Archive for 'Banking'

Jan
2014

Facilitating Financial Inclusion through Digital Transformation

Today, the world is talking about Financial Inclusion. Financial inclusion became the buzzword, as a result of findings related to financial exclusion and its direct correlation to poverty. Financial exclusion refers to those processes that prevent poor and disadvantaged social groups from gaining access to the financial system. It has important implications for uneven development because it amplifies geographical differences in levels of income and economic development. Thus, financial inclusion appeared and emerged as a great promise to scale down the poverty levels, worldwide. Financial inclusion is defined as the delivery of financial services at the most affordable costs to the weakest and most abandoned class of society. Predictably, Financial Inclusion features amongst the most important agendas of United Nations Development Programme (UNDP). India was introduced to this term for the first time in 2005, by the then chairman of Indian Bank, K.C. Chakraborthy. This was soon made a mandate for financial institutions in India. To abide by this mandate, States & Union Territories across the country are thriving hard to increase the population covered by the benefits of Financial Inclusion. The Reserve Bank of India, charged with implementing this goal of ‘Affordable Banking to All’, has done its bit to ensure that number of beneficiaries keep increasing each year.

In a country as diverse as India, financial inclusion could be a revolution to contain ever-increasing levels of poverty. Several measures have been initiated in this regard. Opening of no-frills accounts, relaxation on know-your-customer (KYC) norms, engaging business correspondents (BCs), use of technology, adoption of Electronic Benefit Transfer (EBT), simplified branch authorization, and opening of branches in unbanked rural centers, etc., are some of the commendable efforts so far in this direction.

Despite these efforts, things are easier said than done in a country as wide, as populous and as remote as India. The underprivileged are illiterate and therefore totally unaware of the benefits that they can reap out from the mandate of financial inclusion. Besides that, the deposits these remote branches attract do not match the costs incurred for building brick & mortar bank premises. Even the BCs being used as alternatives need some assistance to achieve targets.

However, much of these problems can be addressed by the use of technology. The term can either be applied generally or to specific areas like Information Technology (IT). IT in its advanced stage leads to Digital Transformation. Digital transformation is much more than going paperless. It is about transforming the lives of people across societies through effective use of ever evolving robust methodologies.

Newgen, a pioneer of the IT product industry in India, has helped transform the lives of people across the world in the last 21 years through their innovative products and nascent ideas. Newgen thoroughly empathize with challenges faced by governments and financial institutions to implement the mandates of citizen-centric financial inclusion. To assist governments and financial institutions in delivering basic financial services to the unbanked, Newgen has come up with a range of innovative products to catalyze Financial Inclusion like never before.

ZapIn,its revolutionary mobile capture application enables financial institutions to comply with the principles of financial inclusion in the most buoyant and cost-effective manner, by taking banking at the customer’s doorstep even beyond the most secluded areas of the country. ZapIn is a multi-platform mobile application, especially designed for field executives to capture information and initiate its processing, in real time, at the point of customer contact. This patent pending product from Newgen facilitates BCs to reach upto the frontiers and introduce benefits of financial inclusion to the side-tracked. Mobile capture allows the BCs to capture physical application forms and supporting documents along with key metadata and initiate the process of customer on-boarding, instantly. Based on the application, certain key fields can be entered and images of Application form, KYC form and other supporting documents can be captured using a built-in camera, compressed to transferable sizes and immediately sent to the back-office for processing, using a GPRS/3G connection. Thus, the time lost in deporting paper documents from point of capture to the processing centre is bypassed in a most economical way.

OmniDocson Cloud from Newgen software is another effort in this direction of accomplishing absolute financial inclusion. The collation of a robust document management system with cloud computing has resulted in conception of an omnipresent platform which can be used to create, capture, manage, deliver and archive large volumes of documents required for providing banking fundamentals to the neglected ones. OmniDocs on Cloud, unlike any on-premise solution, can be installed with minimal infrastructure support. The pay per usage advantage of cloud-based solutions ensures that BCs can access any information or any document, anywhere and anytime in a most cost-efficient manner. The only infrastructure these BCs need is a laptop or a mobile phone, with a minimum bandwidth support of an online network.

