in Tough Times
CEO, CBZ Holdings
Cash is King!
Leading Asset Management Company
Selects Agile FT
And here it is! Both Spring and our inaugural
issue that you behold at this moment!
We live in interesting times. A period in history
that will be studied for ages to come. There are
lessons to be learnt and for those who can
Optimal Insurance Selects
understand the opportunity within all the
adversity, it’s time to plan for a rewarding future
We invite you to be inspired by the quot;lift of your driving dreamsquot;. This is Managing Liquidity in
the time when we should take a relook at our systems and processes, Tough Times 6
and prepare for the inevitable upswing ahead.
While an enormous spate of activity takes place round the clock at Agile
Global Update 9
FT offices across the world in terms of research, product development
and innovation, we wanted to share some of it with you.
Kalpesh Desai 10
We share the joy that we feel in this initiative as it brings us closer to
you and allows us to chat with you - up close and personal. We invite
you to use this platform to share your own perspective, to reach out and
Cash is King! 14
build partnerships within our community of clients, partners and
So go ahead and read a little, think a lot, get charged even more and
Making Strides in West
soar beyond glass ceilings and as you do, remember to drop us a Africa 16
postcard (or an email will do) to let us know how we fared.
Selects Agile FT 18
Chief Marketing Officer
Write to us at firstname.lastname@example.org
Nyasha Makuvise, CEO, CBZ Holdings, signs the agreement with Kalpesh Desai, CEO,
Agile Financial Technologies. Also see standing (from left to right) are Rumbidzayi
Jakanani, Legal Advisor, CBZ; Munya Mateko, Regional Head - Africa, Agile FT; and
Tatyana Chernyshova, Business Development Manager, Agile FT.
What prompted the recent reorganisation and diversification
Optimal Insurance Company (Pvt) Ltd, a
of the CBZ Holding Company based on client segments and
subsidiary of one of Zimbabwe’s largest and how has it impacted growth?
diversified financial services institution - CBZ
The primary motivation for the reorganisation and
Holdings Limited - has shown its commitment
diversification of CBZ Holdings Limited was the need to
to improving service delivery to its clients by
provide clients with a ‘one-stop shopping experience’. This
recently acquiring the rights to implement meant providing a variety of services and products to clients
AGILIS Core Insurance Software from Agile within a group. The generic financial services model in
Zimbabwe was that of a single service provider and we
Financial Technologies. The new system will
endeavour to be unique in this area.
allow Optimal Insurance to automate all its
existing operations and enable them to quickly The intent of the innovation initiative was to provide clients
create new insurance products thereby with many products and services within one group, but
through various subsidiaries. This is why we have a 360
degree icon as part of our corporate identity which is aptly
combined with the phrase “all round financial facilitator”.
AGILIS covers the entire spectrum of
operations and finance management for an The other objectives of our reorganisation were the
insurer including product management and diversification of income streams, capital and shareholder
distribution (policies), underwriting, value preservation. Diversification of income streams
helped us reduce the shocks of major drops of income in
reinsurance, claims and accounting. Available
one line of business. On the other hand due to the hyper
with multi-language and multi-currency support inflationary conditions in the country, it was important to
and consolidated financial information on multi- preserve capital through acquisitions of value holding assets,
currency transactions, its well-defined workflow for e.g., real estate. We transformed the Zimbabwe dollar
‘trillions’ into land & buildings which held better value. This
covers all the steps of the insurance business
helped us to preserve shareholder value and provide us with
from a single view of the customer profile to steady income.
effective management with pre-configured
reports, including MIS. In what areas has the economic slowdown impacted CBZ
Holding Company, and how has the company maintained a
healthy position despite the economic slowdown?
On this occasion, Nyasha Makuvise, Group
CEO, CBZ Holding Company, shared his
The CBZ Group is largely a financial services company.
insights on the company and industry, in an Lending is a major business, with interest income being the
exclusive interview to Agile Financial Times. main source of income.
The general economic slowdown and the hyper inflationary climate in the country in the past couple of years. However,
conditions in Zimbabwe seriously and adversely affected the we expect business to pick up after the recently pronounced
core business of lending. As a result, financial profitability government of national unity.
was reduced significantly.
The insurance market is a perception-driven market and
The other area that was affected was the stock market. hence the recent political settlement creates an opportunity
Within the group we have a stockbroker and an asset for us to introduce new and improved products ahead of
management company. Their operations almost came to a competitors during the transition period. Competition in the
halt and reduced income flows for the group. industry is based on service delivery and Optimal Insurance
hopes to capitalise on this transition period by being agile
What is your outlook on the banking and financial services and innovative on new products and services. The pre-
industry in Zimbabwe? requisites for this are a robust and scalable technology
platform to complement the launch of new products, as well
Globally the banking and financial services is in bad shape. as superior service delivery by improving document
Zimbabwe is, of course, no exception. However, I see a turnaround.
bright future for our industry as we are poised for a
turnaround. This is mainly because we have been under Group synergies make Optimal Insurance strategically
sanctions and were somehow insulated from the major positioned to significantly grow the bancassurance business.
shocks that affected other markets. The company is also looking forward to capturing
agricultural sector business through bancassurance.
A strong shareholder base increases stakeholder confidence
Competition in the industry is in the company, creating an opportunity for it to increase its
based on service delivery and
Do you believe that the current economic scenario will
Optimal Insurance hopes to throw up any significant challenges for CBZ Holding, and if
so, how do you plan to overcome them?
capitalise on this transition
Indeed at no time in recent times has the term ‘global village’
period by being agile and relating to the world been so real. The general world
economic meltdown has affected Zimbabwe and indeed the
innovative on new CBZ Group. This has mainly been through less borrowings,
hence diminishing opportunities to raise capital. Our main
products and services. focus is on lending, so if we cannot get lines of credit it
automatically translates to less business.
