Agile FINANCIAL TIMES

April
2009

Managing Liquidity
in Tough Times

CUSTOMER INSIGHT
Nyasha Makuvise
CEO, CBZ Holdings

SOLUTION SPOTLIGHT

Cash is King!
iDeal Liquidity

CUSTOMER SPOTLIGHT

Leading Asset Management Company

Selects Agile FT
 April 2009

Editor’s Note
And here it is! Both Spring and our inaugural
issue that you behold at this moment!
CONTENTS
We live in interesting times. A period in history
that will be studied for ages to come. There are
CUSTOMER INSIGHT
lessons to be learnt and for those who can
understand the opportunity within all the Optimal Insurance Selects
adversity, it’s time to plan for a rewarding future AGILIS 4
ahead.
COVER STORY
We invite you to be inspired by the "lift of your driving dreams". This is Managing Liquidity in
the time when we should take a relook at our systems and processes, Tough Times 6
and prepare for the inevitable upswing ahead.
NEWS
While an enormous spate of activity takes place round the clock at Agile
Global Update 9
FT offices across the world in terms of research, product development
and innovation, we wanted to share some of it with you.
INTERVIEW

We share the joy that we feel in this initiative as it brings us closer to Kalpesh Desai 10
you and allows us to chat with you - up close and personal. We invite
you to use this platform to share your own perspective, to reach out and SOLUTION SPOTLIGHT

build partnerships within our community of clients, partners and Cash is King! 14
principals.
PARTNER SPOTLIGHT
So go ahead and read a little, think a lot, get charged even more and
Making Strides in West
soar beyond glass ceilings and as you do, remember to drop us a Africa 16
postcard (or an email will do) to let us know how we fared.

CUSTOMER SPOTLIGHT
Be Agile!
Leading Asset
Shefali Khera Management Company
Chief Marketing Officer Selects Agile FT 18
Write to us at info@agile-ft.com

Nyasha Makuvise, CEO, CBZ Holdings, signs the agreement with Kalpesh Desai, CEO,
Agile Financial Technologies. Also see standing (from left to right) are Rumbidzayi
Jakanani, Legal Advisor, CBZ; Munya Mateko, Regional Head - Africa, Agile FT; and
Tatyana Chernyshova, Business Development Manager, Agile FT.
Optimal Insurance Company (Pvt) Ltd, a
subsidiary of one of Zimbabwe’s largest and
diversified financial services institution - CBZ
Holdings Limited - has shown its commitment
to improving service delivery to its clients by
recently acquiring the rights to implement
AGILIS Core Insurance Software from Agile
Financial Technologies. The new system will
allow Optimal Insurance to automate all its
existing operations and enable them to quickly
create new insurance products thereby
reducing time-to-market.
AGILIS covers the entire spectrum of
operations and finance management for an
insurer including product management and
distribution (policies), underwriting,
reinsurance, claims and accounting. Available
with multi-language and multi-currency support
and consolidated financial information on multi-
currency transactions, its well-defined workflow
covers all the steps of the insurance business
from a single view of the customer profile to
effective management with pre-configured
reports, including MIS.
On this occasion, Nyasha Makuvise, Group
CEO, CBZ Holding Company, shared his
insights on the company and industry, in an
exclusive interview to Agile Financial Times.
4
CUSTOMER INSIGHT
Optimal
Insurance
Selects
AGILIS
What prompted the recent reorganisation and diversification
of the CBZ Holding Company based on client segments and
how has it impacted growth?
The primary motivation for the reorganisation and
diversification of CBZ Holdings Limited was the need to
provide clients with a ‘one-stop shopping experience’. This
meant providing a variety of services and products to clients
within a group. The generic financial services model in
Zimbabwe was that of a single service provider and we
endeavour to be unique in this area.
The intent of the innovation initiative was to provide clients
with many products and services within one group, but
through various subsidiaries. This is why we have a 360
degree icon as part of our corporate identity which is aptly
combined with the phrase “all round financial facilitator”.
The other objectives of our reorganisation were the
diversification of income streams, capital and shareholder
value preservation. Diversification of income streams
helped us reduce the shocks of major drops of income in
one line of business. On the other hand due to the hyper
inflationary conditions in the country, it was important to
preserve capital through acquisitions of value holding assets,
for e.g., real estate. We transformed the Zimbabwe dollar
‘trillions’ into land & buildings which held better value. This
helped us to preserve shareholder value and provide us with
steady income.
In what areas has the economic slowdown impacted CBZ
Holding Company, and how has the company maintained a
healthy position despite the economic slowdown?
The CBZ Group is largely a financial services company.
Lending is a major business, with interest income being the
main source of income.
 CUSTOMER INSIGHT
The general economic slowdown and the hyper inflationary
conditions in Zimbabwe seriously and adversely affected the
core business of lending. As a result, financial profitability
was reduced significantly.
The other area that was affected was the stock market.
Within the group we have a stockbroker and an asset
management company. Their operations almost came to a
halt and reduced income flows for the group.
What is your outlook on the banking and financial services
industry in Zimbabwe?
Globally the banking and financial services is in bad shape.
Zimbabwe is, of course, no exception. However, I see a
bright future for our industry as we are poised for a
turnaround. This is mainly because we have been under
sanctions and were somehow insulated from the major
shocks that affected other markets.
Competition in the industry is
based on service delivery and
Optimal Insurance hopes to
capitalise on this transition
period by being agile and
innovative on new
products and services.
As we come out of the isolation with the removal of
sanctions, business should start to improve. Lines of credit
availability should improve and trade will be facilitated. This
will benefit the industry; hence my optimism.
On the other hand, I do believe that some consolidation in
the industry will take place. This will be based on the need
to improve the capital strength of financial institutions.
Outside consolidation, I also believe that acquisitions,
particularly by larger foreign stronger financial institutions,
will take place. This will allow for financial strength and
stability.
Is the insurance business in Zimbabwe growing and what
are the opportunities for Optimal Insurance moving
forward?
Being a service industry the insurance sector has been
negatively affected by recession, mainly due to the political
climate in the country in the past couple of years. However,
we expect business to pick up after the recently pronounced
government of national unity.
The insurance market is a perception-driven market and
hence the recent political settlement creates an opportunity
for us to introduce new and improved products ahead of
competitors during the transition period. Competition in the
industry is based on service delivery and Optimal Insurance
hopes to capitalise on this transition period by being agile
and innovative on new products and services. The pre-
requisites for this are a robust and scalable technology
platform to complement the launch of new products, as well
as superior service delivery by improving document
turnaround.
Group synergies make Optimal Insurance strategically
positioned to significantly grow the bancassurance business.
The company is also looking forward to capturing
agricultural sector business through bancassurance.
A strong shareholder base increases stakeholder confidence
in the company, creating an opportunity for it to increase its
market share.
Do you believe that the current economic scenario will
throw up any significant challenges for CBZ Holding, and if
so, how do you plan to overcome them?
Indeed at no time in recent times has the term ‘global village’
relating to the world been so real. The general world
economic meltdown has affected Zimbabwe and indeed the
CBZ Group. This has mainly been through less borrowings,
hence diminishing opportunities to raise capital. Our main
focus is on lending, so if we cannot get lines of credit it
automatically translates to less business.
Developing economies are also largely commodity-driven.
The slowdown in the world economy reduces trade and
prices of commodities and this adversely affects financial
services.
I believe that this is the time to prepare for a better future,
so that when the good times come we are ready. This is one
of the reasons for focusing on putting the right technology
in place.
Why did you select Agile FT as your technology partner?
In our quest to provide superior service and delivery to our
clients, we needed a technology partner who understands
our business as well as we do. Agile FT met that need
perfectly.
In addition, the quality and experience of the Agile FT team
gives us a significantly high comfort level that the
implementation will go as planned, and that we will be able
to achieve our goals.
5
 This article explores Managing Liquidity
the nature of the
banking business, the in Tough Times
different types of
risks involved in the Several banks globally have closed down over the past few months, the primary
reason for the failure of these banks being that their lending activity was much
banking business, higher than their deposits permitted. This mismatch between their assets and
deposits led to a shortage of funds for their operating activities. Another
identification, significant reason for the downfall of these banks was the US sub-prime crisis,
which led to a dry up in the securities buyback markets resulting in a severe cash
measurement and crunch.