Cheque Truncation System from Newgen Software extends the doctrine of paperless office to processing of physical cheques. Payment and Settlement process is critical to ensuring efficiency of financial inclusion. Cheque Truncation System or CTS help banks to reduce time taken for clearance of cheques. Physical copy of a cheque is replaced by a scanned copy and this scanned copy is electronically transferred across concerned bank branches in a more secure, cost-effective way while simultaneously ensuring reduced processing time. CTS is a weapon to shorten time-lags in providing banking services to the needy, therefore perfectly abiding the mandates of financial inclusion.

With these and many more innovative products, Newgen Software is determined to assist governments and financial institutions in their endeavor of attaining total financial inclusion.

Name: Shivam

Bio: Shivam Rai is part of the Marketing Communication team at Newgen.

Jan
2014

Banks, Trusts, & FFIs – Best Practice Framework for FATCA Compliance

As we fast approach the stipulated deadlines associated with FATCA enterprises worldwide need to quickly get their acts together and redesign processes to adhere to various regulatory mandates. This enterprise wide change has to be planned meticulously, ensuring business as usual doesn’t suffer any major jolts in the process. While it affects organizations across all industries, financial sector will be the one bearing maximum impact of this paradigm shift in the world economic order. FFIs that do not enter into an agreement with the IRS, termed as non-participating FFIs will bear a 30% withholding tax on all relevant US-sourced payments.

Hence, it becomes imperative for them to understand FATCA intricacies in detail and build a robust strategy around it. FFIs need to invest heavily in reengineering processes around three core areas -documentation, account management and reporting. Approaching FATCA as just another reporting exercise is a short-sighted approach that may lead to complexities in future. Achieving compliance in a comprehensive manner will require specialized roles and processes to be created, facilitated by an extended information gathering mechanism built on an efficient information management system.

Following are some of the best practices that can help you fine-tune your FATCA compliance strategy-:

Analyze FATCA and its far reaching implications– FATCA is an all encompassing regulation that will impact your entire value chain, necessitating a revamp of the organizational structure, processes and systems. More importantly it requires streamlining of all data flowing in from multiple sources. Organizations can register online on the IRS FATCA portal and obtain a Global Intermediary identification Number (GIIN) to experiment and understand how to use the website, besides getting their FAQs answered.

Evolve your strategy as FATCA assumes greater clarity and focus – FATCA is a long term regulation that has many dynamic requirements. It is advisable to have flexible and agile compliance and architecture strategy to minimize operational costs and unnecessary project delays.

Establish Accountability and Ownership– Organizations should determine a leader within their central compliance department to supervise the creation and implementation of FATCA compliance plan, with all deviations clearly noted and rectified in due time.

Initiate Internal and External Communication Process – It is very important to communicate the various changes that will be brought in to all affected teams, preparing them to efficiently manage new requests. Customers should be in the loop too, apprising them of the new regulations and how they can affect them – utilizing a CCM (Customer Communications Management) solution

Update all On-boarding and Data gathering processes– Centralization of critical processes at various direct and indirect customer touch points will put a structure to the information collected. Operational areas most likely to be affected include customer on-boarding, payment processing, tax withholding and deposition and regulatory reporting. As FATCA related documentation requirements become a core component of your new customer on-boarding process, FFIs looking ahead should also scope out solutions for Mobile Capture of these documents as well as a robust but flexible business process or workflow platform that will allow rapid changes to processes to stay in tune with regulatory demands