Developing economies are also largely commodity-driven.
As we come out of the isolation with the removal of The slowdown in the world economy reduces trade and
sanctions, business should start to improve. Lines of credit prices of commodities and this adversely affects financial
availability should improve and trade will be facilitated. This services.
will benefit the industry; hence my optimism.
I believe that this is the time to prepare for a better future,
On the other hand, I do believe that some consolidation in so that when the good times come we are ready. This is one
the industry will take place. This will be based on the need of the reasons for focusing on putting the right technology
to improve the capital strength of financial institutions. in place.
Outside consolidation, I also believe that acquisitions, Why did you select Agile FT as your technology partner?
particularly by larger foreign stronger financial institutions,
will take place. This will allow for financial strength and In our quest to provide superior service and delivery to our
stability. clients, we needed a technology partner who understands
our business as well as we do. Agile FT met that need
Is the insurance business in Zimbabwe growing and what perfectly.
are the opportunities for Optimal Insurance moving
forward? In addition, the quality and experience of the Agile FT team
gives us a significantly high comfort level that the
Being a service industry the insurance sector has been implementation will go as planned, and that we will be able
negatively affected by recession, mainly due to the political to achieve our goals.
This article explores
the nature of the
in Tough Times
banking business, the
different types of
risks involved in the Several banks globally have closed down over the past few months, the primary
reason for the failure of these banks being that their lending activity was much
banking business, higher than their deposits permitted. This mismatch between their assets and
deposits led to a shortage of funds for their operating activities. Another
identification, significant reason for the downfall of these banks was the US sub-prime crisis,
which led to a dry up in the securities buyback markets resulting in a severe cash
measurement and crunch.
impact of liquidity Banks form the backbone of an economy and when they are affected, the entire
economic activity of a country comes to a standstill. Worse, the domino effect
risk, and risk spills over the borders giving rise to the risk of contagion at a global level.
Obviously this is not a desirable situation and banks need to examine the reasons
management systems for this and take concrete steps to ensure that a similar crisis does not recur.
that can be set up Banking Risks
to prevent a The traditional activity of a bank involves the business of borrowing (deposits)
and lending (loans). Profits are generated by the cost income arbitrage that a bank
liquidity crisis. incurs through deposits and loans respectively. Therefore, the primary risks that
a bank faces include credit risk and liquidity risk. The quantum of credit risk
primarily depends on the type of industry and the risks associated with the
industry, which would prevent the borrower from repaying the loans. Liquidity
risk arises out of the inability of the banks to honour their obligations due to
non-availability of liquid funds. This risk is inherent to the general banking
business, and arises out of due course of the banking business. The reason for
this is the manner in which banks conduct business. At this point of time, the bank should be able to identify its
Typically banks lend to customers on a long-term basis and possible liquidity issues and therefore establish preventive
borrow on a short-term basis, such as from the financial measures to steer clear of the same. These simulated
markets. Thus, they keep assets on their books for a longer scenarios help a bank prepare for contingencies. Similarly,
time and provide liquidity in the short term in case of situations or scenarios for the other levels can be simulated
contingencies as well as to cater to the daily cash and tweaked in accordance with the changing environment.
requirements, with the assumption that the business will
continue to refinance itself.
Most banks and financial
institutions fail due to the
There are a number of risk management systems that can be
used to identify, monitor and control risk:
under-pricing of liquidity
Firstly, the bank needs to identify liquidity risk by classifying
risks, rather than a credit
its balance sheet into two classes:
risk due to aggressive selling.
Sticky assets refer to those assets that cannot be returned on
demand, For example, fixed assets like building and Once the scenarios are identified, banks should put them
computers. Core assets refer to those that can be liquidated through a stress test. Here banks would normally follow two
in case of an emergency. For instance, cash with the central testing techniques:
bank, and cash and deposits with peer banks. Clearly, a bank
cannot depend on sticky assets for a bailout in case of a Historical Value at Risk: Historical Value at Risk can be
liquidity crisis. However, a bank can depend on the core arrived at using normal distribution and events method
assets for generating cash in case of an emergency. These where-in the worst possible scenarios and events are
core assets should be further classified into CASA (Current assumed to have taken place and then its effect on the
account saving account), collateralized borrowings, long- liquidity is calculated. Example of such events includes
term loans and so on. failure of banks to borrow, dipping share prices etc.
Balance Sheet Liquidity: Balance Sheet Liquidity puts to
After classifying the assets, banks need to place risk weights test the bank’s ability to raise finance in a short period of
for each of these assets from highly liquid to less liquid and time. This assumes the shortest period within which
illiquid. liquid assets can be sold in the market and funds can be
raised from market makers and brokers. In order to
Thereafter, banks should set up a maturity matrix for both make this possible, banks align the assets in accordance
assets and liabilities, which helps ascertain the maximum with the level of their liquidity. Banks refer to the
negative outflow within a period of three to six months. balance sheet items in terms of the degree of their
This maturity matrix should be defined in terms of a cluster liquidity. For example, a committed line from other
of deterministic items and non-deterministic items. banks is considered as a percentage of short term
Deterministic items are liabilities or assets with a fixed unsecured obligations. The higher the percentage, the
maturity period, interest rate and amount (for example, a higher the liquidity.
bond with a fixed maturity period, coupon rate and amount).
