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Education Entrepreneurship

Be lucky; always!

Recently, I was invited to share my experiences with my alma-mater. I chose to talk about how fresh graduates can maximize their career success.

While several people will ascribe their success or success of others to luck; it is also silently agreed that success is much more than luck. Therefore I prefer Roman philosopher Seneca’s definition of luck.

Luck is what happens when opportunity meets preparation.

Seneca

Therefore I focused on how one can increase their luck by working on creating opportunities and being prepared.

The luck factory

How to create your own luck
Create your own luck, consistently.

Create Opportunities

Network

Networking that matters is helping people achieve their goals.

Seth Godin
  • Create a strong network though out your academic life and career.
  • Be aware of the strength of every individual.
  • Help out others. It improves the strength of the connections.
  • It is easy to help others, if you know them, their strengths and interests.
  • Never burn bridges.

Push yourself

You never change your life until you step out of your comfort zone; change begins at the end of your comfort zone.

Roy T. Bennett
  • The most dangerous place to be in is the comfort zone. It kills luck.
  • You can’t sit under a tree and wait for an apple to fall in your hands while others will be already selling apples from those same trees.
  • When you find yourself in a comfort zone, consciously come out of it. Talk to your manager, ask for a different challenge.
  • Or seek out. Not for money but to break out of a comfort zone.

Be Open

A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.

Winston Churchill
  • Life happens, industries get disrupted. A pandemic like COVID-19 shuts down everything.
  • But opportunities always arrive in disguise.
  • Some companies and individual fare better than others. Because they are better prepared, and are open to change; to suggestions; to challenges.
  • The are open to move out of the comfort zone and do something new
  • Finally, never say or think ‘not my job’.

Give Back

Life is a gift, and it offers us the privilege, opportunity, and responsibility to give something back by becoming more.

Tony Robbins
  • Give back, help your network; like you will expect them to help you.
  • Recommend. Refer. Connect. Share.
  • And give back to the community, society, nation.
  • The world is acknowledging good karma and talking about pay it forward

Being Prepared

Time

When you kill time, you kill your opportunities for success.

Denis Waitley
  • Have time; be disciplined with it.
  • If you don’t have time, you’ll not be able to capitalize on an opportunity.
  • Everything has an opportunity cost – doing something mean not doing something else. So be selective on what you do.

Hard Work

Opportunity is missed by most people because it is dressed in overalls and looks like work.

– Thomas A. Edison
  • Work hard
  • Take pride in your work
  • Always give your best
  • You’ll be known for these things

Skills

I am a great believer in luck, and I find the harder I work the more I have of it.

Stephen Leacock
  • You will develop skills with opportunities
  • And you’ll get opportunities based on your skills
  • Remember to say no to comfort zone and be open to challenges and learning
  • And then apply / demonstrate your skills

and finally..

Be Selective

  • Remember that you have limited time and measure the opportunity cost.
  • Be strategic on the things your work on, however not at the risk of being closed to new ideas and challenges.
  • Be decisive. Once you have decided to do something, give it your 100%.

Be Known

  • It’s not about hyping yourself
  • But also not in dark, you need to be noticed.
  • What do you want to be known for? Build a narrative.
  • Communicate consistent with the narrative.
  • Use the social media properly to build your personal brand

Categories
Technology

Git quick reference

git clone git:…
git add path/to/new_file
git commit -a
git pull
git push

# Showing branches.
git branch -a
gitk –all

# Checking out branches.
git checkout some_branch

# Creating and pushing a new branch.
git checkout -b new_branch_name
git push -u origin new_branch_name

# Checking out an existing branch.
git checkout -b some_branch origin/some_branch

# Merging a branch into your current branch.
git pull origin some_branch

Categories
Technology

The streamlined Volcker 2.0 can open new doors for banks

This post was first published on my corporate blog
https://www.yash.com/blog/volcker-2-0-open-new-doors-for-banks/

The implementation of the new Volcker Rule has proven to be one of the most controversial and complex regulatory regimes to be introduced in the financial services industry in a long time. Now that the Volcker Rule 2.0 overhaul has received the final approval from the Federal Reserve and other regulatory agencies, financial firms will need to make necessary investments in technology infrastructure to comply with exhaustive reporting and monitoring requirements. Massive infrastructure is a requirement for most firms, and as such, banks have been evaluating how they want to streamline and arrange their trading accounts, trading desks, and hedging activities under the new Volcker rule.

Technology can become the salvo for banks in terms of hosting and building high-frequency algorithms for trading strategies, managing P&L, back-office, and risk functions. Let us first understand the implications of the new Rule and how preparing early can open innovative functions for banks.

