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The Responsive Bank. Feature article in Q factor Oct 2014
1. Issue 07 | October 2014 sqs.com
Articles inside
• The Responsive Bank
• Digital and Data Disruptions in Financial Services
• Unified Risk Management and Reporting
• Different Facets of Mobile Testing
• Quiz
2. 2 The Q-Factor BFSI
Digital transformation is reshaping the way we live and do business.
On the ground, strong and sustainable processes to improve and
assure software quality are driving markets. Accordingly, ‘Meghaduta’
the cloud messenger is being superseded by the Q-factor!
The BFSI sector is expected to introduce and quality assure new and
innovative technologies to speed up development cycles in the service
of the evolving and demanding customer. Newer experiences,
competition and cost pressures along with the onset of card and
mobile technologies are increasing the pressure on software services
and products to sustain quality.
Editorial: Providing the technology edge to Financial Inclusion
by Simon Terry
Organizations in the financial services business are today facing a far
more challenging and rapidly changing environment, driven by the fall
out of the global financial crisis and ongoing digital disruptions. There
are new customers,newer regulations and competitive changes that
demand greater agility and a more customer-focused approach that
leverages the creative potential of its people. The time has come for
the Responsive Bank.
Signals from the Edges
Something is up in banking! Many signals highlight the fast changing
environment:
• Wells Fargo has announced a start-up accelerator for financial-services
start-ups.
Issue 07 | October 2014
• Commonwealth Bank has made its digital technology advantages a
key part of its strategic positioning.
• BBVA has launched an open innovation program to help accelerate
its innovation agenda.
• Westpac NZ has partnered with a start-up ‘Moven’ to enhance its
mobile internet banking capabilities.
• Financial services executives from around the world have been
travelling to Kenya to better understand the success of
Safaricom’s highly acclaimed M-PESA mobile payments system.
• World over banks are embracing social media for marketing,
customer service and for deepening connections with to the
community.
Globally banks are looking for newer, faster and more innovative ways
to respond to the changing market. Customer expectations are rising
The Responsive Bank
Manual systems that limit scaling are yielding place to automation.
Globally, the agenda of universal financial inclusion is rapidly
expanding the banked base of the pyramid.Optimization of
operational, distributional, transactional and infrastructural costs,
while simultaneously creating last-mile delivery channels, tailored to
specific market needs,is taking priority. The Q–factor is thus becoming
paramount to success and sustainability.
Amidst these trends and rapid changes Thinksoft Global Services is
now renamed as SQS India BFSI, the Indian Banking, Financial Service
& Insurance arm of the world leader in software quality!
The Quality Factor
Financial Inclusion (FI) being critical to economic growth and socio
economic stability, the World Bank has set a target of universal FI by
2020. An onerous task considering that only around 50% of the adult
population in the world has a bank account! This translates to an
unbanked population of 2.2 billion adults in Africa, Asia, Latin America
and the Middle East.
With an unbanked population of 395 million, the Government of India
is seized with no less a challenging task. Launched in September
2014, the Prime Minister’s Jan Dhan Yojana (PMJDY) seeks to provide
bank accounts to 75 million households in six month’s time, which in
the first phase would include OD facilities, insurance cover and RuPay
Debit and Kissan Cards.
It is globally acknowledged that no-frills bank accounts of the PMJDY
genre, relaxation of KYC norms, General Credit Cards (GCC), opening
of branches in rural areas, expansion of the Business-Correspondent
(BC) network, Electronic Benefit Transfer (EBT), simplified authoriza-tion
and the use of mobile technology are the eight key factors that
could, on the demand side, accelerate FI. Challenging from a
management point of view and even more so from a user acceptance
testing (UAT) perspective.
800 million of the Indian population is set to be covered by mobile
networks. Barebones mobile phones seamlessly incorporated through
formal payment banks and authenticated mobile payment systems and
further expansion of the BC network would progressively ensure 100%
financial inclusion. In parallel, a challenge to be overcome lies in the
fact that mobiles are the most complex to test and certify considering
the numerous types of devices, technologies, terminals, interfaces and
applications involved.
These challenging and exciting developments in the emerging markets
would also have a huge impact on the further growth of the established
banks in UK and USA.
Martin Müller - Managing Director
SQS India BFSI Ltd.
3. The Q-Factor BFSI 3
with exposure to digital transformation across many industries. Banks
are increasingly aware of the threats posed by disruptive competitors
ranging from new intermediaries and even peer-to-peer lending.