Non-deterministic are assets or liabilities with unfixed Based on scenarios and testing techniques, banks can evolve
amounts, interest rates and maturity period (for example, strategies to ensure that liquidity is available for daily
LIBOR-linked securities, callable bonds and put options). operations (the amount of negative outflow limits) and on a
long-term basis (align the deposit and asset side with the
Once the maturity matrix is set up, the banks should identify long term goals).
and assess the liquidity attached to various assets and
liabilities on their balance sheets. Banks need to establish Once the strategy is defined, the bank should set up a
scenarios at various levels (such as at the organizational level, Liquidity Continuity Plan (LCP) that can identify points of
local bank system level and international level) and test how cash limit breaches and measure how a bank can resolve the
these items are affected in a given situation. For example, at situation. Banks should establish clearly documented
an organizational level when a bank’s current accounts are processes that explain the steps to be followed in case of a
being called, deposits are being withdrawn; peer banks or liquidity contingency event.
others hold and cannot offer liquidity, the question to be
asked is how will the bank generate cash for its operations? The LCP should be made known to the large customers,
The recent fallout of major banks re-iterated the fact that
liquidity risk has a strong bearing on the world economy.
Structured Liquidity Risk (SLR) is defined as a risk
undertaken in a conscious manner to generate cash and
maintain assets on a long-term basis. It is termed ‘structured’
because it is well-known and it is undertaken in a planned
creditors and stakeholders. In case a bank does not do
manner. For example, banks need to pay taxes on a specific
so, lack of information at the critical time can lead to a
date, and earmark a certain portion of their funds for this.
crisis. Banking is a business of confidence and it is
critical that the same 'language' is spoken across various
Contingent Liquidity Risk (CLR) is concerned with assets
levels. Lack of synchronisation between various levels
and liabilities of a bank that typically have a long-term maturity,
of management and stakeholders can further fuel the
some examples of which include term deposits, offshore
crisis. Hence, it is critical to keep all stakeholders well-
products and guarantees. Although this is part of the daily
banking business, the possibility of these getting liquidated
prior to their maturity poses significant liquidity risk. For
example, a term deposit with a maturity of five years may be
liquidated by the depositor at the end of the third year.
Liquidity risks have very
Similarly for offshore products like guarantees, if called upon
at any point in time, the bank has to honour the financial
long-standing effects, not
obligations. When banks fail to honour their financial
obligations, it can result in consequences like bad publicity, run
only for the company, but
on banks, breach of depositors trust, and degradation of the
bank’s credit rating. Numerous situations of the same type can
on the country and
give rise to shortage of funds. Such cases occur when there is
a high amount of market volatility, which gives rise to market
economy as a whole.
Market Liquidity Risk (MLR) is the third type of risk and
works on the assumption that markets operate in a normal
Taken together, these steps should hold banks in good
condition and have sufficient liquidity levels. In case money is
stead while managing their liquidity risks proactively.
insufficient in the market, it results in shortage of funds and
eventually leads to a collapse of the financial system. For
example, most banks undertake inter-bank lending and Conclusion
borrowing activities, which allows them to avail money to fulfil
Liquidity risks have very long-standing effects, not only
their financial needs. However, in case of the current financial
for the bank, but for the country and economy as a
crisis the inter-bank lending markets had dried up and a
whole. Hence central governments of many countries
shortage resulted in the markets getting tightened.
step in to bail out ailing banks in a liquidity crisis
scenario. However, banks should not use this as a
The market volatility was so high that the indigenous and
safety net and fall prey to the moral hazard it poses.
endogenous risks led to a severe cash crunch in the market.
For example, the mortgage-backed securities markets dried
Liquidity risk negatively impacts both sides of a bank's
up completely and banks were unable to liquidate their
balance sheet, the assets and the liabilities. Assets are
securities through re-pledging, which led to panic. Similarly,
affected, as bank's borrowers default in repayment of
when banks could not raise finance to meet their contingent
loans resulting in a funds shortage. Similarly, liabilities
and structured liquidity requirements, rating institutions started
are impacted because depositors do not invest in a
downgrading their ratings. In addition, borrowers started
bank that is facing a liquidity crisis.
demanding their loans. All these events had a cumulative
effect on banks getting hit with substantial pressure from all
Most banks and financial institutions fail due to the
stakeholders. Banks were unable to approach the market to
under-pricing of liquidity risks, rather than a credit risk
raise finance through certificate of deposits, commercial paper
due to aggressive selling. Regulators and the
or assets of similar classes, with Lehman Brothers being a
government need to ensure that financial institutions
classic example that suffered the consequences of being
maintain a sufficient level of liquidity to meet sectoral
unable to create liquidity when required.
needs and sustain the level of liquidity in the market.
A quick review of industry news from
around the world.
were issued between family members, whereas now they are
Leading UAE Banks to Convert State Deposits to
Capital: Leading UAE Banks such as Mashreq, RAK Bank, issued to unknown parties) to a financial product issued to
NBAD, Emirates NBD have recently announced their third parties. Similarly, opinions about imposing fees on
intention to convert federal government deposits into guarantees are undergoing a change and many banks have
regulatory capital. This is to improve asset quality and offset already started charging fees for guarantee issuance.
the impact of global credit crisis on the domestic banking
industry. Most of these deposits will be converted to Tier 2 Citigroup to Expand in South East Asia: Citigroup is
capital for effective risk mitigation. believed to be looking to open more branches in Thailand
and starting equity brokerage businesses in Malaysia,
Vietnam and Indonesia later this year, in an overall plan to
Brazil Plans to Reduce Spending Due to Financial
Crisis: As a result of the financial crisis, revenues from tax expand in Southeast Asia. This signifies that Citigroup,
collections in Brazil recorded a significant fall. The which has been affected by huge losses in the United States
government is now taking measures to curb the impact of due to the real estate market collapse, is now banking on
lower inflow of funds. Guido Mantega, Finance Minister of Asia to bolster its business.
