS-Dj923tPKLMdD_nOfm64PzULXL7yc/s1600-h/patience.JPG"><img style="float:left; margin:0 10px 10px 0;cursor:pointer; cursor:hand;width: 299px; height: 224px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi7ZoRiAPiQ8DIIv41k7stOq87fAExroWr43vezbG-1uuVuFmtP9bb3MFF9MKgZfbTKvEkXKvukg_r7XWvOJ1_TumFBIM0pPtZD8mIyvh0Vz_RDzS-Dj923tPKLMdD_nOfm64PzULXL7yc/s320/patience.JPG" border="0" alt=""id="BLOGGER_PHOTO_ID_5353465982350018690" /></a><br />I cannot help but think how things go awfully wrong many a times because you as an individual or organization has not believed on what he/it has done through the long time it takes to take the tree to bear fruits.I have seen so many instances both professionally and personally now, how things have gone off track just when you do not know how close you are to where you wanted to go. One of the primary reasons for things to go amuck i see is interference, taking actions for too many things too many times.<br /><span class="fullpost"><br />My travel to Africa couple of weeks back was a challenge on my patience. I got a seat next to a lady with a fussy kid. The kid cried, slept, cried, slept, cried slept.... and the cycle continued till we reached Dubai. I did not know what went through the kid and why it was crying. The kid did not let it self be put on the seat belt and was rolling all over creating a mess. I was loosing patience and had a deep urge to scare the child so much that it kept quite for the rest of the journey. But I did not, I saw the mother, all she had was a peaceful, wise look on her face. The gentleman next to me said ‘that’s a mother’s patience and passion’. She has it in her to take the tree to bear fruits. <br /><br />The current market situation that has had its toll on IT spending, salaries, jobs, growth etc makes me think many times Are things going the way I wanted? Should I move out to a newer organization for money or growth? Should I switch domains? I joined the current organization about four years back with a vision for my future growth. Should i start tinkering with the plans in order to react to the current scenario? May be i should just keep watering my plant in the hope that it would bear fruits.<br /><br />Recently we saw the Indian markets crash to ridiculously low levels and again ridiculously double within a short period of time. Speculators lost a bundle. Warren Buffet said "Much success can be attributed to inactivity. Most investors cannot resist the temptation to constantly buy and sell". While most investors invested in them, most of them reacted when the market crashed. Many people did not hold out to see their trees bear fruit. <br /><br />MJ did too many things too many times to himself. It was sad to see this creative legend go down.<br /><br />The question is whether firms should continue investing in their IT investments? Projects that are budgeted are put on hold. I am sure banks have a vision and a business case with which the projects are budgeted. Should the banks doubt its investment reason and stop watering their plants till the markets improve?<br /></span>Prashanth Bhathttp://www.blogger.com/profile/03977904575563831164noreply@blogger.com0tag:blogger.com,1999:blog-6115308920745514095.post-85093164979005999172009-05-30T08:09:00.000-07:002009-05-30T08:16:23.575-07:00Opinion: Banks and Google wave: whats in it for a common user ?<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgicSwMCFEl6wjFqq6qTFHwmWLI-aWALWsMA-A5zWnAkmZ4OvsxCrKj5gqUABb-5jevf6l8tPlRqfqyz3MM7c0wNDx6s_Wgeurr7uMSCcmS127U1uVgdYwVyKU-gvcdeiqF8j_kCH405x4/s1600-h/images%5B6%5D.jpg"><img style="float:left; margin:0 10px 10px 0;cursor:pointer; cursor:hand;width: 149px; height: 53px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgicSwMCFEl6wjFqq6qTFHwmWLI-aWALWsMA-A5zWnAkmZ4OvsxCrKj5gqUABb-5jevf6l8tPlRqfqyz3MM7c0wNDx6s_Wgeurr7uMSCcmS127U1uVgdYwVyKU-gvcdeiqF8j_kCH405x4/s320/images%5B6%5D.jpg" border="0" alt=""id="BLOGGER_PHOTO_ID_5341636109851641410" /></a><br />I watched the <a href="http://wave.google.com/">google wave </a>developers demo on friday since i was curious about its potential. It has already created waves on the internet and is currently being talked about as the next big thing coming from google. Google wave is a communication protocol built on the principles and architecture of <a href="http://en.wikipedia.org/wiki/Operational_transformation">operational transformation</a>. It is a client and server based solution that google aspires to release as an open source so that organization can implement their own wave servers and clients into which their users could login and communicate. So what is a wave and whats in it for an organization like banks and users like me and you that would make our life simpler and more powerful ?