XBRL – Bucking the Trend

Regulators are unarguably the primary force behind the growing adoption of XBRL by the banking industry, evident from the initiatives of different bodies, such as the Federal Deposit Insurance Corporation in the U.S., Committee of European Banking Supervisors in the E.U., and the Reserve Bank of India, to name a few. Yet, the idea of using XBRL for internal data management and processing is still largely unexplored. XBRL could potentially find application in several areas within banking organizations, since it is ideally suited to facilitating the exchange, processing or consumption of information by rendering the data system readable, standardized and interoperable. Needless to say, the sooner that banks explore XBRL, the more effectively they can economize their processes.
Let us look at some important operational scenarios where XBRL could play a role.
Loan Origination
XBRL enables banks to define the required granularity of data. Once mapped with a unique XBRL tag, the data can be identified during all the stages of a loan life cycle. It would be possible for a customer to provide all loan related documentation, presently submitted in unstructured form, as XBRL data, which can be easily consumed by the banks’ backend systems. Thus, a majority of the steps involved in the loan life cycle become automated and error free.
Enabled with an XBRL-supported report generator tool, the bank can generate reports based on any data cube or parameter at any time. The bank also has the choice of broadcasting the data online (as HTML) or printing it out as documents in MS Excel, MS Word, PDF and other formats, since XBRL is format agnostic. Leveraging XBRL GL, the final reports can be generated from trial balances, ledgers or transactions, with provisions for adjustments, annotations and additional information. Consolidation of data from various branches, departments or even subsidiaries can be automated based on the business rules defined.
As banks move from a product-centric to segment-centric to customer-centric approach to account centric approach they must understand their customers better in order to sustain competitive advantage. An XBRL-enabled analytical application can talk to the source systems within banks, which also have the taxonomy tagged to the relevant fields. The scope of the analytics that can be carried out is immense.
Having considered the relevant use cases, banks may choose to implement XBRL in one of three ways. Taking a big bang approach would achieve the desired result of straight through reporting; however, success would largely depend on the bank’s readiness and adoption of technology. Another approach could be phased implementation. Banks can draw up a plan to adopt XBRL internally in a step-by-step manner, starting with a few departments before moving on to the rest. This is quite useful when various departments in the bank are using diverse applications. Banks could also peg their level of XBRL adoption to that of the regulators. For instance, in India, the adoption could be in sync with the returns specified by the Reserve Bank of India under the XBRL mandate.

Modern day banking: first thing in the morning, last thing at night

Groggily, Jovy reaches for his Blackberry as the blinking trackball catches his eye. The screen reads “3 New Messages”. It’s already eight in the morning and he has to rush. He runs through the messages. The first is from his fiancée. The other two are from his bank; one regarding his salary credit, the other about a monthly debit towards a recurring deposit.
Jovy’s eyes are glued to the screen when the cellphone rings. The voice on the other side introduces herself as a Direct Selling Agent. Jovy was a sales executive himself, once. He understands the pressures and dilemmas of the job. He decides to give the salesperson a patient hearing; in any case, he has been planning to visit the nearby branch to enquire about a home loan. No need for that now, the lady competently answers his questions. She also tells him about a facility that the bank launched a while ago, namely, cash delivery. With thoughts of his ailing father playing at the back of his mind, Jovy  logs on to his net banking portal, and within minutes, opens a savings bank account for his sister and applies for a home loan for himself. On his way to a nearby restaurant, he stops at an ATM. He also remembers to register his new mobile number with the bank at the ATM itself, saving yet another trip to the branch.
Jovy guides his fiancée to a silent corner of the restaurant where an attractive dinner spread awaits. He’d booked it using the credit card linked to his fixed deposit account, the one he’d recently opened on the Internet.
Back home, there’s an envelope in his mailbox. It contains his bank statements. He had requested them only this afternoon and already they were here. Jovy sprawls comfortably on the couch and ponders over the events of the day, peppered with so many satisfactory banking experiences. What’s more, he had barely exerted himself. With happy thoughts of the advantages of branchless banking, he falls into a deep dreamless sleep.

