Business Analysis: Tips& Checklist

I am writing this post to discuss some tips and tools which a Business Analyst can use during the course of a project life. From my experience, I find these tools very useful for comprehensive and correct coverage of a business requirement. Which tool or methodology to use for effective business analysis depends on many factors like:

• Type and size of project
• Organization and business for which the project will be done
• Software methodology like agile, waterfall or hybrid

The roles and responsibilities of a business analyst has expanded in all the project phases; staring from requirement engineering till the system starts doing business, a BA is the single thread to bind all the stakeholders.

Requirements Investigation

• Brainstorming sessions
• Focus groups: All participants perform the same role
• Cross-functional groups: All business functions involved in an end-to-end process One-on-one interviews
• Research of existing artifacts
• Prototyping
• Wiki (A tool that can be used to allow stakeholders and team members to collaboratively contribute to the requirements)
• Surveys and understanding of business domain

Business Process Diagram

A diagram that models the work flow of a business process. It is very useful to understand the get the domain understanding of the business and at the same time get the agreement from business users on the proposed solution.

Business Use Case

A business use case is an interaction with a business that provides value to an actor (an entity outside the business). Business use-case analysis involves a number of components: Business use cases to model business services and processes; business use- case diagrams to indicate the participants in each process; business use-case descriptions to describe the interaction between actors and the business area; and business use-case realizations, representing the internal business process used to implement the functionality. Business use-case descriptions (specifications) are usually documented as a text narrative; the text should be augmented with an activity diagram if the flows connect in complex ways. Business use-case realizations are usually expressed as activity diagrams, with one partition for each participant. Business use-case diagrams should be used in early meetings with stakeholders and in documentation to communicate high-level business issues: the business processes impacted by the project and the participants involved with each process. A BA should use business use-case descriptions to describe business functionality and business use-case realizations to describe the internal work flow for each impacted process.

Requirements Attribute Table

It is a table used to document properties of requirements, such as authorship, priority, and so on. It provides information such as priority and stability for making decisions concerning requirements, such as when to schedule implementation. It is a central place to look up data about a requirement, such as its author, current version number, etc.

Requirements Traceability Matrix

A table used to trace each requirement backwards to the business processes and objectives it supports and forwards to the subsequent artifacts, events, and changed configuration items that result from it like use cases, functional specifications and test scenarios. A BA should map requirements to other artifacts and configuration items so that the upstream and downstream impact can be determined.

System Use Case and Diagrams

A way that the software will be used by an actor. (An actor is an external entity that uses the IT system under discussion.). It also defines a user task: The task must be complete from the user's point of view and yield a result of value to the user. (The term user, in this context, refers to any entity that uses the system and may be human or an external IT system; it is equivalent to the term actor.)

A use case may be of any size but typically represents a unit of work accomplished in one IT session by a single initiating (primary) actor. It consists of sequences of interactions between an initiating (primary) actor and an IT system, covering normal and alternative pathways for carrying out the task. It may also contain interactions that the IT system initiates with other (secondary) actors. A related term, scenario, refers to a specific sequence of actions that illustrates behaviors. A scenario may be used to illustrate one way the actor-system interaction may play out over the course of a system use case.

Managing Risk

At the beginning of the project, and periodically as the project progresses, the BA should support the PM in analyzing risk. A BA should characterize and evaluate each risk's impact, likelihood, level, type, and risk-management strategy. Each risk should have an associated plan for managing it. Your plan should consider the following strategies:    

• Avoid: Prevent the risk from happening. Possible avoidance plans include changing the scope and re- planning the project.
• Transfer: Transfer the responsibility for dealing with the risk to another entity.
• Accept: Accept the risk and highlight it immediately to the apposite stakeholders.
• Mitigate: Take action to reduce the impact. Mitigation plans may be proactive or retroactive--such a contingency plan ("Plan B").