impact of liquidity Banks form the backbone of an economy and when they are affected, the entire
economic activity of a country comes to a standstill. Worse, the domino effect
risk, and risk spills over the borders giving rise to the risk of contagion at a global level.
Obviously this is not a desirable situation and banks need to examine the reasons
management systems for this and take concrete steps to ensure that a similar crisis does not recur.

that can be set up Banking Risks

to prevent a The traditional activity of a bank involves the business of borrowing (deposits)
and lending (loans). Profits are generated by the cost income arbitrage that a bank
liquidity crisis. incurs through deposits and loans respectively. Therefore, the primary risks that
a bank faces include credit risk and liquidity risk. The quantum of credit risk
primarily depends on the type of industry and the risks associated with the
industry, which would prevent the borrower from repaying the loans. Liquidity
risk arises out of the inability of the banks to honour their obligations due to
non-availability of liquid funds. This risk is inherent to the general banking
business, and arises out of due course of the banking business. The reason for

6
 COVER STORY
this is the manner in which banks conduct business.
Typically banks lend to customers on a long-term basis and
borrow on a short-term basis, such as from the financial
markets. Thus, they keep assets on their books for a longer
time and provide liquidity in the short term in case of
contingencies as well as to cater to the daily cash
requirements, with the assumption that the business will
continue to refinance itself.
Risk Management
There are a number of risk management systems that can be
used to identify, monitor and control risk:
Firstly, the bank needs to identify liquidity risk by classifying
its balance sheet into two classes:

Sticky Assets

Core Assets
Sticky assets refer to those assets that cannot be returned on
demand, For example, fixed assets like building and
computers. Core assets refer to those that can be liquidated
in case of an emergency. For instance, cash with the central
bank, and cash and deposits with peer banks. Clearly, a bank
cannot depend on sticky assets for a bailout in case of a
liquidity crisis. However, a bank can depend on the core
assets for generating cash in case of an emergency. These
core assets should be further classified into CASA (Current
account saving account), collateralized borrowings, long-
term loans and so on.
After classifying the assets, banks need to place risk weights
for each of these assets from highly liquid to less liquid and
illiquid.
Thereafter, banks should set up a maturity matrix for both
assets and liabilities, which helps ascertain the maximum
negative outflow within a period of three to six months.
This maturity matrix should be defined in terms of a cluster
of deterministic items and non-deterministic items.
Deterministic items are liabilities or assets with a fixed
maturity period, interest rate and amount (for example, a
bond with a fixed maturity period, coupon rate and amount).
Non-deterministic are assets or liabilities with unfixed
amounts, interest rates and maturity period (for example,
LIBOR-linked securities, callable bonds and put options).
Once the maturity matrix is set up, the banks should identify
and assess the liquidity attached to various assets and
liabilities on their balance sheets. Banks need to establish
scenarios at various levels (such as at the organizational level,
local bank system level and international level) and test how
these items are affected in a given situation. For example, at
an organizational level when a bank’s current accounts are
being called, deposits are being withdrawn; peer banks or
others hold and cannot offer liquidity, the question to be
asked is how will the bank generate cash for its operations?
At this point of time, the bank should be able to identify its
possible liquidity issues and therefore establish preventive
measures to steer clear of the same. These simulated
scenarios help a bank prepare for contingencies. Similarly,
situations or scenarios for the other levels can be simulated
and tweaked in accordance with the changing environment.
Most banks and financial
institutions fail due to the
under-pricing of liquidity
risks, rather than a credit
risk due to aggressive selling.
Once the scenarios are identified, banks should put them
through a stress test. Here banks would normally follow two
testing techniques:

Historical Value at Risk: Historical Value at Risk can be
arrived at using normal distribution and events method
where-in the worst possible scenarios and events are
assumed to have taken place and then its effect on the
liquidity is calculated. Example of such events includes
failure of banks to borrow, dipping share prices etc.