Changes in the regulatory environment also play a role in the need for
banks to connect with customers and the community. The 2008
Global Financial Crisis (GFC) impacted the reputation of the industry in
many markets and created new regulatory pressures driving customer
focus. The GFC refocused the attention of banks on the need to
deliver exceptional service under traditional lines of business to win
funding and grow revenues in the face of an increasingly savvy
customer. In Australia, the Reserve Bank of Australia is seeking to
drive disruptive innovation in payments with a view to pressurizing
banks to innovate in the interest of consumers.
What is a Responsive Bank?
The Responsive Organisation is a movement of influencers,
organisations and change agents who believe in the need for change
to enable them to respond to their customers, communities and a
competitive market. The traditional models inherited from the
beginnings of management era at the start of the 20th century
struggle to engage employees, to manage change and to realise the
innovation demanded of organisations. New ways of working are
required in an environment of digital disruption.
The Responsive Bank is one that focuses on a number of key shifts
designed to move management from a focus on efficiency to a focus
on effectiveness:
• From profit to purpose:
Clarity of purpose, the rationale and impact of the organisation on
others, is a key way for organisations to engage the employees and
community. Purpose is critical to guide innovation and generate
discretionary effort.
• From hierarchy to autonomy:
Traditional hierarchy assumes that the challenges are efficient
allocation in a relatively static environment. To adapt to rapid
change and deliver excellence in service, organisations need to
empower people to respond to the market and solve issues.
Allowing employees greater autonomy and pushing decisions closer
to the edges of the organisation are important to increase
effectiveness.
• From secrecy to transparency:
In a world of networks, secrecy is a sub-optimal strategy. Banks are
increasingly focused on how to leverage information more quickly.
• From control to experimentation:
Experimentation at the edges enables the Bank to learn faster and
to engage with opportunities to move the organisation forward
faster.
• Embracing networks through and around the Bank to engage wider
communities, deepen trust and learn faster.
Becoming a More Responsive Bank
Many of these changes are difficult for a traditional Bank to consider
and even harder to embrace. However, the elements of a Responsive
Bank are not an absolute standard. Each bank will need to set its own
response to each of these changes to reflect its customer demands,
market conditions and competitive threats. The evolution will involve a
cultural change as well as a change in systems and approaches. Four
key actions will underpin any Bank looking to make this transition:
• Adopt an outward orientation:
In the new competitive environment, customer insights and
community reputation play an increasing role in success. Financial
services organisations need to put in place the processes to drive
decisions based on external insights and leverage external
capabilities. In this context the questions to ask would be: Does
customer data drive your business decisions? Do you have a
customer experience design team? Have you understood the
implications of the disruptive threats at the edges of the industry
from payments technologies, new analytical approaches, new
entrants like supermarkets, etc? How are you reaching out to your
disgruntled stakeholders to listen and engage them?
• Network the organisation and its communities:
Most Banks struggle to share what they know. Focus on
networking the organisation to improve the speed of leverage of
knowledge and to accelerate responses to change. For example,
NAB uses Social media monitoring externally and Yammer, a
private social network, internally to connect its people, to share
information and to innovate and is delivering significant business
value benefits. What connects your communities?
• Embrace experimentation:
Disruptive innovators relentlessly experiment. Experimentation on
hypotheses is the heart of lean start-up methodology. Help your
organisation to learn faster by moving from certainties to
hypotheses through open experimentation. The BBVA program
mentioned in the introduction is one such program. How often do
you experiment and how do you leverage the capabilities of those
for whom it is lifeblood.
• Focus on leadership in every role:
Enabling people to respond to the circumstances that they see
before them is important. Give people the authority and the
capability to use their potential to continuously improve the
organisation. Do your customer-facing people have the freedom to
deliver exceptional customer experiences? Do all members of your
staff have the ability to suggest improvements when they find
something that is broken? Great banks make leadership everyone’s
role.
Financial services have a long and successful history. The models of
management in banking today have an equally long history. A
changing environment as a result of changing customer and
competitive behaviour asks new questions of the management of all
banks. The Responsive Bank offers new ways of working for all banks
to consider in improving the effectiveness of their response to change.
Simon Terry, a consultant based in Melbourne Australia, is
speaker and writer on Innovation, Customer Experience,
Leadership and Collaboration, a Partner of ‘Change Agents
Worldwide’ LLC, an international network of change agents, he
holds the shared purpose of helping organisations leverage
disruptive technologies and future work practices.
