Real-time processing gives banks an edge on security

Real-time processing, as opposed to traditional batch processing, will go a long way towards helping South African banks better manage security risks, says Cecil Roets, Account Executive: Banking, Computer Sciences Corporation operations in South Africa.

"The customer service benefits of real-time transactions are obvious; banks can improve operational efficiencies and reduce operating costs by eliminating the complexities of the traditional memo-post, batch-update model that was shaped by the limitations of older banking software."

While customers and products change, traditional systems have not, he says, preventing banks from broadening their customer-centric models beyond specific lines of business to an enterprise-wide view of the customer and product information. New banking software can access customer, product and relationship data through all business and delivery channels.

Operating on a real-time basis has positive strategic and operational consequences for banks beyond improving customer service. "It gives management better and more timely insight into their business processes and performance. But crucially, it helps them better manage their risks."

For example, money launderers have taken advantage of overnight batch processing, as all it takes is a few hours to move money around before it is picked up bankers.

Real-time transaction processing can support effective anti-money-laundering technology but it also has the added benefit of producing competitive advantage in basic cash management. This can be a winning technology for banks in the corporate cash management market.

If banks build more responsive risk monitoring and mitigating systems that can help management anticipate a crisis, and respond quicker to external conditions, the resulting lower volatility in its results should promote greater investor confidence and facilitate a virtuous circle as capital becomes more readily available.

Roets says that remaining competitive and legally compliant requires a dexterity not often seen in financial institutions bound by traditional business processes that are split between different `business silos`.

"The old management style of reorganising banking along specific product or operating lines is a hindrance in times when real-time access to a comprehensive view of information is crucial.

"The winners will be those that have in place - and use - technology that gives them real-time insight into transactions and alerts them promptly when something suspicious passes through their books, or whose management can use the real-time information to make dynamic business decisions.

"And they can do this without taking their eye off the ball - retaining and gaining customers through superior customer relationship management and innovative product development that is quickly marketed."

Risk management disciplines provide the incentive to address this problem and bridge gaps between business and IT. Forward-thinking banks will devise ways to revisit the ideal of creating an IT organisation aligned to the objectives of the business while devising their regulatory responses.

The core banking systems that are the heart of retail banks hold a vast wealth of information that is being insufficiently leveraged. A core banking system must provide data to feed and run the models and reporting mechanisms essential for agile banking.

"But the process is rarely simple. In many cases the lack of co-ordination between business and IT becomes apparent when thought is given on how to create these new reporting mechanisms. Often IT operations concentrate on technical monitoring and disregard the parameters that drive the business.

"The key is to create a responsive system based on good quality, accurate and timely data in the first place," Roets says.