Wednesday, March 28, 2012

The Villagers and the Monkeys

Once upon a time, a man appeared in a village and announced to the villagers that he would buy monkeys for Rs.10/-. Since there were so many monkeys around, the villagers started catching them. The man bought hundreds of monkeys at Rs.10/- each, and kept them in a huge cage for all to see. As supply started to diminish, it became a bit difficult to get new monkeys and the villagers stopped their efforts.  The man now announced that he would buy monkeys at Rs.20/- per monkey. The villagers now renewed their efforts and started catching monkeys again. Soon, the supply diminished even further and people started going back to their farms. The offer rate now increased to Rs.25/- and the supply of monkeys reduced even further. The man now announced that he would buy monkeys at Rs.50/- ! However, he had to go to the city on some business, and would return after a couple of days. Till then, his assistant would look after the monkeys kept in that cage. When the man was gone, the assistant told the villagers – “Look at all these monkeys in the cage that the man has collected. I will sell them to you at Rs.35/- each and when the man returns from the city, you can sell it to him for Rs.50/-.” The villagers liked the idea, and squeezed up all their savings and bought the monkeys back. Then, then the assistant too left with all the money and never returned.  

Welcome to the Stock Market.

Sunday, March 18, 2012

Fort Raigad - worth a visit

Chhatrapati Shivaji can undoubtedly be counted as one of the greatest kings of India. Starting with conquering Fort Torna at the tender age of 16, Shivaji took on the combined might of the Mughals of Agra and the Adilshah and the Nizams who ruled the Deccan Plateau. His daring exploits, such as the stunning escape from captivity from Agra in a box carrying mithai, to the conquest of the dreaded Afzal Khan, far taller and stouter than him, in hand to hand combat can easily fit into a Bollywood storyline. At its peak, Shivaji’s rule covered parts of the Deccan plateau, and extended South to modern day Karnataka and spread as far as Jinji and Vellore in today's Tamil Nadu. Shivaji was recognized not just for his brilliant battlefield tactics, but also for his extraordinary benevolence. Stories of his generosity and large-heartedness have been documented by several people, including foreign travelers who passed through India during his time. Shivaji’s conquests laid the foundations of the Maratha Empire, which the Peshwas eventually extended from Panipat in the North (today’s Haryana) to Tanjore in the South (Tamil Nadu).

The ropeway has made it easier to visit the Fort
I recently visited Fort Raigad, the seat of Shivaji’s power where he was coronated in 1673. The Fort is at a distance of around 200 km from Mumbai, a 5 hour drive on the Mumbai – Goa Highway. Located in the midst of the towering Sahyadris, at a height of around 2700 feet above sea level, Raigad makes for an outstanding weekend gateway for the tired Mumbaikar. You can take your car right upto the foot of the mountain, from where a private ropeway carries you to the Fort in a few minutes.

Architectural photographers will love the place
The main Fort, spread across an area of almost 100 acres is now largely in ruins. You can hire Government empanelled tourist guides, who parrot their prepared text and take you through the important places of tourist interest. Among these are the palaces of Shivaji’s six (of the seven) queens, the durbar, the granary which also doubled as a prisoner’s cell, and the main bazaar. A grand statue of Shivaji, erected in recent times, serves as the perfect background for the customary photo op session. At one end of the fort is a Shiva temple. Shivaji’s samadhi, where he was cremated on his untimely death in 1680 lies next to the temple. Its almost ordinary façade tells its own story, one of governmental neglect and lost tourist potential. The more adventurous can walk across to places like the Hirkani buruj or the Takmak tok (point) to get a glimpse of surrounding mountains. On your return, you can dump the ropeway and even walk down the 1500-odd stairs to view the main entrance to the Fort.

From the Fort, you get an extraordinary view of the surrounding valleys and mountain ranges. The Maharashtra Tourism Development Corporation (MTDC) has a few rooms for overnight stay, and in fact, this is what makes the place worth your visit. For, the best time to visit the Fort is from dusk to dawn! When the sun begins to set, the day tourists have gone back, and cool breeze begins to set in. As it gets dark, you can listen to the wind, watch the stars and simply amaze at the pitch dark sky!

The fort gives you an excellent view of the Sahyadri Mountains

Magical moments - around the sunset & the sunrise

Friday, March 9, 2012

Future of Banking - Part II

In the previous article (click here), we saw some of the trends that are sweeping across the world of banking technology today. These changes will revolutionize the way we bank in future. We continue from where we left off, covering new developments, this time mainly in Corporate Banking.

7. Remote Deposit Capture: In the U.S., banks now supply a scanner which their business customers use to scan the cheques they receive. The images are then uploaded to a bank portal, from where the image is directly sent to the clearing house for clearing. 

Individual customers can photograph a cheque they have received using their Smartphone, and automatically upload the image through an app to the bank’s portal, which sends it online for clearing. No need to go to the bank to deposit the cheque at all! This development is specific to the U.S., since a special Act ensures legal validity of the cheque thus deposited electronically.

8. The end of L/C: Letters of Credit have been at the heart of world trade for decades, but they would soon be history. ICC (International Chamber of Commerce, the body which regulates world trade) is in the process of giving recognition to a new instrument called the Bank Payment Obligation (BPO) which will one day replace the L/C. The BPO can be exchanged between banks via XML messages and incorporated into an automated STP (Straight Through Processing) environment, causing substantial cost reduction and bringing operational efficiency.