A double major in Economics and Law and an MBA from the
University of Melbourne, Simon spent over a decade with the
National Bank of Australia (NAB) rising to be the CEO of
HICAPS, NAB’s Insurance and government payments business.
He is also a Member of the Board of the Melbourne Chamber
Orchestra, an Advisor at Sidekicker Pty Ltd and a Council
Member of Haileybury.
Issue 07 | October 2014
4. Issue 07 | October 2014
Digital and Data Disruptions in Financial Services
by Paddy Ramanathan
Banks and Credit Unions are facing competition on all fronts,
especially from Non-Bank challengers and cutting-edge banks that are
putting digital and big data technologies to work. Non-Bank
challengers in small business lending, and to some extent consumer
lending, wealth management, and payments, are attacking traditionally
safe revenue sources. They are delighting customers by making their
experience as easy as digital natives; Amazon, Google and Facebook.
Cutting-edge banks are boosting revenues, cutting costs and
improving customer experience by using digital and big data analytics.
The current era of digital and big data is changing the game driven
largely by customer expectations. We see four broad areas of focus:
Area of Focus
Credit decisioning for small business
using big data
Software based Wealth Management
and Advise - RoboAdvisor
Mobile Payments and Value-Added
Services
Customer and Market Intelligence and
Digital Marketing
Description
Leveraging data to determine credit-worthiness
and income potential over
traditional backward looking credit history
schemes and creating near-real time digital
loan origination applications
The traditionally high-touch advice business
is getting disrupted with digital
“RoboAdvisor” that are better, of high
quality, more economical and with lower
account minimums.
Smartphone based payments for goods and
services and value-added services like
loyalty, special offers, and specialized
payments like healthcare payments.
Traditional inside-out sales and marketing
techniques are being replaced by outside-in
techniques, where the decision journey and
experience of the customer is personalized
with the channel experience of choice. Big
Data Analytics and Digital are not only used
for finer targeting and optimizing campaigns
but also used to provide a seamless
experience in customer’s purchase journey
by understanding their motivation, activities,
and barriers.
Examples
OnDeck.com, Kabbage.com and several others
BBVA Compass Bank in partnership and several
other banks
Wealthfront.com, Personalcapital.com,
Betterment.com and several others
Vanguard and other wealth managers
PayPal, Square, Sage and several others
US Bank (Peri), Wells Fargo and several others
Data providers like Acxiom, IXI, Experian,
MasterCard Advisors. Social Media companies
like Facebook, Google and Big Data platform
providers like Teradata.
JP Morgan Intelligent Solutions – exclusive
group inspired by the data economy and the
opportunity to create information based
products that reinvent business, change lives,
and create new commercial value for the firm.
Barclays Information Business and Wells Fargo
Data have similar focus
4 The Q-Factor BFSI
We will now review the first two categories of how non-bank
innovators and leading edge banks are leveraging Mobile, Big Data,
Social Media and the Cloud to disrupt traditional financial services and
review the economic value potential of the disruption.
Big Data based Credit Decisioning for Small Businesses makes Credit
more available.
Non-bank lenders such as OnDeck and, Kabbage have created a
platform that can determine the credit-worthiness and future income
potential of the small business borrower by looking at a wide variety of
data points to process a loan in real-time online. Lenders cross-analyze
business performance data (such as cash flow, customer
growth, depth of transaction volume, shipping data), social media
sentiment about the business and other open-data and are able to
create forward looking view of creditworthiness that is more effective
than traditional (FICO scores; Fair Isaac Corporation scores, credit
scores) backward looking credit history. This type of lending is
transforming the small business lending space. Borrowers not only
prefer this form of lending due to its sheer convenience when
5. Issue 07 | October 2014 5
• Since the financial crisis, it has become common place to argue
that banks should be run as utilities, not casinos. At least in terms
of their financial performance, that seems to be happening. In
2006, the eight American banks that regulators have since labelled
“globally systemically important” generated casino-like profits, with
returns on equity of 30% on average, according to Oliver Wyman, a
consultancy. Extract from the Economist Sep 25, 2014
• Sovereign defaults are common events with many causes. For
Argentina, the path to its 2001 default started with the ballooning
of its sovereign debt in the 1990s, which occurred alongside
neoliberal “Washington Consensus” economic reforms that
creditors believed would enrich the country. The experiment failed,
and the country suffered a deep economic and social crisis, with a
recession that lasted from 1998 to 2002. By the end, a record-high
57.5% of Argentinians were in poverty, and the unemployment rate
skyrocketed to 20.8%. Joseph Stiglitz and Martin Guzman Extract
from the Economist, September 27, 2014.
