Netflix is an online streaming platform. Where subscribers pay to stream movies, dramas and tv shows.

The platform is assumed to be driven/guided based on financial analysis and not run by creative demand lag.

It means the finance team’s opinions and work is given preference over creative team. Not that any one of them is less or more in their work.

Both are different domains and there can be no comparison between both.

Also, just because finance team is given preference, the creative team should not try and be creative with their work. It does not mean that rather that the work that is moderated to generate financial results, mainly.

In work process it means that finance teams get to make evaluation of positive returns after the creative teams have created and made innovative original content (movies, dramas, tv shows).

The creative team tries to make the best creative content one that streams and obtain finance approval fast. It makes the decision sturdy and robust in both terms, create-innovative content and generate positive returns as compared to other similar shows that compete for streaming.

Once the creative team creates the best content and also succeeds in getting the finance approval. All based on FP&A team’s financial analysis of produced content. With creative team’s expectation that it will likely generate the positive returns.

In next step they do detail financial forecasts to find out:

▪ If this creates sufficient revenue to reach break-even point sooner?
▪ or is it able to reach enough subscriber growth?
▪ what kind of impact does it create?
▪ and how far is the reach of that impact?

How would they possibly be doing detailed financial forecasts for high-budget productions?

Picking on the first factor to see the potential subscriber growth.

Potential subscriber growth is linked to a market segment that has potential customers/buyers willing to make a purchase or likely to make a purchase, based on their needs.

If we explore the semantic relationship and find the profound meaning of the words growth, customers, persona, customer segment and market. There would be countless combinations and meanings, varying for every sector.

Here market can be thought of as entertainment industry, where all types of customers/stakeholders are:

a. The creators
b. The actors
c. The singers
d. The purchasers
e. The admirers
f. The content consumers

Then comes the next stage of making evaluation, if in that market, which ones are the likely customers (potential leads) that can be converted into sales.

It could be evaluated based on this customer association with entertainment industry, then making cross-referencing to various demographics/psychographic factors. Such as common ones, the location, the color, preference, the food, buying behaviour etc.

Once a customer profile (customized customer persona) is created/drafted/sketched. Then comes the testing phase, how well a customer is making a purchase of certain product/streaming service.

It means, the effective coordination of marketing & finance team, creating collaboration & developing a meaningful synergy.

So, once it is narrowed down, let's say, from:

▪ market (entertainment) >
▪ personas analysis >
▪ potential customer >
▪ creation of potential customer persona.

The potential (estimated) sales number can be generated.

Arbitrary/illustrative numbers ->

So, the market size (entertainment) is 500K,

the types of personas are 100K,

the potential customers are around 300K,

and the creation of potential customer persona from that 300K (potential customers) are approximately 200K.

It says that there are 200K potential customers in a particular market, who can make a purchase of the particular high-budget production show, let's say it is the Stranger Things.

Continuing with the previous example of 200K potential customers in a particular market (entertainment industry), that shows the potential subscriber growth leading to monthly costs, expenses and earning numbers.

It assists the FP&A teams in creating the detailed financial models.

This was one of the factor that FP&A teams use to make evaluation for Netflix.

Another one is Retention impact for existing members.

This factor is evaluated when two aspects are aligned and complement each other.

First one is having the existing base of customers (subscribers).

Second one is gathering available data and making meaningful analysis.

This two step strategy assists in creating financial forecasts that eventually evaluate the retention impact for existing members/customers/subscribers.

It means, this two step strategy (in second factor) lets Netflix to determine how much impact is being created by existing members/subscribers/customers in streaming business.

All the existing members of streaming movies/dramas/series on Netflix mean:

1. Strong foundation of subscribers/customers.

2. A steady monthly revenue.

3. Views on streaming content is maintained because of existing members/subscribers.

4. It creates the history of member/subscriber, which assists the algorithm in recommending the most relevant shows/movies/series on streaming.

And if these above points are converted in numbers, it would show the number of subscribers, the revenue generated through their consumption, the number of views maintained & adding value to the new ones, and creation of historical data for analysis.

One that eventually sets the pace for future financial and non-financial decisions.

The last factor that FP&A teams evaluate is when they make detailed financial forecasts, Expected Cost-to-Revenue Outcomes.

This one is quite simple to evaluate; it is about finding the total expected costs against the revenues.

Since the FP&A teams would already be making detailed financial forecast models. It would be inclusive of all the details already.

But evaluating the expected cost-to-revenue outcomes for different years they would focus on growth, profit and the costs — one that they would monitor continuously.

Once costs are thoughtfully evaluated, there are possibilities of generating insights around how to reduce costs and increase revenue.

FP&A teams try to evaluate these factors by creating financial models, where they use historical performance data, evaluate trends prevailing in industry, and do some predictive analysis.

This historical performance data mean data in financial statements.

Gaining insights from industry trend means recognizing the trends prevalent in streaming industry.

It tells about contemporary general demand of the customer within streaming industry.

Why is this important? because when trends are quantified with numbers, it tells which trend will make it to the attention economy, subsequently gaining enough traction that it converts the lead to sale or at the very least, increase the number of views.

Once these numbers are quantified, they are matched with the relevant financial drivers of financial statements. Giving them insight if which trending content brought more views/sales in the streaming industry.

This would enable FP&A teams to finalize the most relevant content in their content stack for approval (after all their internal working on the project feasibility is done).

And they would also run predictive analytics wherein which same data is analyzed by adding some variations and taking into consideration all the related factors that may get influenced.

This data is continuously created and worked upon, so that the FP&A teams are able to make informed decisions, when they make financial approval and decisions if which streaming series should end or not, and when.

Some basic decision-making pointers in this is to see if the streaming series are able to meet the financial targets or not.

And those financial targets are directly proportional to following factors discussed above, that is, subscriber growth, retention number for existing members, and cost-to-revenue ratios.

These factors make decision making easy for FP&A teams. So they use financial modeling as a key decision making tool, in addition to doing financial forecasts.

It worked for Netflix. And enabled it to make healthy content-related investment decisions. Something that assists Netflix to increase their growth and consequently the profitability.

Summary,

FP&A teams use financial historical data to:

1. Create financial forecasts.
2. Use them as a base to approve the best content (means considering following factors: Creativity, demand and potential profit).
3. Perform predictive analysis.
4. Use the evaluations as a decision-making tool.
5. Work for long-term sustainable growth.
6. Work on profitability.
7. Prioritize investments in content.

[The end.]

Analysis & Review by Rimshah Rehman

If you have made it to the end and would like to discuss, share thoughts or just want to add, I am happy to learn.

Drop a comment, or email me at: rimshahrehman@gmail.com

Note: It’s a first draft and in edit phase.

Document Reference: https://lnkd.in/dhBBhmcR

Key Words:

1. Online streaming platform
2. Creative demand lag
3. Financial analysis
4. Finance team
5. Creative team
6. Financial results
7. Creative — innovative value
8. Positive returns
9. Finance approval
10. Financial Planning & Analysis
11. Content produced
12. Positive returns
13. Financial forecasts
14. Subscriber growth
15. High budget
16. Productions
17. Semantic relationship
18. Content consumers
19. Potential leads
20. Psychographics
21. Customer persona
22. Finance team
23. Meaningful synergy
24. Financial models
25. Retention impact
26. Monthly revenue
27. Historical data analysis
28. Cost-to-Revenue Outcomes
29. Predictive analysis
30. Financial statements
31. Streaming industry
32. Relevant financial drivers
33. Streaming series
34. Investment decisions

Tags:

#CaseStudy #Netflix #FinancialPlanningAnalysis #Forecasting #ContentProfitability #Streaming #OriginalContent #PostiveReturn #Budget #StrangerThings #FinancialForecasts

#FPATeams #Potential #SubscriberGrowth #Costs #Expenses #RetentionImpact #TwoStepStrategy

#CostToRevenue #ExpectedCosts #Revenue #Inclusive #GeneratingInsights

The article was posted on November 14, 2026, 11:16 PM

This case study is based on public financial data, investor briefings and technology related public announcements from year 2022 and 2023.

This detail is usually important because it ensures the data is gathered through ethical means. And if the case study analysis does not match the real numbers or situation of the company then it would not mean an incorrect analysis. But a case study based on best publicly available information.

Also, this case study is about improving financial planning based on key factors. These factors can be related to operational drivers (finance related), business related (HR, merchandising, logistics, technology), economy related (macroeconomic factors).

All the data is specifically from year 2022–2023. It means the analysis of case study may change if the new & quality data is added the very next day, which is 01-January-2024. Also, considering that the data is of huge significance. It would add certain nuance in analysis.

It begins with stating some background on the company.

1. The type of business → Retailer

2. World ranking → by revenue.

2. What it aims to achieve → Modernize financial planning & forecasting process.

3. Which possible factors influenced the business → Fluctuating consumer demand, inflationary pressures, supply chain disruptions.

4. What lacked in their budget process → Flexibility, slow reaction times, reduced forecast accuracy.

5. Approach applied, based on those lackings. → Deployed driver-based financial forecasting.

6. Resultantly, what was achieved. → Agile, transparent, and analytics-driven planning environment.

For this case study, background gives detail about the company, and the main challenge, which is about improving revenue. To do that they realize to improve their internal financial processes. And tried to find out all most relevant and possible factors.

Like budgeting needed improvement and the external factors that were influencing budgeting process such as market and economic related factors. So, they worked with the technical aspects (financial metrics & formula) of financial statements to work on better forecasting.

Once, that was done, it created effective financial planning. And it proved to be effective, because it was data driven.

So, the connection flows like this:

Revenue problem (Financial management)
→ Solved with better financial planning
→ Specifically budgeting section in financial planning
→ Used creative data analysis system
→ It made better financial planning environment

Since Walmart found out it was their budget section in financial planning that needed improvement. They went from static budget system to dynamic budget system.

One that would provide real-time forecasts.

Let’s say a dynamic budget is set up. Where all numbers are interconnected with each other. And this budget data is connected to real-time financial data of company.

So, if new sales come into their system, that sale would automatically be logged into their budget dashboard, giving real-time update. And then with that addition, it will make necessary changes in all forecast numbers for subsequent years in that dashboard.

Same goes for cash, cost, investments and other similar factors in financial statements.

This means they would not have to wait for a month to end and spend 2 or 3 days to put in right numbers and then see the forecasts for subsequent months, evaluating the changes and deviation from existing forecasts.

If all this is specifically defined, it means:

1. Linking operational drivers to financial outcomes.

Here operational drivers can be sales, cost, expenses, etc. They can be linked to budget forecast dashboard and ascertain the real-time financial impact on business and its operations.

2. Improve forecasts and responsiveness across business units.

Once live budget forecasting dashboard is created, it means employees of Walmart get access to accurate forecasts at all times. The very element that would increase their business units to make informed and better decisions.

3. Enable scenario planning to prepare for inflation, labor cost shifts, and product mix changes.

Along with improved forecasting planning, real-time budget dashboard would make it easy for the reviewers and planners to draft better & informed scenario plans for different factors such as inflation, labor cost shifts, and product mix changes.

That means, if inflation increases with certain percentages, how would that affect the sales and subsequently all other data driven financial metrics.

Same goes for labor costs, if they increase/decrease, what overall impact it would create and what possible financial outcome are expected.

Similarly, if product mix changes are added, either in the form of increased revenue stream or a product being shelved (no longer valuable for selling), then what impact it would have on all the financials?

Once objectives have been clarified (see previous post), then comes the section of strategic actions.

Here, as part of strategic actions, Walmart got the financial planning software/system/feature with advance level data analysis.

Which lead the teams to:

1. Identify key business drivers.
2. Create forecasting engine based on drivers.
3. Create integrated planning system.
4. Do Scenario Analysis and What-if Modeling.

As part of identifying Key Business Drivers, Walmart’s finance team mapped the Operational Levers to the most relevant Financial Metrics.

Operational Levers — Financial Metrics

1. Foot Traffic Revenue
2. Basket Size Cost
3. Fuel Prices SG&A Expenses
4. Wage Rates
5. Supplier Terms

Doing this led them to update their financial metrics in real time.

So, if the foot traffic increased and converted into sales, that sale would be recorded as part of revenue in financial statement.

If fuel prices increased, that means their transportation cost will increase and that would be recorded as part of expense in financial statement.

This meant they would have to digitalize all the operational levers also to their source points.

Assuming they ran digital ad, which got one customer, who came querying and then made the sale.

So, from the point of that ad getting posted on digital platform, to customer reaching out, querying and making sale.

All this interaction of customer would be mapped to CRM or similar software, and that CRM/software would be connected to financial statement dashboard/forecasting engine, showing sales.

Hence providing real time impact and forecasts.

Second strategic action as part of case study is ‘Driver-Based Forecasting Engine’.

It means connecting the drivers such as operational levers (revenue, cost of goods sold, SG&A) with financial metrics in Profit & Loss Statements, that derive profit & loss outcomes.

It was explained earlier as well in identification of key business drivers. But, here, it is specified. That all this will be done through predictive models (think of financial dashboards).

So, assuming one made a financial dashboard, specifically a predictive model. In which the following driver inputs are mentioned i.e. quantity of foot traffic, basket size, fuel prices etc.

The historical record + ongoing record. Then they are linked to profit & loss statements, to find out potential outcomes. But all this is based on former historical fact-based data.

Let’s say, 5 huge baskets brought 10% of Q1 revenue.

So, in predictive model it will be considered as baseline data, so that future predictions can be made.

Here, if we try and create a predictive model (quite basic for — understanding purpose) based on this, it would be assuming that if 5 huge baskets brought 10% of Q1 revenue.

Then 10 huge baskets in Q2 would bring ~15% of revenue (considering adjusting factors).

This one is just representing increase in financial metric, product and the name of quarter.

But if a layer of location is added.

Such as ascertaining revenue forecast for every store in different regions.

Then the predictive model would expand in horizontal analysis.

Whilst in vertical analysis, it would only exhibit the revenue by quarter.

Third strategic action in Walmart’s Case Study is, ‘Integrated Planning System’.

Here they connected all departments, their planning and requirements forecasting with the drivers (operational levers such as foot traffic, basket size, fuel prices, wage rates, etc).

And those drivers were already connected to financial metrics (such as revenue, cost of goods sold, SG&A expenses etc).

It goes like:

Department wise plans (connected to) → Drivers (connected to) → financial metrics (connected to) → Dashboard.

It is more like integrating the dashboard all the way to core of business.

Where departments make the core of business, for it is the point from where the business is managed and carried out.

Since they are profoundly connected with business and create impact on overall financials of the business. I think it would have been only considerate to put their plans along.

Which means each department does their own forecasting for the year ahead, whether it is about recording prepaid expenses, or probable accrued expenses.

Staff hiring or any changes within the department financial or non-financial. They create a plan and do forecasting based on it.

And those are linked to business drivers (operational + others) that create impact on financial metrics. Which are updated as they happen and reflects on financial analytics dashboard, streaming continuous and up-to-date data.

This tells, that if a department posted a plan with some requirements and financials, it would reflect in the driver inputs, it would update the financial metrics accordingly and the whole subsequent forecasting.

For example, a department posted its plan and requirements for the year ahead in a software (internal), that software would be connected to CRM (a source point, where customer activity would be posted about sales and all).

And the CRM would be connected to the Financial Statements on Dashboard.

This means their forecasting will be streamlined in real time and connecting all units together, reflecting impact on financial dashboards.

What this would do?

It would bridge the gap between current data and static forecasting data.

Giving teams/departments real-time insight on available data. Enabling them to make informed, coherent and decisive decisions.

Overall, this seems more like a streamlining strategy at all interaction points and data-based, analytical & informed decision making.

Fourth strategic action in Walmart’s Case Study is, ‘Scenario Analysis and What-If Modeling’.

This fourth strategic action works on the idea of creating interactive dashboards. Where ‘Scenario Analysis’ and ‘What-If’ financial models can be created.

‘Scenario analysis’ and ‘what if’ modeling in financial dashboards mean, taking into consideration macroeconomic factors when creating forecasts.

Macro-economic factors like inflation, minimum wage hikes etc.

This means that a financial dashboard is created showing financial forecasting. And in that financial forecasting, data of macroeconomic factors would be plugged in to forecast the collective impact on financial metrics.

So, lets say, a company has created a historical database of financials and plugged in historical macroeconomic data that includes past inflation percentages, past record of minimum wage rates in different years.

For each subsequent year in past, the corresponding difference would be calculated. Creating a baseline profile for future financial + macroeconomic factors forecasting.

