Banks and Mobile Banking: Fish or Cut Bait!

As we say in the south, either fish or cut bait.

When it comes to mobile banking, banks had better get on board or start looking for a closed sign. In the last couple of months, I spoke at the Nebraska Bankers Association Marketing Conference and at the Wolters Kluwer Financial Services Users Summit.

I was shocked at the number of banks that said, “We’ll never offer mobile banking. It’s not secure and my customers don’t want it.”

Maybe that explains why research from Javelin Strategy & Research says that credit unions are outperforming community banks, with nine out of 10 credit unions offering web-based mobile banking!

They also found that three out of 10 community banks do not offer a single form of mobile banking.

This consumer growth follows smartphone adoption, which is now at 52% and growing. Javelin research reported that mobile banking added 10 million more U.S. adults in the past year as smartphone usage surpassed feature phones and tablet adoption surged to 21%.

My generation didn’t grow up with computers, smartphones or texting, but I personally love “text” banking. I own multiple rental properties in a couple of states and have my tenants deposit their rent directly into my bank. I get text messages instantly showing when their deposits are made and the amount.

I can type in “BAL” to see my balances instantly and “LAST” to see all of my recent history including payments that I’ve made.

A recent PEW Research study found that text messages have doubled from 60 to 100 per day in the 14-17 year-old age group. I know most banks aren’t interested in this age group, but they need to be interested in what’s going on with this younger generation. This is the future and the sooner banks embrace it, the better.

The Intuit Financial Services Financial Management Survey reveals how Generation Y banking customers (those born after 1980) differ in their banking habits from the rest of us. Half of 18-32 year-olds use their smartphones to check balances or make payments. That’s compared to 20% among the public at large.

Every company in America would love for Consumer Reports to endorse their products and services. So bankers, here’s what Consumer Reports says about yours:

“Mobile banking is convenient. Anytime-anywhere account access makes seat-of-the-pants money management possible. For example, you can review your account balances while waiting in a checkout line to see if you should use your credit or debt card for the purchase.

You can also transfer money between accounts, monitor availability of deposited funds, and pay bills. Your bank can send text alerts when your checking balance is low or when withdrawals and deposits are posted to your account. You can get alerts for debit and credit card purchases that exceed a set amount, which might indicate fraud.

The latest innovation, called “remote deposit capture,” in mobile-banking parlance, lets you snap a photo of a check with your cell-phone camera and “deposit” it into your account. You can’t get cash out of your cell phone yet, but you can use it to find the nearest ATM.”

Research from multiple companies shows that mobile phone usage is exploding. Half of our younger generation is using mobile banking and we have Consumer Reports telling everyone why they should be using it.

We have many very good companies in the banking industry that offer secure mobile banking applications to financial institutions. The only reason I can see why banks don’t embrace mobile banking is either that they are scared or they had rather cut bait!

Willis Newton’s First Bank Hold-Up – 1916

In 1916, vast portions of rural Texas and Oklahoma were still very similar to wild days of the Old West. Sam Bass had been shot up and killed in a bank robbery in Round Rock, Texas, 38 years earlier. Jesse James had only been buried for 34 years. Thomas E. Ketchum (Black Jack Ketchum) had been hanged in 1901 for attempted train robbery. Robert LeRoy Parker (Butch Cassidy) and Harry Longabaugh (Sundance Kid) were reported to have been killed by the Bolivian police in 1908. Frank James had died the year before (1915), spending his last days giving 25-cent tours of the James’ farm in Missouri. The Dalton brothers were all gone except Emmett Dalton, who had survived 23 gunshot wounds in the ill-fated double bank robbery in Coffeyville, Kansas, in 1892. He served 14 years in a Kansas prison and then moved to California where he became a real estate agent, raconteur, author, and Western actor. He died in 1937 at age 66.

At the time of the bank robbery, Willis did not know that over the course of his life he would rob more banks and trains than all of his predecessors combined. He and his brothers still hold the record for the most money stolen in train robberies in U.S. history. According to Willis he was “just trying to learn the ropes” in the Boswell holdup.

It was in Durant, Oklahoma that Willis met up with a loose-knit band of bank robbers. One of them asked him if he wanted in on a daylight bank job. “Hell yeah,” Willis told them and he was introduced to two men he would work with in the Boswell robbery.

In his last interview in 1979, he described his first bank holdup.

“One was a tall, slim boy named Charlie Rankins and the other guy-I don’t recall his name but he had a face full of scars, probably smallpox or something. They had horses and we planned up the Boswell bank job; it was about 15 or 20 miles this side of Hugo.

“The bank was the last building in town as you were leaving, Nothing but brush after that. They had some trees there that you could tie up horses. Well, that’s what we done; one day we went over to Boswell and tied up the horses at the bank. Nobody knowed me there so I went on in and acted like I was getting change. Charlie and the other feller come on in as I was talking to the cashier. I threw down on him and hollered for everybody to ‘stand pat because we was robbing the bank.’

“While I kept the front, Charlie and the other guy run around behind and started sacking the money. Charlie got all the money out of the safe and the other guy cleaned out the cash drawers. It come to $10,000. We told everybody to stay put or we would blow their damn heads off. Then big as you please we untied our horses and slowly trotted off into the brush. Nobody come out of the bank when we looked back.

“We headed across the South Boggy River and we followed the river to just outside of Hugo where we split up the money. I give them my horse and saddle and said, ‘You fellows go on and I’m going into Hugo tonight and catch me a train out of here.’ I figured they wasn’t looking for no one to be catching a train, they was looking for three men on horseback. I knew there was a passenger train that left there sometime after 10 o’clock, so I stayed out there in the brush ’til it got dark.

“They took all the hard money (silver) and give me green money (cash) for mine, so I put it around my waist and folded some in my pocket. When I put my coat on you couldn’t tell I had it in my pockets or anything. Just before 10 o’clock come I walked in there and bought me a ticket to Ardmore, slick as you please. It was clear sailing after I got to Ardmore.”

About a month after the Boswell robbery, Charlie Ranking was arrested when they found a quantity of silver dollars in paper rolls bearing the bank’s name. When Willis learned that his friend was in jail he devised a plan to get inside the jail and see if he needed help. He knew a man in Hugo who had been a stool pigeon in prison. Visiting with the man, he boasted that there seemed to be a number of easy banks in the area that “needed to be knocked over.”

The man immediately went to the police and reported his conversation with Willis.

