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2011 Number 12

FINANCIAL INCLUSION
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TCS supports Bank of India and other financial institutions

in national effort to promote full participation in banking system

Date : 31 I 01 I 2007
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TCS Bancs
Treasury 5.0
Launch

HNB
Assurance
Sri Lanka

Asian
Banker
Summit
Awards

Integrated
Governance,
Risk and
Compliance

Challenges to
Algorithmic
Trading
in Asia

ADNEC, Abu Dhabi, UAE

30-31 May 2011
Stall U5

Experience certainty.

IT Services
Business Solutions
Outsourcing

THE WORLD of
financial inclusion

by N. Ganapathy Subramaniam, President TCS Financial Solutions

By 2013, the majority population of India will have been enrolled in a bank account
through Swabhimaan, Indias Financial Inclusion initiative.
We believe that Financial Inclusion will improve the prospects of the people from the
perspectives of economic benefit and social welfare alike. Once the initial enrollments
are complete, and when people have access to reliable, affordable banking services,
the results will be breathtaking.
l Daily wage earners will be able to set aside funds for savings or establish recurring deposits in safe, secure, interest-bearing accounts.
l Individuals will be able to establish credit records, and self-organized groups will
be eligible for loans for cooperative ventures.
l Direct-to-citizen payments promote higher literacy rates, support job training,
and contribute to higher agricultural yields through fertilizer subsidies.
l Small-scale farmers will be able to purchase insurance to protect against deviations in the seasonal monsoons, hedging against the risk of drought.
l Participation in the banking system will also allow people to enjoy access to
lower-cost goods and services through e-commerce and mobile commerce. Manufacturers and consumer product goods companies are already starting to rethink their
distribution models with the realization that a direct-to-consumer approach has the
potential to eliminate extensive supply chains.
Also, Financial Inclusion lays the foundation for electronic transactions to take the
place of cash in day-to-day commerce. Already, India has over 720 million mobile
phone subscribers, which further supports the viability and potential of a wholesale
shift to alternative business models.

It all begins with access to basic banking services.

TCS is currently in the enrollment phase for villages with populations over 2,000, and
we have already deployed across the country over 1,000 Business Correspondents, who
will act as local bankers for people who live a days journey away from the nearest bank
branch. Through C-EDGE, our joint venture with State Bank of India, we will be offering
TCS BaNCS Core Banking to the Regional Rural Banks (RRBs) that will welcome the
entire population of India into the financial fold. (See page 6 for more details.)
We anticipate that other countries outside of India whether in Africa, the Middle
East, Latin America, or elsewhere including developed countries will find this to be an
extremely applicable model for serving their own citizenry with mainstream financial
services. Financial inclusion propelled by IT has the capability to bring about sustainable development, while expanding banking outreach to meet the needs and aspirations of the population historically excluded from the financial mainstream.
As a planning assumption for 2020, we should expect that the most of the people
on the planet are going to be served through direct relationships with financial institutions. Accordingly, financial institutions should prepare to serve this broader client
base with a diverse portfolio of products and services built upon a flexible, scalable and
reliable platform.
This is not an India story this is a global financial services story. Todays Financial
Inclusion participants are tomorrows manufacturers, buyers, traders and consumers in
the global economy.
From Core Banking to Payments to Market Infrastructure, the entire infrastructure of
global financial services will have to undergo a cycle of renewal, refresh and expansion
in order to handle the larger customer base and increased transaction volumes that
necessarily results from financial inclusion. TCS BaNCS has been superbly engineered
to meet these fundamental business requirements of the decade, and we are dedicated to supporting our clients with the technology, business processes, and insights
required to make these strategic transitions.
Finally, on behalf of TCS Financial Solutions, we are extremely proud to be an integral
part of this world-changing effort.
n

letter

from the editor

In this, our twelfth issue of the TCS BaNCS newsletter, we are pleased to showcase our participation in a groundbreaking initiative that will improve the lives of millions of people. We are proud to be a part of the Financial Inclusion
effort to provide banking services to what one day may very well be every citizen in India, and we expect the resulting
economic growth to be nothing short of breathtaking.
The phenomenal growth of TCS has also been a wonder to behold. TCS now has almost 198,500 employees, and
during the fiscal year just ended in March, our annual revenues reached $8.2 billion, up 29 percent from the prior year.
Some highlights of the year:
l TCS BaNCS made significant, strategic wins in key markets including the U.S., Europe and China, with healthy
revenue growth across regions in banking, insurance, treasury and capital markets. In total, we added 37 new
customers during the year.
l Diligenta, TCS wholly-owned subsidiary offering life and pensions solutions to the insurance industry in the UK,
deployed TCS new cloud-based platform, which now supports four million policies.
l TCS was selected for a large, multi-year transformation and full-services engagement by one of the largest banking
groups based in the Middle East, highlighting our strength in the region. For the fourth straight year, TCS will
be a Platinum Sponsor of MEFTEC, the regions premier financial technology conference. (See page 14 for an
interview with MEFTEC conference chair and prominent industry observer Chris Skinner.)
l Our esteemed clients Cathay United Bank (profiled in the previous issue of the TCS BaNCS newsletter) and
Standard Chartered Bank both won awards at The Asian Banker Summit 2011 in Hong Kong (see page 19).
l High ratings from the leading analyst firms: TCS BaNCS was named a Leader in Global Banking Platforms by
Forrester Research, Inc. in the December 2010 report, The Forrester Wave: Global Banking Platforms, Q4 2010.
We are working extremely hard to ensure that we continue to contribute to our clients success through strong,
trusted business partnerships and certainty in delivery and execution. By doing so, we hope to earn the highest
accolades not only from analysts and the media, but most importantly, from our clients.
Until next time
TCS is proud to be a 2011 sponsor of the Boston Marathon
(April 18), the Bank of America Chicago Marathon (October 9)
and the ING New York City Marathon (November 6),
building on our existing support of the Mumbai Marathon.
This is the second year that TCS will participate in all three
premier marathons in the U.S.