Maintain repositories for all historical data– This is the basic rule for all compliance related strategies. Organizations need to maintain a well sorted and easily accessible information bank essential from a long term perspective – given the audit and archival requirements related to FATCA, it is imperative for companies to utilize a sophisticated ECM (Enterprise Content Management) solution.
Organizations thus need to plan ahead and channelize necessary resources well in advance to mitigate any risks associated with the new compliance regime. A well laid out strategy will also go a long way in helping them reduce any unnecessary cost burdens and enhance customer experience significantly.
Our team at Newgen Software Technologies has taken an early lead, incorporating the best practices to develop a framework for addressing the FATCA requirements of the Banks, Trusts and FFIs – broad outlined in the Newgen FATCA Compliance Solution. The Newgen team is also partnering with management consulting companies like KPMG and Ernst & Young to deliver this solution seamlessly out of the box with built-in guarantees to incorporate any regulatory changes coming down the pipe one year from the implementation.

Sign up to check your organizational readiness for FATCA Compliance and register for free to take a FATCA TEST DRIVE…

Name: Rajeev Kak

Bio: Rajeev is the Global Vice President, Industry Solutions and Marketing @ Newgen Software Technologies. Rajeev has over 20 years experience in high technology and consumer product companies including Coats, i2 Technologies, Adobe Systems, SAP and MetricStream with an outstanding record of driving revenue and developing new strategic business alliances, driving corporate marketing and pipeline generation as well as managing new product introductions to achieve consistent year over year growth in SMB and enterprise markets.

Nov
2013

Non-US companies doing business in USA – Things to consider about FATCA

Foreign Account Tax Compliance Act (FATCA) is bound to be implemented on the biggest scale ever seen in the global industrial circuit, impacting several business entities, directly or indirectly through its multiple provisions. Its new documentation, information reporting, and tax withholding requirements on US and non-US companies engaged in international transactions will change the business scene significantly around the world. Since, FATCA is primarily directed at the financial institutions, many multi-national companies (MNCs) outside the conventional spectrum of financial services are mistaken into believing that they will remain unaffected by this new taxation regime transcending on the business environment. However, a deeper analysis of its key implications clears the air around its all encompassing nature, and establishes its reach over a wide range of companies across all industries, including industrial products and services companies.

There are essentially three ways that FATCA applies to your business:
a. There are entities within a multinational company’s global corporate structure that could be termed as FFI (Foreign Financial Institution) and will subsequently be subject to FATCA including non-US retirement funds, treasury centers, holding companies, captive finance companies, special-purpose entities, banking-type subsidiaries, and non-US insurance companies.
b. our multinational company makes withholdable payments that will get impacted by FATCA imposing a 30 percent withholding tax on payments made by and to certain non-US entities (even if they are non-FFIs). The definition of withholdable payment is also murky with several caveats but basically IRS defines this as US source FDAP (Fixed, Determinable, Annual, Periodical) Income for the payee. So, if you make payments such as interest, dividends, pensions, real estate rent, sales commission, grants, prizes, awards as well as insurance premium to insure US risk, they are all considered withholdable.
c. Your multinational company receives withholdable payment – so if any of the entities in global corporate structure receives income such as interest, dividends, rent, commissions etc. it will be classified as an NFFE (Non Financial Foreign Entity) and subject to FATCA related withholding.