“When I went down to the depot that night to catch a train, the law was laying for me. They grabbed me and put me in jail, which was just what I wanted. So then I got to talk to Charlie and I said, ‘You want me to help you? I can come in and turn you out if you want me to.’

“No, hell,’ he said. ‘I don’t think they’ve got much on me, not enough to put me in the penitentiary. They’ll be setting my bond in three weeks.’

“They kept me jailed for three or four days and just wouldn’t turn me loose. They could keep you in jail just as long as they wanted to, in them days. Finally, I had to go get a lawyer and paid them $250 to get out of jail. Later on, I found out they sent Charlie to the penitentiary at McAlester for 25 years. I never did see him again.

“My cut from the robbery was right around $4,000, but I didn’t have it on me when I came back to Hugo. I had come down to San Antonio and put six or seven hundred in the bank and I give them lawyers a check on the San Antonio bank to get me out. Well, about two months after that I went down to San Antonio to draw the rest of my money out and they had the law waiting for me. I had wrote a check to get my money and this teller says, ‘Well, wait here a minute.’ He took it and went back there and I seen him talking to somebody and I knowed they were going to arrest me. So I just walked off and went down to Uvalde and give a little lawyer a check for all of my money, and he went up there the next day and got it. I never did know what they wanted to arrest me for, but that’s what they was fixing to do. They arrested you for nothing in them days. They would do anything they wanted to you.

“The bank in Boswell was the very first daylight job I ever done for money. But I didn’t hesitate. Hell, if you hesitate you’re liable to get in trouble. You go to do anything like that, you better do it. I always told them, ‘Let’s go boys,’ and I took the lead and we never stopped for nothing. The bank robbery at Winters, Texas, with Frank, the old bank robber, was my first night job. We never got but $3,500 in Liberty bonds from there, though, and they killed that one old boy there alongside the car. So I never got nothing out of that. He had the bonds in his hip pocket, the one who got killed.”

Willis’ version of his first bank hold up has a reference to a botched night time robbery in Winters, Texas, where he and three others broke into the bank at midnight. Frank, a friend of his, had been told that the Winters bank had a vault that they could blow with nitroglycerine. His source was a Banker’s Association detective named Boyd, who wanted a cut of the loot. As it turned out after they had blown the vault door, the money was stored in a round safe that they could not open. After ransacking the vault they finally left with $3,500 in Liberty bonds.

Heading back to Abilene, a third man named Al was driving an early model Hudson when the car got stuck in sand and burned out the clutch near Buffalo Gap, Texas. They abandoned the car and hid out in the hills until the next night when they walked into Buffalo Gap. Just as they neared the town, a car full of lawmen passed by them on the road. When the car stopped and turned around Willis and his friend, Slim Edgarton, ran for the brush while Frank and Al stood their ground shooting at the lawmen in the car. After a volley of shots Al took a slug in the chest and went down. Frank then took off in a different direction into the brush. It was the man named Al that had been carrying the bonds when he was shot and killed by the posse.

Willis managed to escape but was later caught with his friend Red, near Sweetwater. They were jailed in Ballinger with Slim Edgarton, who had been caught earlier. After bribing the sheriff’s wife, the trio managed to break out of the jail in the middle of the night and get away.

Repeating a pattern he would use throughout his career, Willis returned to San Antonio after the Boswell job and then headed for the family place in Uvalde. In 1916 he was still “learning the ropes” of the outlaw life while, with exception of his brothers Jess and “Doc”, the rest of the family was engaged in honest labor-working as ranch hands or hard scrabble sharecroppers, known in West Texas as “cyclone farmers.”

Later, Willis and some of brothers would go on to form the Newton Gang that robbed over 80 banks in Texas, the Midwest, and Canada during the early 1920s.

Benefits of IFSC Bank Codes

With internet banking becoming such a snowballing phenomenon, banks have to ramp up the accuracy and safety of such transactions. One of the ways to do that is by making details such as the IFSC number of the participating banks a mandatory pre-requisite when conducting these digital transactions.

What is the IFSC Code?

The Indian Financial System Code is a unique 11 character alpha-numeric code awarded to a bank’s branch if it facilitates online banking. An IFSC such as HDFC0000485 is made up of three parts-the first four alphabetic characters identify the bank’s name, the fifth character is a ‘0’ kept as a buffer for future expansion and the last six characters are the ones which represent the bank’s branch’s address and are usually numeric but can be alphabetical too.

IFSC is used while making fund transfer through electronic means through services such as National Electronics Fund Transfer (NEFT), Real Time Gross Settlement (RTGS) and Immediate Payment Service (IMPS). To successfully complete such a transaction, the payer needs to have the beneficiary’s bank’s IFS Code.

Benefits of IFSC

Saves Time & Money:

Online banking’s biggest advantage over conventional banking is that it saves time. You can skip the traffic, the queues and the formalities of conventional banking and just outright complete your banking transaction within a span of minutes at your comfort and convenience. IFSC facilitates such online transactions and saves your time. Also, online banking enabled through IFSC helps make banking paperless and hence saves money. Such electronic banking is environmentally-friendly too apart from being simpler and quicker.

Shorter Transfer Time:

Online banking enabled by IFSC also saves the time, effort and money, conventional services such as demand draft and bank cheques take for the fund transfer to be successful. Also the transaction is reflected in both the sender’s and the beneficiary’s accounts’ immediately as IFSC details are already confirmed. Moreover, other than the bank’s service charges (if applicable), there is no additional money spent to carry out such a quick transaction.

Secure and Transparent:

For online banking, users need to submit key credentials including IFSC of the beneficiary which are subsequently verified by the bank. Only after the payer’s bank’s verification can a user make an IFSC-enabled fund transfer. This makes the process secure. Also, as online banking through the use of IFSC eliminates the human interference factor from the financial transaction process, such banking becomes more transparent and accountable and reduces the possibility of any kind of scam which can be carried out in the system. Moreover, in online banking since both the sender and the receiver account holders are informed of the transaction immediately through SMS or email, such banking is less susceptible to fraud or any loss.

Helps in Banks’ Reconciliation:

IFS codes are unique to each participating bank branch which is how they help in a bank’s data’s reconciliation and validation. Without IFS codes, accuracy of electronic transactions will go down and banks stand the danger of carrying out inaccurate transactions. Also since all banks are now digitally-enabled, online fund transfers facilitated through IFSC help them in quick reconciliation. Also, IFSC being mandated for individual as well as corporate transactions helps banks in disbursing funds quickly and correctly. IFSC also makes it easy for banks to communicate and comprehend transactions across their branches and with the other banks too.