Three vital tools of a Business Analyst: Eyes, Ears and Thinking

No process or tool in the world can help in absence of a thinking head. A BA should have the strong tendency to read, understand and think intensely. Today a BA is expected to understand the real business problem and then provide all possible solutions. A BA should think and find out all the hidden and covered business problems and should focus on re usability of existing requirements and solutions.

There are three broad sets of skills and knowledge needed for business analysis: 

1. Technical skills of the profession
2. Business knowledge
3. and a range of personal and interpersonal skills.

A BA should have the capability of listening to multiple voices, viewpoints and perspectives, analyzing multiple situations, reflecting on all those voices, synthesizing them and pulling it all together into a proposed way (or ways) forward that meets both strategic needs and the needs of those on the ground. 

There are times in project when the misunderstanding emerges out between:

• Development and QA team during system testing 
• Development/ QA and UAT team during User Acceptance Testing
• Business Users and Project Managers during the actual imolementation

 The above conflicts are the true testing waters for a BA, and using some vital tools and check points is a proven way (based on my own experience) to close down all the understanding, scope and delivery gaps. I think that is the reason a BA is called a bridge or conduit.

Thanks

Himanshu Sanguri

Currency Trading (FX): An insights into Fundamentals of Forex Trading

The foreign exchange market; also known as FX, or Forex, is a world-wide, decentralized, over-the-counter financial market that facilitates the trading of currencies between banks, speculators, and investors. Simply put, there is no exchange floor, or even an exchange; instead buyers and sellers are making electronic contractual agreements in regards to underlying currencies. Because there is no exchange, there is also no clearing, or exchange guarantee, and traders are exposed to counter-party risk; this is in contrast to the futures markets, in which an exchange guarantees all executed trades.

The global FX market was created to simplify the transfer of assets between businesses and countries worldwide but in recent years has quickly become a hotbed of speculation. Whether the additional  liquidity brought by speculators has been positive is up for debate, but in the end, it is the Forex market that determines the relative values of various currencies in relation to others.

Below listed are the fundamentals of FX trading:

• In FX, a currency pair is composed of two elements known as a base currency and a quote currency. The base currency is listed first and the quote currency second, with a hyphen or backslash separating the two.
• Some refer to the base currency as the “primary currency” and the quote currency as the “secondary currency.”
• FX currency pairs are most often traded in 100,000 or 10,000 units of the base currency, but some firms offer increments of 1,000. Because size is relatively standard, the FX community often refers to the various contract sizes as a full-sized contract (standard lot), a mini contract, and a micro contract, respectively.
• All currencies must be traded in pairs; in essence, traders are buying one currency and selling the other. Therefore, if you buy the base currency, you are simultaneously selling the quote currency.
• The bid is the price at which a trader can sell, and ask is the price at which a trader can buy. There will always be a spread between these prices, known as the bid/ask spread, or pip spread.

FX Margin and Notional Value of FX Trade

The concept of notional value and margin in FX is similar to the value of a home relative to a down payment. The notional value of the property is the total worth of the home and the fluctuation in this value determines the profit and loss to the buyer. Yet, the home-buyer is only required to put a deposit of 20% down to acquire the property, which is far less than the notional value of the asset.

• In FOREX, a leverage ratio of 50 to 1 means that you can buy or sell $100,000 worth of currency while maintaining a margin balance of just $2,000 in your account.
• As if this weren't confusing enough, because two currencies are involved in each pair, there are potentially two relative notional values (one in each currency). Luckily, it is standard to use the base currency to determine the notional value. To illustrate, if a trader buys 10,000 EUR/USD at $1.3275, the notional value of the trade will be $13,275 (10,000 × $1.3275). Keep in mind that U.S. brokerage firms offer leverage of 50 to 1; accordingly, a trader could hypothetically purchase 10,000 Euro at $1.3275 and experience the gains or losses of the notional value ($13,275) with as little as $265.50 in a trading account (that is, (1/50) × 13,275).
• If you buy a currency pair, you buy the base currency and sell the quote currency. Conversely, when you sell the currency pair, you sell the base currency and receive the quote currency. 
• For example, if the USD/EUR currency pair is quoted as being USD/EUR = 1.5 and you purchase the pair, this means that for every 1.5 Euros that you sell, you purchase (receive) US$1. If you sold the currency pair, you would receive 1.5 Euros for every US$1 you sell. The inverse of the currency quote is EUR/USD, and the corresponding price would be EUR/USD = 0.667, meaning that US$0.667 would buy 1 euro.