Failure to adhere to FATCA’s new requirements may lead to several penalties including a possible loss of 30% of certain withholdable payments. Non-compliance may further make you liable to 100% of the amount not withheld in addition to related penalties and interest. Thus it becomes imperative for your company to devise a comprehensive strategy for streamlining key processes and procedures in line with FATCA’s reporting requirements. A planned and systematic approach can help you be FATCA ready by the time it gets fully implemented, which will in all probabilities happen by July 2014. Here’s a step wise guideline that you can follow to remain compliant in this dynamic business environment:-
Step 1 – The plan of action should begin by identifying the business entities or operational areas within your global corporate structure that make or receive withholdable payments according to FATCA and thus create the need for specific information reporting and tax withholding processes.
Step 2 – After a thorough analysis of FATCA regulations where you determine all necessary FATCA classifications, documentation, monitoring and reporting; you should try and figure out the existing information reporting processes and documentation that can be leveraged to ensure FATCA compliance.
Step 3 – Formulating a detailed change management strategy should then be your focus in order to modify existing processes and design new processes across business units and regions to ensure compliance. Herein you may need to deploy the services of a financial/legal expert who can guide you into building a robust framework.
Step 4 – Implementation of the new/ amended processes should not affect the business as usual. You will need to devise a well laid out implementation plan that unfolds in a phased manner targeting the most critical processes first and gradually moving towards the non-core processes. An experienced technology partner may provide you with a robust platform to build this process framework.
Step 5 – Since most of the FATCA related process changes will be across organization, identifying the departments and personnel affected is critical. A robust training and education program should then be initiated to ensure resource optimization
Step 6 – Closely monitoring the new process framework to ensure regulatory compliance without letting productivity getting affected is absolutely essential

Name: Rajeev Kak

Bio: Rajeev is the Global Vice President, Industry Solutions and Marketing @ Newgen Software Technologies. Rajeev has over 20 years experience in high technology and consumer product companies including Coats, i2 Technologies, Adobe Systems, SAP and MetricStream with an outstanding record of driving revenue and developing new strategic business alliances, driving corporate marketing and pipeline generation as well as managing new product introductions to achieve consistent year over year growth in SMB and enterprise markets.

Oct
2013

US Citizens Working Abroad: Everything you should know about FATCA

As you willingly or unwillingly pack your bags to take up that work assignment abroad, you have a lot on your mind, from getting the right accommodation to finding your favorite food joints. As a professional trying to work your way out in foreign lands, you are bound to face several challenges, some foreseeable and accountable but mostly unexpected and unpredictable. Amidst all the chaos and conundrums, you definitely will not like to face any tax/financial hassles that may land you in a fix. Here’s all that you need to know to stay clear of the federal watchdogs and focus on your job ahead.

There is nothing to be feared or be skeptical of, if you are a law abiding American without any malicious intention to evade taxes while working abroad. The Foreign Account Tax Compliant Act, better known as FATCA, passed in 2010, lays clear guidelines for US citizens working abroad to manage their finances lawfully. Contrary to the popular belief, FATCA is not designed to create roadblocks and complexities for US expats; rather it’s an effective measure to tackle non-compliance and financial irregularities.

Consequently, all foreign financial institutions (FFIs) need to report to the IRS specific data pertaining to U.S. persons (citizens, green card holders, “accidental citizens” born to Americans abroad, etc.), including annual debit and credit totals and movements out of bank accounts. Institutions failing to report accounts face a 30% withholding tax, meaning financial institutions are being forced to comply. It also mandates US citizens who have foreign financial assets in excess of $50,000 (higher for bonafide residents overseas $200,000 for single filers and $400,000 for joint filers,) to duly report these assets.

However, FATCA comes with its share of rumors and myths about the compliance program and its enforcement. For a comprehensive coverage of myths and facts about FATCA – check out an article written by Robert Stack @ http://www.treasury.gov/connect/blog/Pages/Myth-vs-FATCA.aspx. I have summarized and added a few others …

Myth : Some claim it’s overly penalizing  US citizens as they will be required to pay taxes in multiple jurisdictions

Reality: Treasury and the IRS have designed regulations in a way that minimizes double taxation for individuals. In fact, US citizens can claim the foreign tax credit for taxes paid to foreign governments in their US tax returns. You can read more about this @ http://www.irs.gov/Individuals/International-Taxpayers/Foreign-Tax-Credit

Myth: U.S. citizens living overseas will become outcasts in the international financial world as foreign financial institutions (FFIS) will avoid such deposits and accounts

Reality: FATCA withholding applies to the U.S. investments of FFIs whether or not they have U.S. account holders, so turning away known U.S. account holders will not enable an FFI to avoid FATCA.  FATCA is increasingly getting adopted globally and as part of the due diligence, countries will be asking their financial institutions to provide information about all external and non-resident account holders.

