Financial Services

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Cross post to an interesting article on web data collection is here

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The Australian

TUE 05 OCT 2010, Page 030

Bankwest turns to cloud to host HR platform

By: Fran Foo

COMMONWEALTH Bank subsidiary Bankwest is the latest to jump into the fledgling world of cloud computing, signing up for an externally hosted human resources application.

This is a significant move for the nascent technology platform as many players in the banking and financial industry have security and risk concerns about using vendor-hosted applications.

Bankwest overcame that hurdle by doing its own due diligence on the vendor, including checking customer references.

The new regime means Bankwest does not have to purchase its own servers and storage or require space in their data centres to house the software.

With the workforce analytics portal, Bankwest managers can quickly gain an insight into staff turnover, absenteeism and recruitment patterns, such as the tracking the number of people hired in a particular month and their location.

The system, from SuccessFactors, would allow the bank to forecast the number of workers coming to retirement age and identify potential skills shortages, said Jo McMahon, the bank's human resources management information manager.

Bankwest managers could determine how many people had resigned and drill that information down by gender, age and location, she said.

``Because we can cut the data in many ways we can chart people's career path and also identify issues which may have contributed to people leaving,'' she said.

Bankwest wanted to move into an era of self-service where managers were presented with business intelligence in order to make data-driven decisions.

``We've always had information available, but the focus has always been at the top level,'' Ms McMahon said.

The new system would allow managers to go online and view and track the key performance indicators of workers.
Implementation of the workforce analytics product would begin in March next year, with the rollout expected by July.
It would also benefit Bankwest's 5000-strong workforce.
Ms McMahon said security was a crucial aspect in the decision-making process and the bank conducted its own checks and was satisfied with the vendor.

She said she was comfortable with the cloud arrangement because several government agencies and other large organisations -- locally and overseas -- were using SuccessFactors.

``We've done quite extensive due diligence on them and they have a large number of financial institutions in the US, particularly, using this. I have confidence in their security,'' Ms McMahon said.

"The other thing is that we will only be giving them the pieces of information we choose to give them.''

The cloud approach would save Bankwest from having to hire a full-time systems administrator as upgrades or patches would be automatically done by the vendor.

It would also mean the bank did not have to spend millions of dollars on purchasing hardware for the software.

The total cost of the system, including consultation, support and implementation, would fall in the low to mid-hundreds of thousands of dollars category, Ms McMahon said.
The manager said she selected the system as she had trouble finding anything else that compared well.

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CORE DATA INNOVATION OFFERS CASH-MANAGEMENT SYSTEMS

By: Fran Foo, Australian IT, TUE 15 MAR 2011

COMMONWEALTH Bank's $1.1 billion new core banking platform could become the engine that helps households manage their utility, petrol and grocery bills.

CBA wants to put the power of analytics in the hands of customers and has begun discussions with companies that offer such cash-management services.

Its core banking upgrade, which began officially in April 2008, helps CBA take the guesswork out of introducing products, which could mean less reliance on focus groups.

The highly complex project seeks to replace systems built more than 40 years ago by introducing real-time processing. CBA chief executive Ralph Norris has said the system would allow the bank to launch products in days, not months.

According to chief information officer Michael Harte, the bank increasingly will be able to offer tools to help customers match and reduce their monthly expenses.

``We would like to be in a position to be able to help people with cash management, help people with budgeting, help people ensure they've got the right balances in the right accounts . . . to ensure they've got maximum value and that's what having all those transaction records and account history (in real-time) will help us do,'' Mr Harte said.

``Over time we'll be able to offer people discounts and points for loyalty with much greater efficiency because if you want to be relevant to customers you've got to help them manage their households and manage their business efficiently.''

Mr Harte cited the example of Shrinkbill.com, an online service that works with the Bank of America to help customers manage utility, petrol, communications and grocery bills, among others. CBA was evaluating how best to offer these services to its customers.

``We can increasingly provide that type of capability or, if it's easier or of more value, just partner with those types of organisations. We've met companies like that and are talking to them,'' he told The Australian after an analyst and media briefing yesterday.

Such a tie-up could see data analysis conducted on a customer's itemised credit card bill -- where transactions are in real time every day -- to produce a spending pattern. Armed with this information, customers could make informed decisions, for instance when they saw which grocer charged the most for bread.