Green, the new black

Since it burst into our collective conscience in the sixties, modern environmentalism has become an increasingly dominant motif in policy parlance. For businesses this translates into the need to make green integral to business strategy rather than managing it as an incidental or tactical activity.
Thankfully, green has the potential to be the new black in the balance sheet. In the context of the financial services sector, it can increase efficiencies of existing processes to deliver differentiation, competitiveness and growth in the top and bottom line. Additionally, it opens up a whole new opportunity in the form of the emerging market for green products and services.
Let’s start with the concept of the ‘paperless’ bank, a concept with such obviously green connotations that the attendant productivity benefits are only implicit. In banks, human interactions tend to generate paper even for the most routinely availed services. Digitizing or automating these services is as much about sustainability as it is about freeing up expensive human resources to focus on more critical functions like relationship building, up-selling and cross-selling. And digitization in any form, be it multi-functional kiosks, biometric safe deposit lockers or digital money, delivers sustainability and cost efficiency.
But all these digital solutions running on multiple channels do consume energy. World over, banks are investing in technologies that help them align their performance and their energy consumption requirements. Standard Bank’s London office, for example, managed to cut energy consumption by a third after switching to thin computing and using Virtual Desktop Infrastructure (VDI). National Australia Bank has set a goal to realize 90% virtualization of servers and turn the bank, including its data center, carbon neutral. Cloud computing offers another way to conserve energy and IT budgets. And green computing, an entirely new industry in the making, holds the promise of products built for environmentally sustainable computing.
Technology-led initiatives, however, are only one stroke in the broad canvas of green banking. There are a whole host of opportunities in the form of financial products or investment programs that incentivize sustainable development.
Green banking, therefore, is not about a solar powered ATM, a green financing option or even a LEED certifed bank branch. It is about laying the foundation for a movement whose implications extend way beyond banking.

Channel Banking: Automated yet Human

At 11 a.m. there was maddening rush in my branch. It was peak summer, temperatures were soaring and customers were frustrated with how long the cashier was taking to single-handedly attend to them. Ironically, there was also a kiosk available for depositing cash, but it was completely ignored by the throng of people who preferred to wait in line so they could hand it over to an official. Unable to take it any longer, I started urging customers to give the machine a try; with a little help and within ten minutes, the lobby was empty of all but three. The lesson? Merely installing an alternative channel won’t do the trick.
Until a few years ago, the branch was the most convenient banking channel; a single roof below which customers could get all their work done.  Gradually, alternative modes of banking came along in the form of call centers, ATMs and Internet banking. However, these sprung up in islands, with no linkages between them. But now, with the advent of multi-channel banking, customers can bank across a selection of channels and enjoy a consistent experience across each, which is so seamless that a transaction initiated and abandoned midway in one channel can be resumed from where it was left off, and fulfilled in another. At any time, or place.
Multi-channel banking brings several advantages besides reach and branchless banking convenience. Banks can use channels to showcase their offerings; they can leverage low cost platforms such as mobile banking to penetrate hitherto unbanked areas; they can also venture into social media to engage deeper with customers.
A common platform for channels opens up opportunities for customers and bank staff to connect to them through a range of devices. While this is an exciting prospect, it also carries significant security risk, which must be addressed beforehand.
That being said, banks need to bear in mind that multi-channel banking is not for everyone. For example, older or technophobic customers are likely to want to continue using the branch. During my days as a banker, I happened to interact with three very distinct groups of customers. One, those who came to the branch for just about everything and would not use other channels. Two, those who did just the opposite. And three – the biggest group – customers who were moderately comfortable with channel banking but wanted personal assistance to be readily available whenever required. If they faced trouble progressing with any transaction, they would either chat or video conference with a relationship manager or call their branch.
Banks need to create awareness of the benefits of multi-channel banking among their customers. Since this is where the future lies, neither has a choice.