• Goldman Sachs Group Inc. (GS), the top adviser on corporate
takeovers, is changing its conflict-of-interest policy to bar
investment bankers from trading individual stocks and bonds, a
person with direct knowledge of the matter said. They also aren’t
allowed to invest in activist or event-driven hedge funds. Michael J.
Moore Sep 27, 2014, Extract from Bloomberg News.
NEWSBYTES from Americas
The Q-Factor BFSI
compared to the traditional process of submitting tax records,
business plans, etc. This mechanism brings into the credit pool a lot of
borrowers who otherwise would not be eligible for credit. The same
data based techniques also yield insights to when and which small
business needs credit and that can be used for effective targeting and
acquisition.
Key Enablers:
• Big Data or the ability to learn, infer and analyze multiple forms of
data and predict outcomes with greater accuracy then before, and
• Digital technologies that extend the reach and make the
process of getting a loan the same as buying a book on Amazon.
Market Size and Growth
Total loans are about $3B and are growing at CAGR of 100% to 150%.
Shifting models in Wealth Management – The advent of the Software
based Advisors caters to the new generation of wealth of customers
With the demographic shift of wealth from baby-boomers to
Millennials, estimated to have $7T by 2018 compared to $2T in
2013,traditional wealth management models are changing. As
information proliferates and technology and decision sciences expand,
new models for obtaining advice and managing wealth are emerging.
The change is much broader than just new to olsets but represent a
fundamental shift in the business model.
We see data and analytics coupled with enhanced visualization
substituting the traditional high-touch advisor/client interactions. A
software-based model can learn the goals and preferences of a
customer and design a portfolio with limited or no involvement of
human beings. Innovative software firms have developed multiple
variations of these Roboadvisors with varying focus. ‘Betterment’
provides multiple goal setting support, whereas one of the largest
firms ‘Wealthfront’ has built tax harvesting algorithms to optimize
portfolios. ‘Jemstep’ can provide advice across the entire portfolio held
or managed across multiple firms. Most of the innovation is occurring
in venture capital financed software firms and the traditional wealth
management firms are responding to the competition with their own
services. For example, Vanguard’s new Vanguard Personal Advisor
Services (VPAS) offers both a virtual advisor (like Wealthfront and
Betterment) along with a certified human advisor at a comparable
price.
Key Enablers:
• Digital technologies, and API Management technologies that
automate the entire lifecycle of wealth management
• Data aggregation and analysis technologies such as Big Data and
Advanced visualization
Market Size and Growth
About $2-3B assets in management and growing at around 100%
CAGR!.
Conclusion
Digital and Big Data are changing the face of financial services with
leading-edge banks and non-banks leading the disruptions. Banks
should carefully examine their digital and data roadmaps and identify
their sweet-spots. For some banks it would be growth with better
customer engagement and for others it could be increasing
operational excellence and reducing risk and for some it could be new
revenue stream through product innovation.
Paddy Ramanathan is the Managing Partner at ‘Digital Confluence’
and a Partner with the Bank Solutions Group, based in San
Francisco. With tenures with the Bank of America, Webpalm,
Wells Fargo and the Silicon Valley Bank, Paddy comes with a
proven track record of helping banks and financial firms
innovate and embark on technology led business transformation.
His expertise Spans Mobile/Internet Strategies, Big Data, Data
Analytics, Social Media Integration, SOA/API Infrastructure and
Cloud Technology.
An Electrical Engineer from the Indian Institute of Technology
Kharagpur, with a passion for improving K12 education through
technology, his current focus lies in leveraging information as a
strategic asset.
6. 6 The Q-Factor BFSI Issue 07 | October 2014
Unified Risk Management and Reporting
NEWSBYTES from Asia, Asia-Pacific
• The head of Employees' Provident Fund Organisation (EPFO),
says it has "no option" but to change its rules and put money
into riskier investments by buying stocks for the first time to
seek higher returns. KK Jalan, Chief of the EPFO, said that to get
better returns, the fund with about $125 billion in assets needs
to diversify investments, the bulk of which are in government
debt. "The way our fund size is increasing, and the way it is
bound to increase, there is no other option," Jalan told media in
an interview. Prime Minister Narendra Modi's government also
wants the 80 million-member EPFO, the world's ninth largest by
assets in 2012, to invest in stocks, which could support buoyant
Indian markets. Extract from PTI, September 17 ,2014.