Dennis Roman
Editor-in-Chief
Chief Marketing Officer
TCS Financial Solutions
954 423 3560 office
954 806 6660 cell
dennis.roman@tcs.com
www.tcs.com/bancs

For address changes, requests for new subscriptions, or other inquiries: Email: tcs.bancs@tcs.com
Phone: +61 (0) 2 9318 1088 Fax: +91 80 6725 3473

contents
6

2 The World of Financial Inclusion

N. Ganapathy Subramaniam explores the global implications of inclusion

6 Financial Inclusion: Powered by TCS BaNCS

TCS provides training, devices and TCS BaNCS Core Banking to participants
8 Financial Inclusion: Bank of India Expands Rural Banking
Almost 3,000 villages to receive banking services at their doorsteps

10 Insurance: HNB Assurance

Sri Lankan life insurance and general insurance provider grows with TCS BaNCS

10

14 MEFTEC Preview
Interview with MEFTEC chair Chris Skinner and launch of TCS BaNCS Treasury 5.0
16 Briefing: Risk Management

How to reverse the trend of compliance costs growing faster than net income

18 The Asian Banker Summit 2011

Meet the award-winning TCS BaNCS clients from the Summit
20 Algorithmic Trading

Bharat Shah outlines the challenges of algorithmic trading in Asia

22 Events

Photos from CSD11 and The Asian Banker Summit, plus Forrester Research

About TCS Financial Solutions

18

TCS Financial Solutions is a strategic business unit of Tata Consultancy Services. Dedicated to providing business application
solutions to financial institutions globally, TCS Financial Solutions has compiled a comprehensive product portfolio under the
brand name of TCS Bancs. Our mission is to provide best-of-breed solutions that drive growth, reduce costs, mitigate risk,
and offer a faster speed to market for our customers. TCS Financial Solutions delivers state-of-the-art software solutions for the
banking, insurance and capital markets industries worldwide.
For more information, visit us at www.tcs.com/bancs

About Tata Consultancy Services

22

Tata Consultancy Services is an IT services, consulting and business solutions organization that delivers real results to global
business, ensuring a level of certainty no other firm can match. TCS offers a consulting-led, integrated portfolio of IT, BPO,
infrastructure, engineering and assurance services. This is delivered through its unique Global Network Delivery Model
(GNDM), recognized as the benchmark of excellence in software development.
A part of the Tata group, Indias largest industrial conglomerate, TCS has over 198,500 of the worlds best-trained consultants
in 42 countries. The company generated consolidated revenues of US $8.2 billion for year ended March 31, 2011 and is listed
on the National Stock Exchange and Bombay Stock Exchange in India. For more information, visit us at www.tcs.com.

Copyright 2011, TCS Financial Solutions. All rights reserved. No part of this publication may be reprinted or reproduced without the written permission from
the editor. TCS BaNCS newsletter is provided to clients and prospects on a regular basis. TCS Financial Solutions disclaims all warranties, whether expressed
or implied. In no event will TCS Financial Solutions be liable for any damages on any information provided within the magazine. The information is provided to
outline TCS BaNCS general product direction. The editorial is to be used for general information purposes. The development, release, and timing of any features
or functionality described for TCS Financial Solutions products remains at the sole discretion of TCS Financial Solutions.
From its inception, TCS BaNCS newsletter has been printed on paper from environmentally responsible sources.

cover story

Financial
Inclusion:

Powered by
TCS Bancs

TCS provides training, devices and

TCS BaNCS Core Banking to participants
By K. Krishna Kumar, Head Banking, India, Tata Consultancy Services

With annual GDP growth in the

verse terrain in terms of geogra-

range of eight to nine percent, India

phy, language, and culture. India

continues to be one of the fastest-

has 600,000 villages, and only

expanding economies in the world,

73,000 of these have a population

as well as one of the most populous.

exceeding 2,000 people. These

Yet with almost half of the popula-

larger villages are to be covered

tion living and working outside of

by the Financial Inclusion initia-

formal banking networks, Indias eco-

tive by March 2012.

nomic potential remains relatively untapped.

ernments will directly deposit into these accounts those funds

Financial Inclusion program, has set the goal of ensuring that ev-

related to programs such as the National Rural Employment

ery citizen has a bank account by the end of 2013. By including

Guarantee Act (NREGA), fertilizer subsidies, and payments des-

the entire population within the countrys banking networks, a

ignated to promote literacy. With every citizen having a bank

wide spectrum of opportunities will arise in support of personal

account, such disbursements can be made directly and without

savings, financial stability for families, and commercial success

unnecessary intermediaries.

for enterprises and small businesses.

Several of Indias most prominent Regional Rural Banks (RRBs)

have turned to TCS to implement Financial Inclusion within their
designated regions.

istockphoto

The daunting challenge at hand is to provide banking services to almost half of the population across an incredibly di-

To promote widespread enrollment, national and state gov-

The Indian government, through its ambitious Swabhimaan

TCS, as the most respected and trusted commercial brand in

debits the account and hands over the cash along with a printed

the Indian marketplace, is the largest implementation partner

receipt. Similarly, deposits are credited to the account and con-

to banks in India for the Financial Inclusion initiative. Drawing

firmed with an updated balance. To support universal access,

upon a well-earned global reputation as a trusted implementa-

each printed receipt is confirmed through a voice interface avail-

tion partner for organizations around the world, TCS has a cen-

able in any one of Indias many spoken languages.

tral role in making Swabhimaan a reality for the Indian people

in three main areas:

Business Correspondents

C-EDGE Core Banking

Financial institutions can take on a high volume of new customers using TCS BaNCS Core Banking, made available through

TCS hires, trains, manages, and oversees Business Correspon-

C-EDGE, a joint venture between TCS and State Bank of India..

dents (BCs) in designated villages and towns. These BCs act

C-EDGE provides a low-cost, easy-to-implement Application

on behalf of the banks to originate and service bank accounts.

Service Provider (ASP) delivery model offering the flexibility and

Through the BCs, local people can obtain banking services, in-

scalability of TCS BaNCS Core Banking.

cluding cash deposits and withdrawals, without the need to

The joint venture offers participating financial institutions a full

travel to a distant branch. BCs are trusted people, often working

range of TCS BaNCS Core Banking services, including term de-

for non-governmental organizations, who take on the added re-

posits, loans and overdrafts, cash credits, and agricultural credits

sponsibility of becoming the area banker.

and subsidies, and CASA current account savings accounts. C-

TCS is already on track to register over 16 million new accountholders in the next three years.
TCS understands the fundamental importance of the BC, and
has set up a complete ecosystem to ensure that BCs are properly
selected, insured, trained, and equipped.