LIQUIDITY IN FX Market and Different Time Zones

• Liquidity in the FX market travels across the globe with the time zones. From a U.S. perspective, the trading day actually begins the night before in Sydney, Australia, at 5:00 pm Eastern; however, liquidity doesn't tend to show up until the Tokyo open a few hours later.
• At 3:00 am Eastern, the London markets open, and the last to open is New York at 8:00 am local time. As you can see, there is plenty of action around the clock; the most liquidity can be found during the overlapped time between the London and New York sessions, approximately 8:00 am to 12:00 PM Eastern Time.

Decimal Precision in FX Trading

• Currency pairs are quoted in bids and asks, with the smallest increment of price referred to as a pip. In most cases, a pip is 1/10,000 or 0.0001 of a 5-digit price quote; there are typically four digits to the right of the decimal and one to the left. For example, you might see the ask price of the GBP/USD pair priced at 1.5910, where the last digit in the quote represents the pip.
• The exception to the 5-digit quote format is the Yen, which consists of 4 digits with two of them to the right of the decimal point and two to the left. You might see the last trade in the USD/YEN at 82.17.
• All other pairs and crosses are quoted to four decimal places. For instance, the Australian dollar (AUD)/USD is sold at 1.0469

All yen (JPY) pairs and crosses are quoted to two decimal places. For instance, the US dollar (USD)/JPY is bought at 90.25.

According to data from triennial survey by Bank of International settlements, London is by far the world's largest currency trading market with daily turnover in 2010 estimated at $1.854 trillion, more than that of the next three markets New York, at $904 billion, Tokyo at $312 billion and Singapore at $266 million - combined. Among the Banks, the leading Foreign Exchange Traders in 2012 are Barclays with 10.5% of market share, Deutsche with 9.8%, Citigroup with 9.3%, UBS with 8.2%, HSBC with 7.6% and JP Morgan with 7.5%

To conclude, FX is a dynamic market that relies on margins. The advent of electronic FX dealing systems has revolutionized this market and reduced a gamut of risks that were present in earlier days of manual dealers. The presence of real time payments settlements systems and the ability of banks to do cross border business with their correlation banks have further enhanced the efficiency, speed and accuracy in FX trading.

Thanks

Himanshu Sanguri

Centralizing Cash Management- Efficient and Cost Effective Series 0.1

Centralizing cash management is an intuitively straightforward concept. The basic goals of cash management are:

1. To speed up collection of accounts receivable while slowing down the disbursement for accounts payable
2. To shift cash from subsidiaries that have excess liquidities to subsidiaries facing a cash deficit, and
3. To maximize the return on consolidated cash balances. 

The aim is to minimize the amount of time (measured in days) when cash is trapped in inventory and receivables, while extracting the longest possible delay in paying suppliers provided that supplier financing is cheaper than bank financing:

Consider the case of ABC USA—the subsidiary of the Swiss nutrition multinational.

• Its California-based ABC subsidiary projects a cash balance of $260 million for the month of April 2014, earning a paltry 1.75 percent per annum from its bank deposits.
• XYZ, ABC New Jersey–based pasta subsidiary, projects a cash deficit of $160 million and would have to bridge it by drawing on its line of credit at the cost of 6.75 percent.
• By consolidating both cash positions between its ABC and XYZ subsidiaries, ABC-USA has a net cash balance of $100 million and will save itself [(6.75% − 1.75%) × 160 million]/12 = $666,666.