Myth: Rampant rumors abound that Americans living abroad will give up their U.S. citizenship because of new disclosures required by FATCA.

Reality: FATCA provisions impose no new obligations on U.S. citizens living abroad. Instead, FATCA’s withholding obligations fall on institutions making payments to FFIs, and the due diligence and reporting requirements fall on the FFIs themselves. US citizens living abroad are however, required to report their assets on Form 8938

Myth: Some claim that FATCA is not being enforced and the US citizens do not have the onus for reporting their foreign income

Reality: FATCA violations are reported to run steep liabilities for the FFIs who are in the process of evaluating sophisticated algorithms and integrated business processes solutions to identify, investigate and report US citizens to the IRS. In today’s connected social media world, US citizens are best advised to maintain complete transparency and report their foreign income

The FATCA regulations are still evolving so suggest you setup an google alert to stay abreast of any changes or interesting developments.

Name: Rajeev Kak

Bio: Rajeev is the Global Vice President, Industry Solutions and Marketing @ Newgen Software Technologies. Rajeev has over 20 years experience in high technology and consumer product companies including Coats, i2 Technologies, Adobe Systems, SAP and MetricStream with an outstanding record of driving revenue and developing new strategic business alliances, driving corporate marketing and pipeline generation as well as managing new product introductions to achieve consistent year over year growth in SMB and enterprise markets.

Sep
2013

Scaling of banking services using BPM- a best practice primer

The race for seeking banking licenses is fast gaining momentum. New RBI governor Mr Raghuram Rajan reiterated that new bank licences will most likely be announced around January 2014. Applicant companies are in a rush to build capabilities are be ready before RBI rings the bell.

Technology will play a lead role in success of new banks and hence selecting the right and proven technology is of prime importance. These new green field banks are at an advantage as they don’t have the challenges the existing banks faced with managing legacy applications, old processes and data.

But at the same time they also face a major hurdle of selecting the right technology which can enable

  • Competing with existing successful banks who have gone through the maturity curve and have a huge customer base
  • Building a financially inclusive model of having 25% of bank branches in non-banked rural areas which directly implies that banks have to keep their operational costs low and operate with increased efficiency
  • Scaling up of operations as banks starts to grow in size and geographies.
  • Building centralize back office operations thus increasing efficiency and fostering process standardization.
  • Adhering to compliance, audits from Regulators
  • Building leaner banking branches and have Mobile sales force for wider customer reach.
  • Enabling fast, efficient and prompt customer service & near customer service visibility

To address this concern Newgen Software Technologies Ltd. has brought together a unique convergence of three different shades of opinion from

  1. Top Consulting & Advisory firm KPMG,
  2. One of the fastest grown banks – Indusind Bank and
  3. World acclaimed BPM & ECM Product provider – Newgen Software

Please click to register for an Exclusive Webinar on Sept 11, 2013 titled ‘Scaling of Banking Services using BPM – A Best Practice Primer’.

Jul
2013

Consistent and Cost-effective Reporting – Key to the Success of Wealth Management Institutions

While financial institutions explore new territories and trade across multiple geographies, currencies, and products, they are pressed with the challenge of meeting their customers’ expectations like never before. The new generation high net-worth customers demand far more attention from their wealth managers in terms of time and personalized services, than their older counterparts. These technology savvy customers want services to be delivered instantly, and via their preferred channel. Moreover today’s asset owners are very cautious about the performance of their investments, and demand complete transparency from their wealth managers in asset reporting. In such a scenario, banks not only face the challenge of offering a comprehensive portfolio of products, but are also expected to provide customers with on-demand, real-time reports of the performance of their assets.

Clients expect their primary financial institutions to provide a consolidated view of their net assets, including non-custody investments (investments with other banks or wealth management entities). Financial institutions need to ensure that their communication with customers is consistent across channels. Inconsistent reporting across different channels might translate into customer mistrust, and consequently into customer churn.