EDGE also relies upon the full-featured reporting capabilities of

TCS BaNCS, with support for standard accounting and interest
computations, statutory reporting, internal reporting, and monitoring and reporting of non-performing assets.
C-EDGE operates a high-performance data center with fully
redundant operations, backed by a 24x7 support team offer-

Bank-in-a-Box Handheld Terminals

ing technical and banking domain skills. Level-one support is

provided to participating banks near their own premises, and

TCS provides each BC with supporting technology that pro-

a Mumbai-based team of 70 full-time employees handles the

vides financial services in a box a small point-of-sale terminal

management of C-EDGE operations, including report distribu-

that includes smartcard read/write capability, biometric custom-

tion, help desk operations, dedicated account management,

er authentication, a printer, and a speaker.

and transaction monitoring.

Enrollment is a simple process involving on-the-spot creation

C-EDGE provides RRBs with TCS BaNCS Core Banking at a low,

of a smartcard, which is secured using biometric identifiers in-

predictable monthly rate, with predictability on costs and ac-

cluding fingerprint and voice recognition technology. Once

cess to the technical and business expertise of the joint venture.

enrolled, individuals can withdraw and deposit funds from their

Through C-EDGE, RRBs can meet expanding customer needs,

accounts using the BC as the banks representative.

conform to regulatory norms, and maintain efficient operational

For example, if a person wants to withdraw 100 rupees, the BC

first authenticates the identity of the accountholder, and then

footprints, while welcoming large numbers of new customers

into the mainstream of the Indian economy.

cover story

Financial
Inclusion:

Bank of India Expands

rural banking
Almost 3,000 villages to receive banking services at their doorsteps
By Prem Kumar, New Growth Market India 1.0 Sales, Tata Consultancy Services

or almost 32 years, Mr. A.

P. Ghugal has been a bank

The benefit of branchless bank-

officer at Bank of India,

ing is not limited to those custom-

working throughout the

ers who are new to the banking

country variously as a branch man-

system. More than 50 percent of

ager, department head, and zonal

the rural population already has a

manager in four of Indias six geographic zones. Now, as

relationship with the formal banking system through the

General Manager of Financial Inclusion for Bank of India,

brick-and-mortar model, says Ghugal. With the assistance

Ghugal is heading up the largest customer acquisition ef-

of Business Correspondents and the technology support-

fort ever undertaken by the bank.

ing the Financial Inclusion model, we will be providing ser-

Bank of India has been given a mandate to service

vices to existing customers as well as new customers.

about four percent, or 2,992, of the larger villages. Consid-

One hundred percent of the population from the vil-

ering that Bank of India currently operates approximately

lages we serve will be able to receive banking services,

3,450 traditional branches, the Financial Inclusion initia-

adds Ghugal. We will provide all banking services, whether

tive represents the most extensive organic growth in Bank

its opening savings or term deposit accounts, transferring

of Indias history.

money, extending new credit, or purchasing micro-insur-

In each of these 2,992 villages, designated local Busi-

venience, and free of charge.

ance, mutual funds, or gold coins.

ness Correspondents will be assisting people to open

To ensure the success of the program, Bank of India will

new accounts, capturing their demographic and biomet-

be imparting formal training to Business Correspondents,

ric information using handheld bank-in-a-box devices.

who must be natives of the village in order to take on that

Many people reside over 20 kilometers away from the

role. The bank has also empanelled channel management

nearest branch, and just to receive government benefits

partners, each of whom will oversee 20 Business Cor-

or to conduct banking transactions, they have to waste

respondents. In the role of back-office support, Bank of

one full day traveling, plus pay for transportation, ex-

Indias traditional branch managers will provide business

plains Ghugal. We are in a position to provide banking

correspondents in the field with credit analysis and know-

services to customers at their doorsteps, per their con-

your-customer compliance.

Fast Facts
l Bank of India started operations in 1906
l Bank of India operates approximately 3,450 branches across all
states and territories in India, and 29 branches and representative
offices abroad
l In 2010, rural areas represented 11 percent of domestic deposits
l Global business mix (deposits plus advances) over USD$89 billion,
with assets of USD$61 billion
l For over a decade, Bank of India has been using TCS BaNCS
Treasury, which has enabled the bank to increase efficiency
by 33 percent, reduce time to market, and improve decisionmaking ability.

AT A GLANCE
Company: Bank of India
Headquarters: Mumbai
Business Challenge: To enroll customers in designated areas
into Indias Financial Inclusion program, and provide
ongoing support through a branchless banking model.
Solution: TCS BaNCS Core Banking solution delivered through
C-EDGE joint venture; handheld Bank-in-a-Box device for
Business Correspondents; and training and ongoing support.

consumer goods can simply transfer funds from their own

account to the account of the seller, notes Ghugal.
As a core participant in the countrys Financial Inclusion
program, Bank of India expects to not only foster economic
growth and create the conditions for increased wealth, but
also build sustainable businesses for future generations.
Naturally, implementing technology and creating infrastructure will require some investment, says Ghugal. In the

However, universal enrollment is the necessary first step.

initial period, the returns may not be that much, but once

We believe in simplifying financial services, and the most

things have stabilized, banks will definitely benefit, as will our

important thing is to take these simplified services to the

customers.

people, so that financial inclusion can be accepted by the

When we visit villages, we have made it a point to take

people at the earliest possible time without any mistakes and

TCS people with us to make presentations to the branch

without any deviation, says Ghugal.

managers about how the machines are to be operated, how

Bank of India also recognizes the critical importance of fi-

transactions should take place, and the importance of the

nancial education, including credit counseling and financial

branchless banking model, explains Ghugal. I strongly be-

literacy. Without financial education, financial inclusion will

lieve that its best for our technology providers to be present

not be successful, remarks Ghugal.

whenever we talk to the zonal managers, branch managers

istockphoto (2)

In time, the foundation of financial inclusion using the

branchless banking model will open the way to a cashless
rural economy. Someone who wants to buy fertilizer or even

and business correspondents.