Balance Sheet Liquidity: Balance Sheet Liquidity puts to
test the bank’s ability to raise finance in a short period of
time. This assumes the shortest period within which
liquid assets can be sold in the market and funds can be
raised from market makers and brokers. In order to
make this possible, banks align the assets in accordance
with the level of their liquidity. Banks refer to the
balance sheet items in terms of the degree of their
liquidity. For example, a committed line from other
banks is considered as a percentage of short term
unsecured obligations. The higher the percentage, the
higher the liquidity.
Based on scenarios and testing techniques, banks can evolve
strategies to ensure that liquidity is available for daily
operations (the amount of negative outflow limits) and on a
long-term basis (align the deposit and asset side with the
long term goals).
Once the strategy is defined, the bank should set up a
Liquidity Continuity Plan (LCP) that can identify points of
cash limit breaches and measure how a bank can resolve the
situation. Banks should establish clearly documented
processes that explain the steps to be followed in case of a
liquidity contingency event.
The LCP should be made known to the large customers,
7

LIQUIDITY RISKS
The recent fallout of major banks re-iterated the fact that
liquidity risk has a strong bearing on the world economy.
Structured Liquidity Risk (SLR) is defined as a risk
undertaken in a conscious manner to generate cash and
maintain assets on a long-term basis. It is termed ‘structured’
because it is well-known and it is undertaken in a planned
manner. For example, banks need to pay taxes on a specific
date, and earmark a certain portion of their funds for this.
Contingent Liquidity Risk (CLR) is concerned with assets
and liabilities of a bank that typically have a long-term maturity,
some examples of which include term deposits, offshore
products and guarantees. Although this is part of the daily
banking business, the possibility of these getting liquidated
prior to their maturity poses significant liquidity risk. For
example, a term deposit with a maturity of five years may be
liquidated by the depositor at the end of the third year.
Similarly for offshore products like guarantees, if called upon
at any point in time, the bank has to honour the financial
obligations. When banks fail to honour their financial
obligations, it can result in consequences like bad publicity, run
on banks, breach of depositors trust, and degradation of the
bank’s credit rating. Numerous situations of the same type can
give rise to shortage of funds. Such cases occur when there is
a high amount of market volatility, which gives rise to market
liquidity risk.
Market Liquidity Risk (MLR) is the third type of risk and
works on the assumption that markets operate in a normal
condition and have sufficient liquidity levels. In case money is
insufficient in the market, it results in shortage of funds and
eventually leads to a collapse of the financial system. For
example, most banks undertake inter-bank lending and
borrowing activities, which allows them to avail money to fulfil
their financial needs. However, in case of the current financial
crisis the inter-bank lending markets had dried up and a
shortage resulted in the markets getting tightened.
The market volatility was so high that the indigenous and
endogenous risks led to a severe cash crunch in the market.
For example, the mortgage-backed securities markets dried
up completely and banks were unable to liquidate their
securities through re-pledging, which led to panic. Similarly,
when banks could not raise finance to meet their contingent
and structured liquidity requirements, rating institutions started
downgrading their ratings. In addition, borrowers started
demanding their loans. All these events had a cumulative
effect on banks getting hit with substantial pressure from all
stakeholders. Banks were unable to approach the market to
raise finance through certificate of deposits, commercial paper
or assets of similar classes, with Lehman Brothers being a
classic example that suffered the consequences of being
unable to create liquidity when required.
8
COVER STORY
creditors and stakeholders. In case a bank does not do
so, lack of information at the critical time can lead to a
crisis. Banking is a business of confidence and it is
critical that the same 'language' is spoken across various
levels. Lack of synchronisation between various levels
of management and stakeholders can further fuel the
crisis. Hence, it is critical to keep all stakeholders well-
informed.
Liquidity risks have very
long-standing effects, not
only for the company, but
on the country and
economy as a whole.
Taken together, these steps should hold banks in good
stead while managing their liquidity risks proactively.
Conclusion
Liquidity risks have very long-standing effects, not only
for the bank, but for the country and economy as a
whole. Hence central governments of many countries
step in to bail out ailing banks in a liquidity crisis
scenario. However, banks should not use this as a
safety net and fall prey to the moral hazard it poses.
Liquidity risk negatively impacts both sides of a bank's
balance sheet, the assets and the liabilities. Assets are
affected, as bank's borrowers default in repayment of
loans resulting in a funds shortage. Similarly, liabilities
are impacted because depositors do not invest in a
bank that is facing a liquidity crisis.
Most banks and financial institutions fail due to the
under-pricing of liquidity risks, rather than a credit risk
due to aggressive selling. Regulators and the
government need to ensure that financial institutions
maintain a sufficient level of liquidity to meet sectoral
needs and sustain the level of liquidity in the market.
 NEWS
Global
Update
A quick review of industry news from
around the world.
Leading UAE Banks to Convert State Deposits to
Capital: Leading UAE Banks such as Mashreq, RAK Bank,
NBAD, Emirates NBD have recently announced their
intention to convert federal government deposits into
regulatory capital. This is to improve asset quality and offset
the impact of global credit crisis on the domestic banking
industry. Most of these deposits will be converted to Tier 2
capital for effective risk mitigation.
Brazil Plans to Reduce Spending Due to Financial
Crisis: As a result of the financial crisis, revenues from tax
collections in Brazil recorded a significant fall. The
government is now taking measures to curb the impact of
lower inflow of funds. Guido Mantega, Finance Minister of
Brazil, announced a reduction in current expenditure and
tighter fiscal policies to reduce the mismatch between lower
tax collections and high fiscal expenditure.
Qatar Central Bank to Replace 1.2 Million ATM Cards:
Qatar Central Bank heads told all banks in the Gulf state to
change 1.2 million ATM cards with chip and pin technology
to smart chip cards technology within seven days. The aim
of this move is to offer greater protection to clients from
prospective hackers and ATM fraud. While it will enhance
security, it will also offer greater inter-operability .The banks
sent SMS messages to clients informing them about their
ATM card replacement move.
Shari’a Banks may Impose Fees to Issue Guarantees:
According to religious scholars, Shari'a banks should be
permitted to impose a fee for issuing guarantees as it
involves a transfer of risk to the bank. Supporting this,
Mohd Daud Bakar, advisor, Accounting and Auditing
Organisation for Islamic Financial Institutions (AAOIFI),
stated that the nature of transactions for guarantee issuance
has evolved from a family transaction (earlier guarantees
were issued between family members, whereas now they are
issued to unknown parties) to a financial product issued to
third parties. Similarly, opinions about imposing fees on
guarantees are undergoing a change and many banks have
already started charging fees for guarantee issuance.
Citigroup to Expand in South East Asia: Citigroup is
believed to be looking to open more branches in Thailand
and starting equity brokerage businesses in Malaysia,
Vietnam and Indonesia later this year, in an overall plan to
expand in Southeast Asia. This signifies that Citigroup,
which has been affected by huge losses in the United States
due to the real estate market collapse, is now banking on
Asia to bolster its business.
Yemen Plans to Approve Modified Investment Law:
Salah al-Attar, head of the General Investment Authority
(GIA) stated that the Yemen investment law was undergoing
modification. The modification involved a decrease in
income taxes charged on companies from 35% to between
15-20%, customs exemptions and the amendments of the
General Investment Authority’s board of directors (now
comprising 50% public sector employees, and remainder
from the private sector).
Indian Public Sector Banks Cut Rates: Indian banks
have begun reducing deposit and lending rates after the
Reserve Bank of India announced a 50 bps cut in repo and
reverse repo rates. Three public sector banks viz., Bank of
Baroda (PLR-12%, down 50bps), Union Bank of India
(PLR-12%, down 50bps) and United Bank of India (PLR-
12.5%, down 50bps) have reduced their rates. The rate cut is
expected to encourage banks to offer credit for productive
purposes at feasible interest rates. However, private sector
banks such as ICICI Bank and HDFC Bank have yet to
decide on the rate cut.
9
 INTERVIEW