• Five associated banks of State Bank of India would raise about
Rs 33,000 crore capital, to meet global risk norms – Basel 111 –
in next 5 years: Extract from Deccan Herald, September 22, 2014.
• The former Macquarie Group banker and head of property Bill Moss
says Australian homes are becoming a global commodity, arguing
any moves by regulators will do little to stem the wave of offshore
buyers pushing capital city prices closer to those in international
gateway cities. “This is the first (property) cycle we’ve seen where
there’s a deregulated global market, where capital is free to flow
from Asia to Australia. “We have a free floating dollar, equity
makers are global and now our residential markets are going the
same way.” Extract from The Australian, September 27, 2014.
by Sanjoy Choudhury
One of my friends who happens to be a global fund manager at
Wall Street recently started managing a large cap global banking fund
and asked me to rank three of the world's largest banks
headquartered across various parts of the world in terms of their risk
profile; J P Morgan Chase in New York, HSBC in London and Mitsubishi
UFJ in Tokyo. Without being perturbed, my reply was that as far as
soundness of a bank is concerned one may go for a Capital Adequacy
Ratio (CAR) analysis and on that count HSBC stands first with CAR of
16.1%, Mitsubishi UFJ comes second at 15.5% and J P Morgan comes
across as a distant third at 14.3%. CAR is the ratio of total Capital to
its assets. The rankings were not so important but the fact that I could
so convincingly rank them in that order was important. This would not
have been possible if there wasn't any unified risk management and
reporting concepts in the banking sector globally -- a la Basel III norms
for capital adequacy.
Uniformity in various sectors
Not only for the banking sector but globally similar norms are being
laid down for other sectors as well. Solvency II norms for insurance
and a COSO (Committee of Sponsoring Organizations) framework for
corporate are examples.
Risk is uncertainty and managing this uncertainty is the cornerstone of
risk management. Risk is prevalent in all spheres of life and for all
types of organizations like banks, insurance companies and
corporates. Risk management techniques for different types of
organizations are different but the basic building blocks are the same.
Thus a unified risk management and reporting approach globally
should go a long way in arriving at a common yardstick for
measurement, analysis and management of risk for various
organizations located in different parts of the world. Some path
breaking work on this front has already been started but much more
needs to be done to achieve the end result of absolute uniformity. The
hindrances are many because there are different regulators in various
geographies who have their own set of regulatory requirements which
make the yardsticks non-uniform across the globe.
Global norms for banking
The case for unified risk management and reporting in the banking
sector is much more relevant, focused and evident since the banking
sector globally is much more interrelated and has a much greater
effect on the global economy on a collective basis because of
increased global trade and commerce involving exports and imports
between various countries.
As a requirement for global recommendations of regulations and a
level playing field in the banking sector, particularly pertaining to risk
management, the Basel Accord came into existence in 1988 which
primarily focused on credit risk. It provided the basic uniform
framework as to how much minimum capital needs to be deployed for
a bank to be in business and how it needs to be computed with a
uniformity in the way the financial ratios need to be computed across
the entire banking industry. Though banks have to follow the
regulations prescribed by their respective country's central bank
regulations, by and large, the Basel Committee's recommendations
are presently being followed by most countries.
7. The Q-Factor BFSI 7
Enhanced recommendations came into existence in the form of
Basel II in 2004 where apart from credit risk,market risk and
operational risk were introduced in the system in the form of the
"three pillars" concept of minimum capital requirement, supervisory
review and market discipline. Thereafter, on experiencing the global
financial crisis in 2008, Basel III was announced in 2010 with the
introduction of liquidity risk management in the form of reporting of
liquidity ratios like Liquidity Coverage Ratio and Net Stable Funding Ratio.
Insurance and corporate sector regulations
A similar directive for the insurance sector kicked in 2009 in the form
of Solvency II norms, primarily for the European Union insurance
sector, which has been primarily accepted by insurance regulators
globally and sets the parameter for minimum capital requirements in
this sector.