Brazil, announced a reduction in current expenditure and
tighter fiscal policies to reduce the mismatch between lower Yemen Plans to Approve Modified Investment Law:
tax collections and high fiscal expenditure. Salah al-Attar, head of the General Investment Authority
(GIA) stated that the Yemen investment law was undergoing
modification. The modification involved a decrease in
Qatar Central Bank to Replace 1.2 Million ATM Cards:
Qatar Central Bank heads told all banks in the Gulf state to income taxes charged on companies from 35% to between
change 1.2 million ATM cards with chip and pin technology 15-20%, customs exemptions and the amendments of the
to smart chip cards technology within seven days. The aim General Investment Authority’s board of directors (now
of this move is to offer greater protection to clients from comprising 50% public sector employees, and remainder
prospective hackers and ATM fraud. While it will enhance from the private sector).
security, it will also offer greater inter-operability .The banks
sent SMS messages to clients informing them about their Indian Public Sector Banks Cut Rates: Indian banks
ATM card replacement move. have begun reducing deposit and lending rates after the
Reserve Bank of India announced a 50 bps cut in repo and
reverse repo rates. Three public sector banks viz., Bank of
Shari’a Banks may Impose Fees to Issue Guarantees:
According to religious scholars, Shari'a banks should be Baroda (PLR-12%, down 50bps), Union Bank of India
permitted to impose a fee for issuing guarantees as it (PLR-12%, down 50bps) and United Bank of India (PLR-
involves a transfer of risk to the bank. Supporting this, 12.5%, down 50bps) have reduced their rates. The rate cut is
Mohd Daud Bakar, advisor, Accounting and Auditing expected to encourage banks to offer credit for productive
Organisation for Islamic Financial Institutions (AAOIFI), purposes at feasible interest rates. However, private sector
stated that the nature of transactions for guarantee issuance banks such as ICICI Bank and HDFC Bank have yet to
has evolved from a family transaction (earlier guarantees decide on the rate cut.
CEO, Agile Financial Technologies
The BFSI industry is in a challenged state today due to the
Kalpesh Desai, founder and CEO of Agile
global financial crisis. Where do you see the industry going
Financial Technologies, envisioned the creation
of an unparalleled enterprise that would be a
technology partner to leading players in the Those who fail to learn from past failures are bound to
replicate it - the current state of the financial services sector
BFSI sector enabling business agility. He
is a perfect example. As past experience fails to guide future
formed Agile FT by acquiring and merging
behaviour, banks and financial institutions across the globe
strategic software products and technology find themselves unable to understand what actually
companies in the space of software solutions, happened. Overwhelmed by the sheer volume of lending
activity, many banks opened themselves up to tremendous
technology services, BPO and KPO.
risk - for which they now are paying the price.
Kalpesh has over two decades of experience
The current crisis facing the global financial services sector
in spearheading technology companies to can be attributed to the contracted liquidity in global credit
achieve and sustain a position of market markets and banking systems triggered by the failure of
mortgage companies, investment firms and government
leadership and organic growth. He has earned
sponsored enterprises which had invested in subprime
a reputation of creating and building
mortgages. The crisis, which became more visible
successful, scalable enterprises by defining
and converting corporate vision into strategic
intent and coordinated action. A firm believer of
producing results through people, he has
attracted and retained talented people.
He brings a deep understanding of
businesses having held multiple roles in
executive management, product development,
operations management, sales and
throughout 2007 and 2008, has exposed persistent been the primary challenges in addressing these
weaknesses in the global financial system and regulatory opportunities?
In the current downturn, BFSI companies have increasingly
We believe that the domino effect of what happened to sub- new roles to play. The institution with the ability to
prime will now impact the prime markets. There will be demonstrate responsiveness, turnaround times, transparent
further write downs in the global financial industry, with reporting and effective advisory services will be well placed
investment firms taking mark to market losses and banks to retain and attract customers.
writing off non-performing assets over the next quarter due
to rise in unemployment, lay-offs and pressures due to Insurance companies will see a demand in clients who have
recession in the most economies. In the new economy, made investments desirous of securing their assets. Long
nobody is isolated from the crisis and global liquidity term insurance (Life) is also expected to see an anticipated
contraction is bound to put pressure on financial rise in demand.
Cash is now King. Liquidity management is of paramount
The BFSI sector as we know it has changed its outlook importance to institutions since their liabilities have typically
significantly. Emerging markets will become the new shorter maturity periods than their assets. Banks facing a
powerhouse considering that these economies have worked reduction in their depository base have been forced to
under stretched circumstances already and are in a position leverage and any capital expenditure should be viewed with
to adapt to change quickly. Most emerging economies have concern. The system is under pressure and financial
also been more or less isolated from exposure to complex institutions have new challenges in establishing a balance
financial instruments like derivatives and have been investing between growth and survival.
in fundamental businesses.
Institutions will be challenged to manage customer
expectations, increased regulatory oversight, contracted
liquidity and a deteriorating quality of assets all at the same.