The same logic applies at an international level. For example, ABC–South Korea has a dollar-equivalent deficit of $75 million and faces short-term borrowing interest rates in South Korea of 9 percent per annum. Consolidation of cash balances between the two countries' operations would allow ABC–South Korea to borrow from ABC-USA at the much lower rate of 1.75 percent. This is a classic example of Inter Company Lending, also known as funding the shortfalls internally.

Of course, netting on a cross-border basis raises issues of foreign exchange conversion cost and currency risk. Last but not least, ABC-Argentina is short $10 million for the same period and could draw on ABC-USA at 1.75 percent rather than borrowing in Argentina at the rate of 12 percent. The Argentine peso has been depreciating, and speedy transfer in and out of Argentina may be held up by the country's central bank. This, of course, would make ABC-USA pause before consolidating cash management between its Argentine and U.S. subsidiaries. 

In the next version, I will discuss the advantages of netting and in- house clearing and settlement for global entities.

Thanks

Himanshu Sanguri

21st CENTURY TREASURY INNOVATIONS: USE OF MULTI CURRENCY POOLING

Awareness of liquidity risk and cash management is the new arena to innovate in the hands of treasury practitioners. Effective liquidity management has become imperative to continuing operations and must be addressed through comprehensive processes, policies and programs. Companies and their treasuries have been focusing on gaining real-time visibility on global positions and improving cash forecasting processes, as bedrock to liquidity planning. They have been extending global cash concentration and pooling structures to access worldwide cash and take advantage of internal offsets. And they have been centralizing dealing and portfolio monitoring to guard against hidden risk-taking. 

In the modern era of doing business of expansions, mergers& acquisitions, cross border payments and collections and investments across the globe; three risks are on priority to mitigate by every multi national.

1. Credit and Interest Rate Risks
2. Currency Volatility
3. Country& Regulatory Risks

I have been enthusiastically studying a lot of product and service features by different banks and banking consultants on the new ways of doing Treasury Operations effectively and creating a win- win situation for every player in financial market. 

To start with, I am taking multi currency pooling and the gamut of innovative ways it is being deployed by Treasuries to gain as much as possible. Companies have been focusing on gaining real-time visibility on global positions and improving cash forecasting processes, as bedrock to liquidity planning. They have been extending global cash concentration and pooling structures to access worldwide cash and take advantage of internal offsets. And they have been centralizing dealing and portfolio monitoring to guard against hidden risk-taking. The aim is to save on COSTS, INTEREST PAYMENTS and DEPARTMENTAL TIME and IMPROVE INTER- COMPANY SETTLEMENT while bringing even more of cash under central control. 

Multi currency cash pools – as part of a global liquidity structure – are proving extremely popular among treasury fraternity as a means to gain liquidity and operational efficiencies, whilst also replacing or at least reducing the need for FX swaps. With a multi currency pool, it is possible to offset charges in certain low-yielding currencies by changing the mix of the company’s assets and increasing those currencies which have a wider spread. Furthermore, for the day-to-day operating business, rather than having to spend resources and investment dollars executing FX transactions, treasuries can effectively use the multi currency cash pool as an implicit way of executing their FX swap transactions.

This new innovation has

• Reduced the cost of FX swaps by eliminating the need to do FX trading
• Reduced the credit risk on counter parties
• Reduced the interest rate risks
• Reduced the risks because of currency volatility and geopolitical instabilities.

I will first explain the basic and fundamental concept of doing FX swap, and then will explain how a multi currency pool with Inter Company Lending can achieve the FX swaps internally.

Definition Purpose and Example of FX Swap

An FX swap agreement is a contract, in which one party simultaneously borrows one currency and lends another currency to a second party. The repayment obligation is used as collateral and the amount of repayment is fixed at the FX forward rate. FX swaps can be considered riskless collateralized borrowing/lending. The contract virtually allows you to utilize the funds you have in one currency to fund obligations denominated in a different currency, without incurring foreign exchange risk. Effectively the FX swap is two exchange contracts packed in one: a spot foreign exchange transaction, and a forward foreign exchange transaction. 