These guidelines have a much wider scope as the initial Solvency I
guidelines introduced in 1973 were not very effective. Similar to Basel,
Solvency II also rests on three pillars: that of quantitative
requirements, governance, risk management and effective supervision
of insurers and disclosure and transparency requirements. Similarly for
the corporate sector, COSO was formed in 1985 primarily to provide a
unified risk management and reporting framework in the form of
Enterprise Risk Management (ERM). The five framework components
of COSO include control environment, risk assessment, control
activities, information and communication and monitoring.
Four categories of business objectives within enterprise risk
management framework are strategic, operational, reporting and
compliance. COSO ERM framework was later extended to eight
components of internal environment, objective setting, event
identification, risk assessment, risk response, control activities,
information and communication and monitoring.
The pitfalls
One also needs to be cognizant of the fact that unified risk
management and reporting has its pitfalls as well. Just by having a
unified risk management and reporting framework would not solve all
issues. We have witnessed even Basel compliant banks failing like
Northern Rock in UK. Also various countries have different regulatory
requirements. For example certain percentage of the Indian banks
investments going into earmarked sovereign papers or government
guaranteed securities in the form of Statutory Liquidity Ratio
requirement which is somewhat unique to the Indian banking industry,
which emphasizes the fact that often one size doesn’t fit all and one
cannot have the same yardsticks for measurement.
The way forward
Though some initiatives have already been made to provide a unified
risk management and reporting framework globally for various types of
organizations, much more needs to be done to provide an absolute
level playing field for all organizations in the world! This is easier said
than done due to the different types of regulations prevalent in
different countries with different types of economies, governance,
taxation, etc. Only if all countries of the world come together to adopt
a common approach to risk management and reporting,can a truly
unified framework evolve and people like my friend would sigh in relief
in being able to ascertain, analyze and decide on their own for
organizations in various sectors in the world.
Sanjoy Choudhury based in Mumbai, is Principal – Radiant
Consulting and Spearheadsits Treasury, Risk, Training and
Research Business Globally. With over 20 years in the Banking &
Financial Services Industry, his experience cuts across the ICICI
Bank, GlobeOp Financial Services, the CNBC Network18 Group,
Cogencis Information Services Ltd and Bespoke Consulting
Solutions.
An MBA from the University of Calcutta and an accredited
Financial Risk Manager from the Global Association of Risk
Professionals, Sanjoy is a multi-skilled OTC Derivatives and
Financial Risk professional.
Different facets of Mobile testing
by R Ramakrishnan
Associate Vice President (Delivery Services): SQS BFSI
We live in an emerging mobile world where everything, including
people and organizations, will soon be interconnected. Mobile devices
are becoming indispensable tools to communicate, bank, shop,
socialize and organize our daily lives. Banks like many others are wide
awake to the changing environment and the forecast is that 50% of all
transactions would be conducted on mobile devices by 2017.
“Remember, with great power, comes great responsibility”, so said
the Spiderman from outside his web. The countless opportunities to
grow business through mobile channels impose a huge responsibility
on banks to provide stable, defect free applications to ensure a
satisfying and delightful customer experience.
Mobile applications are to be kept working consistently across the
innumerous types of mobile devices and frequent upgrades of their
Operating Systems (OS). Multiple Carriers, Multiple Languages,
different Wi-fi routers and the permutations and combinations across
all of them tend to queer the pitch.
The Rapid Application Development (RAD) methodology is what is
popularly used for mobile application development. It is very difficult
to address all possible combinations in the short time period
associated with RAD. Therefore, depending on the customer profile of
a bank, an optimum combination of devices viz-viz a browser is to be
selected.
The applications to be tested could be downloaded from an iOS,
Android store or the Mobile Web, where they could be viewed under
Issue 07 | October 2014
8. mobile browsers such as Safari, Android or Chrome. So also the
testing with traditional SMS and USSD (Unstructured Supplementary
Service Data) query features to be considered – e.g. *101# to query
the account balance.
• The world's three economic superpowers - the U.S., China and
Europe - are heading for a major collapse in asset values because
their economic models favor consumption instead of productivity,
said Steve Jakobsen, Chief Economist at Saxo Bank (the on-line
Danish Investment Bank), on CNBC on September 26, 2014
• The European Central Bank would be prepared to enact more
stimulus measures if necessary to increase liquidity in the euro
area, ECB Governing Council Member Luc Coene said. He held out
the possibility that the targeted-loan program that the ECB
announced in June wouldn’t be adequate to spur lending and
stimulate the economy of the 18-nation euro area. “If we estimate
that it’s insufficient, inevitably we will add other instruments at our
disposal to increase the balance sheet of the Central Bank, if it’s
necessary,” Coene told a conference yesterday at Cercle de
Lorraine in Brussels. Ian Wishart Sep 27, 2014. Extract from
Bloomberg News
• European Governments need to "boost demand" in order to reduce
unemployment and avoid deflation, the US Treasury Secretary has
told the G20 Group. ---- Speaking after the meeting of G20 Finance
Ministers and Central Bank Governors in Australia on Sunday
(21 September), Treasury Secretary Jack Lew said that there was
"an intensified call for boosting domestic demand in Europe".