Once baseline profile is created, then whilst creating financial dashboard that reflects future forecasting of different financial metrics, that baseline profile data pertaining to macroeconomic factors is applied.

Creating several scenarios and what-if models. To see if macroeconomic baseline profile data is lowered and matched with financial data to create future forecasts, what results are derived.

And similarly, same goes for when baseline profile data is scaled up means, increased n number, what impact it creates.

All these changes would be made to see if how it all ends up on financial metrics (forecasts) such as operating margin, cash flow and EBITDA.

Usually, these interactive financial dashboards are created for executives to see the impact of various factors on the financial data (at the stage of forecasting).

In next stage of Case Study, few financial metrics and formulas are used.

Probably the most frequent ones in retail business like that of Walmart.

These financial metrics/formulas would be put into financial dashboard. And the numbers reflecting in financial dashboards would correspond from financial statements data and other similar official financial records maintained in excel/similar sheets.

First financial metric/formula they used is Sales per Labour Hour.

It means how many sales on average were made in each labour hour.

What this formula would determine? It would link workforce productivity to revenue.

Here, the point to consider is that Walmart has tied revenue to workforce productivity, but the productivity is dependent on time.

If it would be independent, the formula would have been Sales per Task/projects completed.

It can be written as Sales per task/project completed = Sales / Task-Project Completed.

Since, here the business is retail, and sales are directly proportional to labor hours completed. The formula Sales per Labor Hour is appropriate and compatible.

If we work through the formula to understand its mechanics and the result derived.

First collect the data of total sales per month or per year.

Then collect the data of total labor hours per month or per year.

Assuming, the total sales made were $1,000,000/-
and, the total Labor Hours per month were 360 hours (12 hours per day)

Sales per Labour Hour= $2,777.77/-

These tentative numbers show that Walmart (one store in some region/zone) made Total Sale of $2,777.77/- per Labour Hour.

What they did is connected the workforce productivity to financial aspect (sales) of the work only. Where as there is high possibility, the labour would be working on non-financial (organizing etc) tasks as well. And all the non-financial tasks would reduce the labour hour from 360 hours to less.

Hence, creating the impact on formula, and thereby increasing the number of sales per labour hour (financial).

So, this financial metric/formula does measure the total amount of revenue generated against the number of hours put in by all the labour. And deriving the revenue amount for each labour hour.

What good does this do for Walmart? This financial metric on financial dashboard would reflect the sales made each hour in each store of Walmart each month, with respect to number of labour hours.

Something that could assist Walmart to evaluate the work efficiency of each store and let them plan better in future on sale related strategy or labour hour related strategy.

Second financial metric/formula used in Walmart’s retail business is Contribution Margin per SKU.

It evaluates product-level profitability.

The formula is:

Contribution Margin = (Selling Price — Variable Costs) / Selling Price.

Before, this is discussed, let's find out the revenue earned from sales.

First a product is made, and it incurs cost. The cost can be a variable and fixed one.

Then some earning margin is added, which makes the total price of product, making it a selling price.

For example:

Cost of product: 20 (Fixed cost=15, Variable cost 5)
Profit margin: 10
Selling price: 30

If this data is applied to the Contribution Margin per SKU, it would become:

Contribution Margin = (Selling Price — Variable Costs) / Selling Price

Contribution Margin = (30–5) / 30

Contribution Margin = 20 / 30

Contribution Margin = 4 / 6 or 66.67%

This formula first reduced the variable costs from the selling price.

Creating a baseline for fixed price of specific SKU (product or service).

Once that is determined, then divide it with the total price. It would give the estimate of contribution margin in selling price. The contribution margin here would be akin to fixed cost price. Which would be 0.666 (66.66%) and on deducting it from 1. The remaining would be 1–0.6666 = 0.3334 (33.34%).

Stating the amount of profit margin (33.34%) generated from fixed cost price (66.66%).

If we connect this assumption based analysis with conceptual line. It would be described as:

Product A costs (fixed price) 66.66% of total selling price. And based on this price, it generates the profit (33.34%).

(Please, note this selling price is being assumed at 100%, after deducting the variable costs price. If variable cost is included, the total selling price would be considered at 100%).

Assuming another Products Costs and Profits.

Product B costs (fixed price) 70% of total selling price. And based on this price, it generates the profit (30%).

Here, if comparison is done between Product A and Product B.

Product A Product B
Costs: 66.66% Costs: 70%
Revenue: 33.34% Revenue: 30%

It shows Product A is comparatively generating more profit than Product B.

This product level profitability assessment for all available products can make the evaluation fast for leadership and decision-making teams.

Third financial metric/formula used in Walmart’s retail business is Forecast Accuracy (%).

It measures variance between projected and actual results. It could be for collective sales or sales per product or service.

Assuming this forecast accuracy is being gauged for three different products & services. That is Product A, Product B, Product C.

The formula is,

Accuracy = [ 1-( | Forecast — Actual | / Actual ) ] x 100

If tentative values are put in for brief analysis. It would be:

Forecast of sales unit = 950
Total sales made = 1,000

Product A Accuracy = [ 1 — ( | 950–1,000 | / 1,000 ) ] x 100 -> Finding Difference

Product A Accuracy = [ 1 — ( 50 / 1,000) ] x 100 -> Calculating Relative Error

Product A Accuracy = [ 1 — ( 0.05 ) ] x 100 -> Measuring forecast accuracy

Product A Accuracy = 0.95 x 100 -> Converting to percentage

Product A Accuracy = 95%

This shows that Product A forecast was 95% accurate, with the actual sales that happened.

So, even if the sales were more, lets say 1,000, the forecast was done at 950 sales of product A.

It means the product A sales were under forecasted. Because in actual there were 50 more sales.

But here, increase would not be treated as growth but error. Because this formula is calculating the accuracy of forecast.

Therefore, when the sales were forecasted at 950 but actual were 1,000. The increase of 50 units would be treated as error from Forecast Accuracy (%).

And when evaluated in terms of percentage, this error is translated into 5%. Once reduced from 100% of accuracy forecast, the result becomes 95%.

This tells that the Forecast Accuracy (%) for Product-A was 95%.

Assuming the Forecast Accuracy (%) for other products, it would be:

Forecast Accuracy (%) for Product-B = 98%
Forecast Accuracy (%) for Product-C = 90%

Product C shows the most error or difference in results between forecast to actual.

Whereas, Product B shows the least error difference in results between forecast to actual.

This insight across different product lines for walmart will be crucial information for making decision And evaluating the performance of each product.

Enabling the walmart to identify the difference in their expectation of sales and the actual sales happening per product.

And this can be further elaborated for robust analysis when the factor of per product sale is evaluate location wise, and in different time durations/seasons/quarters/one-off events.

With the results available on forecast accuracy (%) for each product, walmart will be able to evaluate the work efficiency level of its employees, the overall operations and supplychain departments.

And working on this difference will assist them to make better plans, become more cost aware and efficient in their work processes.

Fourth financial metric/formula used in Walmart’s retail business is EBITDA Margin.

It tracks operating efficiency overall. Though, if one intends to find the operating efficiency of each product, they can do so by creating financial statements product wise. Where revenue, costs and expenses would be recorded exclusively for one product.

Also, if a business wants to find out the operational efficiency per store or per location, they can do so by creating financial statements specific to store (area) or location (city or country).

EBITDA per definition is, ‘Earnings Before Interest Taxes Depreciation & Amortization’

Think of it as a Sale amount, from which Cost and Operation expenses are reduced. But Depreciation and Amortization expenses (related to asset purchase) are added back.

This means a company gets to find out what they earned from a sale (here we are considering single sale) eventually after the cost and operation expenses are deducted.

But the partial amount of assets is added back (perhaps to inflate the sales earning or to dilute the effect of asset expenses, that if deducted, would have indicated, that certain permanent assets were used to generate that sale amount. And when added back, it shows that sale earning is shown here, regardless of input of assets used to generate the sale.)

So, it is showing earnings of a sale after reducing cost and operation expenses, regardless of which or how many assets were directly or indirectly used or assisted in making that sale.

When applied to formula EBITDA Margin = EBITDA / Total Revenue x 100

The calculated earnings amount (EBITDA) is divided with total sale amount (revenue). Which shows the ratio of earnings amount to sale amount. That is how much sale amount gets converted to earnings.

For example:

EBITDA = 20
Sales (Revenue) = 30

When applied on formula it would be EBITDA Margin = EBITDA / Total Revenue

EBITDA Margin = 20 / 30
EBITDA Margin = 4 / 6

The tentative answer here is 4/6. It means the earning amount to sale amount ratio is 4/6 or 2/3. This shows that for every sale which is equal to three parts, two of its parts account for earning amount and one part accounts for cost/expenses amount.

This formula is usually used for investor analysis and companies' comparison, and usually the results are different because companies of different sizes have different capital structures, different (customized) finance and accounting practices are followed, though, they are indeed ones which are in compliance with international accounting standard framework.

These four financial metrics and formula discussed in previous posts:

a. Sales per Labor Hour
b. Contribution Margin per SKU
c. Forecast Accuracy (%)
d. EBITDA Margin

When Walmart deployed these and created interactive real-time financial dashboard, showing data in real-time.

The results by the end of fiscal year 2023 were huge.

Sales per labor hour gave insight into total sales generated in reference to work done by labour, collectively.

Contribution margin per SKU showed how each product was performing in terms of generating earning in comparison to total sale price.

Forecast accuracy (%) calculated product sales forecast number against actual results. Letting the Walmart know how efficient there working was.

EBITDA Margin showed how much their operations were efficient when the cost & expenses value was calculated against each revenue stream.

The overall results they generated:

1. When inflationary changes in economy affected the businesses, Walmart’s planning cycles were +22% faster.

This could mean they were ahead in their planning, because they had real-time data and were timely generating insights on that data. Specifically, the data related to sales.

Because they knew the sales amount location & quarter-wise. With available data, they were able to make accurate forecasts and take timely decisions.

2. Achieving better forecast accuracy % with time across different product categories, Walmart was able to improve higher forecast accuracy percentages especially in following two categories, grocery and household goods.

It would most probably be achieving the insight by working on historical data of customer, if when does a customer purchase which grocery and household goods in which season or quarter of the year.

Hence, working on the demand & supply cycles across stores, ensuring these specific products are available.

3. Walmart was able to save $1.1 billion just by making its labour efficient and working on its inventory management, based on these financial metrics numbers.

It means Walmart collected the sales data and analysed it against the labour work input. And based on this, it generated the insights if how many sales are being made in each work hour and referenced it with available inventory. Making informed & efficient decisions about expenses.

Overall, it proved beneficial for Walmart to adopt driver-based forecasting.

It transformed the way they did financial planning. Now with real-time data and insights.

It increased their profits, work efficiency, reduced costs, and led them to improve their forecast accuracy percentage. The results that saved them billion+ funds, and just accurate capital deployment.

All they did was connecting the operational levers (all the operations related activity) and connected them to financial metrics in real-time.

They worked and responded fast, comparatively and their resource allocation decisions become better.

Nothing was new in finance. It has been going on like this ever since. The new in all of this was integration of technology and leveraging data (analysis) better with time (speed).

Something that scaled-up corporate finance, for Walmart. A proven case study that could be applied and experimented in similar industry or others with required customizations.

[The end.]

Analysis & Review by Rimshah Rehman

If you have made it to the end and would like to discuss, share thoughts or just want to add, I am happy to learn.

Drop a comment, or email me at: rimshahrehman@gmail.com

Note: It’s a first draft and in edit phase.

Document Reference: https://lnkd.in/dhBBhmcR

Key Words:

1. Public Financial Data
   2. Investor Briefings
   3. Financial Planning
   4. Operational Drivers
   5. Forecasting Process
   6. Inflationary Pressure
   7. Supply Chain Disruptions
   8. Budget Process
   9. Financial Forecasting
   10. Agile
   11. Economic Factors
   12. Financial Statements
   13. Revenue Problem
   14. Financial Management
   15. Financial Planning
   16. Budget Data
   17. Financial Outcome
   18. Business Units
   19. Forecasting Dashboard
   20. Scenario Planning
   21. Inflation
   22. Labor Cost
   23. Product Mix Changes
   24. Strategic Actions
   25. Data Analysis
   26. Foot Traffic Revenue
   27. Transportation Cost
   28. Digitalize
   29. CRM
   30. Key Business Drivers
   31. Predictive Models
   32. Vertical Analysis
   33. Integrated Planning System
   34. Prepaid Expenses
   35. Accrued Expenses
   36. Financial Analytics
   37. Streamlining Strategy
   38. Scenario Analysis
   39. What-If Modeling
   40. Macroeconomic Data
   41. Baseline Profile
   42. Financial Metric
   43. Operating Margin
   44. Cashflow
   45. EBITDA
   46. Workforce Productivity
   47. Revenue Generated
   48. Contribution Margin
   49. Product-Level Profitability
   50. Profit Margin
   51. Selling Price
   52. Specific SKU
   53. Fixed Cost Price
   54. Variable Costs
   55. Product Costs
   56. Profitability Assessment
   57. Calculating Relative Error
   58. Forecast Accuracy
   59. EBITDA Margin
   60. Total Revenue
   61. Operating Efficiency
   62. Cost Expenses
   63. Operation Expenses
   64. Amortization Expense
   65. Asset Expense
   66. Earnings
   67. Sale
   68. Capital Structure
   69. Accounting Practice
   70. International Accounting Standard
   71. Framework
   72. Revenue Stream
   73. Inventory Management
   74. Capital Deployment
   75. Resource Allocation

Tags

#CaseStudy #Finance #Analytics #Walmart #FinancialPlanning #DriverBasedForecasting #2022 #2023 #DigitalDefynd #SCQA #Framework #Analysis #Review #FinancialData #InvestorFindings #Briefings #Technology #MacroeconomicFactors #OperationalDrivers

#FinancialAnalysis #Walmart #Retailer #Revenue #Forecasting #ConsumerDemand #InflationaryPressures #SupplyChainDisruptions #ModernFinancialPlanning

#ForecastingProcess #BudgetProcess #Flexibility #ForecastAccuracy #FinancialForecasting #Agile #Transparent #AnalyticsDriven

#BudgetSection #StaticBudget #DynamicBudget #RealTimeForecasts #Interconnected #FinancialOutcomes #Sales #Costs #Expenses #FinancialImpact #BusinessOperations #Responsiveness #BusinessUnits #Inflation #LaborCostShifts #ProductMixChanges #DataDriven #FinancialMetrics #RevenueStream #Financials

#Objectives #StrategicActions

#DriverBasedForecastingEngine #Drivers #OperationalLevers #Revenue #CostOfGoodsSold #SGA #PLStatements #PredictiveModels #BusinessDrivers #FinancialDashboards #PotentialOutcomes #RevenueForecasts #HorizontalAnalysis #VerticalAnalysis

#IntegratedPlanningSystem #Departments #Planning #Forecasting #OperationalLevers #Drivers #Revenue #CostOfGoodsSold #Expenses #DepartmentWisePlans #FinancialMetrics #Dashboard #Business #CRM #FinancialStatements #CoherentDecisiveDecisions #StreamliningStrategy #InteractionPoints

#FourthStrategicAction #ScenarioAnalysis #WhatIFModeling #InteractiveDashboard #FinancialModels #FinancialDashboards #MacroeconmicFactors #Forecasting #Inflation #WageHikes #FinancialMetrics

#FinancialReview #FinancialMetric #Formula #Retail #ContributionMargin #Profitability #SellingPrice #VariableCosts #CostOfProduct #ProfitMargin

#Retail #EBITDAMargin

#SalesPerLabourHour #ContributionMargin #ForecastAccuracy #EBITDAMargin #SalesGeneration #SalesPrice #RevenueStream #InformedDecisions #StoreLevelInvestments #Insights #AvailableInventory #DeployingCapital

#Conclusion #DriverBasedForecasting #FinancialPlanning #RealTime #DataAnalytics #OperationalLevers #Connected #Technology #ForecastAccuracyPercentage #LeveragingData #CorporateFinance #Customization

The article was posted on November 07, 2026, 06:18 PM

Frameworks work effectively when they are followed in true letter & spirit. They define the structure, the limitations, within which policies, procedures, controls, relevant measures can be made.

Here in Technology Risk Management Framework, the central bank has ensured that Payment Institutions (all financial companies involved with payments) are robust at their governance & oversight level in payments.

This is made the foundation, so that the direction can be set.

Something that is subtle control vanishing point for payments institutions (PIs) to follow.

Under Governance and Oversight, the board of directors are required to have some experience in Technology Risk Management & Cyber Security.