The differences between the business and the IT teams of
the financial institution become more acute in these
circumstances and the challenge is to ensure business agility
in an environment that is straddled with inflexible
Current IT systems that were deployed in the quot;good timesquot; applications, islands of information, multiple interface
were designed to function and deliver to a context that points, tedious product development, succession planning
perhaps isn’t relevant today. It is imperative that systems that imperatives and lack of research.
focus on liquidity, capital conservation and growth of capital
need to have deep functionality with extensive risk and limit What kind of role do you think technology can play in
management capabilities. Institutions will have to give a lot addressing these challenges?
more focus to moving risk management upstream to their
front office, and examine the possibilities of working with In the current situation of global economic slowdown and
service providers who can undertake to manage their mid liquidity crunch, a re-orientation of technology plans of
and back offices. This will allow customer centricity, product banks and financial institutions has to take place which
development, quality of assets and capital adequacy to come needs thorough preparation on the part of the institutions.
into focus and enterprise risk management will shift its role Only that technology platform, which offers a low total cost
to bring about a tighter integration with the business. of ownership, can contribute to business growth quickly,
and which at the same time can help banks to reduce their
Do you think that even in the current downturn, possible regulatory compliance burden and costs, while improving
growth opportunities exist for BFSI companies? What have their business processes, customer retention and growth, is
likely to be considered in the short to medium term. Platform enabled outsourcing services is emerging as the
definitive IT model for many banks as they strive to lower
Given the enormity of the crisis, risk management operational costs to ensure a high return on investment.
technology will be a key industry focus for the next three or This can be defined as the ability of an outsourcing vendor
four years. While firms have invested significantly in their to provide its services around functionality rich application
risk infrastructure over the past 10 years, significant software platforms that are used for fulfillment and
investment and modifications to the existing infrastructure dissemination. Platform enabled outsourcing is likely to
will be made. To provide the chief risk officer with the experience tremendous uptake in the coming months,
appropriate risk infrastructure, firms will augment their especially in the wake of the current credit crisis. Financial
Value at Risk (VaR) framework modeling to embrace institutions should, therefore, take advantage of the benefits
scenario analysis. Enterprise risk management platforms that can be sought from this model in order to stay ahead of
will become the need of the hour as market, credit and the competition and drive innovation.
operational risk management become more essential in
running a modern financial institution. Do you see any particular trend in terms of business
requirements from BFSI companies? Have you noticed any
Diversified financial groups will revamp the way to look at significant change over the last 5 years?
customer centricity around their cash & liquidity
management, mortgage finance, wealth management, asset An increasing number of financial institutions have been
using the software as a service (SaaS) model. The financial
services sector is one of the largest industry users of SaaS.
However, most of the current financial services SaaS
Financial institutions, across the deployments are CRM applications. But in the wake of the
current market scenario, large asset managers and brokers
world, are considering their have been increasingly using certain types of non-CRM SaaS
offerings. In the risk and compliance space, there has been
competitive position, capital an upswing for vendors offering hosted applications and
financial institutions willing to use such services. SaaS-
base, and growth prospects. delivered risk and compliance applications include corporate
actions, approval mechanisms for complying with customer
regulations and anti-money laundering applications.
management, broking and insurance services. Applications Many large institutions are increasingly using SaaS for wealth
with deep functionality in these areas and the ability to be management advisory functions; they take these on a need
rapidly implemented will see more increasing demand. basis from large clearing providers and wealth management
software providers. Such arrangements are a good fit for
Two other key technology initiatives will become institutions that have agent networks of 10,000 or more
increasingly important as firms revamp their platforms. financial advisors.
First, normalising and validating data across the enterprise
will become critical. Grid, cluster and virtualization will IT managers of financial institutions also face innumerable
become more common within as institutions look at challenges as business needs have been extremely defined,
consolidating their resources within a central processing and existing systems that have been loosely coupled together
platform. Secondly, institutions will look for technology are unable to cope with demands from business. Customers
partners who can service them holistically, instead of just have become very demanding on security issues. Informed
software product vendors or point service providers. and tech-savvy customers expect financial institutions to
handle remote deposits, nationwide ATM and debit card
Margins for BFSI companies are under severe pressure services, online banking and electronic bill payment from
today. How do you think this will impact their technology multiple physical and digital locations. As a result, fraud
decisions? detection & prevention, regulatory compliance and ID &
data security issues have become as mission critical for the
Banks, both small and large, are under tremendous pressure CIO as managing the operations infrastructure.
to tighten their financial belts. Consequently, they are
considering efficient ways of managing internal costs, In the current economic scenario, financial institutions
particularly with respect to their IT applications. worldwide are opting for SaaS to reduce IT costs and predict
their IT spending. Banks can reduce the total cost of
As capital markets firms recede, reorganise, and seek safe ownership (TCO) for IT by outsourcing the hosting of
harbours, IT spending and priorities are coming into focus. applications. Through this, banks are able to significantly
Financial institutions, across the world, are considering their reduce the implementation costs which otherwise would
competitive position, capital base, and growth prospects. have been higher for custom built solutions. Banks save on
time and money as most of the risks of selecting and outsourcing services, and creating a differentiator for
implementing new applications are avoided. ourselves.