9. Automation of Supply Chain Finance: Soon, Corporate buyers will receive quotations, select suppliers, place orders, receive bills and make payments directly through their bank’s portal. Sellers can bid for tenders, accept orders and raise invoices online, through their bank's portal, without handling any paper. This is much more than simply scanning a physical invoice or any other commercial document – the system will generate its own serial number, have digital signature etc and be a legally binding document without any physical existence. Further more; the Bank’s Core systems will be integrated with the Corporate ERP systems, making communication between the two entirely automated.

Automation of the Supply Chain will save billions of dollars across the world and prevent millions of trees from being cut. The BPO, and Supply Chain Automation taken together will completely revolutionize the way corporate financing is done by banks in the world today.

10. eBAM (Electronic Bank Account Management): Can you imagine how many bank accounts a large corporation such as McDonald’s or General Electric might have? Could be in thousands. Managing so many bank accounts – opening, closing, keeping the list of signatories and their operating mandates updated, efficiently utilizing the funds lying around in them, sending instructions of various types to the banks and following up with them is a mammoth task. eBAM, a product launched by SWIFT allows a company to open accounts, add or remove signatories and close accounts online without any manual intervention. Since transactions (i.e. sending and receiving money) have already moved online, once Banks perform the mandatory KYC (Know Your Customer) exercise and establish a relationship, a Corporate customer can open accounts, operate them and close accounts when the purpose is over, all by itself, without any manual intervention by the bank 

To conclude, Banking will look very different from the way it looks today. Plastic cards and cheque books will cease to exist, you will not need to know what your account number is. Mobile phone based payment systems will make physical currency become redundant, and offices will become truly paperless!

Apple’s iPhone is hardly four years old, but in such a short span of time it has turned the world of mobile telephony upside down. Developments which are at a conception stage will become mainstream tomorrow, and that day is not far away!

Sunday, March 4, 2012

Future of Banking: Top trends that will drive the change

It is too clichéd to use the term “change is the only constant”, but nowhere is this truer than in the field of technology. In this 2-part article, I bring to you some recent technological developments in the field of banking that will change the way we do our banking forever: 

1. Biometric ATMs: If my fingerprint or iris scan is enough to identify me, do I need a plastic card? A bank in Turkey has rolled out 2400 biometric ATMs across the country. Japan already has a huge network of such ATMs operational, all of them based on the “finger vein” technology of Hitachi. Under this technology, rays of light pass through your fingers and capture pattern of the veins. The pattern is image processed using a special algorithm and digital data is generated. Pattern readers installed at ATMs read customer’s vein pattern and by comparing it with what is already present with the bank, a customer is identified. Hitachi claims finger vein technology is more reliable than using fingerprints, since the veins are inside the body and hence completely tamperproof. 

And if ATMs can have vein readers, will POS Terminals (those ubiquitous swipe machines where they swipe your credit card) be far behind? Plastic cards may soon be history. 

2. The "Pingit": You can now send money to anyone using only his mobile number, no need to know the account number! A common database, operated by a central body such as a Clearing House, will hold a “mapping” of the customer’s phone number to the account number. A simple mobile phone app will allow users to transfer money from their bank accounts to another just by entering the recipient’s phone number or selecting the name from address book. Payment instruction will be routed to this common database which will identify the account number to be credited. This development will substantially reduce the need to carry cash, even more than what the advent plastic cards did. (“Pingit” here is actually the brand name of such a service launched by Barclays in the U.K, others may launch it with a different name).

3. The e-Wallet: A “digital” wallet, stores all the data about your credit cards, prepaid cards etc digitally, which you can access online or through your mobile phone. When you shop, you just tap the phone on the wallet “reader” installed with the merchant and the transaction is authenticated automatically. The communication between your phone and the merchant’s reader happens over an electro magnetic field (somewhat akin to Bluetooth). 

To use the e-wallet online, once you have selected the items you want to buy and move to the payment options, just sign-in into your e-wallet account and the transaction is completed instantly using credit card data mapped within the wallet. Digital wallets are considered safer than leather wallets and credit cards, which can be stolen and misused. Banks will soon stop issuing physical cards completely, since only the data on the card is required, not the physical card itself. If the same data can be stored on your mobile phone, do you need a plastic card?

4. The Social Networking bank: Last year, Facebook got 15% of its $ 3.7 billion revenues from Payments business. It has already got ‘money transmitter’ licenses in 15 U.S. states, and is applying for more. This way, it is directly competing with Banks and money transfer companies like Western Union in the remittance business. In India, ICICI Bank allows customers to perform transactions like checking your account balance, generate statement and order cheque books through Facebook. Social Networking sites will give serious competition to Banks for certain types of services in the future, as it will not be necessary to visit the bank website to operate your account!

5. The end of Cheque Book: Europe has already done away with cheque books. Even in the rest of the world, cheque book usage is declining. And with the payment revolution brought about by the mobile phone hitting the banking world like a Tsunami, cheque books will soon be a thing of the past.

6. Bank Account portability: Regulators have been talking about Account Number Portability (“change your bank without changing your account number”) for a long time, but it is difficult to introduce and expensive to implement. Thankfully, with the cheque books gone, account numbers will die too! Or atleast, the way we see them today.   

A central body, such as a Clearing House will hold the “mapping” of a customer’s old account number to the new account number, and any mandate to debit or credit the old account (such as direct debit / credits, ECS mandates, RTGS, NEFT transfers, standing instructions and all sort of Electronic Fund Transfers whichever way they are done) will be automatically routed to the new account. Changing your bank will then become completely hassle free, reducing bank account to a commodity.

(To be continued…….)