Interview
Kalpesh Desai
CEO, Agile Financial Technologies

Kalpesh Desai, founder and CEO of Agile
Financial Technologies, envisioned the creation
of an unparalleled enterprise that would be a
technology partner to leading players in the
BFSI sector enabling business agility. He
formed Agile FT by acquiring and merging
strategic software products and technology
companies in the space of software solutions,
technology services, BPO and KPO.
Kalpesh has over two decades of experience
in spearheading technology companies to
achieve and sustain a position of market
leadership and organic growth. He has earned
a reputation of creating and building
successful, scalable enterprises by defining
and converting corporate vision into strategic
intent and coordinated action. A firm believer of
producing results through people, he has
attracted and retained talented people.
The BFSI industry is in a challenged state today due to the
global financial crisis. Where do you see the industry going
from here?
Those who fail to learn from past failures are bound to
replicate it - the current state of the financial services sector
is a perfect example. As past experience fails to guide future
behaviour, banks and financial institutions across the globe
find themselves unable to understand what actually
happened. Overwhelmed by the sheer volume of lending
activity, many banks opened themselves up to tremendous
risk - for which they now are paying the price.
The current crisis facing the global financial services sector
can be attributed to the contracted liquidity in global credit
markets and banking systems triggered by the failure of
mortgage companies, investment firms and government
sponsored enterprises which had invested in subprime
mortgages. The crisis, which became more visible

He brings a deep understanding of

businesses having held multiple roles in
executive management, product development,
operations management, sales and
marketing management.