Challenges of Nigeria Mobile Banking

Mobile Banking refers to provision of banking and financial services with the help of mobile telecommunication devices. The scope of offered services may include facilities to conduct bank and stock market transactions, to administer accounts and to access customized information. Also known as M-Banking in Nigeria or in some instances SMS Banking etc. It is a term used for performing balance checks, account transactions, payments and others transaction services via a mobile devices. Some mobile Banking applications in Nigeria use pre programmed configurations settings.

Mobile Banking in Nigeria started from the transaction based activities whereby Bank customers are Notified via sms when transactions are conducted on their account or via Atm. This is a one way event and only for informational purposes only. GT Bank was on of the earliest Banks to provision this service to customers.

That was the early days on Mobile Banking in Nigeria. Nigerian Banks are now deploying full fledge banking via the Mobile Phones with array of services which were only possible in the Banking Halls before. Zenith Bank, UBA , GTBank, Diamond and Intercontinental Banks are the fore runners of this innovation.

Despite the watch and see attitude that some very leading Banks are taking about Mobile Banking in Nigeria, The mobile remains the Only and most available feasible means to provide mass market alternative to Branch Banking in Nigeria. The internet has only a penetration rate of 6 percent in a population of 140 million but mobile technology is close to 50 percent penetration with prospects for growth.

Mobile devices are the most promising way to reach the masses and to create a tie-in among current customers, due to their ability to provide services anytime, anywhere, high rate of penetration and potential to grow. Deployment of 3G in coming months will also enable Banks to offer more robust Mobile Banking technologies.

Key challenges in developing a sophisticated mobile banking application are Interoperability. The single reason for is the manner in which mobile phone applications evolved over time, device manufacturers focused on particular standard and and this led to a proliferation of applications. The Financial Regulator CBN should look in this issue at this early stage so that Mobile Banking ecosystem can be robust with National standard that cuts across all Banks. Bank specific Mobile Banking platforms is akin to having each bank deploying its own ATM Technology which other bank customers cannot access.

Interoperability can also help to evolve a standard that will enable low end phones which are currently excluded, to do Mobile Banking. Some countries like India and South Africa are already using some standards like R-World and USSD.

Application distribution for Mobile Banking is another area where some Banks are facing Challenges. While some forward looking Banks are overhauling their gateways and reducing their reliance on Mobile Operators settings to enable customer’s phones, Some Banks are actually asking that Customers come with regular Operator settings which in many instances might not be correct configurations settings..

Operator settings are not really meant for critical operations since most of the settings are used for entertainment based activities. Nigerian Banks that are looking at competing at this sector must look beyond operators settings which might not be correct, delayed in arrival,may not come at all and not regularly updated. Some Mobile operators do update like every three months while some do not at all. For wap and Gprs based Mobile Banking applications, mobile network coverage will also be an issue.

As part of their marketing strategies, I will expect that by now, customers do not need to visit local Branches to download Banking applications. Over-the-Air (OTA) Settings should be readily available online and some innovations can even come to play by Banks deploying Bluetooth application machines in Shopping malls and some strategic places where customers can visit and download Mobile Banking applications for free or for a fee..This will increase the addressable market of the Banks offering Mobile Banking exponentially in Nigeria.

Bank Bailout – What Does That Mean?

Banking crisis has detrimental effects on the rest of the economy. Banking crises usually result in severe economic crises with negative GDP growth, frequent bankruptcies, high unemployment and often social and political turmoil. A possible breakdown of the whole payment system, capital flight and higher probability of currency crises, as well as a general loss of confidence added to the list.

Bailouts of insolvent financial institutions to avoid spreading of bank insolvencies put a heavy burden on the budget and can increase social inequality by transferring money from tax payers to depositors. Budget deficits constrain future government spending and can result into inflationary monetary policy thereby imposing an additional inflation tax on tax payers. Bailouts can distort economic incentive schemes by keeping inefficient banks alive and therefore reducing the motivation of managers to act efficiently and of depositors to choose financial institutions cautiously, thus preparing the ground for future banking crises.

At this point there is an agreement among economists that banking crisis causes higher losses for developing countries than for developed countries that have well-developed banking system and efficient supervisory schemes.

By “bank bailout” economists refer to the provision of funds to the bankrupt or nearly bankrupt financial institution in order to increase its liquidity (in other words provide additional cash) and prevent bankruptcy of the financial institution. Generally bailouts are made by government or by private investors willing to take over the troubled institution in exchange for the funds provided.

The recently adopted 700-billion-dollar bailout plan by US government known as Emergency Economic Stabilization Act of 2008 is a good example of bank bailout. Bank bailout has also happened in the past in several other countries (Thailand, Malaysia, Korea, Russia), when banking problems reached the level that concerned whole countries. To solve the crisis central banks applied their function of Lender-of-Last-Resort (LOLR).

LOLR function is one of the basic functions of the central bank in the context of their role of banking sector supervising entities. Ideally LOLR function is used by central banks in order to solve temporary liquidity problems (cash problems) of the banking institutions. As liquidity problem within the bank arises, the bank tries to borrow funds from other banks. In case it manages to do so, the problem is automatically solved. However LOLR function existence has a justification that during systemic crisis normal financial relations are hampered and a banks requiring borrowing cannot manage to receive funds. If the bank fails to raise funds, it faces serious threat of getting bankrupt. So there must be some institution that will provide credit to the troubled bank. In this case central bank lends to the troubled bank in order to solve temporary liquidity problems of the banking institution.

So why authorities cannot just let the bank go bankrupt? Because bank failures have externalities – negative effects on other market players. They often impose heavy burden on other market participants. For instance client companies of failed banks often experience drop in the share value on stock exchange. This is because potential investors think that failed bank may have clients with poor financial standing.

In addition, bank failure has a domino effect: if one bank fails, there is a risk that it may spread to entire banking system. Depositors of other commercial banks may start thinking that failure of one bank is just a beginning and due to false expectation may create a “bank run” – a situation, when depositors massively withdraw deposits from the banks that are characterized by large queues in front of the bank offices.