Key highlights of the proposal

A centerpiece of the ‘Dodd-Frank Act’ (Dodd-Frank Wall Street Reform and Consumer Protection Act), the Volcker Rule saw amendments proposed in terms of an approved 373-page notice of proposed rulemaking on May 30th, 2018. The FDIC and OCC approved the final Rule on August 20th, 2019.

The proposal is aimed at simplifying and tailoring the compliance requirements of the Rule, which was finalized back in December 2013 to prevent banks from being involved or engaged in prop(rietary) trading and from owning PE or hedge funds. Among other changes, the new Rule:

  • Creates categories of financial entities based on the size of their trading assets and liabilities
  • Tailors compliance requirements based on the financial firm’s level of trading activity
  • Modifies requirements related to metrics of reporting and streamlining of the data collection process

Optimizing your lines of defense

It is no big secret that in the changing regulatory environment, compliance, although necessary for a firm’s reputation, can be difficult to implement. Even then, banking entities must now realize and understand where they stand within the scope of the Rule’s applicability, as well as the needful across the six pillar compliance programs. For example, banking entities with the ‘significant’ or ‘moderate’ trading assets (in addition to the ‘limited’ trading entities), are sure to see some early benefits of an assessment. By identifying IT, complexities such as fragmented security frameworks, inconsistent and duplication of roles end up in slowing the time-to-market, as well as popping compliance and audit issues.

As such, financial and trading entities, big or small, can leverage risk, compliance, and governance solutions. Through this, they can create a perspective and then a plan around their current processes as well as potential modifications of the respective compliance programs. Early assessments tend to increase the risk tolerance of any organization, as they are able to accordingly embed, integrate, standardize, and automate digital infrastructure into their core business framework.

Furthermore, the outlook related to data privacy and cybersecurity continues to indicate strong regulatory developments, as many countries are already enhancing their existing regulatory requirements. They already see benefits of proactive risk mitigation, improved performance, and reduced cost of ownership due to early assessments, also contributing to business outcomes in the end.

Advantage of acting in the face of uncertainty

In the wake of sweeping digitization, regulators across the world are sure to continue to set high expectations intended towards maintaining a strong and resilient financial sector. These financial firms must secure robust operational and financial resilience, supported by strong compliance and risk management capabilities.

Categories
Technology

Banking on RPA

The combination of an evolving regulatory roadmap for the financial sector and the effects of modern technological developments have altered the way customers interact with banks and the services that they expect. Overall, this is a positive trend for the development of financial institutions in the digital age. However, consumers can find banking disputes to be a cause of frustration and inconvenience. As card transaction volume increases, so have the number of dispute-led transactions (as well as incidents of fraud), putting enormous stress on the operating backend systems and millions in cost.

Modern banking: The need to limit regulatory risk appetite

Today, compliance plays a significant role in how FIs (financial institutions) operate. There are norms for pretty much anything –  from how a bank should interact with its customers to the language they need to use. Some of the complexities and critical obstacles with banks still anchored in traditional processes are:

  • Complicated operating models: Many financial institutions operate with stringent budget controlled departmental structures that lack clarity in providing holistic dispute-management experiences. Disjointed models such as these lead to delays in the overall dispute handling processes. As disputes can be scattered anywhere across the world, this exacerbates the pressure on operational costs (especially if most tasks are manual).
  • Over-processing of disputes: Regardless of the dollar amount or the disputed history, banks tend to duplicate processes to solve conflicts end-to-end. As a result, the dispute volume rises, putting additional and unnecessary pressure on dispute squads, raising costs, and the number of regulatory infractions.
  • Over-dependence on case management systems: Traditionally, case management systems used to drive down costs for institutions. Yet, most FIs only realized negligible improvements in the speed and efficiency of the grievance redressal. Without effective integration, sole reliance on these systems can leave systemic blind spots and ineffective dispute investigations.
  • Growing regulatory scrutiny: Regulations in the United States are tightening timelines/TATs for resolving disputes – increasing pressure on dispute teams to resolve the issue and deliver credit faster.

Compliance norms such as Electronic Funds Transfer Act (EFTA) and Regulation E are now making banks rethink the way they manage disputes while being cost-effective, quick, and ensuring the same with lower regulatory risks. Moreover, from a legal perspective, given that Reg-E is a federal framework, Financial institutions would need to take this seriously.

Making the most of disputes with RPA  – Turning dispute compliance from weakness to strength

Traditionally, banks have tried to enhance their dispute resolution process through technological investments that enable process tweaks – something that leads only to marginal profits. If banks treat disputes as a patchwork or consider only firefighting issues to minimize it, they miss the opportunity to strengthen customer relationships.