While efficient client reporting is critical to the success of wealth management institutions, they still struggle to deliver consistent and cost-effective reporting to their clients. Aggregating data collected from multiple disparate systems is challenging. Further, report creation involves multiple reviews by financial advisors, analysts, and legal and compliance functions, which adds to the process complexities. In order to overcome these challenges wealth managers need an end-to-end process automation solution covering every aspect of client reporting – including data aggregation, validation, creation of personalized reports, multi-channel distribution, and archiving using a single integrated solution.

Bio: Garima is Manager - Marketing & Communications at Newgen Software.

Jun
2013

Customers have Options, Banks don’t…

Today, customers not only want anytime-anywhere access to their account details, but also the power to manage accounts, check status updates, and even chat live with a customer service representative 24/7. If you can’t satisfy your customers’ requirements, someone else will.

With expansion plans of leading banks, government’s focus on financial inclusion, and the entry of foreign banks, competition in the banking landscape is getting stiffer each day. Driven by the preferences of their tech-savvy customers, banks are investing significant time and money in exploring newer technologies that can help them exceed their customers’ expectations. Banks are looking at innovative technologies such as mobility, cloud, and virtualization to drive differentiation. Going by a recent industry research, published by analyst firm Ovum, IT spending by banks globally will reach $118.6 billion in 2013.

In today’s scenario, where real-time customer service has become a norm, mobility has become a strategic imperative for banks to remain competitive and retain their customers, by proving convenient, simple, and secure banking services. Mobility offers an opportunity for banks to offer convenient self-service tools to their customers. It gives customers the freedom to securely access their personal accounts, process transactions, or make payments – all using their mobile devices. When it comes to retaining customers, there is no room for delay – your bank is either on mobile or off the market.

Bio: Garima is Manager - Marketing & Communications at Newgen Software.

Apr
2013

How prepared are you for FATCA?

FATCA stands for the Foreign Account Tax Compliance Act. According to leading consultancy firm PWC – “It adds a new chapter to the Internal Revenue Code (Chapter 4) aimed at addressing perceived tax abuse by U.S. persons through the use of offshore accounts. The new rules require foreign financial institutions (FFI’s) to provide the Internal Revenue Service (IRS) with information on certain U.S. persons invested in accounts outside of the U.S. and for certain non-U.S. entities to provide information about any U.S. owners.”

FATCA was enacted by the United States government in 2010, as part of the Hiring Incentives to Restore Employment (HIRE) Act. It is an important development by the US to combat offshore non compliance. It is also being seen as an initiative that will increase compliance and transparency around US persons and assets, and hold to task those that do not meet its conditions.

FATCA applies to any individual, US or global banks and institutions, and any company or business entity that engages with US clients or assets over a certain threshold in an account. While FATCA will impact US MNCs and withholding agents, its bearing upon Foreign Financial Institutions (FFIs) will be most profound.

FATCA requires that FFIs and global banks register with the IRS and enter an FFI agreement whereby they promise to identify, collect and report information on offshore bank accounts of their US clients. Entities can register through the FATCA web portal. In order to be included on the IRS’s list of compliant institutions in December 2013, all entities must register before October 25, 2013.

What is your bank’s or organization’s role after FATCA coming into effect?

  • Perform a detailed analysis of your existing customer base to filter and identify any U.S. clients and report them to the IRS.
  • Send annual reports to the IRS on the assets held and transactions that have occurred on the accounts or portfolios of any U.S. clients.
  • Capture additional documentation with respect to new customers as and when they set up an account or portfolio.
  • Make modifications or updates in your existing banking system that will withhold the 30% U.S. Tax on customers that refuse to supply the information and documentation required.

Why prepare now?

With FATCA coming into effect, it is imperative for entities that fall under the purview of FATCA to be prepared.

Many strategic and operational decisions need to be made, analysis needs to be done, and systems and controls need to be in place before applying for an agreement, in order to to ensure compliance. If no steps are taken and the deadline is missed, the 30% withholding will begin to be enforced.