Given all the payments are absolutely digital these days. This measure seems quite plausible.

◾Also, based on the experience in Technology Risk Management, they would be able to perform their duties well, that is:

a. Keeping relevant and updated policies, procedures and controls in place.

b. Evaluate capabilities of senior management with respect to managing technology risks.

c. And always ensure to have firms audited with independent audit firms.

◾Once the technology risk management defining work is done, then it gets to senior management.

They are responsible for:

a. Developing, implementing and updating policies & procedures.

b. Given the technology risks impending, describe the roles and responsibilities of staff for it.

c. Ensure that Board of Directors are kept in loop at all times regarding any update in technology risk, cyber incidences, anything that may create impact on Payment Institutions.

d. To ensure that Head of IT and Heads of Information Security are competent, updated and possessing sufficient skills & expertise to be at their positions.

Summary: It’s about defining that payment institutions is serious business and people heading them should have relevant skills, experience and knowledge in Technology Risk, Management and Cyber Security domain. It will set a guiding line to carry out rest of the work. Such as hiring and evaluating competitiveness of senior management, who will then define &develop the controls & resources.

When it comes to Technology Risk Management and then making policies and procedures taking that framework (TRM) into consideration.

Those policies and procedures includes all the interconnected aspects to the Technology Risk Management.

Some of them are:

1. Securing information assets.
2. Functionality.
3. Security.
4. Performance.

Related to these following measures are taken:

1. Controls -> for Confidentiality, integrity -> to protect Customer data & processes.

2. Policies -> to address potential vulnerabilities and threats.

3. Systems/channels -> To reduce service disruptions.

4. Dispute resolution mechanism -> To handle customer grievances.

5. Cyber response plan -> to neutralize cyber threat.

6. Outsourcing policy ->To mitigate outsourcing & related risks.

Outsourcing policy may include following:

a. Roles & responsibilities of all stakeholders.
b. Materiality assessment criteria.
c. Vendor management.
d. Risk assessment & mitigation measures (for outsourcing risks) as follows:

i. Contingency planning.
ii. Exit strategy.

Summary:

Technology Risk Management is about taking into consideration all the connected and interconnected domains and aspects.

So, first the aspects are determined to decide on the scope this framework will cover.

Then work begins on measures that will curb the potential threats, risks and maximize the systems outcome, whether that is indirectly service optimization, revenue generation, or creating robust systems.

When the term Technology Audit is used, it means to evaluate resiliency and robustness of technologies.

Their results determine, are they able to deter and prevent potential threats.

The current governance and internal controls are sufficient for deployed technologies.

And that the technologies are up to the mark, and deployed as per policies, procedures, processes and controls.

These technology audits once done, they provide Board of Directors (BoDs) and senior management to form independent and objective opinion on:

1. Technology Risk Management
2. Governance
3. Internal Controls

While those technology audits are done, it is to ensure, that they are designed on same level that meets following criteria of technology systems and applications of companies being evaluated:

1. Complexity
2. Sophistication
3. Criticality

As a result, following gets check:

1. Technology risk management
2. Governance
3. Internal controls
4. IT policies
5. Procedures
6. Processes
7. Controls

Summary: Technology audit is done to evaluate if the technologies deployed are robust enough. Independent technology audits are encouraged to evaluate the systems put in place. And those technology audits shall be designed in a manner that they match the deployed technology system and are sufficient. Once the technology audit is done, it lets Board of Directors (BoDs) and senior management to form their objective opinion and take relevant necessary measures.

Overall it revolves around placing sufficient controls and ensuring non-repudiation.

Controls are placed:

1. To safeguard against following risks

a. Confidentiality
b. Integrity
c. Availability
d. Authenticity

2. To ensure robust Non-Repudiation of

a. Customers’ data
b. Systems
c. Services
d. Applications

Once the overall scope is clarified. These principle aspects can cover for following domains under Technology and Cyber Risk Management:

1. Inventory Management
2. Identity and Access Management
3. Network Security
4. Security Testing
5. Data Security
6. Patch and Change Management Life Cycle
7. Incident Response & Reporting
8. Application Programming Interfaces (APIs)
9. Cyber Threat Intelligence and Information Sharing
10. Cyber Event Monitoring and Detection

If we explore the inventory management domain. It can be done as follows:

a. Maintain record of Key Roles -> Classify them based on -> Level, Criticality, Business Value.

b. Maintain record of Information Technology Assets -> Level of usage, Criticality, Business Value.

c. Maintain record of Critical functions, Processes -> Levels of usage, Criticality, Business Value.

d. Maintain data flow diagram of -> Network resources, inter-connections, dependencies.

e. Conduct risk assessment of hardwares and softwares, depending on their span of life.

All this risk management for Technology and Cyber in Inventory Management signifies that most crucial of the risks are averted by maintaining the record and that too in organized form. Also, by assigning them value from different perspectives (factors). And the purpose to maintain such record is to ensure that the firms are stay up to date on their own resources. Where data for it can be easily accessed and required replenishments, maintenance be done just in time.

Once the data is organized, managed, it becomes easier and quick to evaluate the hardwares and softwares in use. Gives a quick snapshot of their usage, performance, relevance and remaining life.

So, this measure covers the risks that may arise on breach of confidentiality, integrity, availablity of resources and their authenticity. Also, ensures the risk of denial (non-repudiation) coming from opposite parties related to issues such as: customer data invalid, system malfunctioned, services not given, application failed.

In Technology, its not only about creating a system, a software, but also ensuring that it is end-to-end secure. From all perspectives. Beginning from its deployment, record maintenance, maintenance and usage by customers (and all the queries coming from their end especially related to non-repudiation, covering or minimizing that level of risk too).

Identity And Access Management

Everything in technology and cyber risk management is dependent on Identity Management and Access Management.

It is so, because if a user of technology does not have identity defined in technology (ID), that user cannot even use the technology.

This is the first stage of risk management in technology about usage.

Then comes the second stage, where it gets to next level which is about Access Management.

Here, technology user can have identity (User ID) to use technology, but the user can only access the technology or different levels of technology based on the Access allowed to them.

And that Access Level for each user is defined & managed under Access Management in that technology.

So, this is the second stage of risk management in technology.

These two basic layers of security, assists in mitigating the technology and cyber risk.

The core idea beneath these two ensure the Operating Systems (Laptop’s/Computers) or any other tech based software installed is secured. It means that only users with Identity (ID’s) and specific level of authorization to access the systems/technology, can use the ID and access the systems/technology.

So that the users with no Identity assigned (User ID’s) can use the system/technology. And even if they are assigned User ID, they could not access the whole system/technology, but only the assigned access to system/technology. And that too based on their authorization level that they gain access to the system/technology.

And based on this, some measures are taken to ensure that Identity and Access Management, are planned thoroughly to prevent risk management.

Some measures described below:

1. Implement policies, procedures, and controls -> To define and administer access privileges.

2. Deactivation of default authentication settings in systems/software/services.

3. Access to whole system/technology, on principle of least privilege only.

4. Mechanism to inactive systems & remote sessions after some time duration.

5. And incase privileged access is granted, its on need-to-use basis and minimum time duration.

6. Reviewing user access at defined intervals.

7. Put into place necessary security controls, such as centralized whitelist/blacklist mechanism.

8. And introducing Multi-Factor Authentication (MFA) for remote work.

Summary:

All controls, including default deactivation of authentication settings, access based on least privilege principle, automation of mechanism, granting need-to-use basis access only, reviewing user access at regular intervals, necessary security controls, and measures like Multi Factor Authentication (MFA), are put into place to manage identity and Access to the systems/technology.

Network Security

Network security is about ensuring that all things connected to network are secured. It can be as following:

1. Network devices
2. Systems
3. Data
4. Network Traffic
5. Network and System Log
6. Detecting Anomalous Activity
7. Permitted Applications and Services with Validated Needs running
8. Allowed devices (Laptop, desktop, mobile etc.)
9. Ports

And following measures can be taken to secure them:

1. Set a frequency to see if security rules are being followed. -> Network devices.

2. Organize, then segregate systems and data with different level of criticality. -> Network Segmentation

3. Set up multi-layered security model. -> Network Traffic / Data Flow

4. Comprehensively monitor. -> Network and system logs

5. Set automated security alert monitoring system. -> Detecting Anomalous Activity.

6. Implement Anti-malware solutions. -> Data

7. Implement whitelisting solutions, prevent access to malicious websites. -> Applications and services.

8. Permitted connections to network only. -> Allowed devices

9. Scan open and listening ports of network. -> Ports

The above-mentioned content about all connected things to Network show, how for each connected thing a different relevant measure is adapted to secure the network.

It revolves around frequency, organization, segregation, multi-layered security system, monitoring, automation, anti-malware solutions, permission-based access, scanning.

While these are part of the Technology and Cyber Risk Management in Network Security. It has potential to further evolve and become robust by adding more emerging risk management feature such as cryptography, or quantum secure solutions.

Summary:

Network is part of tech infrastructure. Securing its security means to safeguard system against all sorts of threats & potential threats. While ensuring to take sufficient measures so that they can be continuously prevented in future.

The process of safeguard involves listing all the potential things connected with network and then jotting down the potential ways to see how best they can be protected.

Either through prudent & scrupulous approach (referring to measures such as scanning/screening/monitoring etc) or by implementing some software/hardware solution.

Security Testing

When it comes to testing Security, the risk mitigation measures are built around these four aspects:

1. Confidentiality
2. Integrity
3. Availability of Systems
4. Applications

All this for information security.

Following measures are taken:

1. Assessments
a. Risk Based
b. Vulnerability assessments

2. Testing
3. Establishing process
4. Setting scan frequency — complementing system/application criticality and exposure
5. Defined timeframes testing
6. Reporting recurring issues to BoDs/relevant committee
7. Detailed analysis
8. Corrective actions

What outcomes do they achieve:

1. Risk based assessment -> Identification, mitigating vulnerability.
2. Process -> Identification, scanning, scanning frequency aligned to system/application criticality and exposure.
3. Digital services -> Scanning (frequency at least a year).
4. Defined timeframes -> Security testing
5. Recurring issues -> Reported, Detailed Analysis

What happens in process:

1. Mitigate vulnerabilities.
2. Remediate security risks.
3. Systems are updated.
4. Security deficiencies are remediated.
5. Corrective actions.

This whole security testing part under Technology & Cyber Risk Management, is about securing information. And being active at all vulnerable points of external interaction with information/technology. So that if there is a likely potential for some event to happen, it may be prevented.

Summary:

Different measures can be deployed to achieve different outcomes for different aspects.

But regardless of it all, the testing mechanism is built around:

Establishing Controls (Setting frequencies/Policies/Procedures) -> Employing Risk Based Approach -> Making Assessments -> Scanning -> Identification -> Remediation -> Updating Systems -> Testing -> Reporting Issues -> Doing Detailed Analysis -> Taking Corrective Actions.

It can be called a comprehensive framework where the policies and procedures defined based on these would become effective.

However, the most important part here is timely identification & prevention. This is at the core of security testing. While everything else before and after is designed to achieve these two results.

Data Security

◼ Data security means ensuring two things:

1. Data is secure.
2. Data can be retrieved without damage.

To achieve these two objectives,

◼ Kinds of Data one should secure:

1. Critical Business Information.
2. Customer Information.
3. Databases.
4. Payment cards data.
5. Backups of data.
6. Procedures backup data.
7. Data of transactions.
8. Audit trails data.

1️⃣The first step is to ensure the prevention of data leakage.

2️⃣The second step is to ensure that it is secured.

3️⃣The third step is to ensure the data is properly handled, processed, stored, and protected, means back up maintained.

◼ Some measures that can be taken:

1. Data leak prevention mechanism.
2. Place controls for application and database security.
3. Follow payment data security guidelines when storing data.
4. Maintain offline encrypted backup of data.
5. Set frequency for testing
6. Maintain backup procedure as per defined intervals.
7. Ensure recovery without loss of data.

🌿Summary: All payment institutions that deals in data, whether its internal or external data (related to customers) maintained at their data centers. All this shall be secured in a manner so that it can be retrieved later on without damage.

Data can be in the form of information, records, logs, databases, cards payments, backup data, transactions data, audit trails data etc. Then comes the process of securing and protecting data.

And for which several measures are taken in the form of controls, mechanism, processes, encrypting backup data and several similar measures depending on the data. Where the frequency for each process is defined.

Patch and Change Management Life Cycle

Patching is releasing a piece of code, that updates/fix/improves the software or applications.

These patches are released by the creators of software’s/applications, when they come across a issue or some space for improvement.

▪ Process of patching:
1. Identify patches that needs to be deployed.
2. Implement those patches.

▪ Kinds of Patch:
1. Security patches.
2. Bug fix patch.
3. Improvement patch.
4. Update patch.
5. Critical patches addressing threats.
6. Centralized patching.
7. Virtual patch management system.

▪ Different kind of patches needs different timeframe, for example:
1. Security patches need to be deployed as per defined frequency.
2. Critical patches need to be deployed immediately.

▪ Precautions when implementing patches:
1. First test and validate those patches in non-productive environment (demo).
2. Then implement those patches and changes in production environment (live).

▪ General Precautions:
1. Automatically update antivirus and anti-malware.
2. Conduct regular virus and malware scans.

▪ Where are those patches deployed:
1. Technology
2. Software assets
3. Relevant systems
4. Applications
5. Internet-facing servers — Prioritize
6. Software processing internet data — Prioritize
7. Antivirus and anti-malware solutions.

▪ Guideline for effective patching:
1. Put in place a documented mechanism for implementing patches.
2. Ensure patch is applied to relevant system or application.
3. Define timeframes for each type of patch.
4. Deploy critical patches immediately.
6. Ensure all patches are first tested and validated in non-production environment (demo) and then put those changes (patch) in production environment (software/systems).
7. Give priority to internet related patches and then deploy.
8. Use centralized patch management systems (which would be virtual).

These are framework level details, defining the parameters to adhere to when drafting policies, procedures and relevant rules.

Summary:
Patching is the quick and effective solution for fixing errors, making updates, improving software, applications. There are different kind of patches, and they all have different timeframes and prioritization level.

Effective patching is when it is tested and validated in demo environment and then implemented in original software. These can be applied to all technology that runs on code. To keep systems running, conduct & update antivirus and antimalware.

Most effective patching takes place, when it is implemented in centralized production environment.

Slide deck (PPT) can be downloaded here: https://lnkd.in/dAbRFR4P (Note: It is showing removed, but it is not. You may need to sign in to download)

Incident Response & Reporting

Wherever there is tech deployed, there is possibility of cyber-attacks.

▪ Those cyber attacks could be:
1. Ransomware incident.
2. Inaccessibility of critical systems.
3. Security incident.
4. Critical system outage.
5. Infrastructure outage.

▪ How can such cyber incidents be averted:
1. Create response plan — maintain and exercise it.
2. Draft procedure — for response and notification.
3. Draft plan — for critical system inaccessibility.
4. Establish process — to identify and investigate the security control deficiencies.

▪ What measures can be done when the cyber incident has already happened?
1. Conduct post incident analysis — determine impact and root cause of incidents.
2. Plan adequate measures — to avoid recurrence of similar incidents.
3. Report all technology incidents — follow regulatory instructions on incident reporting.

These incident response and reporting measures are taken and planned ahead of the incidents. They are specifically designed for the type of cyber attack. There can be many. Few of them were discussed in previous posts in the form of security challenges from different perspectives, such as network security, data security, and the ones related to identity & access management.

They would all collectively be categorized under cyber risk. Therefore, it is imperative that incident response & reporting measures can be designed for all types of cyber risks. All this based on the notion if what possible kind of cyber attacks could possibly take place.

Anything that is intended by the attacker ranging from slowing down the internet speed or creating even a slight disruption in transmissions or a glitch in IP’s or even increased speed of functions, or creating intentional error in API’s, all this would be termed as Cyber Incident. Hence, one should have incident response and reporting measures ready for all such incidents, even minor or negligible ones as these.

▪ Summary: It is broad framework about incident response & reporting. Where few cyber risks are mentioned, stating if what possible measures can be taken to prevent them. And what measures/process can be taken afterwards if such cyber incidents happen. Also, what do these measures/processes achieve in process.

Application Programming Interfaces (APIs).

APIs is itself an interface. It’s in a document form where instructions are mentioned in a language that computers understand. And these documents are shared through URL link. And usually have passwords for access. Those passwords are called API keys.

There are internal APIs and third-party APIs. These APIs communicate with between two systems or software's.

Now there is possibility that the System is internal and data is being retrieved from software/application/database of third party.