Robotic Process Automation (RPA) serves as an intelligent (and virtual) workforce to automate redundant/time-consuming aspects of the resolution process. RPA deployment in banks has led to a dramatic reduction in the dispute resolution cycle and human errors, boosting operational efficiencies, and improving the overall customer experience.

Reduction in the average handling time of every dispute has three significant benefits:

  1. Ability to efficiently handle large volumes of claims within a given timeframe
  2. Freeing-up resources from manual processes to invest in other high-priority banking activities
  3. Increase in the accuracy of the operations without any penalties for non-compliance

Yet the most significant benefit is the overall improvement of the customer experience. Some have taken the process and improved them by 99%[1], while others have seen 100% accuracy with no manual errors, and a reduction of the average handling time from 9 hrs to 2 hrs a day. Mckinsey has estimated that almost $3 billion is spent (combined) by the top 15 banks in the United States on just processing disputes. At a macro level, almost 50-100 million disputes occur every year in the US. Deploying RPA and AI-led technologies have proven to reduce OpEx by ~25 – 40%[2].  It could, therefore, lead to a multitude of operational, resource and cost benefits

Banking on bots for a quality banking experience

Dispute resolutions are cumbersome and result in the loss of consumer trust. As the scope of regulations focuses on how quickly and efficiently payment disputes are resolved, the onus falls on banks to better manage their internal processes while maintaining end-to-end compliance. While banks seek to improve their dispute resolution processes, they can go beyond making incremental changes and re-evaluate the entire customer journey roadmap.

Critically identifying which processes to automate will not be a simple exercise, requiring everyone across the board to be invested in working with an AI-workforce. If the evidence from global success stories is any indication, the rewards, however, are sure to be significant.

Categories
Technology

Reinvented mortgage lending with the new URLA and AI

This post was first published on my corporate blog
https://www.yash.com/blog/mortgage-lending-with-urla-and-ai/

Financial institutions have a wealth of information available to them from consumers. Due to manual and antiquated models, residential lending processes so far have had several negative experiences for both the lender and the borrower. Banks are plagued with application limitations, transaction complexities and data collection and processing challenges.

The ‘one-size-fits-all’ loan application simply does not work anymore. The newly implemented and redesigned URLA (Uniform Residential Loan Application), aims to simplify, organize and streamline the entire consumer journey – from loan request, to the underwriting and approval process.

The new URLA document, implemented from July this year (2019), (with a mandatory use date of February 1, 2020), comes with a completely new layout and content. The all so familiar four-page document used for so long is now replaced by a system of five critical components that have been mixed and matched to correlate the requirements of a specific transaction. Digitization of traditional workflows along with the more user-friendly approach of the new residential loan model can solve many of the existing issues. Let us understand what the changes mean for banking compliance, as well as the opportunities they can create.

The need for this change in the data communication format

Fannie Mae and Freddie Mac understood the need for a critical change in the data communication format – relevance of the data collected. For today’s underwriting to be accurate while being predictive, new uniform data sets needed to be created. Hence, the GSEs have both removed and added information from the URLA.

How will AI help reshape mortgage lending

The promise of Artificial Intelligence (AI) or Machine Learning (ML) towards transforming the lending industry is now beginning to unfold as several key players across the consumer lending frontiers are already leveraging the technology to streamline processes, improve productivity, efficiency, borrowers experience, risk alignment and loan quality. Lending by itself is a data-rich environment, and the benefits are there for everyone to see.

For example, in its quarterly Mortgage Lender Sentiment Survey®, Fannie Mae’s ESR (Economic & Strategic Research) Group found that almost 63% of lenders are acquainted with AI/ML, but only about 27% have tried or used AI tools for mortgage functions. Even almost 3/5th of lenders (~58%) said that they expect to implement AI tools in two years[1].

In the coming months, the additional data provided by the new URLA document enables several new use cases for deployment of AI/ML tools. We will see AI and ML come to frequently influence the end-to-end borrower journey from shopping for homes to owning said homes. AI and ML can be leveraged to prioritize and score leads, match borrowers to assets, manage risks, predict propensity to close, convert and so much more!

To reduce the negative experiences, lenders can accurately detect and highlight anomalies for underwriters, and essentially predict borrower default propensities within servicing to either further engage or incentivize borrowers for timely payments.

AI/ML tools through enterprise tools like SAP or Microsoft are already opening up new lines of revenues for financial institutions in other segments like consumer lending. Servicers working on portfolio retention can use AI or ML to not only predict customer behaviour 3-6 months in advance, but also combine it with attractive offers or discounts that turns them into customers-for-life. Better use of relevant data also includes additional benefits like fewer losses from frauds, accurate automated valuation models or AVMs for the properties, and reduced credit losses through accurate EPD & general loan default predictions.