The most common use of FX Swaps is for institutions to fund their foreign exchange balances. FX swaps are also used by importers and exporters, as well as institutional investors who wish to hedge their positions. They are also used for speculative trading.

The diagram below illustrates graphically the flow of funds in a typical EUR/USD contract. At the start of the contract company A gives company B EUR in the amount of X, which later receives in the same amount at maturity. Company B gives USD in the amount of X times S, the spot exchange rate to company A at the start. At maturity company A pays back company B USD in the amount of X times F, the forward rate.

Since the swap contract is virtually the difference between a forward and a spot contract, it is expressed as F – S (where F = forward, and S = spot)

F – S = S * [((1 + r1)/(1 + r2)) T – 1]

• r1 = simple interest rate in the term currency
• r2 = simple interest rate in the base currency
• T = tenor (periods of interest accrual) 

In a multi-currency notional or inter-company loan cash pool structure, there is no need to convert or swap the different currency balances in the cash pool to a single currency. By means of a simple translation mechanism treasury determines the net-cash pool balance in a currency. In practice a treasury maintains the overlay structure of the accounts in different countries and currencies. A global header account is maintained in the country and currency of treasury choice. Henceforth, regional treasuries or companies can sweep funds among pool accounts and with the help of a simple inter company lending interest rate maintenance; they can charge the optimal rates for lending or hedging the currency risks. 

To conclude, from negative interest rates to significant currency volatility and geopolitical risk, today’s treasurers are operating in largely uncharted territory. Exploring and exploiting this new liquidity landscape will require skillful navigation and an open mind. These kinds of innovations are only going to become more popular as people adjust to the new normal. And over the last five years, treasurers have already demonstrated great flexibility in their mind-sets, adjusting their investment comfort zones to include instruments such as secured lending, offshore securitization, centralizing, rationalizing and automating their liquidity management  so thinking outside the box has almost become part of the job description for those at the top of the profession.

To be continued... with the next innovation in Treasury :-)

Thanks

Himanshu Sanguri

Banking Framework: How the Banks work.

In this article, you will learn the basic framework in which a bank works. The framework that I have introduced is a very generic model adopted in almost all banks. However, there are exceptions where some banks deviates from the standard I have proposed based upon their operational scale, business needs or regulatory requirements. To start with, please find below a diagram that defines the banking framework in three broad layers.

1. CHANNELS

Channels are the modes through which customers interact with a bank. There is a gamut of instruments that a bank deploys to allow customers to place their banking needs. 

1(a) Branches

A branch is a place where a customer can directly come and use the banking facilities like deposit, withdrawal bill payments, account opening/ closure etc. This is the oldest and most conventional channel of Banking. A branch is located in secured premises and placed at strategically locations so that a bank can reach out to each and every customer in the market.

1 (b) Electronic

This mode of channel has brought a revolution in banking industry. This includes a number of different areas that all have the common theme of the customer dealing directly with bank software rather than bank people like internet banking, ATMS's, Point of Sales (POS), credit and debit cards, online banking, emails etc. There are lots if innovations going across the globe in electronic channels for banking. 

Taken together this is a very important and growing element of service delivery for banks because it can lead to Straight Through Processing (STP) – i.e. without staff manual intervention – this is seriously low cost for the bank and any place- any time banking for the customers.

1(c) Phone

The way the Financial Services Group handles phone calls, both incoming and outgoing. It includes call centers call routing, telesales and interactive voice response as well as computerized response to “push buttons” on the handset. This is another fundamental area of service delivery for banks.

1(d) Mail

Customers still send thousands of letters a week to large financial services organizations and conversely financial groups send millions of letters a week out (statements, letters, etc). The inbound mail is usually a service trigger. The outbound mail (e.g. a credit card statement) is often the principle window for the customer onto the bank’s activities with errors and corrections usually very visible.

1(e) Tied Sales Force

A sales force that works only for the Financial Services Group (or more usually a part of it). They can be employed by the Group or be independent and / or commission only. Normally they are not relevant to service delivery but can be an escalation point for customers with complaints. In the banking area the Relationship Managers that deal with business and high net worth individuals often get involved in service delivery by being the “first point of contact”.