The decision to implement SaaS for small and medium-sized What are your plans for Agile FT over the near-to-medium
banks helps them to gain access to flexible software term?
applications that they traditionally have not been able to
obtain. SaaS enables banks to benefit from the highly Agile Financial Technologies provides business enablement
specialised applications at minimum cost and maintenance services wrapped around its software products platform. We
fee. Smaller brokerages, fund managers and asset service businesses of financial groups that focus on the
management firms have a much easier time integrating data conservation or growth of capital. Our software products
from different applications with hosted services-oriented run the core businesses of investment management firms,
applications than their larger counterparts. SaaS also finance companies and insurance companies. We have the
provides increased flexibility in responding to changes in
demand as well as seamless product enhancements, thereby
allowing financial institutions to concentrate on providing
A change of mindset is in
better customer service to their customers.
the air - towards the
Corporate clients can also benefit from SaaS. Financial
institutions offer online web-based cash management
adoption of platform
service to corporate treasurers which can help them to
automate and consolidate their financial processes by having
enabled services adoption.
complete access and control of their financial activities
through the bank’s online cash management tool.
The biggest obstacle to SaaS in large firms is integration -
integrating hosted Web services with back-end data storage ability to provide financial institutions not just the software,
and legacy systems. Although SaaS offerings can integrate but managed services around their technology infrastructure
with other programs, they operate more efficiently when the and the ability to take on the outsourced functions of mid
data is in the SaaS provider’s data centre. Security is another and back office operations. We have a distinctive advantage
issue to be dealt with. by uniquely being able to provide an integrated offering.
From Agile FT’s perspective, opportunities will span from Our focus in the near to medium term is to target emerging
the smallest and the most cutting-edge, to the largest and the markets in Latin America, Africa, Eastern & Central Europe,
most secure. During times of crisis, firms traditionally cut Middle East, South Asia and some parts of APAC. We
back on IT spend, centralise development and operations to identify and enable partners to operate as extensions of
cut down on redundancy and look to outsourcing to reduce Agile Financial Technologies and hence are able to garner
cost and thus focus on core deliverables. Our delivery model market information quickly and rapidly and delivery locally.
will enable our clients reduce the cost of core technologies
(traditionally provided by larger vendors) and cut back on We are young, nimble and our agility is drawn from the years
newer, riskier technologies (traditionally provided by smaller of experience that the constituent companies that have now
vendors). become part of Agile Financial Technologies bring to the
CEO’s of financial institutions are taking the rein alongside
the Chief Information Officer since the need of the hour is Our belief is that to better service our clients, we need to
not just the technology required to run the business, but to think, act and behave like them. We treat clients with the
step into identifying what needs to be centralised, same deep respect that a financial institution would treat
outsourced and managed by an outsourcing service theirs. We deploy systems and build products with a focus
provider. Thus a change of mindset is in the air - towards on flexibility, adaptability to change, and most importantly
the adoption of platform enabled services adoption. usability. Our outsourcing process inculcates the same
operational risk management parameters that an institution
We understand that a certain loss of control and having a would look at whilst deploying its own central processing
third party handle the IT infrastructure and the operations infrastructure.
can be a little un-nerving for any financial institution. Hence,
alongside the cost and time efficiencies and a pay-on- With a delivery model that seeks to differentiate itself from
consumption pricing model that is simple and attractive, we other service providers, and the ability to reach and service
differentiate our delivery model by basing the same on the clients whose needs are very, very different in the emerging
foundation of operational risk management, thus innovating markets, we believe we will create a niche for ourselves in
on how we deliver our software platform and operational this industry.
Cash is King!
The success or failure of a financial institution iDEAL LIQUIDITY
is determined by its ability to remain liquid and
The two keys to good liquidity management are:
yet prudently invest money and lend judiciously
(a) to ensure that the regulatory norms of the country are
to make profits. Most financial services adequately met, and
companies borrow short and lend long, and at (b) to ensure that treasury has a good technology system that
can help them model scenarios and track transactions on
the same time, must not remain too liquid
a real-time basis.
because cash does not yield interest and
resultant profits. Many have failed in the past iDEAL LIQUIDITY from Agile Financial Technologies is a
because of irregular asset and liability comprehensive straight through processing (STP) liquidity
management system that integrates the front office, mid
office, back office, banking and accounting processes of any
bank. It comprises iDEAL FINANCE, ALM and Risk
A treasury function in a financial services
Management. iDEAL Finance helps banks in smoothly
company is in charge of raising finance for managing multiple outstanding loans or borrowings and
funding the business, taking care of short term generating future cash flows and MIS reports with minimal
manual intervention. The Asset and Liability management
cash management and managing liquidity
(ALM) component manages exposure. The risk
required for operations. What the perfect
management component is designed to manage net worth
system must do, therefore, is take into account by risk management, capital management and liquidity
the complex transactions that a treasury of management.
financial services company performs in its
The solution covers the following base product classes, with
lending and record and track these
scalability to handle new product structures as the market
The system must also simultaneously keep Commercial Papers
track of the cash position and adequately Deposits
provide for the day-to-day operations of the
treasury and generate accurate and regular Non Convertible Debentures
MIS reports for the management. All this must
be done in a scalable fashion applying the The key features of iDEAL Finance are that it can manage
asset as well as liability products, supports multiple product
mandated regulations that exist so that the
structures, supports fixed/floating loans, simple as well as
cash ratios are maintained. compounded interest payment, hybrid loans, options
(put/call), stubs, termination, transfer out, rollover and
adjustment entries as well as ad-hoc principal repayments
Asset Liability Management
against outstanding contracts.
