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Encore Solutions



Preparing for the challenges

The ability to use ‘soft market’ time to prepare for the next big business cycle is what makes leaders in the banking industry stand out from the rest. SUKIRAT KOCHAR and MANINDER BHANDARI explain.

Posted on 02 January 2012, CASH & TRADE Magazine

All industries go through ups and downs and the banking industry is no exception. However, what differentiates the leaders in this business from the rest is their ability to prepare their organisations, during a soft market, for the next big business cycle.

They invest in improving their business processes and implementing better systems during those times to empower their users and move their business to the next level. They also invest their employees’ valuable time in implementing/upgrading systems while business volumes are low. In this way, they are prepared for the next big business cycle and in a position to handle more business, with better customer service, at a lower cost.

Challenges for trade services in banks

Role of technology
In an environment where business volumes are not growing much the only way banks can grow their business is by winning clients away from their competitors. Some of the key factors that will help them achieve this are better customer service and availability of products that are the need of the hour at the right price”. Technology can play a very key role in enabling a bank to provide all the above services and really help differentiate themselves from others.

Heavy capital investment has been a prohibitory factor for many banks to upgrade their technology platforms but there are newer models available in the market today that can enable them to achieve their objectives without any upfront capital investment through the “SaaS” model.

What is the SaaS model?
SaaS stands for Software as a Service.

Traditionally, software providers have been selling a licence of their trade services application to the bank and charging separately for other services such as implementation, customisation etc. The banks install the software in their premise and pay most of the fee before they really start using the software in production mode.

Apart from the software, the bank also needs to procure the requisite hardware (servers etc.), invest in disaster recovery (DR) sites, procure database licenses, other supporting software, dedicate people to manage the hardware, application etc. Basically, the bank’s 100 per cent capital investment on this project is done even before they start deriving any benefit from the application.

In the SaaS model, the software providers host the trade services application at a particular location (which could be the bank’s premises) and the application is pre-packaged with the basic set-ups readily available so the client can subscribe to the software rather than buying it and, after a quick deployment cycle, they can start using it in production mode.

Customers can then begin use of the front end while the bank deploys the best of processing, to the benefit of all, very quickly.

Variations of the SaaS model
The SaaS model is available in the following formats:

Based upon each bank’s preference, security guidelines and their country’s regulatory requirements, they can opt for any format of the SaaS model. The cost benefits may vary slightly based upon the chosen format but the basic essence of the SaaS model is still preserved and the cost savings and operational efficiency benefits can be tremendous.

Benefits of the strategy

Experience of enterprise clients using SaaS mode
Challenges and key success factors

Managing all these aspects is not very difficult and the service providers need to discuss these aspects in detail with their clients

As in most cases, adopting new strategies brings new challenges as well as new opportunities at the same time. However, if executed well this model can be really beneficial especially for organisations that want to use technology as a key differentiator for them in the market.

Sukirat Kochar

Sukirat Kochar is the chief operating officer of Encore Solutions. He has more than 14 years experience in the technology industry focused on the banking, financial services and insurance (BFSI) verticals. His area of expertise has been in product development, transaction processing, business process outsourcing, client relationship management, programme management and strategic business development.

Before Encore, Sukirat was vice president and business head of 3i Infotech Inc. North America. After a successful tenure in Middle East and Africa, he was instrumental in setting up the company’s US operations. He was a key member of the Business Solutions team for the BPO and transaction processing business and worked with clients such as JP Morgan Chase, American Express, Wells Fargo and Prudential. He is available on sukirat.kochar@encoresolutions.com

Maninder Bhandari

Maninder Bhandari, managing director, The Encore Group, has been a career banker for more than 27 years at HSBC, ABN AMRO, Emirates NBD and The Bank of New York Mellon in senior positions at the wholesale, retail, acquisition and Islamic banking areas located in Asia/Pacific, Middle East/Africa, Latin America/Caribbean and North America. Before he became the founding partner of the Encore Group, he was the managing director (treasury services) for Middle East and Africa for the Bank of New York Mellon. He is available on maninder.bhandari@encoresolutions.com

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