10
 INTERVIEW
throughout 2007 and 2008, has exposed persistent
weaknesses in the global financial system and regulatory
framework.
We believe that the domino effect of what happened to sub-
prime will now impact the prime markets. There will be
further write downs in the global financial industry, with
investment firms taking mark to market losses and banks
writing off non-performing assets over the next quarter due
to rise in unemployment, lay-offs and pressures due to
recession in the most economies. In the new economy,
nobody is isolated from the crisis and global liquidity
contraction is bound to put pressure on financial
institutions.
The BFSI sector as we know it has changed its outlook
significantly. Emerging markets will become the new
powerhouse considering that these economies have worked
under stretched circumstances already and are in a position
to adapt to change quickly. Most emerging economies have
also been more or less isolated from exposure to complex
financial instruments like derivatives and have been investing
in fundamental businesses.
Institutions will be challenged to manage customer
expectations, increased regulatory oversight, contracted
liquidity and a deteriorating quality of assets all at the same.
Current IT systems that were deployed in the "good times"
were designed to function and deliver to a context that
perhaps isn’t relevant today. It is imperative that systems that
focus on liquidity, capital conservation and growth of capital
need to have deep functionality with extensive risk and limit
management capabilities. Institutions will have to give a lot
more focus to moving risk management upstream to their
front office, and examine the possibilities of working with
service providers who can undertake to manage their mid
and back offices. This will allow customer centricity, product
development, quality of assets and capital adequacy to come
into focus and enterprise risk management will shift its role
to bring about a tighter integration with the business.
Do you think that even in the current downturn, possible
growth opportunities exist for BFSI companies? What have
been the primary challenges in addressing these
opportunities?
In the current downturn, BFSI companies have increasingly
new roles to play. The institution with the ability to
demonstrate responsiveness, turnaround times, transparent
reporting and effective advisory services will be well placed
to retain and attract customers.
Insurance companies will see a demand in clients who have
made investments desirous of securing their assets. Long
term insurance (Life) is also expected to see an anticipated
rise in demand.
Cash is now King. Liquidity management is of paramount
importance to institutions since their liabilities have typically
shorter maturity periods than their assets. Banks facing a
reduction in their depository base have been forced to
leverage and any capital expenditure should be viewed with
concern. The system is under pressure and financial
institutions have new challenges in establishing a balance
between growth and survival.
The differences between the business and the IT teams of
the financial institution become more acute in these
circumstances and the challenge is to ensure business agility
in an environment that is straddled with inflexible
applications, islands of information, multiple interface
points, tedious product development, succession planning
imperatives and lack of research.
What kind of role do you think technology can play in
addressing these challenges?
In the current situation of global economic slowdown and
liquidity crunch, a re-orientation of technology plans of
banks and financial institutions has to take place which
needs thorough preparation on the part of the institutions.
Only that technology platform, which offers a low total cost
of ownership, can contribute to business growth quickly,
and which at the same time can help banks to reduce their
regulatory compliance burden and costs, while improving
their business processes, customer retention and growth, is
11

likely to be considered in the short to medium term.
Given the enormity of the crisis, risk management
technology will be a key industry focus for the next three or
four years. While firms have invested significantly in their
risk infrastructure over the past 10 years, significant
investment and modifications to the existing infrastructure
will be made. To provide the chief risk officer with the
appropriate risk infrastructure, firms will augment their
Value at Risk (VaR) framework modeling to embrace
scenario analysis. Enterprise risk management platforms
will become the need of the hour as market, credit and
operational risk management become more essential in
running a modern financial institution.
Diversified financial groups will revamp the way to look at
customer centricity around their cash & liquidity
management, mortgage finance, wealth management, asset
Financial institutions, across the
world, are considering their
competitive position, capital
base, and growth prospects.
management, broking and insurance services. Applications
with deep functionality in these areas and the ability to be
rapidly implemented will see more increasing demand.
Two other key technology initiatives will become
increasingly important as firms revamp their platforms.
First, normalising and validating data across the enterprise
will become critical. Grid, cluster and virtualization will
become more common within as institutions look at
consolidating their resources within a central processing
platform. Secondly, institutions will look for technology
partners who can service them holistically, instead of just
software product vendors or point service providers.
Margins for BFSI companies are under severe pressure
today. How do you think this will impact their technology
decisions?
Banks, both small and large, are under tremendous pressure
to tighten their financial belts. Consequently, they are
considering efficient ways of managing internal costs,
particularly with respect to their IT applications.
As capital markets firms recede, reorganise, and seek safe
harbours, IT spending and priorities are coming into focus.
Financial institutions, across the world, are considering their
competitive position, capital base, and growth prospects.
12
INTERVIEW
Platform enabled outsourcing services is emerging as the
definitive IT model for many banks as they strive to lower
operational costs to ensure a high return on investment.
This can be defined as the ability of an outsourcing vendor
to provide its services around functionality rich application
software platforms that are used for fulfillment and
dissemination. Platform enabled outsourcing is likely to
experience tremendous uptake in the coming months,
especially in the wake of the current credit crisis. Financial
institutions should, therefore, take advantage of the benefits
that can be sought from this model in order to stay ahead of
the competition and drive innovation.
Do you see any particular trend in terms of business
requirements from BFSI companies? Have you noticed any
significant change over the last 5 years?
An increasing number of financial institutions have been
using the software as a service (SaaS) model. The financial
services sector is one of the largest industry users of SaaS.
However, most of the current financial services SaaS
deployments are CRM applications. But in the wake of the
current market scenario, large asset managers and brokers
have been increasingly using certain types of non-CRM SaaS
offerings. In the risk and compliance space, there has been
an upswing for vendors offering hosted applications and
financial institutions willing to use such services. SaaS-
delivered risk and compliance applications include corporate
actions, approval mechanisms for complying with customer
regulations and anti-money laundering applications.
Many large institutions are increasingly using SaaS for wealth
management advisory functions; they take these on a need
basis from large clearing providers and wealth management
software providers. Such arrangements are a good fit for
institutions that have agent networks of 10,000 or more
financial advisors.
IT managers of financial institutions also face innumerable
challenges as business needs have been extremely defined,
and existing systems that have been loosely coupled together
are unable to cope with demands from business. Customers
have become very demanding on security issues. Informed
and tech-savvy customers expect financial institutions to
handle remote deposits, nationwide ATM and debit card
services, online banking and electronic bill payment from
multiple physical and digital locations. As a result, fraud
detection & prevention, regulatory compliance and ID &
data security issues have become as mission critical for the
CIO as managing the operations infrastructure.
In the current economic scenario, financial institutions
worldwide are opting for SaaS to reduce IT costs and predict
their IT spending. Banks can reduce the total cost of
ownership (TCO) for IT by outsourcing the hosting of
applications. Through this, banks are able to significantly
reduce the implementation costs which otherwise would
have been higher for custom built solutions. Banks save on
 INTERVIEW
time and money as most of the risks of selecting and
implementing new applications are avoided.
The decision to implement SaaS for small and medium-sized
banks helps them to gain access to flexible software
applications that they traditionally have not been able to
obtain. SaaS enables banks to benefit from the highly
specialised applications at minimum cost and maintenance
fee. Smaller brokerages, fund managers and asset
management firms have a much easier time integrating data
from different applications with hosted services-oriented
applications than their larger counterparts. SaaS also
provides increased flexibility in responding to changes in
demand as well as seamless product enhancements, thereby
allowing financial institutions to concentrate on providing
better customer service to their customers.
Corporate clients can also benefit from SaaS. Financial
institutions offer online web-based cash management
service to corporate treasurers which can help them to
automate and consolidate their financial processes by having
complete access and control of their financial activities
through the bank’s online cash management tool.
The biggest obstacle to SaaS in large firms is integration -
integrating hosted Web services with back-end data storage
and legacy systems. Although SaaS offerings can integrate
with other programs, they operate more efficiently when the
data is in the SaaS provider’s data centre. Security is another
issue to be dealt with.
From Agile FT’s perspective, opportunities will span from
the smallest and the most cutting-edge, to the largest and the
most secure. During times of crisis, firms traditionally cut
back on IT spend, centralise development and operations to
cut down on redundancy and look to outsourcing to reduce
cost and thus focus on core deliverables. Our delivery model
will enable our clients reduce the cost of core technologies
(traditionally provided by larger vendors) and cut back on
newer, riskier technologies (traditionally provided by smaller
vendors).
CEO’s of financial institutions are taking the rein alongside
the Chief Information Officer since the need of the hour is
not just the technology required to run the business, but to
step into identifying what needs to be centralised,
outsourced and managed by an outsourcing service
provider. Thus a change of mindset is in the air - towards
the adoption of platform enabled services adoption.
We understand that a certain loss of control and having a
third party handle the IT infrastructure and the operations
can be a little un-nerving for any financial institution. Hence,
alongside the cost and time efficiencies and a pay-on-
consumption pricing model that is simple and attractive, we
differentiate our delivery model by basing the same on the
foundation of operational risk management, thus innovating
on how we deliver our software platform and operational
outsourcing services, and creating a differentiator for
ourselves.
What are your plans for Agile FT over the near-to-medium
term?
Agile Financial Technologies provides business enablement
services wrapped around its software products platform. We
service businesses of financial groups that focus on the
conservation or growth of capital. Our software products
run the core businesses of investment management firms,
finance companies and insurance companies. We have the
A change of mindset is in
the air - towards the
adoption of platform
enabled services adoption.
ability to provide financial institutions not just the software,
but managed services around their technology infrastructure
and the ability to take on the outsourced functions of mid
and back office operations. We have a distinctive advantage
by uniquely being able to provide an integrated offering.
Our focus in the near to medium term is to target emerging
markets in Latin America, Africa, Eastern & Central Europe,
Middle East, South Asia and some parts of APAC. We
identify and enable partners to operate as extensions of
Agile Financial Technologies and hence are able to garner
market information quickly and rapidly and delivery locally.
We are young, nimble and our agility is drawn from the years
of experience that the constituent companies that have now
become part of Agile Financial Technologies bring to the
table.
Our belief is that to better service our clients, we need to
think, act and behave like them. We treat clients with the
same deep respect that a financial institution would treat
theirs. We deploy systems and build products with a focus
on flexibility, adaptability to change, and most importantly
usability. Our outsourcing process inculcates the same
operational risk management parameters that an institution
would look at whilst deploying its own central processing
infrastructure.
With a delivery model that seeks to differentiate itself from
other service providers, and the ability to reach and service
clients whose needs are very, very different in the emerging
markets, we believe we will create a niche for ourselves in
this industry.
13