The Asset Liability Management (ALM) solution from
The system supports multiple currencies and can provide
Agile Financial Technologies is comprehensively
dynamic generation of future cash-flows with an option to
designed to manage intermediation risk and the net
worth of the institution by tracking risk, liquidity and
capital. It provides a complete and dynamic decision
Most importantly, the software is flexible and easy to
framework of measuring, monitoring and managing
configure and has built-in features that take care of event-
liquidity and interest rate risks by uploading enterprise-
based charge definition (stamp duty, brokerage, taxes) and
wide asset and liability portfolios.
charge on charge (taxes on brokerage, service tax).
In the normal course of operations, financial institutions
iDEAL Finance for liquidity management allows treasurers
are exposed to credit and market risk in view of the
to transact in a real-time environment and generate
asset-liability transformation. They are required to
meaningful reports relating to their transactions. The system
periodically determine their own interest rate on
has interfaces that allow upload, addition or modification of
advances and deposits, subject to the ceiling on
benchmark values and also to upload/store beneficiary
maximum rate of interest they can offer on deposits, on a
positions for outstanding non-convertible debentures.
dynamic basis. Intense competition coupled with
increasing volatility in the interest rates brings intense
pressure on banks and financial institutions to maintain a Managing Loans and Borrowings
good balance among spreads, profitability and long-term
This is a crucial function of the treasury. Using the iDEAL
Finance module, they can place and withdraw loans in full or
part as well as track multiple linked loans. The system allows
The quest for profitability and sustenance exposes these
treasury function to generate and estimate future cash flows
institutions to several major risks - categorised as credit
as well which gives them a forecast in line with the liquidity
risk, market risk and operational risk - which emphasises
needs of the financial institution.
the need to address these risks in a structured and
The system also has a settlement book that maintains
scheduled cash flow information. This allows marking cash
It is important for financial institutions to base their
flow as principal redemption, interest payment or
business decisions on a dynamic and integrated risk
brokerage payment as realised, redeemed either fully or
management system and processes driven by corporate
partially, capitalised interest, realised schedules/unscheduled
strategy. In this context, Agile FT’s ALM system is
cash flows and calculate interest accrual and event based
designed to serve as a central system for analysing,
monitoring and simulating the balance sheet and aid in
enterprise wide risk management.
Managing Banking & Accounting Transactions
The key features of the system include:
The banking and accounting module helps in tracking
Comprehensive reporting and analysis. appropriation, payments and receipts and provides a
comprehensive and reconciled view of the accounts. The
Data management module for integration with legacy accounting engine can also be configured to generate
databases and retrieval and processing of branch data. vouchers and accounting statements as required.
Identifying funding gaps and estimating pre-payments. Administering Users
Standard analysis for assets, liabilities and integrated iDEAL Finance allows for easy administration of users
ALM analysis. through a centralised console. Every user has a secure and
unique login id to the system and access to the system is
‘Interest Rate Sensitivity’ and ‘Net Interest Income’. defined based on his function, role, and authority in the
Facility to bucket non-performing assets as per the
guidelines set by the regulator. Generating MIS Reports
Enhanced risk management functionalities via analytical iDEAL Finance has the ability to intuitively generate a
techniques like duration gap analysis and market value variety of reports that are required by different executives in
calculations. the management from time-to-time.
A listing of key Agile FT partners from
Bade Aluko, Managing
Finance Application Systems Limited Director, FASYL, shares his
thoughts with Agile Financial
What is the strategic rationale
Finance Application Systems Limited (FASYL), a Nigeria- of your partnership with
based information technology company, was founded in Agile FT?
1998, and primarily offers specialist support services for
enterprise and finance applications & software systems Agile FT follows a proactive
within areas of product sales, implementation, support and approach while meeting
training. In addition to this, FASYL also provides customer needs compared to
consultancy services for the finance and telecom industries. other partners who follow a reactive approach. They have a
high level of responsiveness to the company expectations as
While the company’s operations extend across Asia, Africa, well as the customer demands.
Europe and the UK, its main focus is primarily pan-Africa.
FASYL also has offices at Mauritius (slated to become the In addition, Agile FT provides a suite of products and
future group headquarters), Nigeria (to become a regional services that complement our current offerings and enables
office), Ghana, Sierra Leone, South Africa, UK and India. us to meet customer requirements.
The company, which currently has a staff strength of 120, With the current economic scenario, what will be the impact
also plans to set up offices at Cote d’Ivoire, Kenya and on partner relationships?
Angola in 2009.
The current economic downturn is not going to significantly
change the role of partners. Partners with a long term view
survive an economic crisis as their prime focus is not only to
FASYL’s clients include Union Bank of Nigeria, Access have quick profits, but to align goals with the partner
Bank, Intercontinental Bank, Diamond Bank, Skye Bank, company in order to meet customer expectations.
Ecobank Group, Sierra Leone Commercial Bank, First
Securities Discount House Limited, NEXIM Bank, United Thus, I believe that short term partners will perish whereas
Bank of Africa, First Bank, Bank PHB, Fidelity Bank and long term partners will continue to service the clients
Spring Bank. effectively.
The financial services industry is undergoing a change; how Company, African Petroleum, Adeniran Ogunsanya College
will this affect client requirements and buying decisions? of Education, Ghana Telecom, British American Tobacco,
Banks are undergoing change due to the customer
demand for better and faster banking services. There is Besides Agile Financial Technologies, they work closely with
significant competition amongst banks and hence they have Infosys Technologies and Oracle.
to rely on technology to gain a competitive edge. Customer
expectations are increasing manifold. The nature of services
Pacific Solution and Technologies
demanded by banks is changing drastically from the manual
mode to a technological platform where banks are
competing to provide faster and improved service to its www.pacificsolutiontech.com
clients. Similarly, the changing banking services are giving
rise to a need for newer and better technology platforms to
meet the changing customer needs. Pacific Solution is a system integrator founded with an
objective to provide solutions to West African countries.