And to make that connection of talking/communication between internal system and third party software/database APIs are used as communication/programming tool. And lets the data communication happen.

Given their peculiarity of connecting two or more software/system/database etc., they are quite famous among technologists. Because with these it becomes possible to create innovative solutions across different sectors.

Here, in this framework, following aspects of API are considered:

1. API
2. Third party API
3. API keys
4. Access tokens
5. API logs

Measures that one can take for API:
1. Perform Risk Assessment
2. Establish security controls
3. Establish security mechanism
4. Protection measures for API keys and Access tokens
5. Set timeframe
6. Strong encryption standard
7. Key management control
8. Security testing
9. Maintain log of all sessions

What these measures do?
1. They control the sensitivity of exchange data and ensures that critical business information being disbursed in secure manner.

2. These measures secure API.

3. Reduce the risk of unauthorized access.

4. Secure transmission of sensitive data through APIs.

5. Conduct security testing of API before it’s deployment in production environment.

6. Ensure that logs record all necessary information at the time of API connection: Identity, date, time, transactions conducted, data accessed. And logs be available for audit purpose.

Summary: APIs are interface that assists in communication between/among systems/software's. They are quite useful when it comes to transfer the data in a secure manner. Often lead to innovative and quite insightful solutions. To use them, connected aspects such as logs, keys are also considered to ensure that the whole communication takes place in a secure manner. Various controls and measures are established, ranging from prevention measures, pre-assessment, testing, management, to recording logs. And as a result, the data is exchanged in secure manner, effectively.

Cyber Threat Intelligence and Information Sharing

The most important part in cyber threat intelligence and information sharing is having information at just right time.

And everything else in its surrounding is the creation of mechanism, to adhere to this concept of getting to the information at just right time.

Because it makes huge difference in preventing any such cyber incident or threat.

The process of cyber incident/threat prevention can be as simple as this:

1. Collecting information.
2. Processing information.
3. Analyzing information.
4. Establish cyber intelligence monitoring services.
5. Participate in cyber threat information-sharing arrangements.

Establishing cyber intelligence monitoring services actually mean collecting information.

It is in the process of collection of information that they are able to prevent the cyber threat, timely. Which means they are able to perform their monitoring services & prevent cyber incident.

So, it all comes down to having the information and then its about what process/mechanism is applied to analyze the information.

It is essential because it create impact on business and IT.

The effective the information gathering system and its processing, the better would be cyber threat prevention.

There can be many places these information can be found or analyzed from, it can range from as vague as few numbers to as specific as identification of the potential incident per se.

Few of these could be (brainstormed with AI):
1. Security feeds
2. Government advisories
3. Industry groups
4. Dark web monitoring

Summary:

At the core of it all is securing the business from possible disruption and that it continues. And keep getting sales from products & services. Because any disruption would affect the services and hence the customers. The affect would then translate on to the sales.

The disruption could be cyber related. Regardless the impact would be similar. And to avert this, cyber security related information is collected by establishing cyber intelligence monitoring services. Which is about monitoring for the purpose of collecting information.

So, essentially its a two step process, but in reverse. Whilst both complement each other.

In descending order it would be:
1. Gathering information.
2. Process and analyze it, which is a form of monitoring.

In ascending order, it would be:
1. Providing monitoring services.
2. Gathering information (whilst monitoring).

Cyber Event Monitoring and Detection

Cyber event monitoring and detection is about ensuring to review and detect any out of line activity from normal operations.

Usually its about reviewing and detecting out of line activity in following places:
1. Logs
2. Baseline profile of IT systems
3. System activities
4. User behavior

How can these logs be reviewed and detected, the potential mechanism:

For Logs Review, establish process:
1. Collect logs
2. Process logs
3. Review logs
4. Retain logs

This mechanism will assist in “payment institutions”, Security Monitoring Operations.

Establish defined login mechanism:
1. Log successful login events.
2. Log unsuccessful login events.
3. Log privilege changes.

And these logging details shall be protected from unauthorized access.

For Baseline Profile of IT System:
1. Establish baseline profile of each IT system routine activity.
2. Then review the routine activity of each IT system.
3. Then see if there are any changes in routine activity of each IT system with regards to its Established Baseline Profile.
4. Once observed, analyze those system activities against the baseline profiles. The possible deviations, the triggers, the duration etc.
5. If suspicious/anomalous system activities or user behavior is found, escalate to relevant stakeholders.

Summary:

This cyber event monitoring and detection system emphasizes on keeping scrupulous checks on User, User Behavior, System Activity Profile, System Activities.

Which comes down to decorous logging of login events. Whether it is successful login events or unsuccessful login events. Their record is maintained so that it can be reviewed and analyzed accordingly.

Also, if some users were given privilege access, then are those login events in line with the defined system. Because essentially, that would trigger the deviation for that particular IT system baseline profile. Which would be clarified based on the access given earlier.

But incase if there is a trigger to baseline profile of IT system activity related to non-privilege access, then that would be a trigger indicating the deviation. Prompting the review team to prepare for escalation of suspicious/anomalous system activity.

Prevention of Digital Financial Fraud Risks

In technology there are two main risks, one is hideous when it happens, it is called cyber risk. This one is related to attack done for stealing information. Another one is apparent and loss is tangible. This one is related to finance. Hence called Digital Financial Fraud.

When cyber attack is done, it could for any of the following reasons:
1. To slow down business.
2. To disrupt the connection.
3. To steal information.
4. To make systems inefficient.
5. To steal money.

It means when something tangible is stolen digitally, it is second stage of attack. Because the first stage is the cyber attack itself. That is breach of system security and accessing the unauthorized access.

And in order to prevent that second stage of attack, which is prevention of Digital Financial Fraud Risk. Specialized end-to-end process shall be designed for preventing digital fraud risk.

Something which would usually be linked to the customers, if the funds involve belongs to customers. Therefore, in that end to end process design, customer complaint management shall also be taken into consideration for this risk prevention.

To prevent the digital fraud risk and if happens, then manage the customer complains, the process may involve:

1. Monitor -> digital financial activities continuously.
2. Prevent -> Any possible digital financial attack in advance.

Despite prevention measures, if some activity happen, then detect.

3. Detecting -> Any out of baseline digital financial activity.
4. Respond -> To that financial activity and complains & queries immediately.
5. Remediate -> Incidents of digital financial fraud.

Some of the ways Digital Financial Fraud Risks can be Prevented:

1. Establishing Governance of ‘Fraud Risk Prevention Function’
2. Taking Fraud Prevention Measures
3. Putting into place mechanism of ‘Fraud Detection, Response & Recovery’

Summary: When any cyber incident happens, it is a two stage incident. First, it is a breach of security, which is accessing unauthorized access and then it is second stage, which is determining which function/part/aspect of digital was affected. Whether it was to take information, to take funds, to slow down business, etc etc. Once that is clarified then prevention of digital fraud risk mechanism shall be put into place, customized for each type of second stage cyber incident.

Prevention of Digital Financial Fraud Risks

One of the ways that Digital Financial Fraud Risks can be prevented is by:

1. Governance of ‘Fraud Risk Prevention Function’

a. The first thing one can do as part of governance is establish Prevention Function. A system that would prevent digital frauds and all the related risks.

And this Prevention Function (department) would be under senior management. While Board of Directors or a Designated Committee would supervise them.

b. Then get to the work and ensure that it begins properly. Which is building capacity, begin by add and assign resources, purchase necessary equipment/technology, hire relevant talent, create system.

c. Identify the digital fraud risks, categorize them, then create security mechanisms. One that would be designed in a way that it matches the level of risks. Completing requirements for each risk level.

Also, when the identification process is being carried out for digital fraud risks, ensure that they cover digital payments, products and services.

d. Once everything is in order, defined and determined, now carry out detailed fraud investigations. Work through mechanism, identify root causes, take corrective actions, document the whole process.

If all this is analysed in a concise manner:

1. Establish -> prevention function
2. Allocate -> resources, systems, people
3. Enforce -> risk level based security mechanism
4. Perform -> comprehensive fraud investigation

Further elaborated:
1. Prevention function -> Controlled by management, supervised by Board of Directors.
2. Resources, systems, people -> To build capacity.
3. Risk based security mechanism -> In areas of digital payments, products and services.
4. Comprehensive fraud investigations -> Identification, action, documentation.

It could be explained as working on prevention system that is adequately controlled and supervised by relevant authority. Who would then determine the requirements/essentials to run the prevention system. Mainly focusing on fraud related risks in payments, products & services. Following which they would be able to carry out detailed fraud investigations

This sums up the all the basic steps from creation of fraud prevention system to ensuring if any such thing happens despite of it all, then carry out investigations, based on the defined investigation system.

Fraud Prevention Measures

In the process of designing end-to-end digital processes to prevent digital fraud risk, payment institutions take some measures to prevent fraud.

Some of them are:

1. Customer identification — Biometric
2. Customer verification — Biometric
3. Customer device registration — Biometric
4. Customer device registration — using device finger printing/device binding
5. Customer device add/remove option — Mobile App.
6. Customer new device registration notification — Contact (email/phone number).
7. Limitation on number of devices — one account.
8. Limitation on number of accounts — one device.
9. OTP or other Multi-Factor Authentication — Preventing phishing attacks.
10. Transaction limits — increase/decrease after due authentication.

It is about taking security measures such as identification & verification of the user, to protect customer data.

It may include:
1. Sign up/Activation data — Customer using financial institutions product.
2. Customer device — registration and linkage of device to customer data profile.
3. Email address — Modification/Addition
4. Phone number — Modification/Addition

Customer device related measures:
1. Biometric verification when new customer registers device for the first time.
2. Then next time the new device of same customer can be registered using that device finger printing or device binding, so that customer access can be verified.
3. Mobile apps can be used to add or remove the registered devices.
4. New device registration of customer shall be notified to their contact (email or phone).
5. Limits assigned on number of devices using one account. And the number of accounts used on one device.

Customer using device:
1. If customer intends to change the credentials (ID/password), it can be done by:
a. Implementing Multi-Factor Authentication (MFA).
b. Using registered device.

Use Multi-Factor Authentication such as OTP to secure financial and non-financial transaction communication:
a. OTP is fetched when customer initiates transaction.
b. OTP’s are controlled by senders (sender binding control).
c. They prevent phishing attacks.
d. Other forms of Multi-Factor Authentication can be used where OTP cannot be used.

Transaction Limits:
a. Set default transaction limits — digital channel
b. Customer can change transaction limits — after due authentication

Fraud Detection, Response & Recovery

Fraud happens when there is intention of accessing unauthorized access. Then stealing or causing harm to system/speed.

To prevent this, organizations follow frameworks, make policies, procedures, measures, processes and controls.

It ensures, that their systems are safe and secure. Their customers can carry out the transactions seamlessly and quickly.

And if any customer transaction fails because of lack of organization’s system or implementation of mechanism/process.

Then the liability of that loss, will be on the payment institution.

This exhibits, regulator ensures that the payment institutions maintain robust system and procedures when it comes to payments and handling of transactions.

Because if they do not and customer bear any loss, then they will have to take the liability.

It implies, that payment institutions not having robust and strengthened systems, is also a form of fraud.

This means, here regulator made customer secure for its financial assets from fraud that may or may not be intentional by the organization.

Instances when payment institutions would be liable for any loss of customer funds’ and PIs (payment institutions) would fully compensate:

1. Delayed remedial actions.
2. Control failure (blocking digital channels, initiating dispute requests).
3. False customer registration
4. Lack proof of customers’ registered device (for disputed transactions).
5. Transaction alerts delayed and not received in timely manner.

Originating Payment Institution (Liability to pay customer):
1. Dispute not lodged in time (30 minutes of complaint).
2. Customer unable to lodge complain — because no complaint channel available.

Beneficiary Payment Institution (Liability to pay customer):
1. Dispute amount not blocked by beneficiary payment institution, despite the case was lodged by sender within 30 minutes).

Summary:

The liability of customer loss, that happened due to negligence of payment institution, either Initiating Financial Institution or Beneficiary Financial Institution. That particular financial institution (FI) will bear the responsibility.

Several instances are stated above mentioning the points of customer interaction (complaint management, financial account operation, customer device registration, transaction alerts) where such possible negligence may or may not happen.

Outsourcing and Technology Service Provider Management

While working in technology, one can outsource technology management to third party/business partners -> technology service providers.

Common practice among many technology users. Who does not maintain in-house tech based infrastructure, rather, outsource associated tech based work to experts, altogether.

Think of outsourcing cloud based services to expert level cloud service providers, such as Google cloud or Microsoft etc.

They provide customized cloud based services to their customers and become business partners.

And there are a lot of categories that they offer in their cloud products. The choice of on-premises or off-premises, private cloud, public cloud, virtual cloud, and maintaining the redunancy to ensure the 99.99% uptime even if disruption happens in one zone/area/data center.

Therefore, central banks try and ensure that whatever services banks or financial institutions are acquiring from third party, their agreements should comply with the framework set by the central bank.

Something which is designed to ensure customers stay protected, services provided by such financial institutions stay uninterrupted and their designed system is in compliance with the regulatory guideline.

These are the principles that makes the foundation of framework — outsourcing management and technology service provider management.

1. Outsourcing does not become reason of provding sub-standard quality services to customers.
2. Outsourcing does not reduce the technology protection & security, available to customers.
3. Outsourcing does not make financial institutions to avoid tech based compliance with regulatory requirements.

To stay align with these principles, following measures can be taken by the implementing financial institutions:

a. Outsourcing oversight
b. Outsourcing arrangements
c. Outsourcing agreements
d. Third party risk management

Summary:

When financial institutions opt for outsourcing some part of technology to third party/business partners/technology service providers, they are required to abide by rudimentary principle set by central bank in framework (Technology & Cyber Risk Management). The crux of all three principles, is about ensuring quality services, protection & security, and compliance of regulatory requirements.

Outsourcing Arrangements

Financial institutions are themselves trying to make a balance and avert any risk that may pose threat to their business and overall infrastructure.

Then in addition to that when the factor of technology is added in the mix of finance. The expertise, knowledge, skills and experience are different from finance.

A banker and or finance person may not necessarily know all about technology. Yes, financial institutions can surely hire the tech person, but then again, the tech person working in financial institution does not become acquaint with finance or banking as a banker does.

Therefore, often a collaborative team is formed where such gaps can be fulfilled. A team of finance and tech people, where they can share their knowledge skill and expertise to complete the task on hand.

This set up works until something advance or more complicated or specialized skills are required. Or times when time is less, and such internal arrangement cannot be worked out and all this needs to be outsourced. Outsourcing to third party/vendors/ specialized experts.

Because a finance institution cannot be a tech institution at core. Skill set, knowledge, work, training, expertise and mindset are absolutely different.

Then in such situations where outsourcing is done. Then financial institutions have to apply prudent approach.

Ensuring that the work they are outsourcing gets outsourced without reducing institutions, confidentiality, integrity and availability (the core aspects of Technology & Cyber Risk Management).

And when they do, they have to comply with central bank’s framework, which states:

1. All financial institutions shall conduct outsourcing arrangement in compliance with SBP’s framework (if outsourcing is about Cloud Service Providers, then cloud specific framework shall be considered).

2. If financial institutions are entering into any sort of outsourcing arrangement, they should inform the central bank of such outsourcing arrangement.

3. If it is foreign outsourcing arrangement then a written approval shall be taken from central bank.

4. And incase any outsourcing arrangement gets eventually finalized, then that outsourcing arrangement shall be done in a manner that it does not directly connect with institution, rather through some extended connection.

For this one think of creating an indirect customized API, linked to main API that connects with the systems/software of finnacial institutions.

So, it will be like Institution -> Data -> system/software -> Main API -> Link API -> Outsourcing arrangement (software/company).

Outsourcing Agreement

Outsourcing agreement is part of outsourcing arrangement. First companies decide on outsourcing arrangement, once decided it goes to next stage which is outsourcing agreement.

At the decision stage of outsourcing arrangement, financial institutions are required to inform the regulator.

It means financial institution would make a draft and inform the regulator prior 7 business working days.

And then they would be required to draft an outsourcing agreement with their business partner/vendor/third party entity. Normal business case.

But that outsourcing agreement is required to fullfill following requirments of central bank, which are:

1. Central bank will have access to system, information, documents and all things that are related to outsourcing activity.

2. It can conduct on-site assessment of service provider.

3. Central bank can request third party to conduct on-site assessment of related systems/information/document, instead of doing it all on its own.

What this all implies, that central bank is not privy of the financial institutions and their outsource activities.

Rather, they have deployed prudent approach, with a vision to protect the customers and the financial system from any untoward incident.