The data could be crunched to show spending trends monthly, fortnightly or annually.

Since software giant SAP and IT services firm Accenture were selected as project partners in 2007, CBA has flicked the real-time switch on various products. Offerings such as its First Home Saver and Goal Saver accounts run on the new platform.
Already 1.2 million term deposit accounts, 10 million retail deposit and transaction accounts have migrated to the SAP system. In 2009, 53 million customer records were migrated to SAP.

Mr Harte said the core banking system had drastically shrunk the go-to-market timeframe for CBA while allowing flexibility, a luxury not many of its rivals enjoyed.
``Making a simple change could take four months, a more complex change six to 12 months and (cost) millions of dollars and involve lots of people,'' he said. With core banking, everything was ``preconfigured'', allowing CBA to pick and choose the features it wanted for certain products and launch within hours or days.

He said CBA could test products with real-life customers and not in a laboratory. Goal Saver, a personal savings account, had been tested selectively in Tasmania before CBA decided on a national rollout. ``In most organisations we tend to operate on intuition, we tend to operate on focus groups and none of that proves to be particularly effective,'' he said.

``But the more you do rapid testing and experimentation, you can get a lot wrong but you get a lot right much earlier and spend less time and money getting there.''

He was unperturbed by rival banks' efforts to boost their core banking modernisation programs.

Although there was no exclusive deal with SAP or Accenture, CBA had hired the best core banking brains from both organisations and thus had robbed its rivals of a chance to modernise their IT systems effectively, Mr Harte said.

CBA executive general manager, core banking, Dave Curran, said competitors could buy a core banking product from SAP but it would be difficult to match CBA's project dream team, which had taken two years to assemble.

National Australia Bank has completed the first phase of NextGen, its $1 billion core banking upgrade. The second and third releases will come over the next three years. ANZ is expected to update investors on its plans on Friday.

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Australian Financial Review,THU 17 MAR 2011

Banks caught napping by e-criminals

By: Julian Bajkowski

It used to be that sleeper cells were the exclusive domain of foreign spy rings and terrorist groups, but now it's retail banks that are waking up to the dormant threat of infiltrators working on the inside.

At least that's the view of SAS Institute's Stu Bradley, the man in charge of developing fraud detection systems for most of Australia's banks.

Mr Bradley believes that established crime gangs have now changed their game from a volume business to one focused on grabbing fatter margins from fewer stings using what he calls "flash fraud".

The scams work by using a combination of moles to collect intelligence on bank operations, particularly fraud detection techniques, and then establishing large numbers of what appear to be legitimate customer accounts.

"Crooks are definitely putting plants into banks," SAS general manager of risk intelligence Brendon Smyth said.

The accounts are set up using either stolen or real identity credentials from people dubbed "mules", who receive a cut of the scam.

But it's what happens next that has banks worried the most. Instead of pulling money from bank accounts as soon as they're activated, the crooks sit back and wait until they have accumulated hundreds of them across several institutions.

Next, they hit and empty all the accounts at the same time so that the overnight haul is far larger that picking off accounts one by one.

"They will bust out for millions across multiple banks," Mr Bradley said.

A typical take from a one-day flash fraud sting, also called a "ring attack" , is in the range of between $2 million and $3 million.

The real headache for banks is that because there are so many relatively small frauds across so many accounts, the cost of investigating and prosecuting thefts blows out.

"They know the cost to engage law enforcement and stay below the threshold," Mr Bradley said.

"There are now career fraudsters."

The task recruiting "mules" has been greatly aided through the proliferation of social networking websites that provide easy access to a pool of potentially millions of financially challenged people willing to take a risk to make a fast buck.

"The mules are aware," Mr Bradley said. "There is a hierarchy just like in other crime rings."

Banks and employers were also discovering an increase in payroll fraud where a fake employee is created and their pay put into an account that is then milked.

This creates a liability issue between the payee employer and the bank in terms of who wears the loss.

While there was no single solution to stomp out the natural innovation of crooks, one proven method was to run analytics software across the bank's business unit as a whole rather than just in individual business units or products.

Mr Bradley predicted that next big fraud challenge consumers would face was the convergence of the telecommunications and financial services sectors because of smartphones.

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Australian Financial Review, TUE 08 MAR 2011, Page 31

By: Paul Smith

Commonwealth Bank of Australia has been named one of the world's best examples of a next-generation digital financial services organisation by international technology research company Forrester.