We have very good interactions through our cooperation
with TCS, says Ghugal.

case study

future

assured

Sri Lankas fastest-growing insurance firm offers life and

general insurance through a single TCS BaNCS solution

By Arindam Saha, Program Manager, TCS BaNCS Insurance, TCS Financial Solutions

There are currently 19 insurance firms in Sri

Lanka serving a population of approximately
22 million people. Fierce domestic competition has placed downward pressure on pricing
even as customer service expectations have
increased.
HNB Assurance PLC has been the fastest-

Initially, the technology architecture of HNB Assurance was

managed almost entirely by a small, in-house development
team. They developed several small, custom-built applications
to manage the individual business processes required to

growing insurance company in Sri Lanka,

run an insurance company. Spreadsheets filled in the gaps.

consistently improving year-over-year market

To complete the entire lifecycle for an insurance policy, we

share through challenging market conditions.

The company, founded in 2001 as the insur-

had around seven isolated applications, and many business

processes were managed with spreadsheets, says Namal
Gunawardhane, Head of IT, HNB Assurance.

ance subsidiary of Hatton National Bank PLC,

The startup-focused approach quickly reached its limits.

one of the largest private-sector commercial

In 2004, HNB Assurance called upon TCS to deploy point

banks in Sri Lanka, currently ranks sixth in

terms of market share.
With an emphasis on professionalism and
customer service, HNB Assurance thrives with

solutions for certain key business processes. Yet upgrading

from custom-built applications only acted as a temporary
stopgap measure. Company executives took the time to
evaluate what IT solutions would ultimately be required to
meet the competitive demands of the market.
The long-term strategic objective was to have a single

a consultative approach. Agents address the

solution that could manage the entire range of services

entire range of customer concerns with a

offered, across multiple customer channels. In addition to

broad range of customizable policies across life

offering life insurance and general insurance through its own

insurance and general insurance, including fire,

marine, and automobile policies.

10

RAPID RESULTS

branch network, HNB Assurance also provides insurance

services through the branch network of its parent bank and
through independent agents and other associated financial

Namal
Gunawardhane,
Head of IT, HNB
Assurance PLC

istockphoto (3)

11

case study

institutions. As such, the company has to be able to present

weeks time, says Gunawardhane. We can tremendously

its entire range of offerings as a single entity across any

improve end-user efficiency.

channel, enabling HNB insurance agents to gain a total view

An early product launch targeted the youth market, ages

of the customer relationship. We wanted to cover all of our

18-40, with mylife, a life insurance policy that permits partial

business processes and business lines, says Gunawardhane.

withdrawals for major life events such as marriage or the birth

HNB Assurance commenced the search for a technology

of a child. The launch was an immediate hit, earning industry

provider in 2007, and considered several alternatives

awards, public accolades, unprecedented customer interest,

including major software providers in the industry as well

and a high volume of policy originations.

as locally-produced applications built expressly for the Sri

TCS BaNCS also enabled HNB Assurance to maintain

Lankan market. Ultimately, the decision was made to expand

competitive parity with established competitors. For example,

the relationship with TCS with an implementation of TCS

when Sri Lankas largest insurance company introduced on-

BaNCS. We provide insurance in two separate segments

the-spot claims settlement, HNB Assurance was challenged to

life insurance and general insurance and most applications

match or exceed the new industry benchmark for customer

treat those businesses separately, says Gunawardhane. TCS

service. With TCS BaNCS, we improved the service level

BaNCS maintains both of them in the same application.

Combining the life and general insurance businesses

for claims settlement from three days to three hours, says

Gunawardhane.

represented a significant undertaking for the young

Now that HNB Assurance has an extremely efficient back-

organization. The deployment began in 2008 and took

office providing fast time-to-market for new insurance services,

approximately 18 months to complete. Implementing an

the next step in the roadmap completes the companys

application for two different companies, across life and

strategic vision by ensuring that the entire range of insurance

general insurance, had the complexity of a merger, says

services are available throughout HNB Assurances entire

Gunawardhane. We had a major challenge in reengineering

agent network. In addition to connecting with its own branch

our business processes to align with best practices in the

network and that of its parent company, HNB Assurance also

industry.

intends to link TCS BaNCS to an extensive range of external

parties, ranging from hospitals, other banks, ATM networks,

UNIFIED SERVICES
By mid-2009, HNB Assurance was ready and eager to put its
expanded capabilities to work in the marketplace.

12

and insurance brokers. Were planning to work with TCS

BaNCS on a new SOA [Services Oriented Architecture]driven portal, notes Gunawardhane.

To introduce new products rapidly, product managers

The continued relationship with TCS ensures that HNB

can use TCS Ba NCS to clone existing policies, changing

Assurance will be prepared to propel itself further into the top

relevant terms on an existing policy to create a new policy

echelon of insurance providers in Sri Lanka. TCS is one of our

quickly and accurately. If we want to introduce a new

leading solution providers, but more than that, we consider

product, its very simple to clone an existing product,

them to be a significant strategic partner in our business, says

change the values or the rules, and introduce it within a few

Gunawardhane.

Fast Facts
l Founded in 2001, HNB Assurance is the subsidiary of one of the
largest private-sector commercial banks in the country, Hatton
National Bank PLC.
l The company provides life and general insurance services
through a network of 52 branches staffed by approximately 1,500
professional insurance advisors, and through branches of Hatton
National Bank, insurance brokers, and other financial institutions.
l In 2009, HNB Assurance exceeded Rs. 2 billion (USD $18 million) in
Gross Written Premium, and is currently ranked #6 by market share
in Sri Lanka.

AT A GLANCE
Company: HNB Assurance PLC
Headquarters: Colombo, Sri Lanka
Business Challenge: To support a fast-growing, innovative
insurer with a solution supporting both life insurance and general
insurance policies.