The last, but not least is cost of bailout. First of all during bailout taxpayers’ money is transferred to the depositors and second bailout creates a moral hazard: an institution that receives funds for bailout get an impression that next time crisis occurs authorities will come to help again. Consequently the bank starts favoring high risk-high return projects that tends to be very dangerous for the overall stability of the banking sector in long-run. If this happens, the system may be become absolutely unsustainable, since funds required for bank bailout will rise each time.

Implementation of Corporate Governance in Banks and Its Relationship to Risk Mitigation

During the past twenty-five years the focus was on attention to the application principles of corporate governance in banks as a result of the rapid developments in financial markets and the globalization of financial flows and technological progress, which led to the pressures of an increasingly competitive between banks and non-bank, also led to a rapid growth in the financial markets and a wide variety of financial instruments to banks, which increased the importance of risk measurement and management and control, which requires continuous innovation to business and ways of managing risk and change the laws and surveillance systems so as to maintain the integrity and strength of the banking system. Since banks differ from other institutions because the collapse of banks affect a wider circle of stakeholders resulting in a weak financial system itself which lead to adverse effects on the economy as a whole, placing a special responsibility to the members of the Board of Directors.

The Bank for International Settlements has been defined the governance in banks as the methods & approaches used to manage banks through the board of directors and senior management which determine how to put the bank’s objectives, operation and protect the interests of shareholders and stakeholders with a commitment to act in accordance with existing laws and regulations and to achieve the protection of the interests of depositors.

Principles of corporate governance in banks:

Basel Committee issued a report on strengthening governance in banks in 1999 and then issued a modified version of it in 2005 In February 2006, the updated version included the following: –

The first principle: – members of the Board of Directors Must be qualified to fill positions and they have fully aware of the governance and the ability to manage in the bank, and the members are fully account for the bank’s performance and integrity of its financial position and strategy formulation in the bank and the policy of risk and avoid conflicts of interest and move away themselves from the decision-making When there is a conflict of interest makes them unable to perform their duties to the Bank, and to do the restructuring of the Board which includes the number of members, encourages greater efficiency, duties and powers include the selection and control and the appointment of executives to ensure the availability of talent capable of managing the bank, The Board of Directors responsible for establish committees to assist them, including the executive committee and internal review to take corrective decisions in time and to identify weaknesses in control and non-compliance with policies, laws and regulations. In addition to the Risk Management Committee sets out the principles for senior management on the management of credit risk, market – liquidity, operational, reputation and other risks, also the pay commission committee that sets the pay systems and principles of the appointment of executive management and the Bank officials, in line with the objectives and the Bank’s strategy.

The second principle: – Members of the BOD have to approve and monitor the strategic objectives of the Bank and the values and standards of work with the interests of stakeholders and that these values are valid in the bank, and should ensure that the executive management implements strategic policies of the Bank and prevent the activities and relationships and attitudes that undermine governance specially conflicts of interest such as lending to the staff or managers or shareholders who have control or majority.

The third principle: – The BOD must establish clear lines of responsibility and accountability in the bank to themselves and to senior management and develop a management structure encourages accountability and responsibly.

The fourth principle: – BOD Should ensure of the existence of the principles and concepts of executive management in line with the Board’s policy and officials owned the skills necessary to manage the Bank’s business and that is the Bank’s activities in accordance with policies and regulations established by the Board of Directors and in accordance with an effective system of internal control.

The fifth principle: – The independence of auditors and the functions of internal control shall be approved by BOD as essential to the governance of banks in order to achieve a number of control functions to test and confirm the information obtained from the senior management for operations and performance of the bank, senior management must recognize the importance of audit functions and the effective of internal and external control for the safety of the bank on the long-term

Principle VI: – BOD Should ensure that the policies of remuneration commensurate with the culture, objectives and strategy of the bank in the long term and linked to incentives of senior management and executives to the bank’s long-term objectives.

Principle VII: – Transparency is necessary for effective and sound governance, according to the Basel Committee Guide on transparency in the banks, it is difficult for shareholders and stakeholders and other market participants to observe correctly and efficiently the performance of the Bank’s management in light of lack of transparency, and this happens if there is no sufficient information to shareholders and stakeholders about the ownership structure of the bank and its objectives, timely & adequate market disclosure will achieve market discipline, and be disclosed in a timely and accurate through the Bank’s website and in annual and periodic reports, and be tailored to the size and complexity of the ownership structure and size of the Bank’s exposure to risk, or what If the bank registered in the stock market, and in the information that must be disclosure of information relating to the financial statements, exposure to risks, issues related to internal audit and governance in the bank, including the structure and qualifications of board members, managers, committees and the structure of incentives and wage policies for staff and managers.

Eighth Principle: – Members of BOD and senior management Should understand the structure of the Bank operations and the regulatory environment in which it operates which can be exposed the bank to legal risk indirectly when doing services on behalf of its clients who use the services and activities offered by the Bank for the exercise of illegal activities, putting the bank reputation at risk.

In conclusion, the application of corporate governance in banks leads to positive results: increase in funding opportunities and lower cost of investment and financial market stability, and reduce corruption. The application of the principles of corporate governance to the lower degree of risk when dealing with banks and reduce defaults.

How Banking Systems Originally Started

What is a banking system? It seems like a simple question. However, depending on where you sit and your personal perspective there can be several different answers.

When I pose this question to participants on my courses I invariably get an answer that deals exclusively with a computerized process. In today’s jargon the word “system” seems to automatically refer to a computer and a computer only.

However a “system” is bigger than just a computer. A “system” is a grouping or combination of things or parts forming a complex or unitary whole. An easily understood example is the postal system which includes things like letters, stamps, parcels, letter boxes, post offices, sorting offices, computers, clerks, mailmen, delivery vans, airlines; just to mention a few of its components. It is how all this is organised and made to work that makes it worthy of the title “postal system”. So, when we speak of a system, we speak of something much larger and more complex than the computerized part of that system.

The same logic relates to any other “system” and “banking systems” are no different.

The cheque clearing system (or check clearing system to our American cousins) can probably lay claim to the honour of being the oldest banking system in the world. This system, with variations, is used to this very day in all countries where the cheque still forms a part of the national payment system.

Today in the twenty first century, in most countries where the cheque is still in use, the cheque clearing system is a highly sophisticated process using state of the art technology, readers, sorters, scanners, coded cheques, electronic images and lots and lots of computing power.