Preparation is key

The revised URLA is probably one of the single largest compliance changes in a long time as it creates an effective pipeline management system, which can be tailored to the lender’s required business outcomes.

Preparing is a key component and it must always begin with a strategic implementation plan, as any bank must first understand which areas of its functions will be impacted by this change. For instance, whether your existing loan origination system supports the dynamic version of the URLA or not, how you can use the voluntary information from borrowers to see its benefits early on. Regardless of where you stand, there are benefits of testing the waters early as this major redesign in the URLA can cause headaches later, if caught off-guard.

If lenders are interested in exploring AI and ML, we recommend starting in small areas where you can use legacy or historical data, can help implementation teams gain confidence with AI on a practical level to further inform decision-making/investment decisions.

Categories
Technology

ISO 20022: The new paradigm for the digital payments world

This post was first published on my corporate blog
https://www.yash.com/blog/iso20022-for-digital-payments/

The timeline for the migration to ISO 20022 has been decided, and the step could prove to be a quantum leap into the future of payment processing. Adoptions will need to begin in all financial institutions by November 2021 and completed by 2025. Ever since the launch of the Single Euro Payments Area (SEPA) almost 10 years ago, ISO 20022 is the opportunity for organizations to be able to meet the ever-increasing demand for service speed, efficient automation, and a richer quality of data.

For banks, this offers a chance to boost communication standards and even cut costs concerning processing payments, as ISO 20022 promises to take out the struggle out of compliance and the detection of financial frauds. While early adoption is beneficial for businesses towards avoiding any sudden disruption of business, it is equally important to understand what ISO 20022 is and how it can influence your business in the long and short run.

What is ISO 20022? Why is it significant?

While the European financial businesses well understand ISO 20022 for quite some time through the initiatives of SEPA and SWIFT (Society for Worldwide Interbank Financial Telecommunication), the registration authority for ISO 20022, North American banks are still getting to know the new language. These institutions have been working closely with its community to help secure the consensus on how the new standard can be used in the context of financial payments and reporting.

Given that the payments industry is iteratively evolving in light of digital technologies, the change is also being driven by real-time transaction and banking initiatives like Open Banking, Instant Payments, RTGS (Real Time Gross Settlement) and even cryptocurrencies and distributed ledger technologies. Each new development pushes the boundaries for traditional banks and market infrastructures, and the reality is that the move will lead to a common international standard for all financial data exchange and communications. Developed by the Organization for Standardization (ISO) and maintained globally under ISO’s governance, ISO 20022 is widely now identified as the “global, common language of financial communications” of the future. The proposed migration is one of the most significant and sweeping standardization moments for years to come, and even SWIFT guesses that by ~80% of high-value payments (by volume) and ~90% (by value), will already have migrated to the new norm by 2023.

The new common language for financial messaging

So why is the migration to ISO 20022 so significant for your business? Well, one of the primary reasons for this is that the ISO 20022 payments message carries far more qualitative data than the legacy formats commonly used today. There is also increased interoperability between data sets from the information within the message, which allows not only for cross-border and domestic payments but also for high-value transactions in real-time.

Additionally, ISO 20022-based transactions come with additional functionalities that follow XML-based approaches and offer improved remittance. Consequently, banks can now integrate formats that did not formerly allows for global operations, and also reduce risks and cost to the business. In fact, a number of HVPSs globally have already transitioned to the new language system, including Switzerland, China, and Japan. While the Eurozone is relatively experienced, adoption in Australia is at a reasonably early stage. However, going by the RBA (Reserve Bank of Australia) and Australian Payments Council’s interests in the new norm, the nation is aiming to complete their transition by 2024’s end, to be in time for global adoption.

How should you prepare?

The key to success with ISO 20022 is in the rich quality of data that can be transmitted between banks when communicating. The current payments infrastructure is limited in structure and space. As opposed to the current MT 103 system, for instance, the ISO 20022 allows for more unique references that enable accurate and efficient processing from end-to-end services for their end-customers.

The first step recommended by SWIFT for financial institutions is to map out and assess the impact of the business units and the success of their current payment processing applications are delivering. Typically, realizing the full business benefits of ISO 20022 will require banks to dedicate time and resources over a sustained period with a unified vision, so that they can combine their investments in both creating a center of knowledge, while at the same time sharpening their expertise. Before that, however, they would need to collaborate with domain specialists, ecosystem stakeholders, and regulators to gather a field-level understanding of the new standard payments messaging system.

Ultimately, the migration to ISO 20022 will involve hurdles and complexities beyond any technological transformation we have seen so far. A common system evaluates new business models, infrastructures, and market positioning holds the key to the digital future of payments and financial services.