The nod comes in a report that warns most financial services companies have outdated websites and are not taking advantage of opportunities offered by online and mobile technologies.

The news will be a boost to CBA, which spent much of last week hosing down customer angst and talkback radio notoriety after a systems glitch caused its internet and phone banking to be suspended, and led to some ATMs dispensing more cash than customers had in their account.

The Forrester report said customer expectations and the importance of the internet and mobile devices as sales and service channels meant financial services organisations had to improve the way they served customers via digital channels.
It found that leading online companies such as Amazon, Apple and Google had continually raised the bar for digital sales and service, which had resulted in financial services customers often feeling frustrated by the limitations of online banking options.

The author of the report, Alexander Hesse, said despite the online channel being more than a decade old, most financial services companies had yet to fully use its potential. He said many websites suffered from problems such as confusing layouts and online application processes that were too complex.
Financial services companies often failed to support customers across different channels in a uniform way, didn't make good use of evolving business intelligence technology and social networking to provide individually tailored online service, and the online customer service was too frequently sub-par, the report found.

"Many financial services executives have either seen digital channels primarily as a way to cut costs by serving customers more efficiently or mistakenly regard digital channels as exclusively self-service channels," Mr Hesse wrote.

"Yet people remain by far the most effective channel for high-value interactions like converting a mortgage buyer or handling a complaint. Many firms make it too hard for customers to reach human help through digital channels, often resulting in lost business or unhappy customers."

However, the report said CBA had created seamless cross-channel experiences by linking all product applications together with unique identifier numbers, and had made innovative use of online videos to sell mortgages. The CBA was also praised for its NetBank banking service, which allows customers to create a personalised home page.

Last month, The Australian Financial Review reported the bank was preparing a technological assault on rivals, using the "real-time" features of its new core banking platform over the next 12 months to lure customers fed up with waiting days for transactions to clear. The bank has opened more than 400,000 customer accounts since unveiling a retail core banking project which is expected to cost $1.1 billion by the time it is completed.

Chief executive and vice-chairman of Indian outsourcing giant HCL Technologies, Vineet Nayar, told the Financial Review a technology race among leading banks around the world was particularly intense in the Asia-Pacific region due to the vast number of younger customers.

He said this should have serious implications for the regional expansion plans of banks, including ANZ Banking Group and CBA. "Fifty per cent of the population in the emerging market is less than 25 years old and they are all digital kids," Mr Nayar said. "They are not going to interact with the banks in the same way that their parents did. If you do not create a digital experience for these guys, they will not do business with you."

Mr Nayar said banks needed to treat the establishment of a customer's first account similar to the way Google viewed the creation of a free Gmail account. It would be a central point for institutions to add other revenue streams such as credit cards, insurance policies and links to discount offers from online business partners.

"The mother of all battles will be fought in grabbing the sub-25-year-old kids, in getting them to open their first bank account," Mr Nayar said. "Once they have it, it becomes about the bank using technology to know the customer so well that they can predict what they need and create a web page for them around their profile. Customisation is the key word ? people no longer want a regular generic bank website."

Mr Nayar said CBA and Deutsche Bank were the leading examples of how to approach the overhaul of ageing bank technology platforms.

The report found even though most financial services companies sought to serve a variety of customers with different demographics, attitudes, and needs, most still offered everyone the same content and functionality.

It made no sense for older visitors to a bank's website to see the same marketing or home page as generation Y, the report said. While some already used banner ads on their sites to increase the relevance of product offers, most provided a one-size-fits-all experience.

"Next-generation digital financial services will use all available customer data ? like customer records, product holdings, and interaction histories across all channels ? to personalise the entire experience," the report said.

This meant customers would receive personalised product offers and service messages. Online advice tools would be pre-filled with existing customer data and contact information sections would automatically show the relevant branch or personal adviser.

The report said: "Building a new generation of digital financial services is a huge and costly undertaking that will involve years of work by many roles across the business, from marketing to security. But doing so successfully is critical to the long-term success of retail financial services companies."

Financial services can be defined as the products and services offered by institutions like banks of various kinds for the facilitation of various financial transactions and other related activities in the world of finance like loans, insurance, credit cards, investment opportunities and money management as well as providing information on the stock market and other issues like market trends.


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