The cheque is basically a humble piece of paper, an instruction to a bank to make a payment. The story of the cheque clearing system is a story that is worth telling. It is that story of a banking system that is now in its third century of operation. It is the story of a banking system that has evolved and changed and been improved through countless innovations and changes. It is a story of the key payment instrument that has helped grease the wheels of commerce and industry.

How did the cheque begin? Most probably in ancient times. There is talk of cheque-like instruments from the Roman empire, from India and Persia, dating back two millennia or more.

The cheque is a written order addressed by an account holder, the “drawer”, to his or her bank, to pay a specific amount to the payee (also known as the “drawee”). The cheque is a payment instrument, meaning that it is the actual vehicle by which a payment can be taken from one account and transferred to another account. A cheque has a legal personality – it is a negotiable instrument governed in most countries by law.

To illustrate let us use an example. Your Aunt Sally gives you a present for your birthday. A cheque for one hundred pounds. To get a hold of your real present (the cash that is) you have two options. You can take yourself off to Aunt Sally’s bank and claim payment in cash by presenting the cheque there yourself, or you could give the cheque to your own bank and ask them to collect the amount on your behalf.

Collecting your present in person can be a real bind, especially if Aunt Sally lives in another town, miles away from where you live. So you deposit your cheque with your bank.

Cheque clearing is the process (or system) that is used to get the cheque that Aunt Sally gave you for your birthday, from your bank branch, where you deposited it, to Aunt Sally’s bank branch and to get settlement for the amount due back to your own branch. Given that on any one day millions and millions of cheques are processed, sorted, processed, transported; getting payment for and keeping tabs on all of these items is no easy feat.

A year or two back the annual number of cheques processed in the United Kingdom was just over five million. Not per year but PER DAY!

However, we are digressing. We need to get back to our story, now unfolding almost two and a half centuries ago. Until about 1770 the collection of cheques in London, which by then had already become the world’s premier banking centre, was pretty much an informal, tedious affair. Each afternoon clerks from each of the dozens of London banks would set out with a leather bag tucked under their arms. In the bags were the cheques that had been deposited with their banks drawn on all the other London banks.

They would trudge from one bank to another, through rain and through mud, in summer and winter. At each bank they would present the cheques that had been deposited with them for collection and would receive in exchange cash payment for the items presented. When necessary they would also take delivery of cheques drawn on themselves and deposited at these other banks, keeping a tally of balances between them and the other bank until they settled with each other. This dreary exhausting trudge from one bank to another would often take the best part of each afternoon. On their return the cash received in payment of those cheques would be balanced up. Life was indeed hard.

And then it happened! A spark of innovation flashed across the mind of one of those weary clerks. Who it was, is not known, but he had a real brainwave, probably driven by thoughts of how to boost his leisure time or settle his nerves with that extra pint of ale.

The logic was simple. If the clerks could all meet at a set time at a single place, they could transact their business, each with the other in a fraction of the time and without the need to walk miles and miles to dozens of banks. They started doing this by arranging to meet daily at the Five Bells, a tavern in Lombard Street in the City of London, to exchange all their cheques in one place and settle the balances in cash. In the spirit of the efficiency gained they could maximise their leisure and drinking time – which they promptly did, much to the satisfaction of the local publican. An added benefit was that all this now happened out of the cold and the wet and the gloom.

The cheque clearing system had been born.

There were other benefits to be gained from this new system too. By having all the banks present at a single exchange session permitted interbank obligations to be settled on a multilateral net basis. This provided a huge savings in the amount of cash that each of the clerks had to carry to settle his banks obligations.

Pretty soon the next innovation kicked in when the banks dispensed with settling in cash. This was replaced when the banks set up a process of exchanging IOUs drawn on their respective accounts at the Bank of England, for the net amounts payable or due. The IOU was called… you guessed it; a clearance voucher.

In the next two hundred years the process or system was replicated around the world as the only method for the collection and settlement of cheques, which at that time was the only domestic payment instrument.

Different countries adapted the system with minor variations. However the principal remained the same. While the various systems operated beautifully in terms of operational and technical efficiency, the legal risk in the netting process was neatly ignored. This lacuna was only corrected in the 1990s with the realization of the systemic risk that this gap had created.

The nineteenth century saw the previously handwritten cheques being replaced by printed forms issued by banks to their clients, often embodying some form of security feature to hamper attempts at forgery.

Nothing much changed until the 1960s and 1970s when automation was introduced into the cheque clearing system. Growing volumes of cheques around the world necessitated new ways to process the flood of new payments being made. During this period we saw a proliferation of automated clearing houses in which machine-readable cheques were processed, sorted, batched, cleared and settled. The method used for this was the code-line printed on the cheque, either in magnetic ink (MICR -Magnetic Ink Character Recognition) or using a special font (OCR – Optical Character Recognition).

Subsequent innovations have seen this data being transmitted electronically from bank to clearing house and then to the bank again. Images of the cheques are now also regularly transmitted between banks. In many jurisdictions the digitized image of the cheque has become the legal replacement of the original paper cheque allowing the paper instrument to be truncated at source.

Despite the growing popularity of pure electronic payments in many parts of the world, the use of the cheque still remains popular in the United States. Perhaps the ultimate accolade to the durability of the cheque and the cheque clearing system is the fact that many American banks today allow their customers to photograph their cheques, using a bank developed app, for deposit via their smartphone. The cheque image, both front and back, is transmitted to their bank for credit of their account.

This original banking system has certainly come a long way in two and a quarter centuries since the first cheque clearing house began its operations in a room at the Five Bells Tavern in the City of London, as a smart idea to give a bunch of young bank clerks more drinking and leisure time, out of the cold and the damp.

Mobile Banking Grows More Popular Each Year

The term “Mobile Banking” has grown in popularity in recent years, especially with the proliferation of cellular phones around the world. The term does not refer to specific technology, but instead is broadly used when discussing several different methods of using your mobile phone to perform various banking tasks, such as checking balances, transferring funds and making payments. Some mobile customers bank via text messaging, others by accessing their bank’s on-line banking web site via their Smartphone browser, and yet others by using bank-specific applications developed for the mobile phone. Whichever method is selected, the overall trend is the increasing popularity of mobile banking in all demographic groups.

At the end of 2012, a survey and report were prepared by the Consumer Research Section of the Federal Reserve Board’s Division of Consumer and Community Affairs, known as the DCCA. It was a follow-up to a similar study done the previous year. All findings indicate that Smartphones are becoming more and more ubiquitous in the U.S., and as a result, banking via Smartphone is on the rise. The reasons are obvious – portability and convenience make Smartphones a logical choice for keeping track of your finances. And more banks have apps available to mobile customers for a variety of devices, making it even more readily accessible and simple to navigate, even for novice users.