He added that EU Governments needed to combine short-term
stimulus measures with structural reforms to their economies.
Benjamin Fox, in EU Reporter, September 22, 2014
NEWSBYTES from Europe
Manual testing is not the answer for end-to-end mobility testing as the
tests need to be run on multiple configurations involving devices, OS
versions, browsers, languages, carriers etc. It is difficult for manual
testing to cope with the short duration of test cycles. Therefore, a
comprehensive automated approach is the way forward.
In automating the tests, tools like ‘Seetest’ provide cost effective
adaptors to connect to popular automation tools like UFT, RFT,
Selenium, MS TFS etc. The tester can then access and initiate various
actions on the mobile device, which is connected to a remote machine
at a different location. This also helps testing services under an
onsite-offshore model. Available tools also help in capturing the
automation script on one platform and then running them on others.
8 The Q-Factor BFSI
Platfrom
Testing using emulators
Manual testing using physical devices
Cloud based testing solution
Automated solution using
physical devices
Pros
• No investment in physical devices
• Emulators mostly available for free
• Most realistic view of test results
• User experience can be simulated for different
scenarios
• Remote access for offshore testing
• Most realistic view of test results
• User experience can be simulated for different
scenarios
• Remote access for offshore testing
• Most realistic view of test results
• User experience can be simulated for different
scenarios
• Remote access for offshore testing
• Scripts can be batched to run on multiple
devices connected to a desktop
• No security threat as the devices are within the
secured connectivity
Cons
• No guarantee that it will work on physical
devices considering various form factors
• Useful for initial round of testing only
• Procurement cost of devices
• Restrictions in testing multiple
configurations due to shorter test cycles
• Performance & Security testing cannot be
performed
• Cloud solution cost is still high
• Devices are available for testing only
during a prescribed window
• Security risks in exposing the bank data
• Procurement cost of devices (can be
mitigated by leveraging the Mobile Test
lab of testing provider)
The Mobile testing platforms – the Pros & Cons
Issue 07 | October 2014
9. Mobile testing is different in that it goes beyond the testing of
functionalities. The following dimensions are to be accommodated:
• Usability, Visibility, Navigation and Verification under online and
offline modes, User Friendly messages, Ease of Installations and
Upgrades, Consistency of data across other channels like ATM,
IVR, Internet etc.
• Compatibility across
• Myriad mobile handsets and Tablets running on different OS
platforms (iOS, Android, Windows)
• Multiple versions of OS platforms (iOS 6.1.6, 7.1.2, 8.0,
Android 4.2, 4.3, 4.4 etc)
• Compliance standards set by Apple and Android platforms
• Compatibility of the app undermobile web across multiple
browser combinations
The Q-Factor BFSI 9
• Working of the app under different network types – 2G, 3G, 4G,
Wi-fi; Server connection changes from 2G/3G to Wi-fi when user
walks into a Wi-fi zone
• Interoperability testing – Back up of information in the app,
recovery plan in the instances of low battery, instances of app
upgrades, how app behaves during interruptions like call, message,
reminders, alarm, etc.
• Performance testing both on the server side,i.e., impact on CPU
usage, memory, number of users, bandwidth, latency etc., as well
as on the device side,.i.e., Response time, CPU usage, memory
usage, Frame rendering, Battery consumption, etc.
• Security testing – Prevention of hacking of info residing in the
mobile, handling & managing malicious content, encryption and
decryption for data exchanges, etc
Test-automation could be highly beneficial. However, the constant
introduction of new devices, frequent updates to OS and browsers,
continual enhancements in functionality offering newer services and
better customer experiences, imposes a need to continually update
the automation pack.
The applications also needs to be tested proactively for various
forthcoming operating system upgrades - may be a Beta version -even
before they hit the market. This would ensure that the current
applications continue to work very well when customers upgrade their
firmware. Testers should identify the new features or changes, which
impact the current applications and create tests to validate them. The
consequences of failure of a bank’s mobile channel could significantly
lower customer satisfaction levels that never get reported to the Bank.