Solution: TCS BaNCS Insurance

istockphoto (2)

www.tcs.com/bancs
www.tcs.com/bancs

13

MEFTEC preview

Q&A

with Chris Skinner

ow in its 7th successful year,

microfinance initiatives providing access to

MEFTEC, note that all of these topics are

MEFTEC is the worlds pre-

the financial networks to vast numbers of

related to technology. A common misper-

mier

technology

the unbanked. We can see both extremes of

ception regarding MEFTEC is that it is an Is-

event for emerging markets,

wealth and poverty from one country to the

lamic banking and finance event. Although

next, which is distinctive to the region.

banks in the region certainly have strong

financial

connecting IT decision-makers from the

financial industry with leading-edge solu-

The Middle East has an extremely strong

offerings in Islamic banking and finance,

tion providers. The conference chairman of

set of regional players in financial services.

from a technology perspective these ca-

MEFTEC is Chris Skinner, an independent

While Citibank and HSBC are active in the

pabilities simply represent another line of

commentator on the financial markets and

region, the majority of the banks succeeding

business rather than a fundamental differ-

frequent speaker at leading industry forums.

in the region are domestic and regional.

ence in bank operations and technology. In

Skinner chairs the Financial Services Club,

which meets regularly in London and other
European cities to debate the future of bank-

limited to the Middle East, as its already a

feature of Asian banking and part of the

ing. He is a prolific blogger and author of sev-

At the top of the list is technology in-

eral books including The Future of Banking,

frastructure, particularly the trend toward

The Future of Finance after SEPA and The

private cloud for back-office processing. At

Future of Investing after MiFID.

this stage, cloud computing is more likely

growth agenda for banks in European and

American markets.

What other trends in the

Middle East might translate
well to other markets?

Skinner spoke with TCS BaNCS about

to support the back office rather than main-

some of the technology topics to be ex-

stream provisioning of financial transactions

plored at the MEFTEC conference.

to customers.
Mobile payments and mobile banking are

were now seeing other mobile payments,

How would you describe

the MEFTEC conference and
its attendees?

compelling topics, as these hot technologies

mobile banking and microfinance services

have come to maturity over the past few

building up throughout the Middle East. m-

years.

Pesa is a mobile phone-based money transfer

Following the success of m-Pesa in Kenya,

MEFTEC is the largest technology confer-

A highly talked-about topic is the use of

service that arose following a period of civil

ence in the region, focused on how specific

social media to connect with both business

unrest in Kenya. During that period, people

technologies relate to financial services in

customers and individuals. For financial insti-

were less inclined to trust government enti-

Mediterranean Rim countries in the Middle

tutions in the Middle East, social media tends

ties or traditional financial institutions, which

East and North Africa, GCC states and the

to manifest itself as the formation of a private

gave an opening to the m-Pesa service of-

sub-continent.

community network rather than using Face-

fered by non-traditional market entrants.

book to create a fan club or the like.

Above all, the service had a compelling value

We expect about 500 attendees, most

with positions in middle-to-senior-level IT
management at financial institutions.

Fraud, mobile malware and security is a

proposition with strong word of mouth. Con-

large area of concern, particularly in the wake

sidering current events, we may see growth

One of the characteristics of the region is

of the Stuxnet attack in Iran targeted at one

of similar services in the Middle East.

the wide range of business requirements by

specific entity. In the context of the Middle

The mobile money approach may also

country. For banks in wealthier countries, the

East, people are concerned about privacy of

take root in markets across Europe and the

most compelling imperative is meeting the

customer data and continued operations in

Americas, with telecom companies moving

needs of high-net-worth customers. Banks

adverse business conditions.

from microfinance to mainstream deposits

in other countries are largely focused on

14

fact, Islamic banking and finance is hardly

Which topics will be high on the

agenda at this years MEFTEC?

Befitting

the

technology

focus

of

and accounts. Over time, why not?

TCS BaNCS Unveils Next-Generation

Treasury Solution
at

Attendees at MEFTEC, the

worlds premier financial
technology event for
emerging markets,
will be among the first to
get a look at TCS BaNCS
Treasury 5.0, an enriched
solution poised to redefine
the paradigm of transaction
processing.

One of the early adopters of TCS

BaNCS Treasury 5.0 is HDFC Bank,

TCS BaNCS Treasury 5.0

which is the second-largest private-

is an integrated, multi-entity, multi-

sector bank in India and the winner

currency treasury solution supporting

of The Asian Bankers Strongest Bank

front-, mid- and back-office opera-

Award 2011 in the Asia Pacific region,

tions with efficient Straight-Through-

outperforming more than 50 of its top-

Processing (STP) support. The solution

tier peers across 13 markets.

functional

Harish Shetty, Executive Vice Presi-

enhancements and rich analytical ca-

dent of IT at HDFC Bank, said: Technol-

incorporates

innovative

ogy has been one of the prime levers

pabilities across asset classes including

foreign exchange, money markets, fixed income,

Benefits include:

for HDFC Bank. Our long-standing association

equities and derivatives.

l Decision-making support with pre- and

with TCS and TCS BaNCS Treasury assures us of

post-deal analytics

their delivery capability, while the new version

ity of TCS BaNCS Treasury 5.0 enables institu-

l Proactive risk management with extensive

of the solution strengthens our vision of keeping

tions to move from multiple systems limited by

market-curve sourcing, support for generation

pace with the latest technological trends.

country and asset class to a single platform.

and creation of synthetic instruments, multiple

The powerful and comprehensive functional-

For risk management, TCS BaNCS Treasury

N Ganapathy Subramaniam, President, TCS

fitment routines, and rules-driven mark-to-

Financial Solutions, said: We take extreme pride

5.0 proactively manages and monitors risk ex-

market engines

in launching our next-generation treasury so-

posures across the multi-entity financial services

l Next-generation user interface, with path-

lution across the globe. Our relationship with

organizations, helping identify sources of risk

breaking features such as Personalized Single

HDFC Bank is a testimony of our commitment

through innovative desk-book folders and risk

Workspace, Quick Deal and Smart Query

to our customers, where our solutions help

transfer mechanisms. Architected on a robust,

l Total Cost of Ownership (TCO) advantages

them transform their business. Version 5.0 of

state-of-the-art Java EE and SOA enabled archi-

stemming from platform independence and

TCS BaNCS Treasury enables banks like HDFC

tecture, it facilitates rapid enterprise integration.

the ability to house multiple treasury units

Bank to complement their treasury business

Through a single installation, financial services

under one installation

with a functionally rich, robust and state-of-the-

institutions can transform, modernize and con-

l Quicker go-to-market capabilities using stan-

art technology platform for an agile financial

solidate their treasury operations.

dardized implementation methodology

supply chain.