The success or failure of a financial institution
is determined by its ability to remain liquid and
yet prudently invest money and lend judiciously
to make profits. Most financial services
companies borrow short and lend long, and at
the same time, must not remain too liquid
because cash does not yield interest and
resultant profits. Many have failed in the past
because of irregular asset and liability
management practices.
A treasury function in a financial services
company is in charge of raising finance for
funding the business, taking care of short term
cash management and managing liquidity
required for operations. What the perfect
system must do, therefore, is take into account
the complex transactions that a treasury of
financial services company performs in its
lending and record and track these
transactions.
The system must also simultaneously keep
track of the cash position and adequately
provide for the day-to-day operations of the
treasury and generate accurate and regular
MIS reports for the management. All this must
be done in a scalable fashion applying the
mandated regulations that exist so that the
cash ratios are maintained.
14
SOLUTION SPOTLIGHT
Cash is King!
iDEAL LIQUIDITY
The two keys to good liquidity management are:
(a) to ensure that the regulatory norms of the country are
adequately met, and
(b) to ensure that treasury has a good technology system that
can help them model scenarios and track transactions on
a real-time basis.
iDEAL LIQUIDITY from Agile Financial Technologies is a
comprehensive straight through processing (STP) liquidity
management system that integrates the front office, mid
office, back office, banking and accounting processes of any
bank. It comprises iDEAL FINANCE, ALM and Risk
Management. iDEAL Finance helps banks in smoothly
managing multiple outstanding loans or borrowings and
generating future cash flows and MIS reports with minimal
manual intervention. The Asset and Liability management
(ALM) component manages exposure. The risk
management component is designed to manage net worth
by risk management, capital management and liquidity
management.
The solution covers the following base product classes, with
scalability to handle new product structures as the market
evolves:

Commercial Papers

Deposits

Term Loans

Floaters

Non Convertible Debentures
The key features of iDEAL Finance are that it can manage
asset as well as liability products, supports multiple product
structures, supports fixed/floating loans, simple as well as
compounded interest payment, hybrid loans, options
 SOLUTION SPOTLIGHT
Asset Liability Management
The Asset Liability Management (ALM) solution from
Agile Financial Technologies is comprehensively
designed to manage intermediation risk and the net
worth of the institution by tracking risk, liquidity and
capital. It provides a complete and dynamic decision
framework of measuring, monitoring and managing
liquidity and interest rate risks by uploading enterprise-
wide asset and liability portfolios.
In the normal course of operations, financial institutions
are exposed to credit and market risk in view of the
asset-liability transformation. They are required to
periodically determine their own interest rate on
advances and deposits, subject to the ceiling on
maximum rate of interest they can offer on deposits, on a
dynamic basis. Intense competition coupled with
increasing volatility in the interest rates brings intense
pressure on banks and financial institutions to maintain a
good balance among spreads, profitability and long-term
viability.
The quest for profitability and sustenance exposes these
institutions to several major risks - categorised as credit
risk, market risk and operational risk - which emphasises
the need to address these risks in a structured and
comprehensive manner.
It is important for financial institutions to base their
business decisions on a dynamic and integrated risk
management system and processes driven by corporate
strategy. In this context, Agile FT’s ALM system is
designed to serve as a central system for analysing,
monitoring and simulating the balance sheet and aid in
enterprise wide risk management.
The key features of the system include:
Comprehensive reporting and analysis.
Data management module for integration with legacy
databases and retrieval and processing of branch data.
Identifying funding gaps and estimating pre-payments.
Standard analysis for assets, liabilities and integrated
ALM analysis.
‘Interest Rate Sensitivity’ and ‘Net Interest Income’.
Facility to bucket non-performing assets as per the
guidelines set by the regulator.
Enhanced risk management functionalities via analytical
techniques like duration gap analysis and market value
calculations.
(put/call), stubs, termination, transfer out, rollover and
adjustment entries as well as ad-hoc principal repayments
against outstanding contracts.
The system supports multiple currencies and can provide
dynamic generation of future cash-flows with an option to
override.
Most importantly, the software is flexible and easy to
configure and has built-in features that take care of event-
based charge definition (stamp duty, brokerage, taxes) and
charge on charge (taxes on brokerage, service tax).
iDEAL Finance for liquidity management allows treasurers
to transact in a real-time environment and generate
meaningful reports relating to their transactions. The system
has interfaces that allow upload, addition or modification of
benchmark values and also to upload/store beneficiary
positions for outstanding non-convertible debentures.
Managing Loans and Borrowings
This is a crucial function of the treasury. Using the iDEAL
Finance module, they can place and withdraw loans in full or
part as well as track multiple linked loans. The system allows
treasury function to generate and estimate future cash flows
as well which gives them a forecast in line with the liquidity
needs of the financial institution.
The system also has a settlement book that maintains
scheduled cash flow information. This allows marking cash
flow as principal redemption, interest payment or
brokerage payment as realised, redeemed either fully or
partially, capitalised interest, realised schedules/unscheduled
cash flows and calculate interest accrual and event based
charges.
Managing Banking & Accounting Transactions
The banking and accounting module helps in tracking
appropriation, payments and receipts and provides a
comprehensive and reconciled view of the accounts. The
accounting engine can also be configured to generate
vouchers and accounting statements as required.
Administering Users
iDEAL Finance allows for easy administration of users
through a centralised console. Every user has a secure and
unique login id to the system and access to the system is
defined based on his function, role, and authority in the
organisation.
Generating MIS Reports
iDEAL Finance has the ability to intuitively generate a
variety of reports that are required by different executives in
the management from time-to-time.
15
 PARTNER SPOTLIGHT

Making
Strides in
West Africa
A listing of key Agile FT partners from
West Africa

Bade Aluko, Managing

Finance Application Systems Limited Director, FASYL, shares his
www.fasylgroup.com thoughts with Agile Financial
Times:

What is the strategic rationale

Finance Application Systems Limited (FASYL), a Nigeria- of your partnership with
based information technology company, was founded in Agile FT?
1998, and primarily offers specialist support services for
enterprise and finance applications & software systems Agile FT follows a proactive
within areas of product sales, implementation, support and approach while meeting
training. In addition to this, FASYL also provides customer needs compared to
consultancy services for the finance and telecom industries. other partners who follow a reactive approach. They have a
high level of responsiveness to the company expectations as
While the company’s operations extend across Asia, Africa, well as the customer demands.
Europe and the UK, its main focus is primarily pan-Africa.
FASYL also has offices at Mauritius (slated to become the In addition, Agile FT provides a suite of products and
future group headquarters), Nigeria (to become a regional services that complement our current offerings and enables
office), Ghana, Sierra Leone, South Africa, UK and India. us to meet customer requirements.

The company, which currently has a staff strength of 120,
also plans to set up offices at Cote d’Ivoire, Kenya and
Angola in 2009.
Key Clients
FASYL’s clients include Union Bank of Nigeria, Access
Bank, Intercontinental Bank, Diamond Bank, Skye Bank,
Ecobank Group, Sierra Leone Commercial Bank, First
Securities Discount House Limited, NEXIM Bank, United
Bank of Africa, First Bank, Bank PHB, Fidelity Bank and
Spring Bank.
With the current economic scenario, what will be the impact
on partner relationships?
The current economic downturn is not going to significantly
change the role of partners. Partners with a long term view
survive an economic crisis as their prime focus is not only to
have quick profits, but to align goals with the partner
company in order to meet customer expectations.
Thus, I believe that short term partners will perish whereas
long term partners will continue to service the clients
effectively.