<br /><span class="fullpost"><br />Google wave is a new way of communication that integrates real time messaging, emails and other powerful features into a convergent platform. Waves could be created and sent across multiple users just like email. The waves enable users to concurrently communicate with other users in real time where changes made by other users could is seen online character by character. Unlike traditional emails and documents which is a block of text, a wavelet document is an XML content tree on which Operational Transformation is applied. The wavelet could be edited, embedded with links, comments, rich media, etc all concurrently by multiple users. In the traditional methods a Document is managed with versions where users make changes serially. But in a wave system users dont have to wait till the other person is finished since concurrent changes are made online. The changes to a wave at different timelines can be viewed online using the playback option with a wave.<br /><br />But what excites me is not the real time document editing, but the powerful feature of collaborating the users with a number of web services inside the same wave. You can drag and drop robots(web services) into a wave that lets you perform activities and workflow related to the wave content from inside the same wave interface. Example: A blog robot what google calls bloggy can be included in the wave that would automatically publish the wave content into the blog with a click of a button. whats remarkable is you can also track the blog inside the same wave where comments posted by others is reflected and you can post your replies all from a single place in real time. <br /><br />Application of Waves in Banks <br /><br />1. A wave can help integrate the front office, middle office and backoffice operations workflow through online colloboration of the three functions and a workflow robot. This would help reduce the lead time in transaction processing and decision making immensely affecting the SLA's and improving the customer experience in the bank. <br /><br />2. Waves can be used for customer communication by making the interaction more open ended than the usual close ended communications through mails and online banking. Waves could be sent to the customers of the bank into which the customers can participate with their views and opinions. This would enhance the customer experience, by making the bank more responsive to the customer needs. <br /><br />3. Online dashboards could be established with data, graphs and reporting data that could help the various operations, business users in the bank in discussions and decision making. <br /><br />4. In a requirement gathering session for a new solution, online collaboration among business analysts ans stake holders can work very well through the wave. Requirements could be brainstormed, worked on simultaneously in real time and then on a click of a button the robot could log and track requirements or issues on the requirement management system all inside the same wave.<br /><br />It is this integration capability that could give organization the flexibility and powerful features of communication, workflow, service intiation all inside a single place. Any one on more ideas of making use of waves through applications while i wait for the wave to be available ? <br /></span>Prashanth Bhathttp://www.blogger.com/profile/03977904575563831164noreply@blogger.com1tag:blogger.com,1999:blog-6115308920745514095.post-8706470158717457652009-05-22T05:00:00.000-07:002009-05-25T10:10:41.319-07:00Views: Does your bank have Customer data pollution ?<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgB64XnfVwIdgDPRy78tuAtdWE78ViBFLvfW1tSI9r3UWkmd_DBPVFtkUO2pEnYBPHhcoUMivPRX6n_RqY4IIyyDozKAL9EsHt4Ej6w_cLWZ2GKx7xc8iwCVdJTNABb7yeoMsYPQhK4pFU/s1600-h/CustomerAndLaptops1.jpg"><img style="float:left; margin:0 10px 10px 0;cursor:pointer; cursor:hand;width: 234px; height: 169px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgB64XnfVwIdgDPRy78tuAtdWE78ViBFLvfW1tSI9r3UWkmd_DBPVFtkUO2pEnYBPHhcoUMivPRX6n_RqY4IIyyDozKAL9EsHt4Ej6w_cLWZ2GKx7xc8iwCVdJTNABb7yeoMsYPQhK4pFU/s320/CustomerAndLaptops1.jpg" border="0" alt=""id="BLOGGER_PHOTO_ID_5339688934708787762" /></a><br />Over the last three years, any bank i met up with irrespective of the region, size, how tech savvy the bank is, or if the bank had a data warehouse or an enterprise CRM; all had a common concern <strong>'The challenge is clean customer data'</strong>. Essentially, since most banks operate on a silo mode, the customer