Because all financial institutions are interconnected with in an economy of any country. They work as financial pillars.

And due to increased digitalization, and interdependency of financial institutions within an economy. There are chances if even any one of them collapses due to whatsoever reason, lets say bankruptcy or untoward incident because of outsource activity. One that financial institution could not detect timely.

In order to avert this from happening. Central banks ensure, that they keep supervision on financial institutions in a more prudent manner.

Summary:

After the outsourcing arrangement has been decided, the next stage is drafting an outsourcing agreement. One which is in compliance with regulators requirement. Where regulator requires financial institution to make these as part of their outsourcing agreement.

One that requires them to provide, direct, timely and unrestricted access to outsourced activity. Let them conduct onsite assessment or an onsite assessment is conducted by the third party.

Third Party Risk Management

Outsourcing any service to service offering company, makes the outsourcing company, ‘Third Party’.

And when Payment Institutions (PIs) deal with third party service provider(s) to outsource any work, there is always a risk involve with the work they would do for the payment institution.

Therefore, to neutralize that risk, some measures are taken and third party risk is managed.

Here, despite of all the precautions and prudent approach that regulator delineated for anything outsourced. And itself being vigilant in supervision. Few guidelines have been described below, which is about safeguarding the critical services.

1. Identify the critical third-party service provider(s).

2. Manage relevant operational risks. — Critical Services

3. Manage relevant financial risks. — Critical Services

4. Ensure effectiveness of risk management process.

5. Implement relevant policies and procedures.

6. Provide sufficient resources.

7. Ensure confidentiality.

8. Ensure integrity of information.

9. Ensure availability of its critical services. — Fulfil terms with Payment Institutions.

10. Make business continuity plans — If outage happens, business can be timely resumed.

11. Make disaster recovery plans — If outage happens, business can be timely resumed.

12. Create a mechanism to regularly evaluate critical service providers.

To identify critical third party service providers, payment institutions can associate risk level with each. Create a list of all third party service providers. Assign risk level to each, such as Risk Level 1 as the basic level of risk. And Risk level 10 as the high level of risk.

In this way, it would become rather easy to work through in critical times, when speed and recovery matters most.

To manage operational and financial risks to critical services, payment institutions can work with the historical data and be prepared. Think of creating scenario analysis models and implementing ‘what if’ models.

Risk management process, policies & procedures are only effective if implemented & followed in vim and vigor.

One of the risk also arises when there is lack of resources and due to which it increases the possibility of breach of confidentiality and integrity of information. Therefore, being informed and mindful of resources & critical services available, depleted or required for future, reduces the risk that comes with lack of sufficient resources.

Since, with third party service providers, one of the risk always remain, that is their non-availability of services. In those times, payment institutions can stay prepared and ensure that their business continues, timely, despite of all the disruption that happened.

Disaster Recovery and Business Continuity

There is always a risk of disaster happening in Technology and cyber. It can be due to attack or inefficiency of companies’ system and its management.

In any case, the results are disruption in business continuity, financial losses and negative impact on business operations.

What areas can be affected and taken care of, to improve:
1. System availability
2. Business continuity
3. Stress volumes
4. Service level objectives
5. Business operations

The negative effects on these above-mentioned areas can appear in the form of:
1. Non-availability of system.
2. Disruption in services.
3. Disruption in business.

What measures can be taken to improves these negative effects:
1. Design IT systems — that meet business requirements, record them in Service Level Agreements.
2. Create business continuity management process.
3. Conduct Business Impact Analysis (BIA) — It analyses the business disruption in different scenarios, quantify its exposure and overall impact.
4. Establish system Recovery Time Objectives (RTO).
5. Establish Recovery Point Objectives (RPO) — Aligned with the results of Business Impact Analysis (BIA).
6. Set up a Disaster Recovery (DR) facility — in geographically diverse zone than PDC (Primary Data Centre).
7. Establish scalable capacity.
8. Conduct Disaster Recovery Drills — Decide on frequency.
9. Analyze Recovery Time Objective (RTO) & Recovery Point Objective (RPO), rectify deficiencies on urgent basis.
10. Minimize RTO (Recovery Time Objectives) to 02 hours.
11. Maintain proper record of drills.
12. BCP and DR to cover various scenarios:
a. Total shutdown
b. Switchover of the primary site/component failure — at the individual system/application level

Results achieve on taking these measures:
1. Systems become available
2. Businesses are able to provide flawless services
3. Achieve goals defined in service level agreements
4. Minimize losses in the event of severe business disruption
5. Handles increased stress volumes.
6. Achieve service level objectives.

To ensure fast Recovery of Disaster and Continuation of Business means, ensuring:
a. System is available.
b. Business continuity management and disaster recovery measures are ready.
c. Testing of disaster recovery plan.

Principle to follow for achieving all of this:
1. Continue to serve customers with minimal disruptions
2. Reduce financial losses to the institution
3. Reduce negative effects on business operations.

Baseline Technology Readiness Requirements of Central Bank

If some payment institution applies for license and gets clearance for pilot stage operations. That payment institution needs to make sure that they meet following requirements. They are baseline technology readiness requirements.

It means to ensure that at the pilot stage operations, the payment institutions are ready to provide seamless customer services atleast. One that covers the basic system and process related requirements of a financial institution.

1. Have Wallet Management System/Payment Service Solution ready.

It means to ensure that customer is smoothly onboarded and provided with seamless & functional payment solutions.

2. Put into place the Transaction Monitoring System (TMS).

So that customer transactions are continuously monitored and checked, and if anything out of line appears (other than baseline activity), alert system gets activated.

3. Have robust security apparatus.

Everything that becomes part of technology infrastructure becomes part of security apparatus, whether it is basic network, applications, database security tools etc.

4. Have active Fraud Prevention Management System in place.

This is a system where set of fraud prevention tools, fraud prevention technologies are designed in a way that they assist in detecting frauds, preventing them and then mitigating the fraudulent activities, by putting into place the prevention measures, within an organization.

It can be done by:
a. Analyzing the data
b. Identifying patterns
c. Triggering alerts for suspicious activity

5. Have Customer Complain Resolution Management System in place.

Develop a process of accepting customer complaints, handling them, processing them, finding solutions, resolving them, asking customers about their opinion on resolution process and any concerns that they may have.

6. Put Fraud Risk Prevention Management Process in place.

There is distinction of Fraud Risk Prevention Management SYSTEM and PROCESS. The first is about making system, designing it (the infrastructure, software's, applications, technologies) in a way that it prevents the fraud risks. The second is about the process that get involves in Fraud Risk Prevention Management.

The process involves:
a. Identification of Fraud — through systematic approach.
b. Assessment (means evaluation).
c. Reducing the risks of fraudulent activities.

So that as a result, the fraud is:
a. Detected.
b. Response strategies applied and
c. Fraud prevented.

Baseline Technology Readiness Requirements — Commercial Operations

If a payment institution decide to begin Commercial Operations, it would require payment institution to complete pilot stage operation requirement, commercial stage operations requirement and then become eligible for Commercial operations stage.

For completion of commercial operations stage requirement, a payment institution needs to complete following process/plan requirements:

1. DR/BC Process:

If due to some reason an organization’s business get disrupted and it could not continue the business operations. Then these Disaster Recovery / Business Continuity processes are designed and implemented.

It ensures that an organization is able to continue its business operations during disruption by implementing Business Continuity Process.

While that is being done, it is to ensure that disruption happens, organization is able to restore the IT systems and data by implementing Disaster Recovery Process.

2. Cybersecurity Plan

Cybersecurity plan is all about preventing cyber security threats. Any attack, minor or major on technology systems will be considered as cyber-attack/ And to prevent it a plan is drawn which delineates how a finance/technology company will protect itself from cyber-attack.

A company needs to protect itself from, Cyber Threats and Cyber Related Vulnerabilities, in all these following areas:

a. Network security
b. Data protection
c. Risk management
d. Incident response

It implies, that regardless of the measures already taken in network security, data protection, risk management and incident response. There always remain a threat, a vulnerability, that needs to be taken care of by continuously updating cybersecurity plan and upgrading systems.

3. Incident Response plan

Financial institution can implement an incident response plan to timely avert the cyber threat or vulnerability that may probably cause some harm to systems and all things associated.

So, what they could do is draft a formal document. And write down all the procedures that may be relevant for all types of incident.

Its listing the incident types and their response procedures.

Assuming there are three different incident types. Then each would require different response and procedure.

As a result, one manages the security incidents in an appropriate manner.

The response plan would usually include:

a. Detection of incident type.
b. Making an analysis of that incident.
c. Apply containment strategy immediately.
d. Then remove it effectively.
e. Begin recovery.
d. Complete all post incident activities.

Essentials for reporting technology incident.

When technology incidents happen, the absolute crucial is to ascertain how to communicate effectively. Communication that is sufficient, not less not more. It’s about being specific and complete, at the same time.

Not over communicating neither understating any information that might be crucial at the time of incident reporting and will essentially assists in resolution.

First priority would be in ascertaining the type, is it Cyber Attack or IT incident.

Then comes to find out about the category of Attack or Incident, is it:

1. Ransomware
2. Data Breach
3. DDoS
4. Website Defacement
5. Upgradation Failure
6. Hardware Failure
7. Patch Upgrade Issue
8. Connectivity Issues
9. Power
10. Data Center Hazards
11. Others (please specify)

And finally what did the attack/incident achieved, it means to find out, what it affected? Something that gives insight into attackers intention of attacking. Hence, the way to mitigate the negative impact fast.

1. Unavailability of system
2. Service degradation
3. Financial loss
4. Data breach
5. Data integrity
6. Others (please specify)

Following this every other detail is of secondary importance, but equally essential such as:

1. Detection date & time.

2. Time and date at which incident was responded initially.

3. Which areas it affected: Customer facing services (products) or non customer facing services (internal systems/apps/softwares).

4. Time duration required to mitigate and contain the incident/attack.

5. If it is vendor dependent that details of that vendor.

6. Now that it has happened, the time it would require to recover.

7. If the recovery is vendor dependent, then mention details of that vendor.

8. If services were dependent on external cybersecurity firm, then mention details of that cyber security firm.

All these would be reported to central bank in case of cyber-attack or IT incident happens. Primary listing, it is about finding out what type of attack it was, what got attacked and what was impacted.

Then its about secondary data, which is to ascertain the data & time of attack and the incident was responded. Which specific services were affected, were those vendor dependent.

How much time would it take to recover, is that vendor dependent too. Gathering details of the vendor. If any cyber security firm was involved, detail of that cyber security firm as well.

Tools that assists in onboarding third party service providers and doing their ongoing monitoring.

When third party service providers provide outsourcing services, there is always a risk involved for the outsourcer. Here in this case it is the payment institution to watch out for risk. So, to mitigate that risk to some level. Which is not direct but indirect. Payment institutions can reduce that indirect risk by staying informed of third party service provider’s business.

Therefore, when the payment institutions are onboarding third party service providers, they have to take certain measures and complete the documentation. In this way they would also be able to conduct an ongoing monitoring.

What they can acquire from third party business provider:

1. Ask them to share their business continuity plans.

2. Their controls related documentation.

3. Know about their business performance and how do they measure it.

4. Evaluate their financial performance — audited financial reports, credit rating reports.

5. Gather other relevant information such as:
a. Data Breach.
b. Service disruption reports.
c. Risk assessment report — on cyber security.
d. Details of their key nth-party service providers
e. Gather reports of their service providers supply chain.

6. Develop questionnaires on cyber and business continuity for service provider.

7. Ask service providers to let you inspect their technology assets and infrastructure — premises.

8. Ask service providers to let you do the non-critical but tailored assessment of their cyber and technology vulnerabilities.

9. Collect following reports/documents/information from independent parties:
a. Incident reports
b. Root cause analysis
c. Remediation actions

10. Reports on technology platforms that third party use to manage their workflows and for monitoring of financial institutions internal controls.

Summary:

When third party service provider offers outsourcing services to payment institutions, they also carry some risk on both levels. On their business level and the services they offer. In order to mitigate that risk, some measures are taken by financial institutions at the time of onboarding them and monitoring them simultaneously.

CONSOLIDATED SUMMARIES

Technology Risk Management Framework: Consolidated summary of all previous posts

The document emphasized that for having robust Technology Risk Prevention framework, it should be set in right order and be directed and supervised from top level, that is Board of Directors. Where they would work on alignment of mission with vision on broader perspective.

They plan, devise and strategise all, including deciding on the competencies of senior management who then goes on to make decisions on policies and procedures to be carried out within an organization. One that ranges from securing information assets to working on functionality, security, performance, policies, and system/channels.

Also on Technology Audit. Which is the crucial of all aspects. It is about evaluating technology systems, their resiliency and designing audits tailored to the tech deployed.

Other than this inventory management is also of critical importance in technology & cyber risk management, because it details everything tangible or intangible per their level of criticality. Whether its organizing records of key roles, assets, functions, data flow or defining their levels of criticality in business.

Technology Risk Management Framework: Consolidated summary of all previous posts

After inventory management comes the Identity and Access Management (IAM). Which is about reducing the overall cyber risk that emanates from unauthorized access breach.

Having this system in place does two things, identifies the person in technology (authentication, authorization and governance) and then determines which person can do what.

It secures the overall network. While network security is about securing all connected components and threats. Applying layered defense mechanism and monitoring it.

Permitting only verified devices & apps. And continuously scan, detect and prevent threats.

Then it is about testing security (deliberate testing to find security issues, vulnerability assessments or audits). To see if all is intact, confidentiality, integrity and availability by evaluating risk based assessments and processes. Applying corrective and prevention measures.

This all includes data as well. But would be considered separately to ensure effective data security. Which means applying principles of prevention, protection and preserving the data simultaneously.

Technology Risk Management Framework: Consolidated summary of all previous posts

Every single piece of information is data regardless of what aspects are being discussed about technology.

Considering patch and change management life cycle in tech, its releasing a piece of code that update, fix or improve software's or applications.

Its a reiterative process where patches are identified and implemented. It can be security patch, bug fix, improvement, update, and critical to security.

On release it is tested in a non-production environment and then deployed in production environment.

Since tech is vulnerable to cyber attacks and possess possibility of various risks such as ransomware, critical system inaccessibility, security incidents, system outages, and infrastructure failure.

One can deal with them with preparedness, compliance, and continuous improvement.

Then comes API (Application Programming Interface). It connects all the systems/applications and softwares, when it is about making them communicate with each other and exchange data. It can be shared via shared link and secured with API keys.

This leads to another aspect of technology which is preventing cyber threat intelligence by sharing timely information. First data is gathered, then processed, analyzed and eventually shared among relevant stakeholders.

Technology and Cyber Risk Management Framework: Consolidated Summary.

Everything in cyber threat intelligence is linked to information sharing. That’s the core. But that information becomes redundant or less relevant when it does not reach its intended place timely, or is not caught (the information of risk) during monitoring and deployment of detection system, then it becomes a problem.

To address this earlier, cyber events monitoring and detection system are established. To detect any out of line activity timely or in routine check, so that it can be addressed and resolve before it escalates any further.

Something that assists in preventing digital financial frauds. Which is about ensuring that they do not happen and therefore the whole system is established that monitors continuously, prevent, detect, respond and remediate incidents of digital financial fraud.

Technology Risk Management Framework: Consolidated summary of all previous posts

Preventing digital financial frauds is about continuous monitoring, prevention, detection, responding and remediating incidents of digital financial frauds.

It would include creating governance mechanism to prevent fraud risks, taking fraud prevention measures, putting in place mechanism of fraud detection, response & recovery.

Then comes the technology outsourcing part, where payment institutions outsource technology to become cost efficient and work efficient. Where they do become so but it all comes at the cost of risks associated with third party.

Therefore, oversight mechanisms are deployed, outsourcing arrangements are made, outsourcing agreement is drafted, and critical measures are taken for third party risk management.

Technology Risk Management Framework: Consolidated summary of all previous posts

Then next in line comes the third party risk management. Which is about ensuring to identify all the critical third-party service providers. Manage the relevant operational and financial risks associated with it. Just so that all the risks could be mitigated.

Then comes the measures taken for disaster recovery and planning drafts for business continuity.

All this is done in effort to mitigate the negative effects of disruptions on business operations. It means to ensure that system is available, plans of business continuity management and plans for recovering from disaster are kept in place.

And all the relevant testing of Disaster Recovery Plan is done timely. Where Disaster Recovery drills are conducted atleast annually. Relevant changes are made, after testing complete switch over at the individual system or application level.