How many mobile owners utilize mobile banking?

87% of adults in the U.S. own a mobile phone, with 52% of those being internet-enabled; the technology referred to generically as Smartphones. Mobile phones that are not able to access the internet can bank via text message, but the survey reports that Smartphone users are much more likely to utilize banking applications than those with non-internet phones. 48% of Smartphone users have taken advantage of mobile banking, but the overall percentage of cell users banking by phone is just 28%. Even that number is on the rise, up from 21% at the end of 2011. Another 10% of cell phone users responded that they most likely would begin during 2013, indicating that the trend will continue. Of course the mobile phone has a wide variety of uses, with banking being far down on the list. It has been noted that even making phone calls is far less common on Smartphones than checking the time, browsing the internet and playing games.

What groups are most likely to bank by phone?

  • Younger mobile phone users are much more likely to adapt banking via their mobile than their older counterparts, with over 38% of those aged 18-29 banking on their phone versus just 8% of those over the age of 60.
  • The higher the household income, the more likely a person is to have banked via their phone, with those earning over $100,000 per year at a 28% usage rate compared with 16% for those earning less than $25,000.
  • Education also factors into banking on a mobile, with 37% of college graduates having banked by mobile phone while less than 6% of those without a high school education have done so.

What kind of banking do people do via their phones?

The study found that by far the most common banking task initiated via mobile phone was balance and transaction checking (87% of mobile banking customers), followed by the transfer of cash between accounts (53% of mobile bank users). On the rise is the usage of mobile devices to deposit checks, by utilizing a service such as Mobile Deposit, which allows bank customers who are Smartphone users to deposit a check into their account by taking a photo of each side of the check and submitting it to the bank via a Smartphone app. 21% of mobile banking users have utilized such a service.

Why don’t people use mobile banking?

Of those surveyed who did not utilize mobile banking, there were 2 common reasons why. The most frequent response was that other banking methods were more useful and convenient, and the customer could see no reason to start banking by phone. The second most cited reason was a concern for the security of their information and finances. In reality, mobile banking applications do offer a high degree of security, with data encryption, strict user authentication and connection limits. If in doubt about the security of your bank’s mobile application, visit their web site or contact a bank representative for additional details.

The Federal Reserve report is available for viewing on-line at the Federal Reserve web site for those interested in additional details. It does seem clear that the trend toward mobile banking is firmly implanted in our current culture, and will continue to expand as technology brings us even better security and fast, easy-to-use applications for managing finances. If you are a mobile phone user who doesn’t utilize mobile banking, contact your bank for details about their options and how to get started!

Impact Of Technology In Banking

In the world of banking and finance nothing stands still. The biggest change of all is in the, scope of the business of banking. Banking in its traditional from is concerned with the acceptance of deposits from the customers, the lending of surplus of deposited money to suitable customers who wish to borrow and transmission of funds. Apart from traditional business, banks now a days provide a wide range of services to satisfy the financial and non financial needs of all types of customers from the smallest account holder to the largest company and in some cases of non customers. The range of services offered differs from bank to bank depending mainly on the type and size of the bank.

As a central bank in a developing country, the Reserve Bank of India (RBI) has adopted development of the banking and financial market as one of its prime objectives. “Institutional development” was the hallmark of this approach from 1950s to 1970s. In the 1980s, the Reserve Bank focused on “improvements in the productivity” of the banking sector. Being convinced that technology is the key for improving in productivity, the Reserve Bank took several initiatives to popularize usage of technology by banks in India.

Periodically, almost once in five years since the early 1980s, the Reserve Bank appointed committees and working Groups to deliberate on and recommend the appropriate use of technology by banks give the circumstances and the need. These committees are as follows:
-Rangarajan committee -1 in early 1980s.
-Rangarajan committee -11 in late 1980s.
-Saraf working group in early 1990s.
-Vasudevan working group in late 1990s.
-Barman working group in early 2000s.

Based on the recommendations of these committees and working groups, the Reserve Bank issued suitable guidelines for the banks. In the 1980s, usage of technology for the back office operations of the banks predominated the scene. It was in the form of accounting of transactions and collection of MIS. In the inter-bank payment systems, it was in the form of clearing and settlement using the MICR technology.

Two momentous decisions of the Reserve Bank in the 1990s changed the scenario for ever there are:
a) The prescription of compulsory usage of technology in full measure by the new private sector banks as a precondition of the license and
b) The establishment of an exclusive research institute for banking technology institute for development and Research in Banking Technology.

As the new private sector banks came on the scene as technology-savvy banks and offered several innovative products at the front office for the customers based on technology, the demonstration effect caught on the reset of the banks. Multi channel offerings like machine based (ATMs and pc-Banking), card based (credit/Debit/Smart cards), Communication based (Tele-Banking and Internet Banking) ushered in Anytime and Anywhere Banking by the banks in India. The IDRBT has been instrumental in establishing a safe and secure, state of the art communication backbone in the from of the Indian Financial NETwork (INFINET) as a closed user group exclusively for the banking and financial sector in India.

Liberalization brought several changes to Indian service industry. Probably Indian banking industry learnt a tremendous lesson. Pre-liberalization, all we did at a bank was deposit and withdraw money. Service standards were pathetic, but all we could do was grin and bear it. Post-liberalization, the tables have turned. It’s a consumer oriented market there.

Technology is revolutionizing every field of human endeavor and activity. One of them is introduction of information technology into capital market. The internet banking is changing the banking industry and is having the major effects on banking relationship. Web is more important for retail financial services than for many other industries.

Retail banking in India is maturing with time, several products, which further could be customized. Most happening sector is housing loan, which is witnessing a cut-throat competition. The home loans are very popular as they help you to realize your most cherished dream. Interest rates are coming down and market has seen some innovative products as well. Other retail banking products are personal loan, education loan and vehicles loan. Almost every bank and financial institution is offering these products, but it is essential to understand the different aspects of these loan products, which are not mentioned in their colored advertisements.

Plastic money was a delicious gift to Indian market. Giving respite from carrying too much cash. Now several new features added to plastic money to make it more attractive. It works on formula purchase now repay later. There are different facts of plastic money credit card is synonyms of all.