information gets defined in different places to varying levels of data quality, leading to a <strong>'Polluted customer data' </strong>from an enterprise point of view. <br /><span class="fullpost">This is a concern for all banks going in for any new enterprise solution since interfacing and data quality is an issue. The question is 'how do you identify and link up the related customers defined at various business silos'? This answer is in the quality of customer data and the available parameters. In some countries regulations have played their part in the solution by implementing KYC (countries like India now lay a lot of emphasis on KYC) norms. With KYC, linking up customers is possible using parameters like Social security number, Passport, PAN numbers, etc. However, the challenge is the KYC implementation is not complete. Larger banks capable of investing in Master Data management systems (MDM) have gone for ambitious projects creating a centralized warehouse for the customer information. Whereas mid sized and smaller banks are left grappling with the challenge. One of the possible solutions to this problem is having a mediation capability that could deliver the required customer information. Mediation from BFS perspective is an ETL tool working along with a business rules engine. Customer information from various locations could be collated, cleaned and transformed (using Meta data) based on the rules defined in the rules engine. The transformed customer information can then be delivered to the newer solutions with the mediation system acting as a data bus. Later, however if there is a change in the eco system or a new implementation of CRM, the rules could be changed so as to continue to deliver the required information.<br /></span>Prashanth Bhathttp://www.blogger.com/profile/03977904575563831164noreply@blogger.com2tag:blogger.com,1999:blog-6115308920745514095.post-49719665129937982262009-04-25T15:28:00.000-07:002009-05-25T04:24:42.053-07:00Views: Nigerian Banks, F1 and IPL !!Its been a week of Nigeria, F1 and IPL2 for me. I am almost ready to leave back to Bangalore and it was a week of witnessing the new emerging players, tremendous competition and good performance exhibition under unfavorable circumstances. <br /><span class="fullpost"><br />Firstly the F1 race at Shanghai, it is the first ever win (first and second place) for the Red bull team and Vettel's performance was excellent given the competition and toughest of the wet weather conditions. Red bull has not been the favorites of the teams but now its definitely something to watch out for, way to go!! </p><p>IPL season 2 going on at South Africa is nothing short of spectacular, especially since what Lalit modi managed to achieve in a short notice of 3 weeks. Between all the internal politics (interesting blog by the <a href="http://fakeiplplayer.blogspot.com">fake IPL player</a>!!), pressures among the teams to stay on the league tables and weather challenges I think IPL has managed to be a great success with a decent media coverage everywhere (even in a not so cricket crazy country like Nigeria it is shown throughout the day live with all the usual highlights and tamashas), way to go !! I am hooked on. </p><p>Nigeria, a recent democracy is somewhere in the list developing nations having its bag full of problems like a large population of un employed and wasted youth, stressed infrastructure(power cuts, traffic problems, etc), poor health care (average life expectancy of 47 years), high level of corruption and a devalued currency (The Nigerian Naira virtually has no value and nobody wants this currency outside Nigeria ; even inside Nigerians prefer dollars much more). Among these challenges Nigeria is emerging as a leading country in Africa culturally and economically currently growing at the rate of around 9% annually. I find the people fun loving, cheerful and having a lot of promises for their future (they have lot in common with Indians like food habits, attitude and a legacy of ex British empire). </p><p>Coming to the Nigerian banks, due to the central bank regulations banks there are currently going through a major consolidation with most banks either getting merged into or acquired by a larger bank. A senior industry veteran told me that the competition among banks is building up severely and now the banks are slowly starting to see themselves as bigger banks in the market which so far had a myopic vision for their departments and organization. My interactions with these banks gave me an impression that they are not as organized and robust as their American and European counterparts, but they have adopted technology