Technology & Cyber Risk Management Framework: Consolidated Summary

Annexures delineating the requirements for payment insitutions at pilot stage operations and commercial stage operations.

For pilot stage operations they would need to have atleast a wallet management system / payment service solution, transaction monitoring system, security apparatus, fraud management system, customer complaint management system, customer complaint management process.

If its commercial stage operations, they would require to fulful all the pilot stage operations requirements at first and then in addition to that the commercial operations requirements.

Where they would be required to have cybersecurity plan, incident response plan in place, along with the DR/BR process and VA/PT process.

They form part of Annexure-I part A. Which is about forming foundation for providing basic finance facilities.

Result of all solutions, applications, monitoring system, security tools, technologies, mitigating fradulent activities, pattern identification, generating alerts, handling customer complaints, forming mechanism, applying systematic approach, deploying risk mitigation measures, improving customer service quality, communicating solutions, or taking preventative measures.

Whereas part B of Annexure I includes, processes, that focuses on business continuity, maintains operations, and does disaster recovery on restoring IT systems and Data.

It may also include blueprints, outlines details, formal documents detailing procedures for response and deployment of automated processes.

Technology & Cyber Risk Management: Consolidated Summary

Annexure — II of Technology Incident Reporting template lists down all the necessary information required to convey in a timely and effective manner.

It ranges from jotting down dates, type, category, identification time, areas it would impact, type of services getting affected in the process and listing down the related stakeholders directly or indirectly involved in it.

Annexure-III lists down all the tools required for onboarding critical third party service providers and monitoring them.

It ranges from collecting information, documenting controls, reviewing financial documents, making risk evaluations, preparing incident reports, finding root causes, and monitoring financial institution’s internal controls.

[The end.]

Analysis & Review by Rimshah Rehman.

If you have made it to the end and would like to discuss, share thoughts or just want to add, I am happy to learn.

Drop a comment, or email me at: rimshahrehman@gmail.com

Note: It’s a first draft and in edit phase.

Document reference: https://lnkd.in/dggQSBUv

Key Words:

1. Frameworks
2. Technology Risk Management (TRM)
3. Cybersecurity
4. Risk Mitigation
5. Technology Audit
6. Governance
7. Internal Controls
8. Cyber Risk Management
9. Inventory Management
10. Identity And Access Management
11. Muti-Factor Authentication
12. Network Security
13. Network devices
14. Network segmentation
15. Network Traffic
16. Network and System Log
17. Detecting Anomalous Activity
18. Emerging Risk Management
19. Cryptography
20. Quantum secure solutions
21. Data Security
22. Patch and Change Management Life Cycle
23. Patching
24. Release Code
25. Incident Response
26. Reporting
27. Cyberattacks
28. API
29. Cyber Threat Intelligence
30. Information Sharing
31. Cyber Event Monitoring
32. Detection
33. Baseline Profile
34. IT systems
35. System activities
36. Payment institutions
37. Security monitoring operations
38. Unauthorized access
39. Digital Financial Fraud Risk
40. Cyber Risk
41. Process Design
42. Customer Complaint Management
43. Digital Financial Activity
44. Digital Financial Attack
45. Fraud Risk Prevention Function
46. Fraud Prevention Measures
47. Fraud Detection
48. Response
49. Recovery
50. Payment Institutions
51. Remedial Actions
52. Beneficiary Payment Institution
53. Outsourcing
54. Technology Service Provider Management
55. Outsourcing Arrangements
56. Outsourcing Agreements
57. Third Party Risk Management
58. Technology & Cyber Risk Management
59. Disaster Recovery
60. Business Continuity
61. Baseline Technology Readiness Requirements
62. Wallet Management System
63. Transaction Monitoring System
64. Robust Security Apparatus
65. Customer Complain Resolution Management System
66. Commercial Operations
67. Incident Response Plan

Tags

#Frameworks #Structure #Limitations #Policies #Procedures #TechnologyRiskManagement #PaymentInstitutions #CyberSecurity #Skills #Expertise #Knowledge #PaymentInstitutions #BoardOfDirectors

#Aspects #Measures #Control #Functionality #Security #Performance #Systems #Channels #DisputeResolutionMechanism #CyberResponsePlan #OutsourcingPolicy #MaterialityAssessment #VendorManagement #RiskAssessment #MitigationMeasure #ContingencyPlanning #ExitStrategy #ServiceOptimization #RevenueGeneration #RobustSystems

#TechnologyAudit #Resiliency #Robustness #Technology #PotentialThreats #Governance #InternalControls #TechnologySystems #Complexity #Sophistication #Criticality #RiskManagement #SeniorManagement

#NonRepudiation #InventoryManagement

#IdentityManagement #AccessManagement #CyberRiskManagement

#NetworkSecurity #NetworkDevices #Systems #Data #NetworkTraffic #NetworkLog #SystemLog #DetectingAnalomousActivity #Permission #Application #Services #Validated #AllowedDevices #Port #Cryptography #QuantumSolutions #TechInfrastructure #SecurityMeasures #PotentialThreats #PrudentApproach #ScrupulousApproach #SoftwareSolution #HardwareSolution.

#RiskMitigation #Confidentiality #SystemsAvailability #Applications #InformationSecurity #Assessments #Testing #EstablishingProcess #ScanFrequency #TimeFrameTesting #Reporting #RecurringIssues #CorrectiveActions

#CyberRisk #DataSecurity #DataRetreival #CriticalBusinessInformation #DataBases #PaymentCardsData #AuditTrails #ProcedureBackup #Controls #Mechainism #ExternalData #Recovery #TransactionData

#PatchManagement #ChangeManagement #Patching #Patches #Softwares #Application #Improvement #Implement #Security #BugFix #UpdatePatch #CriticalPatch #CentralizedPatching #VirtualPatch #SoftwareAssets

#IncidentResponse #Reporting #TechDeployed #Possibilities #CyberAttacks #RansomewareIncident #Inaccessibility #CriticalSystems #SecurityIncident #CriticalSystemOutage #InfrastructureOutage #ResponsePlan #Procedure #Process #SecurityControl #Measures #CyberIncidents #SecurityChallenge #NetworkSecurity #DataSecurity #IdentityManagement #AccessManagement

#APIs #Interface #DataExchanged #PreAssessment #PostLogging #Audit #SensitiveData #AccessTokens #APIKeys #APIlog

#CyberThreatIntelligence #InformationSharing #RightTime #Mechanism #CyberIncident #Threat

#EventMonitoring #Detection #NormalOperations #BaselineProfile #SystemActivity #UserBehavior #PotentialMechanism #LogReview #CollectLog #ProcessLog #RetainLog #LogPrivilegeChanges #RoutineActivity #ITSystem #SystemActivity #BaselineProfile

#Prevention #DigitalFinancialFraudRisk #Disruption #InfoTheft #FundsTheft #SystemInefficiency #RiskPrevention #CustomerComplains #DigitalFraudRisk #RiskPrevention #FraudDetection #Response #Recovery #FraudPreventionMeasures

#DigitalFinancialFraudRisk #Governance #FraudRiskPreventionFunction #Management #BoardOfDirectors #Committee #BuildingCapacity #Talent #CreateSystem #DigitalFraudRisk #SecurityMechanism

#FraudPreventionMeasures #DigitalProcesses #PaymentInstitutions #Identification #Verification #DeviceRegistration #MFA #TransactionLimits #FinancialTransactions #FinancialInstiution #PreventionProcesses

#FraudDetection #Response #Recovery #UnauthorizedAccess #Speed

#Outsourcing #TechnologyServiceProvider #ThirdParty #BusinessProviders #TechBasedInfrastructure #CloudBasedServices #CloudServiceProviders #GoogleCloud #Microsoft #CloudProducts #VirtualCloud #HybridClouds #FinancialInstitutions #Framework #RiskManagement #Oversight #Agreement #Arrangement #Protection #Security #Compliance

#Balance #Risk #Pose #Infrastructure #Technology #Expertise #Finance #Knowledge #Experience #Skills #CollaborativeTeam #CustomizedAPI #MainAPI

#OutsourcingAgreement #OutsourcingArrangement #Regulator #BusinessWorkingDays #BusinessPartner #Vendor #ThirdPartyEntity #CentralBank #OutsourcingActivity #FinancialPillars #System #Information #Documents #Digitalization #Interdependency #Economy

#Outsourcing #ThirdPartyRisk #ThirdPartyRiskManagement

#DisasterRecovery #SystemAvailability #BusinessContinuity

#BaselineTechnology #PilotStageOperations

#PaymentInstitutions #CommercialOperations

#Essentials #TechnologyIncident #Communicate

#PilotStageOperations

#ConsolidatedSummary

#PieceOfInformation #Data #ChangeManagementLifeCycle #SecurityPatch #BugFix #CriticalToSecurity #Tested #NonProductionEnvironmet #CyberAttacks #ProductionEnvironment #CriticalSystemInaccessibility #ApplicationProgrammingInterface #TimelyInformation

#Technology #CyberRiskManagement #TechnologyRiskManagement #Framework #Summary #CyberThreat #Intelligence #InformationSharing #Redundant #Deployment #Detection #RoutineCheck #Resolve #Preventing #DigitalFinancialFrauds #MonitorContinuously #RemediateIncidents

#ContinuousMonitoring #FraudPrevention #Response #Recovery #OutsourcingTechnology #CostEfficient #Mechanisms #OutsourcingAgreement #OutsourcingArrangement #CriticalMeasures #ThirdPartyRiskManagement

#IncidentReporting #IdentificationTime #TypeOfServices #AnnexureIII #Tools #Onboarding #CriticalThirdPartyServiceProviders

The article was posted on October 24, 2026, 10:31 PM

Dubai had been at the forefront of innovation. It believes in technology-based solutions and growing sustainable economy. This characteristic distinguishes Dubai from many countries. It aims to bring high-tech solutions to their country, for their people.

Dubai is known for food, diverse cultural environment, thriving business place, distinctive Arabic traditions, norms & values, architectural landscapes and plans to integrate all through technology.

With AI and Generative AI (Gen AI), they are now more focused on digital financial solutions. It will enable them to connect every single point of their citizen’s interaction at the intersection of technology, financial services and any other factor that could be added in the mix. It could be anything ranging from business transaction to shopping, to payments and receipts.

Their vision is to keep up with the latest technology.

The same vision is shared by their largest growing FinTech named Emirates NBD.

Emirates NBD aims to invest more in their existing banking & digital infrastructure, so as to upgrade their system. And be able to provide customized solutions to their users.

Ones that would match to the specific requirements of business, payments, banking, commerce related or consumer related payments.

Including them, every single business or individual wants to have better banking experience. Their idea surrounds the very notion of connecting the whole world in a way that they are able to carry out their work or interactions in smart way.

They know this impactful change that they intend to introduce in the lives of their people and people around the world, because for them it had been a very personal experience.

From how transactions were carried out back in year 1950 to this current year 2025. It’s completely different. It was tedious, required more than necessary time duration, boxes and a lot things to carry and remember.

But in year 2025, it has transformed their journey and consolidated everything in the form of digital app in smartphone. The phone already had features that actually complements the banking app or digital wallets (app).

Now they simply make transactions in a matter of seconds and take their financial decisions in a more customized, tailored and smart ways. Because, today every thing is connected and automated.

Going forward it appears that these digital financial apps are going to be integrated well enough that they would also provide a medium, where social-financial interactions would be taking place. Such as pitching investors to gain funds, a place to market their products/services and secure a sale, or perhaps even connecting it directly to some e-commerce market place to make some purchases.

In UAE Fintech has taken the shape of disruptor and became the hub of global finance. Though the investment declined but the growth in innovations and technological development kept up. It coupled with rising consumer demand for digital + financial services and all the support by UAE government, providing enabling ecosystem environment in the form of regulatory frameworks.

Because of UAE’s focus, it managed to become one of the top five fintech hubs in the world, with Emirates NBD Group leading in Fintech industry.

Using strategy that creates synergy & meaningful collaboration among different market players.

They began with focused investments in strategic, rewarding & Impactful areas such as:

a. Digital banking
b. Customer acquisition
c. Service quality

They rank their success with the total amount and number of digital transactions. And how well customers perceive it on scoreboards.

In this pursuit, they made collaborations, partnerships, Labs, and investments with other financial institutions. All this led to increased number of revenue streams, low costs, and improved customer experience.

All these initiatives of Emirates NBD Groups innovation journey were in alignment with Dubai’s vision.

It tells that it is the governments and authorities that work in cohesion & alignment of country’s vision, with the industries such as this Fintech, investments & finance, that leads the way and assists them in establishing themselves as one of the world’s top five fintech hubs.

In case of Dubai, the most apt saying goes, ‘preparation met opportunity’.

They did not get lucky and had their global fintech moment. For them it was similar to having a broad vision all the way ever since they began with developments and met Fintech midway while on their way to long-term vision and short-term mission.

In this endeavour Fintech only complemented their efforts & hardwork. For them Fintech did come as a disruption and became the core component of the global financial industry.

Digital Banking in Middle East & Africa

This phenomenon of fintech integration globally within the finance industry was not mutually exclusive but inclusive. It was happening simultaneously across different markets in North America, Europe and Asia.

In this connection the most common happening was notable increase in usage of digital banking in Middle East and Africa.

Usage increase due to two factors:

1. Use of mobile phone
2. Increase in consumer demand.

Also because major potential areas are untapped and making their way for fintech sector to grow, thrive and become mature.

Dubai Leaderhip’s Vision

And this does not end here, it all began with Dubai’s leadership’s vision. They wanted following factors included within their economy to strengthen and grow it, factors such as: digital economy and fintech innovation for sustainable future growth.

The same vision and timely efforts that led them to stay ahead of Frankfurt and Shanghai in Global Financial Centres Index.

What Dubai’s leadership is doing differently?

1. Introduced business-friendly regulatory framework.
2. Let foreginers take ownership in different sectors.
3. Offered & introduced visas for talent.
4. Created state-of-the-art digital infrastructure.
5. Formed a strategic East-West gateway position.

The last point here is of utmost importance. It worked as a building-block for Dubai, made it the:

1. Hub of business
2. Global finance
3. Global investment

It is now on its way to become one of the top five fintech-hubs in the world.

This strategic East-West gateway position was created as part of vision for Dubai. Where they intended to work with businesses around the world, without any exception. Providing them opportunities and space in Dubai to work, do business, create employment, and make Dubai better.

Impact of Dubai’s Vision

In return, Dubai did not only get the diverse range of ideas and notions but also the workforce with good talent & skillsets, the increased revenue streams, the better & thoughtful workflows and efficient work systems.

And this very base worked for them and enabled to create specialized centers such as DIFC (Dubai International Financial Centre). It created a Fintech hive and led the entrepreneurs to thrive and showcase their work in the form of pilot projects.

It connected them not only to financial institutions, investors but also assisted & guided them through independent regulator such as Dubai Financial Services Authority (DFSA).

This authority worked on regulations and laws that are not only supportive to the work they do but also encouraging enough that they happen to grow better.

Since DFSA worked with regulations on digital assets, crowdfunding and open banking. It attracted many fintech/startups with blockchain technology and crypto related ones.

Their work complemented the frameworks of Abu Dhabi Global Market (ADGM) and Virtual Assets Regulatory Authority’s (VARA) frameworks.

Some workflow down the line in descending order is written below:

1. Dubai’s visionary leadership Initiatives: Dubai Economic Agenda D33, and UAE Centennial 2071 programme.

2. Ranked 12th in Global Financial Centres Index.

3. Thoughtfully created fintech/work ecosystem.

4. Part of ecosystem, Fintech accelerator, Dubai International Financial Centre (DIFC).

5. Fintechs/startups graduating in connection with banks and investors.

6. Follows supportive rules & regulations from independent regulator, the Dubai Financial Services Authority (DFSA).

7. Complements the Abu Dhabi Global Market (ADGM) and Virtual Assets Regulatory Authority’s (VARA) frameworks.

Their vision is not just internal but one that is focused towards external (The MEASA — Middle East, Africa and South Asia) and connecting it all back again to internal (Dubai)

Potential Needs in Underserved Markets

They have identified huge potential that needs serving in domains of fintech for these emerging underserved markets there. And when those underserved emerging markets are connected to Dubai through cross border transactions, it only benefits them both.

After COVID-19, within 3 years of time 2020 to 2023, the fintech funding from Middle East and North America (MENA) increased by 650%. It was 6.5x more in comparison.

The sheer level of this MENA region’s importance can be ascertained from the very fact that of all the investment in venture capital there, the fintech took the huge share of 24%, making it the largest share in comparison to all the sectors.