Credit card is a financial instrument, which can be used more than once to borrow money or buy products and services on credit. Banks, retail stores and other businesses generally issue these. On the basis of their credit limit, they are of different kinds like classic, gold or silver.

Charged cards-these too carry almost same features as credit cards. The fundamental difference is you can not defer payments charged generally have higher credit limits or some times no credit limits.
Debit cards-this card is may be characterized as accountholder’s mobile ATM, for this you have to have account with any bank offering credit card.

Over the years, the banking sector in India has seen a no. of changes. Most of the banks have begun to take an innovative approach towards banking with the objective of creating more value for customers and consequently, the banks. Some of the significant changes in the banking sector are discussed below.

Taking advantages of the booming market for mobile phones and cellular services, several banks have introduced mobile banking which allows customers to perform banking transactions using their mobile phones. For instances HDFC has introduced SMS services. Mobile banking has been especially targeted at people who travel frequently and to keep track of their banking transaction.

One of the innovative scheme to be launched in rural banking was the KISAN CREDIT CARD (KCC) SCHMME started in fiscal 1998-1999 by NABARD. KCC mode it easier for framers to purchase important agricultural inputs. In addition to regular agricultural loans, banks to offer several other products geared to the needs of the rural people.

Private sector Banks also realized the potential in rural market. In the early 2000’s ICICI bank began setting up internet kiosks in rural Tamilnadu along with ATM machines.

With a substantial number of Indians having relatives abroad, banks have begun to offer service that allows expatriate Indians to send money more conveniently to relatives India which is one of the major improvements in money transfer.

E-Banking is becoming increasingly popular among retail banking customers. E-Banking helps in cutting costs by providing cheaper and faster ways of delivering products to customers. It also helps the customer to choose the time, place and method by which he wants to use the services and gives effect to multichannel delivery of service by the bank. This E-Banking is driven by twin engine of “customer-pull and Bank-push”.

Technology has been one of the most important factors for the development of mankind. Information and communication technology is the major advent in the field of technology which is used for access, process, storage and dissemination of information electronically. Banking industry is fast growing with the use of technology in the from of ATMs, on-line banking, Telephone banking, Mobile banking etc., plastic card is one of the banking products that cater to the needs of retail segment has seen its number grow in geometric progression in recent years. This growth has been strongly supported by the development of in the field of technology, without which this could not have been possible of course it will change our lifestyle in coming years.

March Of The Mindless – A Note to Bank Officers and Directors, And to the FDIC

Sometimes, some things just have to be said. And I, being on the front line of distressed commercial real estate loan workouts, find myself compelled to say it.

There is trouble afoot. A fundamental miscalculation is being made, sending bankers, senior officers, directors, troubled asset advisors, special asset committees, and their respective attorneys, down the wrong path.

Blame it on Wall Street. Blame it on the FDIC. Blame it on regulators generally. Lord knows we have been blaming it on evil real estate developers, investors and borrowers for this entire economic down cycle.

We are bankers. The pure at heart. Protectors of the American dream. Providers of the fuel that runs our economy. [Never mind that the fuel tank exploded a few years ago.] We are the righteous. We are the strong.

Troubled assets [we like to call them “Special”]: The shopping centers, office buildings, industrial properties, senior housing projects, multifamily and condominium projects, and other real property that serves as collateral for our loans.

The borrower said the asset was worth $20 million. Today it is worth barely $10 million, if even that. We must have been defrauded!

Our guarantors gave personal financial statements reflecting a net worth of $15 million when they obtained their loan. Today, they claim to be broke. They are evil thieves who must be hiding their treasures off shore, or in their back yards. [Oh wait. We foreclosed on their back yards – it must be in their mattresses!] Where else could it have gone?!!! Never mind that it was comprised of equity interests in commercial real estate developments, with revenue from fully occupied centers, whose values have plummeted, or been lost in foreclosure to others.

They promised to pay us off by selling-out their condominium project in 36 months. That was six years ago. Liars… Liars! Their pants must surely be on fire!

So now, here we are. We have a huge number of defaulted loans. We are on the Troubled Bank List. [Shouldn’t it be called the “Special” Bank List?] We are one of the FDIC’s problem banks. Or, perhaps, we are a “fortunate” successor bank – with a loss sharing arrangement with the FDIC.

We have a boat load of “Special Assets”. What do we do now?

One choice would be to make the best of a bad situation. Recognize the virtual certainty, in many cases, that the loan is going to result in a loss. Detach from the blame game. Use prudent commercial business sense and sophisticated business acumen to analyze the situation and take steps to recover as much as we reasonably can from these troubled loans. Behave as prudent bankers. Pursue the loan workout objective pronounced by our banking supervisors in their joint Policy Statement on Prudent Commercial Real Estate Loan Workouts issued October 30, 2009 (available on the FDIC website): “Loan workout arrangements need to be designed to help ensure that the institution maximizes its recovery potential.”

There’s a novel idea. Take steps designed to MAXIMIZE RECOVERY POTENTIAL. What do you suppose that means?

Do you suppose that means putting blinders on, declaring every default, and mindlessly enforcing each and every remedy provided in our loan documents? Pushing real estate collateral to a trustee’s foreclosure sale or sheriff’s sale, even when other potential purchasers have expressed concrete interest in purchasing the property in an “ordinary course of business” purchase transaction for significantly more than we can reasonably expect to realized at a forced sale? Pursuing guarantors, without compromise, to the point of effectively forcing them into bankruptcy (which may often be a “no-asset” liquidation from which we will recover nothing) instead of negotiating with a guarantor for a release of guaranty in return for cooperation in getting the highest possible price for the collateral – or for even a moderate payment from funds the guarantor may be able to borrow from friends or family to avoid bankruptcy – and which we will never receive if the guarantor must file bankruptcy?

For many years I represented banks, bank shareholders (holding company shareholders), senior officers and directors. In this down cycle, my focus has been primarily representing distressed borrowers and guarantors, but I get it. I have been on each side. These aren’t just bad loans. For more than a few, these are bad loans threatening to take down the bank. With that, is the risk that the FDIC will subsequently sue senior officers and directors, and in some cases their attorneys and advisors, seeking to impose personal liability for imprudent loans or failure to properly manage loan risks or failure to take adequate steps to maximize recovery.

In other cases, the bank has already failed, and the focus is on enforcing loans in a way that complies with our duty to the FDIC to mitigate loss to the FDIC insurance fund, and enable us to gain the benefit of loss sharing arrangements with the FDIC.