15

briefing

towards
a single view
of risk

How to reverse the trend of compliance costs

growing faster than net income
By David Vohradsky, IRM Advisory Practice Manager,
Australia & New Zealand, TCS Global Consulting Practice

In an August 2010 survey conducted by the Professional Risk Manag-

The overwhelming complexity and potential failure associated with a

ers International Association, 71 percent of risk managers saw efficien-

non-integrated approach ultimately leads to greater risk and regulatory

cy as the strongest driver of future investment in risk management.

threat. The systemic analysis and oversight of risk data becomes almost

The consensus on efficiency stems from ever-increasing business and

impossible in an environment of overwhelming complexity, with over-

operational risks in the financial services industry. From the strategic to the

lapping processes and controls, and with severe constraints on labor

tactical, banks are under immense pressure to undertake several transfor-

and time.

mative initiatives at once. Customers have become more demanding, as

evidenced by increased transaction volumes and higher complexity in financial offerings. Firms have responded by building or partnering to gain

16

Integrated Governance,
Risk and Compliance (GRC)

new capabilities, while outsourcing a wide set of commodity functions.

Due to these drawbacks, the industry has recognized the value of

At the same time, broad regulatory mandates have further challenged

an integrated approach to GRC. According to Oliver Engels, KPMG Eu-

business-as-usual approaches. Throughout all these concurrent transfor-

ropean Head of Governance, Risk and Compliance, GRC convergence

mations, boards of directors have to maintain a comprehensive picture of

is an idea whose time has come. It is not simply a technology tool; it

organizational activities as part of their responsibilities to regulators and

is a way to rationalize risk management and controls, giving manage-

shareholders.

ment the information they need to improve business performance

In the past, with the idea of cutting costs, executives have addressed

and achieve compliance (Source: The convergence challenge: Global

the tide of new requirements through single-point (and often overlap-

survey into the integration of governance, risk and compliance, KPMG,

ping) initiatives directed to each particular law, rule, or regulatory body,

February 2010).

without giving further thought to an opportunity to create greater

Bank and financial services executives, along with their boards, re-

business value. Over time, this tactical approach has left them with a

quire clear visibility into risk exposure and compliance status to effec-

hodge-podge of point solutions, spreadsheets and manual processes,

tively manage long-term organizational strategies. Industry executives

resulting in outdated and multiple views of risk and control within the

are looking for a systemic approach to ensure accountability and trans-

organization. These disparate systems cause confusion due to duplicat-

parency, to manage and mitigate risks, and to build customer and share-

ed, opaque and contradicting information as well as waste due to over-

holder confidence.

lapping and inconsistent strategies, and policies, processes and systems

An integrated approach to GRC harmonizes and unifies risk and com-

that must be maintained. Point solutions also lead to data difficulties,

pliance activities across all business lines, creating a single view of risk

including pockets of unavailable data and lack of viable aggregation

that treats risk and control functions holistically and seeks to enhance

and analysis tools.

their effectiveness and efficiency.

Benefits

of a common taxonomy or vocabulary, common sets of rules and pro-

A holistic GRC approach jointly addresses potential governance is-

cesses, and ideally, a common technology platform, across the various

sues, business risks and compliance challenges. This improved account-

GRC processes. The technology platform could include a common user

ability and transparency increases the quality of risk management as

interface, a common security model, a common workflow engine, and

well as allows for a speedier and more coordinated response during a

common set of productivity tools.

crisis. Banks are rife with specialist lines of business reliant on sharp di-

In this way, improvements can be implemented in one GRC area and

visions of labor, which results in information asymmetry in corporate

then replicated to the other GRC areas of the enterprise according to

structures. The technology of GRC provides a powerful remedy.

regulatory or management priorities.

Obtaining a single view of risk is critical for regulatory filings as well

Ultimately, every financial services organization will need to trans-

as giving management, executives, and the Board increased confidence

form the way governance, risk and compliance are managed. The

in the level of corporate governance in place. An integrated GRC ap-

priority given to adoption of this posture will either be driven by

proach improves effectiveness by reducing complexity, facilitates stan-

regulatory scrutiny or by strategic intent, and we strongly recommend

dardization of processes and taxonomy, allows for the rationalization

the latter.

of controls, and allows a movement from tactical to strategic activities

through automation.

TCS and its partners in GRC

Having common taxonomies, common processes, common technol-

With an in-depth understanding of critical internal bank

ogy, and in some cases, common staff, allows organizations to increase

processes through our TCS BaNCS solutions and decades of expe-

the efficiency of their governance, risk and compliance functions, re-

rience establishing robust, holistic risk management structures for

versing the current trend of compliance costs growing faster than net

financial institutions, TCS offers consulting and implementation ser-

income. These efficiencies also come at a time when compliance bud-

vices that help banks integrate their GRC processes, data and technol-

gets are increasingly constrained by competition for resources among

ogy. Using TCS Global Network Delivery Model, TCS Global Consulting

business functions. The value proposition includes a reduction in costs

Practice has risk management practitioners in close proximity to client

due to reduced oversight of controls and duplication of effort; reduced

geographies, recently expanding our presence in Asia Pacific and the

compliance and reporting costs due to improved availability of data; and

Middle East.

system support costs from the elimination of redundant and overlapping

systems and inefficient processes.

Through our Co-Innovation Network (COINTM), TCS has academic

alliances, our own research, and an extensive partner ecosystem
focused on Governance, Risk and Compliance. Our global GRC solu-

Implementation

tion experience includes the Gartner Leaders Quadrant offering from

Integration of GRC does not merely imply consolidation of the underly-

MetricStream, enterprise solutions from leading technology vendors

ing functions that a financial services organization may have strategically

such as Oracle, EMC-RSA and SAP, as well as products from Track-

chosen to decentralize. Instead, GRC integration involves the application

wise and Riskwatch.