This just does not come handy on a bright sunny day but with Dubai’s government thoughtful approach of business:

Which is ‘Test, Scale and Lead’.

It may be structured as:

1. Test new technologies -> Dubai’s market,

2. Scale successful models -> Regionally, and

3. Aim to lead -> in niche domains (Islamic fintech or digital payments).

Not only that it worked but complemented all that was already a work-in-process.

Global Fintech Summits are held in Dubai. All major industry events happen there, be it related to payment, people, digital banks, digital wallets etc. They all are choosing Dubai as their venue place for doing business.

Therefore, when global results clock-in, Dubai ranks high in Fintech’s ranking. It is no surprise that initially it was their thoughtful strategy, huge investments were made in public and private business spaces, along with the capability they garnered, making them able to innovate better.

UAE Fintech Ecosystem

In UAE venture capital investments are on rise. They are gaining all the possible traction and attention. Fintech businesses are also on steep rise as compared to others. While they all are based in UAE, their further segregation comes at city or emirates level, such as many fintechs are based in Dubai and remaining in Abu Dhabi.

PWC & UAE’s Emirates NBD fintech

Per the report attached prepared by PWC and UAE’s Emirates NBD fintech, fintech business is on rise.

It is getting more fintech investment funding than other ventures.

The largest share in MENA (Middle East & North Africa Region) in year 2024, which is about ~$265 million (could be 32%-39%) was in fintech funding.

When two progressing countries such as Saudi Arabia and UAE are compared with the lens of fintech business.

1. Saudi Arabia is said to be growing more and better because of increase in funding.
2. Whilst UAE is growing more and better because it had already established an ecosystem where fintech would thrive.

What did UAE work on to make its fintech ecosystem thrive:

1. It established a venture capital network.
2. Cosmopolitan talent pool.
3. Created more options of exit opportunities/plans.

Fintech, Regulation, Investment and Innovation

a. Fintech Infrastructure & Ecosystem

UAE did not get lucky. They had already built infrastructure, and it complemented the fintech ecosystem. And with Gen-Z, their consumer demand, digitalization and smartphone availability (90% population having phones), it all became possible for them to elevate fintech business.

Also, what makes UAE the most ideal place for fintech investors to invest? It is UAE’s clearly defined policies and stance on venture exits. Having international standard recognized systems to carry out all the work.

Besides, the local Arab families and Arab Emirates banks also try & set up funds/incubators & investments so that it gives boost to fintech ecosystem. Something that would also enable and propel growth towards innovation.

They are proactive when it comes to providing regulations & fintech-friendly ecosystems.

All while taking care to align innovation with frameworks, and balancing risk with new business models.

In this effort, they have developed:
1. Fintech regulatory framework.
2. Sandbox programs.
3. Testing solutions, first with partial and then with full licensing regime.

Besides, this DFSA/DIFC also have regulations for:
1. Open Banking
2. Crowdfundng
3. Crypto assets

Because of their preparedness and being ready at all levels they have become one of the leading places in the Middle East.

b. Modernizing Economy

One thing UAE’s Central Bank surmised very early on is their ability to ascertain the need to modernize the economy. Make technologically advanced so that UAE is able to lead in digital spheres and dominate.

And in order to do that all, they planned to begin with upgrading their infrastructure. So, they launched the Financial Infrastructure Transformation (FIT) Program in year 2023.

As part of that program, they launched the nine initiatives. Few of them are:

1. Instant Payments Platform (IPP)
2. Central Bank Digital Currency (CBDC)
3. Open finance
4. eKYC and Suptech

✔ Instant Payments Platform: This initiative is about making UAE go cashless. Ensure that all transactions are documented in digital form. And in alignment with the Dubai Cashless Strategy, 2026.

✔ Central Bank Digital Currency (CBDC): This initiative of UAE is about reducing costs, working on speed issues and encourage innovation in payments. It is about digitalization improving speed and reducing the costs.

It was not an overnight change. They were working on this since year 2019. A joint project of Saudi-UAE Project Aber (2019) and mBridge project with Asian central banks.

✔ Open Finance: Following IPPs launch in year 2023–2024, open finance regulation was launched in year 2024. It created the frameworks for banks to share customer data in a secure manner with fintechs, opening the way for open banking in UAE.

It led the fintechs to develop apps using bank data and services. Making UAE Application Programming Interface (API) economy, one that works on data driven innovation.

✔ eKYC and Suptech: Another key initiative that changed the lives of finance and tech people whilst offering banking services was updating their eKYC and Suptech infrastructure.

It means using eKYC as a unified data to let the consumers acquire or try new products and services seamlessly, without having to give or input data every time they go for using new products and services.

Whereas Supervisory Technology deployment is about ensuring that regulations are robust and serving their purpose.

Just few of these initiatives are sufficient to think and reflect if how banking is picking up the pace gradually and changing in its form when mixed with technology. Finding new, more inclusive, fast, cost effective and seamless ways, to how all people can do banking these days.

c. Digital Goals

All the initiatives taken by authorities such as ADGM and DIFC were in line with the UAE’s vision. The objective was same, to achieve digitalization.

Under ADGM, the Financial Services Regulatory Authority launched:
1. Regulatory Lab.
2. Fintech Sandbox.
3. Digital Bank Licenses.
4. Crypto Asset Regulations.

ADGM complemented DIFC’s strengths.

The first one got attention of two types of Fintech’s:
1. Wealth Management Fintech.
2. Insurtech Fintech.

Whereas the DIFC worked well in following areas:
1. Payments
2. Digital Banking

The Digital Lab by ADGM led banks and fintech’s to work together, created and tested solutions in virtual environment.

What happened is that as a result of these initiatives, it introduced financial stability and encouraged traditional business persons to invest in these new technologies.

Reason? it was solving problems, making processes easier, accessible and easy to implement, not for a certain market segment, but for all.

Something that was nothing less than revolutionary.

When businesses (such as banks & financial institutions) in UAE saw regulator taking interest in innovative banking, which is better for UAE overall. They also began to explore different banking options, such as:

1. Open banking APIs
2. Fintech
3. Partnerships (Digital & Telco, perhaps)

What also worked well for local banks there was:
1. Launch of Digital Dirham
2. Payment Token Services Regulation

And in response to these two, it led local banks to experiment with:
1. Blockchain infrastructure.
2. AED backed stablecoins.

A cashless and digitally engaged market:

All the efforts that UAE have put in to accelerate its economy and become more developed, where results are derived based on efficiency, fintech’s are doing exactly just that. Where efficiency has increased, results have improved and costs decreased.

How fintech has created its impact on market, it can be measured with following indicators:

1. More digital payments
2. Meeting user expectations
3. Providing digital banking services
4. Adding variety of segments

Digital payments: With availability and accessibility of digital payments, cash transactions have been reduced from 67% to 17%.

Which means citizens there are preferring more and more digital transactions over cash transactions. And it is because of the availability and accessibility of digital payments.

These digital payments can be done through:
1. Cards.
2. Mobile wallets.
3. Buy-now-pay-later.
4. Crypto payments.

Also, these payment modes are on rise because they are fast, easy, and cost effective.

Meeting user expectations:

UAE digital banking and fintech users are now preferring more AI and advanced analytics-based insights. Since it is customized to their usage and financial history. 87% of them are preferring them more and more.

They deployed:

a. AI-driven financial insights in fintech apps.
b. Offering customized insights and recommendations for their finances.
c. Integration of AI and advanced analytics in apps.

Providing digital banking services:

Almost 89% of UAE citizens are using digital banking, either through,

a. Traditional bank’s mobile app.
b. Digital-only banks.

Example of two such banks are:

a. 98% of new Emirates NBD Group accounts were opened online in year 2024.
b. Liv bank driven the trend of opening accounts via mobile and app-based banks.

And their way to measure such percentages of acceptance were mainly based on two metrics:

a. Digital transactions
b. Digital service requests

Adding diverse segments:

a. They added underserved segments into the formal financial system.
b. Identified the digital transacting mode by blue-collar expatriate workers:

i. Digital wallets.
ii. Prepaid cards.
ii. Micro investment apps.

Apps that were used by first-time investors.

Something that also aligns with UAE’s financial inclusion goals.

If all is concluded in summarized form, it can be concurred that more the number of payments is digitalized, and used by diverse segments, the digital ecosystem becomes more robust and gains more traction. Becomes more popular. The end result of which would be cashless and digital economy.

The role of banks in enabling the fintech ecosystem:

When banking system was first introduced, it catered to the needs of documented and formal financial sector. But there was a lack in accessing the services of of formal financial sector. It was not reachable nor accessible to underserved and unserved sectors.

How can major consultancies differentiate between two:

Fintechs provide:
a. Innovative services
b. Digital experience

Banks provide:
a. Trust
b. Infrastructure
c. Regulatory Support

Whilst all this was going great but not sufficient enough and a requirement was put forth to banks to do better than just collaborating in a passive manner.

An active collaboration that would include following actionable steps:

1. Open APIs and infrastructure: It led fintechs to build on banks trusted systems.

2. Create dedicated fintech partnership teams: Teams who would look after business of fintech’s with profound focus.

3. Invest in regulatory sandboxes: For fintechs to do well and offer better products & services that would create an impact, banks would be encouraged to invest in collaboration with regulators and fintechs (regulatory sandbox) offering & testing innovative solutions, so as to accelerate licensing wherever required.

4. Enable co-branded distribution models: It is about creating and offering fintech products, ones that would be in compliance and maintaining customer trust. Something that would be done by leveraging the digital and physical channels, so as to increase the reach.

5. Offer flexible capital models: Since fintechs are not that established, therefore it is imperative that banks work together with them through different structures. Be it investment, revenue-sharing, or co-lending structures. So that the constraints related to funding are reduced.

6. Foster knowledge sharing and joint innovation: Banks and fintechs are actually the products & services that they offer. The better the products & services the better would be their overall outcome. And to improve that they focus on following initiatives:

a. Regular dialogue
b. Hackathons
c. Shared R&D initiatives

How can banks play their part to create ecosystem for fintech?

When it’s a conversation about fintech, it’s not about traditional business and banking. Rather being more customer-oriented, experimenting with ideas that solve financial problems and responding in an agile manner.

While it works and provides this space, the challenges it grapples are around trust of customers, having robust regulatory structures & frameworks, and less market reach in evolving & regulating markets.

And to bridge this space on part of fintech, banks are assisting them to co-exist in financial ecosystem, by partnering them, sharing infrastructure, launching joint projects. All while also getting benefits from such innovations.

✔ Challenges for Fintech’s in financial ecosystem:

1. Building customer trust and market legitimacy: Usually people invest in businesses that they could trust. And with trust it means knowing that their funds would be secure at all points of interaction. Here, it also means trusting Fintech’s with data. And when they partner with banks, it gives them sort of legitimacy in terms of offering products & services.

2. Dealing with financial regulations & licensing: The major part that Fintech’s struggle to deal with are:

a. Licensing
b. Data protection laws
c. Capital requirements

Something that would be costly for Fintech’s but not for banks. And if they partner with banks, their costs can somehow be reduced, while they focus on innovation.

✔ How banks assist Fintechs to better complement financial ecosystem:

1. Assists Fintechs to scale distributions and operations,

Banks can assist Fintechs in two ways:

a. Reducing customer acquisition cost.
b. Assisting Fintechs reach more audience regardless of their marketing budgets.

Ways that can be done:

i. Access to large customer bases.
ii. Co-branded products.
iii. Fintech features in banking apps.
iv. Distribution through physical and digital channels.

2. Act as customers of fintech innovation: When banks become customers of fintech, they assist Fintechs better by rendering analysis on their products & services. How they can be improved and transformed into robust financial solutions.

Here, Fintechs are innovative solution providers. Industry derived from banking system to provide formal financial solutions. Where per regulators (for enabling ecosystem), banks can assist them to do just that.

Considering requirements of underserved and unserved segments of society, banks can make provision of financial services through Fintechs. They have ease of time, and it enables them to focus on particular segments only.

What strategy did Emirates NBD fintech deploy to speed-up innovation in Dubai finance-tech sector?

They deployed following strategies:

1. Increased their focus on fintech partnerships.
2. Encouraged more and more digital transactions.
3. Made investments in startups and incubators.
4. Launched capital fund for startups.

They began by creating a dedicated fintech partnership team one that could focus on locally, regionally and globally for these partnerships.

All while keeping the factor of collaborative innovation at the heart of it all. Either through development of fund or by establishing enabling ecosystem for other startups and incubators.

The specifics of their strategy was:
1. Focus on digital transformation.
2. Developing complementing framework.

With digital transformation the idea was to:
1. Inculcate innovation
2. Manage risk
3. Ensure strategic alignment

In development of complementing framework, the idea was to:
1. Scale-up fintech partnerships
2. Focus on digital leadership
3. Be the main player in evolving payments landscape

Other complementing steps that Emirates NBD fintech took was:
1.Partner with both public and private sectors
2. Invest in new technologies
3. Support startups

With this they could not only be part of the change but actually drive it.

It all sums up to Emirates NBD:
1. Fintech’s strategy
2. Interaction model
3. Key partnerships & investments

It explains how the strategy alone cannot work but has to be enabled with complementing strategies creating the task based eco-system around it.

Which means to stay focused on internal developments and then shift to outwards to connecting external developments. Here, the focus of strategy is going from inwards to outward all while keeping the subtle connections at different intersecting points. Think of concave lens or glass structure.

How did Emirates NBD work on fintech interaction model?

They use SEED framework, where:

S= Scout
E=Evaluate
E=Experiment
D=Deploy

In other words, it could be interpreted as four stages of creating meaningful interaction.

Where,
Scout could mean approaching fintech’s,
Evaluate could mean finding the best complementing ways/theories,
Experiment could mean testing those ways/theories, and
Deploying could mean to pick the best of them all and put into practice.

Also, in addition to doing that all, they also had to add a collaborative perspective to it. Which is about not seeing the Fintech’s as competitors of banks rather as partners.

Ones they would collaborate, set up a dedicated Digital Innovation and Partnerships unit to work with in the interactive fintech ecosystem.

Wherein, this model actually operates as:

1. Scout: In this stage, Emirates NBD would deploy a strategy per which they would try & look for startups globally and locally in areas such as:

a. Payments
b. Lending
c. Sustaintech (Sustainability Technology)
d. Regtech (Regulatory Technology)

Their strategy to look for these startups were by:
a. Attending fintech demos.
b. Running hackathons.
c. Exploring fintech networks.

2. Evaluate: Once the interaction gets through successfully, they would take following measures:

a. Conduct due diligence to evaluate technical feasibility.
b. See security related compatibility.
c. Check for regulatory compliance.
d. Do business case assessments.

3. Experiment: Once the evaluation phase ends, Emirates NBD conducts tests of fintech solutions in real-world from conducting tests in controlled environments.

As a result of this approach, they would have proof of it now, if how well it works, when and how. Which assists them in mitigating risks that comes with these fintech partnerships. And make banks confident of the returns on their investment, whilst improving customer outcomes.

Deploy: This is the stage where results have been tested both in controlled environments (regulatory sandboxes — think of training/testing environments) and in real-world environment.

And then with proven results stack, digital banks or Emirates NBD Groups integrate these fintech solutions in their operations.

It could lead to following outcomes:

1. Launch a new payment service.
2. Adopting a technology, like building AI tool for fraud detection.

What another strategy did Emirates NBD deployed?

They focused on:

1. Speeding up innovation
2. Mitigate risks within the innovation
3. And expand the innovation

While bringing fintech to the forefront, they also focused on making strong retail banking leadership.

Tried to be the leader in UAE retail banking. And scored high on performance in various product lines. They did exceptionally well in credit card market and in area of deposits:

1. Secured one-third share of the UAE in credit card market.
2. Did well in deposits because of various customer campaigns.

Case study of Appro: Fintech used to streamline customer onboarding.

CHALLENGE:

• To improve retail banking onboarding.
• Traditional documentation verification methods were taking time to offer financial services, such as: Credit cards and personal loans.
• This affected areas: Good customer rating, potential risks of fraud and regulatory compliance.

Reason: Manual processes are prone to errors more than automated processes.

SOLUTION:

• Appro (Fintech) automated employment and income verification processes.

What it did?

• Reduced application time from hours to minutes.
• Streamlined onboarding checks:

a. Income verification
b. Employment status
c. Creditworthiness

• Kept KYC process streamlined
• Proved better for fraud prevention

IMPACT:

When Appro (Fintech) was integrated with Emirates NBD’s:

1. It improved customer experience and efficiency.
2. Increased onboarding speed.
3. Reduced fraud risks.
4. Standardised checks.
5. Ensured compliance.