early and have an increasing appetite for something new. While speaking to the Head of technology at one of the leading banks, we discussed about the current problems due to the liquidity crunch like shortage of liquid dollars in Nigeria which prevents these banks from making timely vendor payments, general lack of interest in the market and how the management is pushing back on newer technology spends. Through this, he was very enthusiastic to know what new his bank could do today and put us through to the next steps. Like anywhere else the Nigerian banks now want to outrun each other in capturing market share through customer acquisition and newer products and increasing the profitability with existing customer by attracting more deposits and product usage. I think Nigeria and the other countries in this region would be the new must target markets for the Indian IT companies in the coming years!<br /></span>Prashanth Bhathttp://www.blogger.com/profile/03977904575563831164noreply@blogger.com0tag:blogger.com,1999:blog-6115308920745514095.post-80156117290024884132009-03-12T07:54:00.000-07:002009-05-25T04:27:42.063-07:00Opinion: Banks and Revenue Leakages!What do you and me as individuals do when the going gets tough economically? Double check our telephone bills? See if we used them more than we should have; check if there is a better plan out there with better rates which was not so important before? <span class="fullpost"> Weigh whether to use your car or public transport now depending on the need to use. Make sure that you bought groceries and vegetables at the best rates that were never so important since you loved the place you shopped more than the value. Double check all the rebate coupons that you never cared to check on before. There are two keys things that I am talking about, one is controlling the overhead costs or expenditures and the second is plugging the leakages that existed before but you cared less. I believe similar to this, banks in today's environment will have to closely consider performance metrics like costs, profitability of product and revenue leakages. Measurement of costs and product profitability are in practice today, but is there systematic way of identifying revenue leakages and fixing the same? Revenue leakages could be of various types like a lost opportunity to price right, not able to monitor the customer SLA’s, losing transactions due to system in efficiencies or unable to recover from customers due to in adequate processes. Sudhir talks about revenue leakages in banks today at various stages of a relationship life cycle in his published paper 'Revenue leakage an opportunity calling' (<a href="http://www.sda-asia.com/sda/psecom,id,52,whitepaper,42,p,0.html">Published link 1</a>, <a href="http://www.banktech.com/whitepaper/Customer-Insight-Business-Intelligence/Pricing-Profit-Optimization/revenue-leakage-opportunity-calling-wp1234873632208;jsessionid=PETVQFAX0VPOEQSNDLPSKHSCJUNN2JVN?cid=twdl_email">Published link2</a>) . I agree ! </span>Prashanth Bhathttp://www.blogger.com/profile/03977904575563831164noreply@blogger.com0tag:blogger.com,1999:blog-6115308920745514095.post-41625571291052327352009-03-09T04:56:00.000-07:002009-05-25T04:45:54.331-07:00Views: Banking for the unbanked - contd...To continue on product innovations, to reach newer segments of the banking market i was thinking about telecom. Why there is such an explosive growth(in terms of reach to common man) in telecom industry versus a hindu rate of growth when it comes to traditional banking. <br /><span class="fullpost"><br />I am not talking about the 20% growth in revenues the banks are making by doling out home loans and credit cards to the consuming public at various interest rates. I am talking about parallel's to pre paid cards, small recharge tickets available at the beedi shops, life time free incoming facilities, bundled products like land line + internet + IPTV, etc that is making telecom companies add 3-4 million subscribers month on month. Is it that the need for a common man to have banking facility is minimal when compared to his need to communicate? I think the answer to this is the way we understand customer segmentation. Unlike the uniformity in need to communicate, the need to have banking services varies widely across the customer segments. i.e. the needs of student, economically backward person, middle class, high net worth individual, NRI all are extremely different. For a middle class or economically backward individual, availing these facilities is still an inhibition. An individual wanting to buy something online for a better deal has very limited options today