A very robust and sustained testing approach will ensure a successful
mobile channel roll out and its satisfactory continuance.
NEWSBYTES Technology and Markets
• Home Depot Inc. said a data breach between April and September
put about 56 million payment cards at risk, signaling that the
hacker attack was bigger than the one that struck Target Corp. last
year. -The hackers used custom-made software to evade detection,
relying on tools that haven’t been seen in previous attacks,
Atlanta-based Home Depot said today in a statement. The
company began investigating the breach on Sept. 2, immediately
after banking partners and law enforcement raised alarms that its
systems may have been infiltrated. Matt Townsend, September
19, 2014. Extract from Bloomberg News
• The vast potential of cellular technology in future banking growth is
evident from the fact that mobile banking-based transaction costs
about 2 per cent of the branch banking cost, 10 per cent of
ATM-based transaction cost and 50 per cent of Internet banking
cost. ‘A paradigm shaper’: Soumya Kanti Ghosh, Deccan Herald,
Sep 22, 2014
• Bitcoin values may be languishing at the $400 mark, but financial
services interest in the crypto-currency shows no signs of abating,
with two of the biggest shows in the banking calendar - Sibos and
Money 20/20 - devoting significant airtime to the technology.
Extract from Finextra September 27, 2014
Issue 07 | October 2014
10. 10 The Q-Factor BFSI Issue 07 | October 2014
to
a. Credit b. Country c. Reputational d. Systematic
a. Bangkok Agenda b. Minsky Moment c. Shanghai Protocol d. We Lin Charter
a. Goldman Sachs b. JP Morgan c. UBS d. Wells Fargo
a. Facetime b. Skype c. Skybot d. Stripe
a. 28 b. 38 c. 48 d. 58
a. Rs 2,000 b. Rs 5,000 c. Rs 10,000 d. Rs 15,000
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or nature, either express or implied. All names, logos are used for identification purposes only and are trademarks or registered trademarks of their respective companies. Wholesale
Banking, Transaction Banking and the Financial Institutions divisions, covering UAE, Qatar and Oman. In 2000 he moved to Sri Lanka as Country Manager and in 2001 to Singapore
as Regional Sales Head Transaction Banking covering Cash Management and Trade for Asia Pacific and Middle East.
SQS – the world’s leading specialist in software quality
QUIZ October, 2014
Q 1 In Kenya 70% of transactions are conducted through M-Pesa. What sort of risk does it not threaten since the value of such
transactions constitute only 2.3% of all transactions?
Q 2 What is the term coined to refer to the Asian debt crisis of the late 1990s?
Q 3 US-based risk analytics outfit Context Relevant has completed $13.5 million in Series B-1 funding and signed strategic partnerships
with three firms. Two of them are Bank of America and Merrill Lynch. Which is the third?
Q 4 Already working with Twitter, which is the start-up that has been named as the payments power behind Facebook's new 'buy'
button?
Q 5 The Global Findex (2012) shows that 20.5% of the Peruvian population aged over 15 has a bank account. This is far below the 42.2%
in Chile and below the more than 55.9% in Brazil. What is the percentage of adults in India who have a bank account?
Q 6 What is the overdraft facility provided to a bank account under the Indian Prime Minister’s financial inclusion scheme known as
PMJDY?
Q 7 According to The European Central Bank (ECB) what is the value of total assets that Eurozone banks, or groups of banks, should
exceed to be classed as significant under the framework, the ECB has confirmed?
a. €10 billion b. €20 billion c. €30 billion d. €40 billion
Please visit
http://www.sqs-bfsi.com/about-sqs/quiz-2014.php
take the quiz.
Note: Register and tick or enter the answer in
the assigned box.
Seven entries with best responses will be
chosen as per a lottery draw and USD 100
will be donated to the chosen charity of each
winner. Last date for responses –
30th November 2014
Winners will be communicated by email.
Answers for July 2014 Quiz
1. 5% is the minimum Tier 1 common ratio
2. $15,200 is the average indebted household credit card debt in USA
3. India had the highest addition of mobile subscribers
4. Capital adequacy is the parameter for a quantitative assessment
5. Istisna allows cash payment in advance
6. Messaging function was launched to exchange information
7. Emulation is better of the mobile testing methods
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