TowerGroup TowerGroup has rated TCS risk management framework as High in regulatory and
compliance value and High in risk management value in its two recently published reports: From
Cohabitation to Wedded Bliss? The Future of Governance, Risk Management and Compliance (GRC)
and From Frameworks to Architecture: Holistic Risk Management Matures Across Financial Services.
Download the report at: http://www.tcs.com/resources/white_papers/Pages/Future-Risk-Management.aspx

17

asian banker summit

summit
sessions

Clients and TCS Executives Participate in Conference Sessions

Girija Pande, Chairman of TCS Asia Pacific spoke during the

Technology and Innovation Opening Keynote Session.
Through a cloud-based, multi-tenanted version of TCS

Zhou

Hengchang,

Chief

Information

B a NCS Core Banking, small village-based banks in India having

Officer, Shanghai Rural Commercial Bank,

just one or two branches can achieve technological parity with

explained the rationale behind SRCBs

larger competitors. A bank sitting in a small territory in India

decision to partner with TCS to deploy TCS

BaNCS Core Banking.

will have the same capability as a medium-sized or large bank,

With Shanghai becoming an increasingly important industrial

says Pande.
At the same time, the smaller institution can provide unmatched
customer intimacy. No amount of technology can do what a

center and financial center in the global economy, SRBC had to

revisit its core banking system, built over 10 years ago.

small bank can do on a one-to-one basis, observes Pande. As a

How to survive and thrive in the fierce competition in the

result, larger banks that once had a technology advantage will be

Shanghai market is one of our biggest concerns, says Zhou.

challenged to respond. We believe it can be a game-changer, says

Therefore, the development of our core banking system is critical.

Pande.
TCS is currently working with a large Chinese financial institution
to provide similar multi-tenanted capabilities to village banks and
James

credit unions in China.

Buckley,

Director,

Center

of

Excellence, TCS BaNCS Core Banking,

Tata Consultancy Services, described the
key success factors involved in core banking
K.T. Chang, Chief Information Officer, Cathay

18

projects.

United Bank, provided an overview of CUBs

Core banking projects are invariably part of a transformation

recent award-winning implementation of

program, says Buckley. Banks are looking for time-to-market in

TCS BaNCS Core Banking (see TCS BaNCS

various shapes and forms, cost rationalization, and organizational

#11 for details).

change.

The implementation won The Asian Banker Technology

Buckey related an anecdote about a core banking deployment

Implementation Awards for Best Core Banking Implementation for

where the business was involved during the deployment,

Mid-Sized Banks and Overall Best Core Banking Implementation

determining which products and services they would launch

Award 2011.

following the go-live date. Within six months of going live, they

CUB has achieved faster time to market with products, which

introduced 50 different products across deposits and lending, and

has resulted in a 12 percent increase in customers and 9 percent

they grew their book by one billion dollars in about four weeks, said

increase in accounts.

Buckley.

asian banker
AWARDS

aNCS had a tremendous showing at the fifth Asian Banker Technology Implementation Awards, with TCS clients earning

TCS B

three awards, more than any other technology provider. The awards program was held in April at The Hong Kong Jockey Club,
in conjunction with the prestigious Asian Banker Summit 2011, the foremost annual meeting for decision makers in the financial

services industry in the Asia Pacific region.

STANDARD CHARTERED BANK, Singapore

l Best Trading Systems Back-Office Award 2011
Standard Chartered Bank Singapore wanted to solve the challenge of an increased demand for real-time corporate action information across several markets and regions, each with varying global processing configurations. The bank

aNCS solution that provides a single unified platform for

implemented a TCS B

corporate action processing and a uniform client experience.

UNITED BANK OF INDIA, Mumbai

l Best Middleware Implementation Award 2011
Union Bank of India and TCS implemented an Enterprise Application Integration solution to facilitate the smooth communication between its
diverse applications. The bank was faced with around 3,000 service outlets
using one core banking solution and had other independent applications
to initiate financial transactions. The solution enabled the bank to streamline and integrate applications such as the e-remit services, electronic

clearing systems (ECS), treasury, and SWIFT transactions.

CATHAY UNITED BANK, Taipei

l Best Core Banking Implementation for Mid-Sized Banks 2011
l Overall Best Core Banking Implementation Award 2011
In 2006, Cathay United Bank was facing a challenging period due to a legacy
system that was established in the mid-1980s and grew over the years to encompass more than 129 subsystems. CUB and TCS embarked on a three-year
core banking implementation to speed up transaction times for customers, accelerate time to market for new products and improve operations with flexible
workflow and higher levels of security.

19

asian banker summit

challenges

to Algorithmic
Trading
in Asia
Algorithmic Trading has seen rapid adoption
in the US and European equities marketplaces
but when will Asia jump in?

By Shekar Hegde, Head of Pre-Sales, Securities Trading, TCS Financial Solutions

In conjunction with the Asian Banker Summit, the

Markets and Exchanges Convention brought together infrastructure providers, exchanges, brokerdealers, market heads, fund managers and related
financial institutions and counter-parties. At the
convention, TCS Financial Solutions participated in

high-frequency trading and algorithmic trading, and European markets are close behind. Yet Asian markets still have a
long way to go.
The launches of Chi-East, Arrowhead and SGX Reach have
led market participants in Singapore, Japan and the rest of
Asia to anticipate revolutionary changes in high-frequency
cross-border trading. Dark pools and algorithmic trading have

a panel titled Algorithmic trading - to infinity and

become increasingly popular in Asia, and adoption of algo-

beyond, featuring Bharat Shah, Global Product

rithmic trading is expected to reach 30 percent across Asia by

Head, TCS BaNCS Securities Trading, as speaker

2015 (Source: Celent).

and panel participant. He shared his perspectives

by very low fragmentation, with no regulations equivalent

on why algorithmic trading has seen rapid adop-

to Reg NMS in the U.S. or MiFID in Europe to enforce Best

tion in the U.S. and European markets, the chal-

Execution.Furthermore, retail customers are still a significant

lenges faced in Asia for adoption of algorithmic

Markets in Asia are exchange-driven and characterized

factor in Asian markets compared to institutional customers,

which has dampened the drive toward algorithmic trading.

trading, and the road ahead. The panel moderated

Regulators in Asia, given the amount of retail participation

by independent management consultant Gordian

and the market crashes associated with algorithmic trading,

Gaeta, included Brian Brown, Managing Director,

20

U.S. markets currently lead the world in the adoption of

are very hesitant, said Shah.

Shah outlines the challenges that have to be overcome

Shogi Group and Philip York, CEO, Empyreal In-

for algorithmic trading to take firm hold across Asian equities

vestment Group.

markets.