unless he has a credit card. He either has to pay through cheque, or make a DD, pay when he receives the item in a few cases etc which are not very convenient options when compared to paying through a credit card. I think a parallel to innovation in telecom in this case would be pre paid currencies available across small shops. If an individual wants to buy something he could top up his account with any bank with a pre paid card available in shops and use it to buy online or through mobile shopping. The balance left could be credited to his account in the bank. Even a small pan walla would use those cards to do cash deposits in bank using his mobile without having to walk into the bank or waiting for a cash collection agent! <br /></span>Prashanth Bhathttp://www.blogger.com/profile/03977904575563831164noreply@blogger.com0tag:blogger.com,1999:blog-6115308920745514095.post-79603199558862670742009-02-19T22:46:00.000-08:002009-05-25T04:50:21.940-07:00Views: Banking for un-banked?I have been thinking quite a bit lately on what innovation could mean to the mass market at the bottom of the pyramid. A lot has been written about the bottom of the pyramid in recent years, that the next level of growth will come from this market. I think this is evident from the emergence of Indian economy. <br /><span class="fullpost"><br />Take for example my self; I come from that strata of society that had seen so much less banking facilities, all by virtue of the economic levels I came from. Today after ten years I am in a good job and now there is a whole set of banks chasing business from me because I have shifted my economic orbit. I think there is a whole generation of Indians today who are very frequently shifting their economic orbits because of the sustainable growth in the economy. And this, is further fueling the growth that has already set in. But, if you think from the bank's perspective, has this change come because of any innovation from bank’s side to reach to those different levels in the society ? I do not think so, this has come more because of the change in levels individuals have seen personally. Even today there is whole section of society that sees so little banking facilities offered to them. Well, Its well known that innovation in banking services is least when compared to other areas like mobile telephony, may be more because of the economic risks involved resulting in a conservative approach to innovation. So what can these innovations mean for the mass ?. One example I can think of is micro finance. How the class, who need tiny capital on a daily basis to sustain their daily trade? If I can get a quick funding of Rs.4000.00 ($80) to take delivery of vegetables or my supply of raw materials for a few days, just there at the market where I am going to close the deal, it would be a great service. If I can find someone just there whom I know can fund me in minutes through a mobile payment. Or I make a call to that person who knows me personally and he sends a sms for completing the transaction. This market I feel has a potential to generate a whole new generation of banking products and services. Any comments ideas are highly appreciated !</span>Prashanth Bhathttp://www.blogger.com/profile/03977904575563831164noreply@blogger.com0tag:blogger.com,1999:blog-6115308920745514095.post-17516497601809848792009-01-28T03:44:00.000-08:002009-03-09T07:42:38.536-07:00Paper series: European payments scenario – becoming a level playing field<p class="MsoTitle" align="left" style="text-align:left;mso-border-between:.5pt solid windowtext; mso-padding-between:1.0pt;padding-top:1.0pt;mso-padding-top-alt:0in;padding-bottom: 1.0pt;mso-padding-bottom-alt:0in;border-bottom:.5pt solid windowtext; mso-border-bottom-alt:0in none windowtext"><span style="Trebuchet MS"font-family:";"><span class="Apple-style-span" style="font-size:small;"><span class="Apple-style-span" style="font-weight: bold;">Introduction</span></span><span class="Apple-style-span" style="font-size:small;"><o:p></o:p></span></span></p> <p class="MsoTitle" align="left" style="text-align:left;mso-border-between:.5pt solid windowtext; mso-padding-between:1.0pt;padding-top:1.0pt;mso-padding-top-alt:0in"><span style="Trebuchet MS"font-family:";"><o:p><span class="Apple-style-span" style="font-size:small;">The evolution path the Banking industry has witnessed in the last few years with Consolidations, Expansions, Electronic Banking in Retail, Developments in Risk management, the evolution of the Euro single currency and subsequently the innovations in payments has made the European banking scene more active than ever.