In either case, decision making is often shaded by fear of FDIC criticism. Perhaps counter-intuitively, this can lead to commercially indefensible decisions based upon simpleminded or misguided notions of what the FDIC is concerned about. More and more frequently, I am experiencing bankers, senior officers, directors, troubled asset advisors, special asset committees, and their respective attorneys, making asset recovery decisions exactly contrary to the FDIC directive to MAXIMIZE RECOVERY for financial institutions.

I have recently had bank attorneys tell me (as I have proposed loan workouts/settlements for borrowers and guarantors) that:

1. It would be better for the bank to sell the collateral through a trustee’s foreclosure sale and realize even only $5 million to $6 million instead of $9.5 million offered by an interested independent buyer seeking an “ordinary course of business” sale – for fear of the bank being “criticized by the FDIC” for selling the collateral pursuant to a “private sale” instead of public sale. [The bank acquired the loan pursuant to a reported 90/10 loss sharing arrangement with the FDIC – Question. Is this the approach the bank would be using to maximize its recovery if the bank stood to suffer 100% of the loss? Is this a little bit of gambling with other people’s [the FDIC’s] money?]

2. It would be better for the bank to actively litigate a foreclosure and guaranty action [against a virtually insolvent guarantor], with two sets of lawyers, in two states, [seriously increasing the bank’s costs and depleting available borrower/guarantor resources] even though the borrower was willing to fully cooperate with the bank in devising a cooperative marketing plan to sell the property at the best possible price, or give a deed in lieu of foreclosure, or agree to a consent foreclosure, [the choice being the bank’s] in return for a release of guaranty.

3. It would be better for the bank to pursue the guarantor and receive nothing following the guarantor’s personal bankruptcy, than it would be for the bank to accept a payment of funds the guarantor would be able to gather by borrowing from friends and family, because a bankruptcy with no recovery from the guarantor would be “cleaner”, reasoning the FDIC could not criticize the bank for not pursuing the guarantors.

Objectively, the obvious question that needs to be asked is – how are any of these courses of action designed to maximize recovery for the financial institution?

The truth is, they are not. There is no objective commercial analysis that can justify any of these positions – at least not in the particular cases to which I am referring, and for which I have personal knowledge. These decisions can only be explained, objectively, as smoke and mirror efforts to create a plausible defense to criticism from the FDIC.

And what criticism is trying to be avoided? Criticism against doing exactly what these banks, bankers and their attorneys are, in fact, doing. Pursuing recovery strategies that are NOT designed to maximize recovery for the financial institution (and avoid loss to the FDIC insurance fund).

On a very simplistic level, I get it. The FDIC, as Receiver for various failed banks, has taken to suing senior officers and directors, and in some cases their attorneys and professional advisors, seeking to impose personal liability for mismanagement resulting in loss. Often there are questionable loans to friends or cronies of bank insiders that have resulted in millions of dollars of loss to the financial institution, and ultimately the FDIC insurance fund. [None of the loans referred to above were to borrowers/guarantors who had any relation to any bank insider.] A recurring allegation, in support of the FDIC’s claim that these senior officers, directors, attorneys and advisors should be personally liable for the loss is that they breached fiduciary duties owed to the institution by failing to take adequate steps to protect the bank from loss, and in many instances “made no effort to pursue the guarantors.”

Taking an overly simplistic view of this allegation, a growing number of senior officers, directors, attorneys and advisors appear to have developed a strategy that is essentially this: “If the FDIC is going to assert as a basis for personal liability that “no effort was made to pursue the guarantors,” then we will just simply NEVER release a guarantor, and will always pursue the guarantor, come Hell or high water, even if we could improve and maximize recovery for the bank by working out a compromise that includes a release of the guarantor from personal liability.”

The underlying justification seems to be: “If I have to choose between the bank [or the FDIC] losing more money, or me being potentially personally liable for not pursuing a guarantor, I am going to protect myself every time. Damn the guarantor – and damn the bank’s balance sheet [and damn the FDIC insurance fund]. I am going to pursue the guarantor to the ends of the earth so the FDIC can never allege in a complaint that I “made no effort to pursue the guarantor.”

To the non-critical eye, this approach may appear to make some sense. Recognize, however, that the legal theory underlying the FDIC allegation of personal liability for failure to pursue the guarantor is that these litigation targets breached their fiduciary duty to the financial institution by failing to take adequate steps to mitigate loss and maximize recovery. It is the purest form of breach of fiduciary duty to sacrifice the best interests of the bank – by declining a workout plan that maximizes recovery – just so you can be in a position to say to the FDIC: “But I pursued the guarantor!”

In the three circumstances I described above – and there are many, many more of the same ilk – how difficult is it going to be for the FDIC to recast the allegation in support of personal liability of senior officers, directors, attorneys and advisors, that they breached their fiduciary duties to mitigate loss and maximize recovery by declining viable workout plans that did just that.

This truly has become the “March of the Mindless“.

The legitimate way to avoid criticism from FDIC regulators, and to avoid exposure to personal liability for breach of your fiduciary duties to your financial institution (and, under loss sharing arrangements, for breach of your duty to mitigate loss to the FDIC insurance fund) is to genuinely act in a prudent manner to maximize recovery, and thereby mitigate loss.

There is no mechanical formula. Each loan, and each workout scenario, must be evaluated based upon its particular circumstances. The objective, always, must be to maximize recovery for the financial institution. Actually maximize recovery. You may not avoid all losses, but you can mitigate loss by pursuing a workout plan that, in fact, is objectively designed to maximize recovery.

My approach on behalf of distressed borrowers and guarantors in loan workouts for seriously distressed loans is, and always has been, to help you maximize your recovery, in return for you releasing the borrower and/or guarantor from further liability so bankruptcy and financial ruin can be avoided. It is not a pretty circumstance for either party – but prudent cooperation all around will give the best possible result for all concerned. This is not a zero sum game. Maximizing loss for the guarantor is not the same thing as maximizing recovery for the bank. The first rule of successful negotiations is to focus on the benefit you receive, not the benefit the other party receives. Why would it be bad for the bank that the guarantor avoids complete financial annihilation? Just do what is right for the bank. Comply with your duty to maximize recovery; by genuinely maximizing your recovery – and move on to the next troubled loan. I’m sure you have plenty.

Thanks for listening,