16
 PARTNER SPOTLIGHT
The financial services industry is undergoing a change; how
will this affect client requirements and buying decisions?
Banks are undergoing change due to the customer
demand for better and faster banking services. There is
significant competition amongst banks and hence they have
to rely on technology to gain a competitive edge. Customer
expectations are increasing manifold. The nature of services
demanded by banks is changing drastically from the manual
mode to a technological platform where banks are
competing to provide faster and improved service to its
clients. Similarly, the changing banking services are giving
rise to a need for newer and better technology platforms to
meet the changing customer needs.
ExpertEdge Software & Systems Ltd
www.cwlgroup.com/ee
ExpertEdge Software & Systems Limited looks at Agile FT’s
iDEAL suite of investment & banking solutions. Its
business focus includes software development &
deployment, systems analysis, design & implementation and
smartcard applications. In-house expertise of providing
implementation, support and training was the key reason for
Agile FT to choose ExpertEdge to provide first level
support to its customers in Nigeria.
ExpertEdge Software & Systems Limited, headed by James
Agada, is the software subsidiary of the Computer
Warehouse Group, one of the fastest growing IT companies
in West Africa today.
Computer Warehouse Group (CWG), an information and
communication technology company, provides integrated
solutions to its clients. Apart from ExpertEdge, the group
consists of two more subsidiary companies:
Computer Warehouse Limited (provides supply and
maintenance of computer hardware and ancillary
equipment)
DCC Satellite & Networks Limited (offers VSAT,
metropolitan area network, wide area network, systems
integration and network monitoring and management
solutions).
The company also provides training to IT professionals
through its ExpertEdge Training Centre. The primary
industry verticals serviced by the company include banking
and telecom.
Key Clients
A partial list of key clients includes First Bank of Nigeria,
Union Bank of Nigeria, Nigeria Aviation Handling
Company, African Petroleum, Adeniran Ogunsanya College
of Education, Ghana Telecom, British American Tobacco,
and Multilinks.
Besides Agile Financial Technologies, they work closely with
Infosys Technologies and Oracle.
Pacific Solution and Technologies
www.pacificsolutiontech.com
Pacific Solution is a system integrator founded with an
objective to provide solutions to West African countries.
The company provides hardware, security, software and
communication services to its clients. Pacific Solution is
essentially the information technology arm of the Budhrani
Group of companies, which has a global presence. The
company has offices in Nigeria, Ivory Coast, UAE (Dubai),
UK, Malaysia, Singapore, Indonesia and India. The key
industry verticals serviced include banking, insurance,
internet service providers, telecom operators, government
and corporates.
Key Clients
Pacific Solution’s clients include Sterling Bank, Royal United
Nigeria, Mikano International, Jubilee Brothers, Somotex
Nigeria, Critical Rescue International, Reliance Textile,
Millenium Furnitures, Hansbro Group, Park n Shop Retail,
MTN Nigeria, Multilinks Telecommunications, GLO
Mobile, Celtel, Lagos Metropolitan Area and
Transportation Authority, Nigerian Postal Service, Industrial
General Insurance, Linkage Assurance, Unic Insurance,
Michael Stevens Consulting and Standard Life Insurance.
Jeetu Hira, Head - Pacific Solution, speaks with Agile
Financial Times:
In what areas of business and technology do you share a
partnership with Agile Financial Technologies?
Pacific Solution and Technology is representing Agile FT for
their Insurance application. We are offering to the market
both, the product as well as the outsourced model of Agilis,
the Insurance suite from Agile FT comprising Life, Non-
Life, Health, Takaful, BancAssurance, Broker among others.
What is the key benefit of this partnership and how has it
impacted the way in which you service your clients?
There is a long standing relationship between the
management of Pacific Solution and Technology Limited
and that of Agile FT. We are bringing a blend of both, the
domain knowledge of Agile FT, and the geographic and the
vertical industry knowledge of Pacific Solution and
Technology.
17

One of the fastest growing and
largest mutual fund company in
India that is part of a large
Indian conglomerate chooses
iDeal Funds from Agile
Financial Technologies.
18
CUSTOMER SPOTLIGHT
Leading Asset
Management
Company
Selects Agile FT
The Asset Management Company (AMC) offers investors a
well-rounded portfolio of products to meet varying investor
requirements and has a presence in 120+ cities across India.
A key business driver for the fund manager is the company’s
constant endeavour to launch innovative products and
provide proactive customer service to increase investor
value.
In line with this philosophy, the AMC wanted to automate
its asset management operations, achieve seamless
integration across the front, mid and back-office, offer a
comprehensive range of fund management products to suit
the investors’ needs and inclinations and provide exposure
to multiple asset classes like equity, bonds, mutual funds,
deposits, equity derivatives and interest rate derivatives as
also commodities like gold. More importantly, the fund
house also wanted to maintain a strict vigilance on limits and
exposures in line with its internal governance requirements
as well as in keeping with the norms of the securities
exchange regulator.
In this context, India’s top Asset Management Company
chose iDEAL Funds from Agile Financial Technologies to
manage its funds and investor portfolio. Apart from more
than adequately meeting the requirements of the fund
house, iDEAL Funds was also identified as a platform to
handle huge transaction volumes and cater to the large
investor base of the fund. In addition, the system integrated
with third-party price feed systems to provide valuation
across markets, and also with register and transfer (R&T)
platforms, business intelligence systems, equity straight-
through-processing and custodial files.
iDEAL Funds generates timely and key management reports
and has a biometric scanning security system for users. Most
importantly, the system has proved to be resilient and
scalable and hence supports the organisation’s expansion
and growth strategy.
 www.agile-ft.com

Agile Financial Technologies Pvt Ltd Agile Financial Technologies Agile Financial Technologies Pte Ltd
701-A, Prism Towers 808-A, Business Central Towers 20 Cecil Street, #14-01
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Views expressed in this publication do not necessarily represent the views of Agile FT and the information contained herein is only a brief synopsis of the issues discussed herein. Agile FT makes
no representation as regards the accuracy and completeness of the information contained herein and the same should not be construed as legal, business or technology advice. Agile FT, the authors and
publishers, shall not be responsible for any loss or damage caused to any person on account of errors or omissions.