</span></o:p></span></p><p class="MsoTitle" align="left" style="text-align:left;mso-border-between:.5pt solid windowtext; mso-padding-between:1.0pt;padding-top:1.0pt;mso-padding-top-alt:0in"><span style="Trebuchet MS"font-family:";"><o:p><span class="Apple-style-span" style="font-size:small;">At different points in time the Banks have faced challenges in achieving the above, powered by organizational growth aspirations in serving the customer base and driven by regulatory changes affecting the banking industry.</span></o:p></span></p><p class="MsoTitle" align="left" style="text-align:left;mso-border-between:.5pt solid windowtext; mso-padding-between:1.0pt;padding-top:1.0pt;mso-padding-top-alt:0in"><span style="Trebuchet MS"font-family:";"><o:p><span class="Apple-style-span" style="font-size:small;">The most recent regulatory changes are the efforts of creating a level playing field in payment instruments in Europe by creating a faster, transparent, standard and cost effective payment infrastructure. OFT (Office of fair trading) in UK and </span><span class="blsp-spelling-error" id="SPELLING_ERROR_0"><span class="Apple-style-span" style="font-size:small;">SEPA</span></span><span class="Apple-style-span" style="font-size:small;"> in European union. This change in direction offers immense challenges for Banks in terms of scaling its IT capabilities and increased competition in the market... <a href="http://www.scribd.com/doc/13107060/European-Banking-Trends-Prashanth-Bhat">read on</a></span></o:p></span></p><p class="MsoTitle" align="left" style="text-align:left;mso-border-between:.5pt solid windowtext; mso-padding-between:1.0pt;padding-top:1.0pt;mso-padding-top-alt:0in"><br /></p>Prashanth Bhathttp://www.blogger.com/profile/03977904575563831164noreply@blogger.com0tag:blogger.com,1999:blog-6115308920745514095.post-27695629570511645452009-01-28T03:24:00.000-08:002009-05-25T04:52:00.836-07:00Paper series - Value propositions of a core banking solution vs pricing and billing solution<p class="MsoNormal"><span class="Apple-style-span" style="font-size:small;"><span class="Apple-style-span" style="font-weight: bold;">Publications :</span> </span><a href="http://www.finextra.com/Finextra-downloads//featuredocs/SunTec_Core%20Banking%20Solution%20vs%20Pricing%20and%20Billing%20solution.pdf"><span class="Apple-style-span" style="font-size:small;"><span class="Apple-style-span" style="font-weight: bold;">finextra</span></span></a><span class="Apple-style-span" style="font-size:small;"><span class="Apple-style-span" style="font-weight: bold;">, </span></span><a href="http://pdf.employmentcrossing.com/money/260032.pdf"><span class="Apple-style-span" style="font-size:small;"><span class="Apple-style-span" style="font-weight: bold;">bankingcrossing, </span></span></a><a href="http://www.financialservicescrossing.com/article/260032/Banking-Technology-Core-Banking-Solutions-vs-Pricing-and-Billing-Solutions/"><span class="Apple-style-span" style="font-size:small;"><span class="Apple-style-span" style="font-weight: bold;">financial</span></span></a></p><p class="MsoNormal"><span class="Apple-style-span" style="font-weight: bold;"><span class="Apple-style-span" style="font-size:small;">Introduction</span></span></p><p class="MsoNormal"><span class="Apple-style-span" style="font-size:small;">Banks have started realizing the importance of pricing as a banking enterprise entity. Core banking solution such as Flexcube, Temenos or Finacle fits well as a technology solution for a banks’ day to day business. However a core banking solution itself cannot cater to all the needs for fee based income of a bank. This is attributable to the complex nature of banks operations across its business areas. The banks are often unintentionally grown into a complex structure with its independent departments often referred to as silos having their own systems tied together to a centralized core banking system. Each of these silos has its own product bundles and offerings and a technology component to capture the fee income for the bank. So what comes out over a period of time is a severe disability to visualize the fee income or pricing of such charges at the level of an enterprise. In this article we will discuss, how core banking solution and the associated systems fit in a bank and what value does a pricing and a billing solution bring to the table that a core banking system cannot fulfill. <a href="http://www.finextra.com/Finextra-downloads//featuredocs/SunTec_Core%20Banking%20Solution%20vs%20Pricing%20and%20Billing%20solution.pdf">read on</a> <br /></span></p><div><br /></div>Prashanth Bhathttp://www.blogger.com/profile/03977904575563831164noreply@blogger.com0