The company provides hardware, security, software and
ExpertEdge Software & Systems Ltd communication services to its clients. Pacific Solution is
essentially the information technology arm of the Budhrani
Group of companies, which has a global presence. The
company has offices in Nigeria, Ivory Coast, UAE (Dubai),
UK, Malaysia, Singapore, Indonesia and India. The key
ExpertEdge Software & Systems Limited looks at Agile FT’s industry verticals serviced include banking, insurance,
iDEAL suite of investment & banking solutions. Its internet service providers, telecom operators, government
business focus includes software development & and corporates.
deployment, systems analysis, design & implementation and
smartcard applications. In-house expertise of providing Key Clients
implementation, support and training was the key reason for
Agile FT to choose ExpertEdge to provide first level Pacific Solution’s clients include Sterling Bank, Royal United
support to its customers in Nigeria. Nigeria, Mikano International, Jubilee Brothers, Somotex
Nigeria, Critical Rescue International, Reliance Textile,
ExpertEdge Software & Systems Limited, headed by James Millenium Furnitures, Hansbro Group, Park n Shop Retail,
Agada, is the software subsidiary of the Computer MTN Nigeria, Multilinks Telecommunications, GLO
Warehouse Group, one of the fastest growing IT companies Mobile, Celtel, Lagos Metropolitan Area and
in West Africa today. Transportation Authority, Nigerian Postal Service, Industrial
General Insurance, Linkage Assurance, Unic Insurance,
Computer Warehouse Group (CWG), an information and Michael Stevens Consulting and Standard Life Insurance.
communication technology company, provides integrated
solutions to its clients. Apart from ExpertEdge, the group Jeetu Hira, Head - Pacific Solution, speaks with Agile
consists of two more subsidiary companies: Financial Times:
Computer Warehouse Limited (provides supply and In what areas of business and technology do you share a
maintenance of computer hardware and ancillary partnership with Agile Financial Technologies?
Pacific Solution and Technology is representing Agile FT for
DCC Satellite & Networks Limited (offers VSAT, their Insurance application. We are offering to the market
metropolitan area network, wide area network, systems both, the product as well as the outsourced model of Agilis,
integration and network monitoring and management the Insurance suite from Agile FT comprising Life, Non-
solutions). Life, Health, Takaful, BancAssurance, Broker among others.
The company also provides training to IT professionals What is the key benefit of this partnership and how has it
through its ExpertEdge Training Centre. The primary impacted the way in which you service your clients?
industry verticals serviced by the company include banking
and telecom. There is a long standing relationship between the
management of Pacific Solution and Technology Limited
and that of Agile FT. We are bringing a blend of both, the
domain knowledge of Agile FT, and the geographic and the
A partial list of key clients includes First Bank of Nigeria, vertical industry knowledge of Pacific Solution and
Union Bank of Nigeria, Nigeria Aviation Handling Technology.
Selects Agile FT
One of the fastest growing and The Asset Management Company (AMC) offers investors a
well-rounded portfolio of products to meet varying investor
largest mutual fund company in requirements and has a presence in 120+ cities across India.
A key business driver for the fund manager is the company’s
India that is part of a large constant endeavour to launch innovative products and
provide proactive customer service to increase investor
Indian conglomerate chooses value.
iDeal Funds from Agile In line with this philosophy, the AMC wanted to automate
its asset management operations, achieve seamless
Financial Technologies. integration across the front, mid and back-office, offer a
comprehensive range of fund management products to suit
the investors’ needs and inclinations and provide exposure
to multiple asset classes like equity, bonds, mutual funds,
deposits, equity derivatives and interest rate derivatives as
also commodities like gold. More importantly, the fund
house also wanted to maintain a strict vigilance on limits and
exposures in line with its internal governance requirements
as well as in keeping with the norms of the securities
In this context, India’s top Asset Management Company
chose iDEAL Funds from Agile Financial Technologies to
manage its funds and investor portfolio. Apart from more
than adequately meeting the requirements of the fund
house, iDEAL Funds was also identified as a platform to
handle huge transaction volumes and cater to the large
investor base of the fund. In addition, the system integrated
with third-party price feed systems to provide valuation
across markets, and also with register and transfer (R&T)
platforms, business intelligence systems, equity straight-
through-processing and custodial files.
iDEAL Funds generates timely and key management reports
and has a biometric scanning security system for users. Most
importantly, the system has proved to be resilient and
scalable and hence supports the organisation’s expansion
and growth strategy.
Agile Financial Technologies Pvt Ltd Agile Financial Technologies Agile Financial Technologies Pte Ltd
701-A, Prism Towers 808-A, Business Central Towers 20 Cecil Street, #14-01
Mindspace, Malad (West) TECOM, Dubai Internet City Equity Plaza
Mumbai 400064 P.O. Box 503007 Singapore 049705
India Dubai Tel: +65-64388887
Tel : +91-22-42501200 United Arab Emirates Fax: +65-64382436
Fax: +91-22-42501234 Tel: +971-4-4331825
Views expressed in this publication do not necessarily represent the views of Agile FT and the information contained herein is only a brief synopsis of the issues discussed herein. Agile FT makes
no representation as regards the accuracy and completeness of the information contained herein and the same should not be construed as legal, business or technology advice. Agile FT, the authors and
publishers, shall not be responsible for any loss or damage caused to any person on account of errors or omissions.