1(f) Brokers and Agents

These salesmen are independent of the bank and work on behalf of multiple Financial Services groups. Although important in service provision in some areas such as insurance, they are not material for service provision in banks at the moment. In the future, this may change (e.g. the use of Post Offices as banking services outlets).

I will update this article to cover the information about other left over banking framework elements.

Innovations in Retail Payments

RETAIL PAYMENTS INNOVATIONS ACROSS THE GLOBE

The article does not cover general technical and business trends, such as cloud computing and outsourcing as well as other strategic approaches in terms of the business behavior of individual banks, since the focus is not on IT developments but on the payment instruments and schemes they.

Retail Payments	Large Value Payments
Mostly in terms of consumer purchase and in retail sector.	These are mostly inter bank payments done on RTGS.
There are a gamut of instruments like card, on line, POS etc.	These are settled on real time gross settlement basis.
They make more diverse use of private sector systems for transactions processing.	They use central bank’s provided secured clearing and settlement systems.
They are smaller in value but large in terms of volume.	They are very large in value though smaller in terms of volume.

To begin with fact findings, let me describe the retail payments in the apposite language.

Typically, the overall payment process or payment scheme is described as four-party system consisting of the payer, the payer’s PSP, the payee and the payee’s PSP.

The payer makes payments by allowing his/her funds to be transferred to the payee.

This funds transfer is made when the payer’s PSP debits the payer’s account, and the payee’s PSP credits the payee’s account, typically by means of clearing and settlement processes.

The use of traditional payment instruments – i.e. credit transfers, direct debits, credit cards and debit cards – is still dominant in retail payments. While cheques are still in use in most of the countries but their usage is now declining every where.

Below mentioned are some trends in habit of retail payments in different geographies:

• Cash continues to be the most frequently used payment instrument for both proximity and P2P payments.
• Credit transfers are frequently used for spontaneous remote payments via the internet as well as for prearranged remote payments and P2P payments.
• Direct debits are the most frequently used instrument for prearranged payments.
• Credit cards are the most frequently used instrument for spontaneous remote payments via the internet and are also frequently used for proximity payments.
• Debit cards have also gained in popularity for proximity payments.
• Cheques are still fairly often used in P2P payments and prearranged payments in some countries.

Trends in Retail Payments under different situations

   Source: Survey conducted by Working Group 2011, Committee on Payments and Settlements

There have been multiple surveys conducted by different agencies like World Bank, Payments service providers, central banks on the changing trends in retail payments and new innovations in payments, their clearance and settlements. Below are some common findings that can be taken as the bullet points for the common trends in new retail payment products or customized payment services.

There is fairly wide spread adoption of electronic channels for payments initiation using innovative retail payment instruments.

Customer funds are fully protected in 60% of innovative retail payment instruments.

P2P, utility and P2B payments have received maximum degree of innovative instruments.

The majority of innovative payment instruments have very little interoperability. This is an area that attracts a lot of offerings from payments service providers.

Generally, innovative payment instruments are not directly connected to clearing and settlement houses.

Security and fraud issues need adequate attention.

Below are the broad level conclusions on innovative drives in retail payments:

• Most of the innovations are focused on payment initiation stage like near field communication, POS terminal, new advanced cards and mobile applications in Android and I phones have gathered a good momentum.
• e- Commerce is the emerging trend in on line shopping and other payments. Although, skeptics level in terms of security is still high. Increased use of cards and wide spread usage of on line shopping and utility bill payments are now finding their space in retail payments market. Also, new innovations like direct debit, standing instructions, easy bill payments and options of EMI in credit card payments have further stimulated the use of e commerce.
• One important innovation is in banking applications that are easy to use for any payment at any time at any place.
• Cash loaded cards; gift cards and wallet in mobile are also gaining grounds in retail payments.
• Innovative products that allows user to do cross border payments in most convenient way are also becoming fast popular in retail users.