Challenges faced by Banks and FFIs:

  • FFIs will need to make a strategic call on remaining invested in the US market or exiting it, for the sake of its customers or itself
  • Current KYC Processes will need to be overhauled as they don’t gather enough information for FATCA purposes
  • Adapting and investing in processes and IT systems to meet the FATCA deadline
  • Non-compliance brings with it the real risk of losing revenue from US customers and assets
  • Undertake training for key personnel and setting up a dedicated team

How can Newgen help you prepare?

FATCA compliance enabled Newgen’s OmniFlow Solution will assist in the identification, classification, documentation, retention, maintenance and reporting of financial information of US Persons with holdings at your Bank’s legal entities. Our solution acts as a layer on top of your core systems thereby ensuring none of your current processes are disrupted, and that our system can run fluently in the background giving you the reports you need. Newgen’s solution provides a focused workflow to bring uniformity and automation to your due diligence process, thus providing visibility and control.

Five practical issues to keep front-of-mind

  • Timing: FATCA is now a timing challenge (not just in terms of key dates but pace of preparation and execution readiness).
  • Business Impact: FATCA will have ‘front-to-back’ impact through financial institutions: from customer awareness and information management, through establishing a Transparent, Repeatable and Consistent Process.
  • Opportunity: FATCA is not just a challenge it is an opportunity; to improve customer data quality and availability, to open new dialog with customers, to transform compliance in this key area. FATCA will have major implications for customer data quality and availability.
  • Imperative and Impending: FATCA is a ‘must fix’ not a ‘maybe fix it at five minutes to midnight’ – it WILL happen and financial institutions need to have a clear picture of their readiness.

Immediate: The time to act is NOW!

Name: Imroz Adeeb

Bio: Imroz is Associate Manager - Corporate Communications at Newgen Software.

Jan
2013

National Automatic Clearing House (NACH) – Elevating India’s Payment Landscape to Global Standards

The nation is now geared up for another NPCI mandate i.e. ACH or Automatic Clearing House. The primary motive of ACH is to handle low value, high-volume transactions based on electronic files. Ideally implementing this mandate will allow transactions to be cleared in real-time mode rather than batch mode. This paradigm shift to Real-time mode will be a milestone for the Payment landscape in the country and mirror global standards. The scope of ACH is set to cover 82,000+ Bank Branches spread all over India.

Automatic Clearing House (ACH) payment system was envisaged in the United States during the early 1970’s. It was a result of studies conducted by the Federal Reserve and also suggested by industry stalwarts that the increasing volume of paper checks used by businesses and consumers to pay their bills would eventually exceed the ability of the existing computer systems to process and sort the checks efficiently. Hence, the Automated Clearing House (ACH) payments system was designed to allow corporations and consumers to reduce or eliminate the use of paper checks to make routine payments. As for 2011, this network processed an estimated 20.2 billion ACH transactions with a total value of $33.91 trillion.

Automated Clearing House (ACH) system is better recognized as Electronic Clearing Service (ECS) in India. ECS is currently available in around 89 centers in the country. It is operated by the Reserve Bank of India (RBI) at 15 centers and by commercial banks at the remaining centers. With the introduction of NACH or National Electronic Clearing Service (NECS) by Reserve Bank of India, the reach of the system has been further deepened and all identified core banking branches of banks are to be included as part of the upgraded system.

The Proposal

NPCI proposes to build, implement and manage an Automated Clearing House (ACH) system with built-in security features and multiple level data validation facility accessible to all participants across the country. The new centralized ACH solution or NACH is expected to consolidate the current multiple ECS systems in due course of time and provide a framework for removal of local barriers /inhibitors and harmonization of standards and practices.