Bharat Shah, Global Product Head,

TCS BaNCS Securities Trading

First, the industry has to address functional challenges resulting in poor liquidity, high spreads, high transaction costs,
and the lack of an effective mechanism for Securities Lending
and Borrowing (SLB). As an essential element in this effort, the
industry has to make a better case against proposed regulations that restrict algorithmic trading, whether they involve
requirements for exchange approval of algorithms, higher
transaction costs from securities transaction taxes, stamp duties, or other mechanisms.

Infinite Possibilities
Despite the challenges faced, the influence of large global
investors and bulge-bracket brokers will ultimately move

Second, marketplaces will have to cooperate on strategies

Asian Markets towards adoption of algorithmic trading.

and approaches to improve market infrastructure. Latency is

Although Asian markets have different dynamics, investors

going to be a key issue, as algorithms are effective only when

want the same thing wherever they trade to get a trade

you have millisecond-level latency, said Shah. Each country

done efficiently, and to get it done cost-effectively, said

needs to look at its market infrastructure to improve latency.

Shah.

Third, paired with the need for latency is the question of

Heres what we can expect in the future of algorithmic

colocation. Market strategies succeed or fail based on how

trading, suggests Shah:

quickly, in milliseconds, trading firms can buy and sell equi-

l Algorithmic trading based on news and fundamental data

ties. The speed requirement makes it critically important for

l Getting a traders gut feel into algorithmic trading

exchange operators to provide colocation facilities which can

l Advanced game theory for competing algorithms

connect to the different liquidity pools instantly.

l Algorithmic trading arms race, with firms seeking com-

Finally, market participants not only require significant in-

petitive advantage through high performance comput-

vestment to meet customer demand for algorithmic trading,

ing, algorithms in firmware, supercomputer deployments,

but it can be a big investment just to serve existing custom-

high-speed switches

ers in a marketplace characterized by algorithmic trading. As

trading increases, so does the volume of market data that all
trading firms have to capture and process, even if the firm

Levels of Algorithmic Trading in Asias Leading Markets

70%

costs to a modern trading infrastructure are covered by reve-

60%

nues, market participants will be pressured to make the business case for providing algorithmic trading services to their
customers.
Stemming from these challenges, Shah expects that the
Asian markets are not going to adopt algorithmic trading
overnight. Its going to be a slow process wherein the
market will take small incremental steps, including direct
market access, co-location, and market infrastructure improvement, before adopting algorithmic trading on a wider scale, said Shah.

Algorithmic Trading %

doesnt trade algorithmically itself. To ensure that transition

50%
40%
30%
20%
10%
0%
Singapore Hong Kong

Japan

Australia

India

n 2008 n 2009 n 2010 n 2011 n 2012

Source: Celent, Electronic Trading in Asia-Pacific: A Market by Market Update on the Dynamic Region, October 2010.

21

events

ASIAN BANKER SUMMIT 2011

1. Thomas Chern, TCS Financial Solutions, K.T. Chang, CIO, Cathay United Bank, N. Ganapathy Subramaniam, President, TCS Financial Solutions,
Brent Zhu, TCS Financial Solutions; 2. Brent Zhu, TCS Financial Solutions, Zhou Hengchang, CIO of Shanghai Rural Commercial Bank - China,
N. Ganapathy Subramaniam, President, TCS Financial Solutions, Thomas Chern, TCS Financial Solutions
3. R. Vivekanand, Global Head Product Delivery,TCS BaNCS;
Mohamed S. Abdel Salam, Chairman, MCDR, Egypt; Monica Singer, CEO, Strate Ltd.

CSD11, CAPE TOWN, SOUTH AFRICA

TCS held an event at the Spier Wine Estate, in the heart of South Africas
wine-growing region, for delegates to CSD11, the Conference of Central
Securities Depositories. TCS was a platinum sponsor of CSD11.
CSD11 is the premier international event among the executive members of the post-trade securities industry, and the event has attracted
prominent speakers, delegates and sponsors from the industry since its
inception almost 20 years ago. Delegates include representatives from the
regional CSD associations around the world as well as regulators, central
banks, vendors, international banks, custodians and other stakeholders in
the capital markets.
The Africa and Middle East Central Depositories Association (AMEDA)
was awarded the bid to host the CSD11 conference that took place in
Cape Town, South Africa from 6-8 April 2011. The intensive three-day
event attracted approximately 200 delegates.
Executives from Strate Ltd., were among the chief organizers of CSD11.
Strate, the authorized CSD for the electronic settlement of financial
instruments in South Africa, recently launched a joint venture with TCS to

aNCS Securities Processing solution through an ASP

provide the TCS B

model serving mid-tier players in the South African marketplace.

22

upcoming events

September 19-23, Toronto

Visit TCS at Stand B116

October 11-13, Chicago

Visit TCS at Booth 800

research
Forrester Research, Inc. has named TCS BaNCS a Global Challenger. Close on the heels of being named

a leader in the December 2010 report The Forrester Wave: Global Banking Platforms, Q4 2010, TCS BaNCS

istockphoto (2)

continued its momentum by again being named as a Global Challenger in the March 2011 report entitled
Global Banking Platform Deals 2010.
In the report, Forrester surveyed 23 vendors of globally deployed banking platforms on their 2010 deals.

23

Powering BankMuscats customers

with a multi-channel DMA and a 2-in-1
banking and brokerage account.

BankMuscat is the largest financial services provider in Oman. BankMuscat wanted to enhance its Investment
Management and Private Banking offering by providing its customers with Direct Market Access and Internet Trading
facility. It needed an integrated brokerage and investment banking platform that would enable clients to trade
directly on multiple markets in GCC countries, besides facilitating online risk management, Straight-ThroughProcessing (STP) with street-side, core banking and internal systems. Further, BankMuscat wanted to differentiate
itself by offering seamless trading through a linked two-in-one brokerage and BankMuscat account. Tata Consultancy
Services (TCS) implemented TCS BaNCS Securities Trading and Securities Processing, a comprehensive front-to-back
office solution. As one of the worlds fastest growing technology and business solutions providers, TCS enabled a
common platform for securities trading, portfolio management, corporate actions and funds, which also complied
with the business regulatory requirements of the region. Empowering BankMuscats customers with seamless trading
in multiple markets via multiple channels and multi-market portfolio management services. And, of course, enabling
BankMuscat to experience certainty.

To learn how your business can experience certainty, visit www.tcs.com