To further understand the innovations in retail payments, below is the list of a gamut of new retail payment products at international level. This list is an attempt to capture the influential products in retail payments during the past decade.

POLi

This is a payment system which directs a payee from its merchant’s web page directly to the internet bank log in page. Now, the payee can directly do a one time payment and will be automatically logged out there after.

 Payclick

               

This payment system provides a user with credit points which he or she can use to transfer

By card swipe or on line credit points transfer to a merchant. The merchant then can redeem   points and credit its account.

PingPing

Mobile micropayment platform that allows users to purchase products and services using their mobile phones (SMS or NFC tag) for proximity payments or on the internet for remote payments up to EUR 25.

Oi Paggo

Mobile payment solution of the Mobile Network Operator(MNO). The MNO grants a credit line to the “cardholder” and acquires merchants to accept the payments. The merchant is paid 30 days after the transaction, while the “cardholder” pays the scheme 25 days later. If the “cardholder” does not pay, the MNO can take out a loan on behalf of the “cardholder”.

Interac e-Transfer

Transfer of funds through online banking to anyone with an e-mail address or a mobile phone number, and a bank account in Canada. It uses e-mail and text messages for fast notification to the recipient that a transfer has been initiated and payment-related information. Funds can be received at both online banking and non-online banking accounts. The limit on the amount that can be transferred is determined by banks.

Reloadable prepaid cards by Visa and MasterCard

Cardholders can make card payments and withdraw cash wherever Visa and MasterCard are accepted, including online and overseas. Cardholders can load additional funds to their cards online, in-branch and through their telephone bill payment system in selected financial institutions or using cash or direct debit from a bank account.

Electronic Commercial Draft System (ECDS)

It caters services for the processing of electronic commercial drafts including acceptance, registering, storage, forwarding and inquiry. Operated by the People’s Bank of

China, and offered to banks and financial companies.

Vingado

Bio metric authentication system that allows registered customers to pay by fingerprint in all stores linked up to the system.

m-pass

Online payments authorized by entering the mobile phone number and a PIN, and verified via SMS. There are plans to extend its service to POS using NFC technology.

Girogo [pilot]

Europe’s largest project for contact less card payments, initiated by German banks and savings banks in 2012. In a first step, the contact less payment function will be available for the German chip-based electronic wallet GeldKarte; in the medium term, contact less payments will also be available for the German electronic cash application on debit cards.

Same day bulk settlement runs

A clearing and settlement service offered by the clearing house in HongKong SAR to help shorten the clearing and settlement cycle (from T+1 to T) for inter bank obligations

arising from electronic money transfers.

Business agents for financial inclusion

Joint ventures between banks and their agents offering innovative payment services based on mobile phones and smart cards to promote financial inclusion and to enable transfer of social benefits.

EBPP

Electronic bill presentment and payment system including services/options such as viewing bills online, paying and        managing bills, auto-pay options, sending reminders, collection of payments, and funds transfer to merchants/utility companies. It provides online platforms run by banks to facilitate consumers’ payments for goods and services, which are then pooled and passed on to merchants/utility companies. Inter bank settlements take place on accounts at the Reserve Bank of India.

Prepaid payment instruments issued by non-banks

Prepaid payment instruments issued by non-banks to be used for the payment of goods and services over the internet and mobile network. Cash withdrawal and funds transfer between instruments are not permitted (however, recently some relaxation has been allowed for funds transfers subject to certain preconditions and limits). For customer protection, prepaid funds are to be kept in an escrow account at a bank. Further security features include limits for the maximum loading amount, limits for individual transactions, and a validity period.

PostePay&Go [pilot]

It is a prepaid product of BancoPosta, developed for users of public transport. Two functions are available in one card: an electronic ticket function (chip/contact less) for local transport, and a prepaid card function (magnetic stripe and chip EMV). The prepaid card function supports all transactions that can be initiated at the POS and via the internet.

There are still many more such innovations in payments, I will continue discuss other revolutionary innovations in my next article.