The NACH platform will have national footprint which will cover 82000+ bank branches. The platform will be robust, secure and scalable with both transaction and file based transaction processing capabilities. It will have best-in-class security features, cost efficiency & payment performance (STP) for all participants. The intention is to create fully automated processes with the use of open standards and best industry practices. This will prescribe a single set of rules (Operating and Business), practices and standards which are common across the country for all Participants, Service Providers, and Users etc.

The NACH platform will support financial inclusion measures initiated by banks, other financial institutions, Government etc. by providing support to UID and Mobile based ACH transactions. The proposed system will allow member banks to design their own products and help address specific needs of the corporate world, Government and retail customers.

Objectives of NACH:

  • Leverage on distribution footprint and technology to provide a modern, robust platform to handle large volumes of repetitive payments
  • Define and Manage Governance Process by way of a set of Operating Guidelines, practices and standards for all Participants, Service Providers and Users etc.
  • Introduce a refined Mandate Management system and processes with defined and transparent SLAs.
  • Provide Enhancements and Enrichments – additional data elements in the message formats, secured access, and user control.
  • Facilitate Exceptions and Dispute management
  • Support financial inclusion by providing support for Aadhaar based transaction

Name: Imroz Adeeb

Bio: Imroz is Associate Manager - Corporate Communications at Newgen Software.

Nov
2012

Technology as an Enabler of the Indian Insurance Industry

“Consumerization of Insurance” by targeting various customer segments is the key for today’s insurance organization. As rightly pointed by Beena, in her post ‘The Role of IT in Shaping the Future of the Indian Insurance Industry’, GoI has come out with a 12 point plan to fuel growth in Life Insurance sector. I would like to bring forth few of the key points that Insurance organizations should focus on high priority.

GoI’s proposal for “Use & File” approach, being considered by IRDA, is aimed towards reducing the approval cycle for a product by IRDA. It is going to be a vehement task for Insurance firms to devise a product that is best suited for a given market segment, and stay ahead of competition. This will involve high degree of customer analytics, customer segmentation analysis & targeted promotion and customer servicing through various channels of communication. Proper infrastructure has to be in place to support such an initiative.

Bank can act as broker for selling Insurance” – There is need for integration and automation of Insurance processes along with the banking processes to have a common infrastructure for selling insurance products and services. This will directly reduce the time for customer on-boarding by having an automated and shared infrastructure between the banking and insurance divisions.  Such integration would enable usage of bank KYC as a valid proof of document for issuance of policy to customers, resulting in faster & easy acquisition.

Horizontally, there is push by the GoI as well as the industry for banking and financial services to penetrate in the rural population. “Rural Insurance” is one such area. Rural areas in India are still far away from digitization and lack infrastructure. e-Mobility solution is one of the technology advancements that most of the Insurance organizations are looking forward to employ, such that their agents are well equipped to capture,  acquire & process customers’ data,  while being on-the move and enable for shortest possible time for policy issuance.

With its proposed plan and changes in regulations, the GoI aims at the betterment of the Indian Insurance industry, and the reach of insurance services to the uninsured rural population. Organizations need to adapt to newer technologies to provide better services and meet the demands of customers and regulators. They need to have intelligent and integrated platforms for Customer & Data Analytics, Social Media Integration, Capturing & Managing Enterprise Content (in any form), Automated Business Process (not only intra-organizational but inter-organization too), Mobile applications and integrated customer communication through various channels.

Newgen has continuously worked towards aligning its solutions with the current needs of its customers. Newgen provides an Intelligent Business Process Management platform, that allows for data processing from multiple channels on the fly, enables data analytics in real time, captures and assesses trends by integrating with social media, and provides real-time communication based on customer profiling.

Name: Benjamin

Bio: Benjamin is Sr.Manager - Products & Solutions at Newgen and part of Newgen's Center of Excellence for Insurance vertical.

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Swati Pandey
19th Feb 14 Posted a comment on Facilitating Financial Inclusion through Digital Transformation
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9th Feb 14 Posted a comment on Opportunities and Challenges for Cloud Adoption in India
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