Customer experience:
a. Faster and transparent application process.
b. Increase in trust and satisfaction.

If all this is concluded, they first happened to work on innovation strategy: How to speed up innovation, reduce risk and scale it.

Along with it they kept their focus on strengthening retail banking leadership. Did well in credit cards market and customer deposits.

Then they tried to work better on customer onboarding. And to achieve this they partnered with a fintech. It offered on solving their customer onboarding problem by automating it. Which not only increased the speed but also shown better results in reducing errors, making the process more compliant and something similar to international standard.

Emirates NBD’s fintech strategy: Speed up and mitigate risk related to innovation, that is reaching and exploring possibilities at new platforms in new geographies.

How else they planned to achieve it?

1. By making investment in innovation funds.
2. By becoming the leader in cross border payments among gulf countries.

Investment in Innovation Funds:

Here, it means they are investing in innovation funds to expand their reach across different industries. The ones who may also have reach in different countries. Making the network of talent, payments systems and innovation stronger.

Their investment for innovation fund reached in following companies with work in following areas:

1. Sustainable finance
2. AI-powered analytics
3. AI/ML securitization
4. Blockchain payments infrastructure
5. Digital asset custody
6. Digital trade
7. Institutional asset and liability deal automation
8. Workplace savings platforms

What benefit it brought to Emirates NBD bank?

1. It let bank diversify the investment and minimize the risk of lower returns.
2. Infact, it proved and worked better for stable long-term returns.
3. Their bank got integrated with companies in different business, increasing the reach to various countries.

Becoming leader in cross border payments:

Since UAE is already considered a global business hub, becoming a leader in cross-border payments would merely complement their very peculiarity.

And to make their effort more robust, they got integrated with Saudi Vision 2030, particularly the diversification strategy.

Where they can work in cohesion and make cross border payments and remittance market, accessible, easy and fast.

Also, they did not build any other independent authority for it rather let their banks lead the technological innovation.

Which resulted in:

1. Offering dynamic payment infrastructure.
2. Lead in cross-border payment solutions.
3. Offer advanced, secure and efficient services for both retail & corporate clients.

At the crux of it all, it appears that Emirates NBD Group is looking forward to expanding its business strategically & meaningfully. Not just across different companies but also in various countries. Perhaps, pursing the idea of ‘being visible, staying relevant, finding new opportunities and tap just in right time’.

Emirates NBD’s fintech strategy for accelerating innovation and mitigating risk in innovation:

Another use case: Safe and instant payments by partnering with iPiD.

✅ Challenge:

The usual dilemma of balancing speed, with regulations, making secure payments and improving customer experience, all at the same time.

✅ Solution:

Partnered with a fintech, which had reach over 6,000 banks across the globe and was offering global payee verification services.

• They tested proactive payee verification system.

• High accuracy rate across a sample of verifiable payment records.

✅ Impact:

• Reduced the fraud risk.

• Lowered costs from payment reversals.

• Improved digital customer experience.

• Solved the Authorized push payment (APP) fraud.

• Solved the failed payments.

• Bank began to be perceived as innovation leader.

• This showed implementation of bank’s strategy: wider fintech reach that generate good business results by incorporating latest technologies, which create safe, smart and customer oriented financial solutions.

This shows that when business problems are put into focus, it becomes easier to solve them, sometimes by outsourcing the services to valid and certified business partners.

Emirates NBD’s fintech strategy for accelerating innovation and mitigating risk in innovation:

Third use case: Partnered with Partior to bring innovation in cross border payments.

✅ Challenge:

How to replace or complement the traditional banking payment systems to evolving requirements of customers in emerging markets.

Old banking system has:

1. Infrastructure problems.
2. Increasing customer demands for speed, transparency and cost efficiency.
3. Multiple intermediaries.
4. Delays.
5. Low market interaction hence less visibility.
6. High fees.

New system would offer:

1. Streamlined settlement processes.

2. Better liquidity management.

3. Add value to real time transfers in multiple currencies.

✅ Solution:

Partnered with Partior, which does the following:

1. Enable real time payment settlement globally and with participating banks.

2. A shared ledge infrastructure is used that reduced elimination and settlement errors.

3. Partior offered Emirates NBD, a tokenised commercial bank moeny (CoBM) rails for fast, cost effective and secure payments between Asia and Middle East countries.

✅ Impact:

1. Emirates NBD appeared as payments innovation in the region.

2. Unlocked liquidity trapped in nostro accounts.

3. Improvement payments visibility for both corporate and institutional clients.

✅ What improved overall:

1. Emirates NBD can now offer 24/7 settlement services in UAE Dirham, Saudi Riyal and Indian Rupee.

2. It improved payments visibility, efficiency and security in global settlement processes.

3. Set foundation for future ready digital payments infrastructure.

4. It fulfilled UAE’s aim to become the financial innovation leader in cross border payments.

For Partior, Emirates NBD became the gateway to the vibrant MENAT region. Got aligned with their strategic roadmap to expand their services in Middle East. They also integrated their blockchain capabilities with Emirates NBD’s trusted network. As a result:

1. It reinforced the shared commitment.

2. Elevated the efficiency and security of cross-border transactions.

3. Drive economic growth and innovation across the region.

This use case shows that improving the speed, efficiency and costs of cross border payments, for one partner works equally well for another partner.

Here, Partior got the access to MENAT region through Emirates NBD bank.

While, the Emirates NBD bank got the benefits of latest and upgraded infrastructure and product, it offered rails for fast, cost-effective and secure payments, between Asia and Middle-East Countries.

Digital Banks like Emirates NBD went into public-private partnerships to create far reaching meaningful affect among masses and small businesses:

They worked towards to get small & medium enterprises (SME’s) enrolled with products & services, offered by Emirates NBD, digitally.

So that better services are offered, all while improving the customer experience and creating innovative & customer centric solutions.

What this does is create a frictionless & seamless customer experience for users.

How?

When a business customer opens an account with Emirates NBD, and as part of banking compliance requirement, Emirates NBD ask for documentation and trade license data.

Once, customer provides that, it is onto bank to verify the same. Manual verification would take time and potentially delay the account opening process. But once, that manual verification is automated and can be done digitally, the verification time reduces from days to few minutes.

That difference alone is huge to make customer services and user experience of banking products and services much better.

So, to address this challenge of fast verification, they got into partnership with public institution of Dubai, named as Department of Economy and Tourism (DET). Where this department shared the Dubai Unified License (DUL) through secure API with Emirates NBD bank. Upon integration of same, Emirates NBD was able to verify the trade license data of customer directly and in way less time duration.

Also, this public-private initiative between Dubai’s public institution and Dubai’s Emirates NBD bank, got seamlessly aligned with the Dubai Economic Agenda D33.

Where per Dubai Economic Agenda (D33), they aim to speed up the economic growth, encourage innovation, and put Dubai into position of premier city to live, visit and work.

As a result, it boosts the investors' confidence and economic cycle gets on right track towards progress.

If all this is concluded, it says how solving one minor verification problem at private bank through digitalization, solves, addresses and adhered to the aim of government for better economy.

Because, it actually ends up solving and supporting the economy problem, which can be thought of as similar to straightening the one minor glitch at a time, which then goes on to create a rippling effect for whole digitally integrated & connected economy.

Emirates NBD’s fintech strategy to speed up innovation and reduce the risk:

Another thing that they did was to improve the banking experience for their federal workers. And they did this by strengthening the digital ecosystem with two main factors: automation and integration.

One of the use-case of this automation and integration, resulted in paperless and fast account opening processes.

Where a federal worker would be required to provide the salary slip or income document to Emirates NBD bank for account opening. This very step has been reduced by API integration and automation.

And the federal workers no longer need to provide the income document for account opening at bank. They request account opening, their income status is verified digitally, and account gets functional in the very next step.

How?

Emirates NBD partnered with Federal Authority for Government Human Resources (FAHR). And FAHR provided Emirates NBD access to employees' salary data for verification through secure API. Which Emirates NBD integrated in its systems and verified digitally with just a single button click.

As a result, Emirates NBD:

1. Opened 45,000 employees’ account.
2. Streamlined the processes.
3. Improved the data security.
4. Speed up the results.
5. Reduces paperwork.
6. Improved federal workers employees experience.

This makes one wonder the potential of improving public service offices administrative work through digitalization, collaboration and integration of latest technologies.

All this is in alignment with UAE’s objective of creating modern, efficient and citizen-centric digital infrastructure.

AI in banking:

AI simply complements the banking industry. Banks have data, old records in various dimensions.

All they need is a tool that can gather all the data, segregate smartly, group them and then create some thoughtful & strategic insights.

Fortunately, now that we have an AI, and it can do all of this in minutes with few designed prompts.

⚡What can AI do for banks:

1. Identify spending patterns.

2. Look through patterns in pricing models.

3. Look through data and find out potential customers with customized investment requirements.

4. Makes phenomenal changes in customer experience, risk management, operations, compliance, and product innovation.

5. AI can improve ESG scoring.

6. Tracks sustainability metrics with precision.

7. Assists bank in achieving their environmental goals whilst maintaining profitability.

⚡How AI is able to do all that?

1. It uses natural language processing to make evaluations.

2. Uses machine learning algorithms to make predictions.

⚡AI can make precise predictions in following areas:

1. Climate-related financial risks.

2. Supporting green financing products.

The huge difference it made in banking was making those channels accessible for formal banking, that were not accessible through traditional banking style.

⚡How?

When a combination of different data points is added in the equation, the results vary.

And these results may vary in following areas:

1. Credit scoring.

2. 24/7 financial guidance.

3. Streamlining onboarding processes.

🌿One of the proven use-case: AI can use customers historical data of the usage of their services, such as payments, mobile phone usage, and social media behavior and create financial identities for untapped sectors.

🌿Another proven use-case: Chatbots & virtual assistants trained better with local language dialects, provides better customer services.

By using these cutting-edge technologies, banks like Emirates NBD Group are not only serving their customers better but growing faster.

🎉 In brief: Automation, digitalization and then integrating AI into this mix, have proven beneficial for Emirates NBD Group Bank.

It surely first needs some investments on using these technologies and making efforts in transformations but eventually, with the optimized services that they offer, the results are maximized, both in terms of numbers & volume.

AI in Banking: Use-cases

World over the trend of deploying AI in their serving financial processes and products are increasing day by day.

🎉 The areas AI has truly transformed by reducing time, cost and number of employees, are as following:

1. Improved & automated customer experience.

2. Deployed AI in risk management and compliance related preliminary decision making.

3. Improving operational efficiency.

4. Designing innovative products.

✨Some examples of banks deploying AI and garnering results from it:

1. Bank of America deployed AI and the results it achieved:

a. Provided flawless virtual assistant services through AI.

b. Handled 1 million queries daily, replacing the work of 3,000 agents.

c. Reduced waiting time, increased efficiency by 35%.

d. Chatbots resolving all the routine queries.

2. Emirates NBD Group deployed Generative AI (GenAI) in contact centres:

a. It improved customer interaction.

b. From waiting long times in branches to getting solutions instantly through online services.

c. Adopted Microsoft’s GitHub Co-pilot product to handle complex tasks better and improve efficiency by 20%.

d. Deployment of AI led banks to operate with leaner and smarter approaches.

3. Some banks have deployed AI in risk management and compliance at preliminary stages:

a. AI looks through large data and find patterns to better analyse and provide credit score.

b. Used machine learning to make accurate predictions related to credit risk.

c. Automated anti-money laundering monitoring and KYC checks.

d. Automated tasks related to operations such as document verification, payment processing, and reconciliation,

e. Enabled banks to deploy more personalized products, increasing sales and improving services in wealth management, and other similar financial products.

🌿In brief: It shows that financial institutions be it traditional style banking institutions or digital banking ones. They all are open to the idea of deploying AI but with calculated risks and in areas that would sufficiently reduce costs, time duration and number of employees. All while increasing the outcomes, exponentially.

AI in Banking means becoming an AI first bank. Where everything is pro-AI. All results fast and efficient. Costs of costly processes reduced. Amazing products and customized personal experience for customers.

With AI banking becomes easy, more accessible, customized and inclusive.

AI Use-case in Investment (AI driven market intelligence)

⚡Challenge:

How to speed up decision making in investment, offer better pitch to clients when the data is scattered across in different places, such as: reports, fillings, transcripts and news to find relevant information.

⚡Solution:

They partnered with AI driven research and analysis firm named Alpha Sense, and integrated their system. Now the employees of Emirates NBD Capital (The Investment Wing) can quickly find the relevant data as per their customized requests/questions and generate better & faster results. Closing deals fast, making investment decision with trust & confidence.

It reduced their overall research time, with them missing any crucial detail that would have been significant in making investment decision.

⚡Impact:

1. Emirates NBD Capital closed more deals. That were rich in data, and backed by real-time insights.

2. Created accessible knowledge hub for junior learners at the firm.

3. Teams coordinated and worked better compared to their earlier experience.

🌿Summary: Without integrating AI, making investment decisions or preparing for investment pitches were cumbersome tasks. Lengthy, time taking, and the continuous presence of uncertainty.

But by collaborating with the firm and integrating their AI driven market intelligence work, solved many challenges, including making faster & better decisions, gaining more clients, and making more sales.

AI in banking: Optimizing compliance work, allocating less risk tasks/jobs to AI, improving cost and efficiency.

How adding AI in the mix changes the results for better?

Financial institution like Emirates NBD wanted to become smart and fast company. Generate better results for their customers.

So, it began by collaborating with firm using AI for research, that generates real time market & financial insights.

And it worked for both the collaborators here. One offering the latest AI based market research services. Other seeking the very service to make better decisions that leads to fast & precise results.

Use-case: Automating compliance screening task with AI.

Challenge:

Emirates NBD compliance department was stuck in balancing the work performance and efficiency. It means they were using more resources for never ending work like screening and related investigations. Also, having a constant requirement of having more resources to do the work fast and efficiently.

Solution:

To address this challenge, they made another collaboration and streamlined their work.

They made collaboration with Silent Eight (AI-powered solution) and automated their financial crime compliance investigations.

What is Silent Eight’s AI product and how it works; It uses machine learning and natural language processing that assists in real time decision making. Solving the alerts with full explainable results.

As a result, it reduced the work in quantity and improved the quality. In screening, false positives were reduced, resolving more cases. Improving consistency & transparency in compliance decisions.

Impact:

1. Reduced number of cases.

2. High efficiency levels.

3. Improved compliance function.

4. Reduced investigation times.

5. Enhanced risk detection accuracy.

6. Skilled staff gets more time to focus on important and high-risk cases.

7. The work AI does is auditable and the decisions it make are traceable.

It means the backend work of AI is in regulatory compliance. One that also adhered to the banks broader vision of digital transformation in compliance and risk management.

Conclusion: Emirates NBD solved another challenge by collaborating with AI driven company. This time they optimized their compliance department, reducing the work time of screening and improving overall efficiency.

If this topic of AI is concluded in UAE banking. They are not just looking to add AI as a tech upgrade. But for them its more. It is about making AI part of their banking. Like how usage of computers/laptops have become strategic part of banking ever since the shift was made from manual banking to digital banking.

Now, no transaction takes places on vouchers/papers. Its all-digital.

Through software’s, through stack of digital hardware’s, sophisticatedly connected through a precise system.

To achieve this level of transformation in banking through deliberate AI incorporation in the system, they would need to:

1. See it with different perspective. One that means including AI as assistant in doing job better and not as replacement of the job per se.

It means to see how human skills & expertise could be improved with AI, such that AI complements those human skills & expertise.

2. Encourage the collaboration culture.

So much so that it collaborate with all strategic partners. The idea is to work together and give shape to industry standards. When diverse range of skills & expertise are pooled in, working together, they create synergy. New solutions that are standardized and can speed up AI implementation.

What approach Emirates NBD implemented?

They tried to connect the traditional banking with fintech innovation.

Reducing the gap between two.

It means covering all the underserved and unserved segments of society through fintech innovation, that remain devoid of access to formal financial services through traditional banking.

And regardless of it all. The winners in this age of banking will be those who put people first. Where their policies, procedures and systems are designed & created for the people.

It means providing swift financial guidance & solutions. Manage risks proactively. Provide opportunities for all. Build the future and not just embrace it.

Future Leaders in Digital Assets

Whether its banking or any other field. There has always been a gap of knowledge between the academia and industry seeking particular skilled employees at work.

Reason: The theoretical concepts often do not translate into real-world work. Those are learned theories and concepts that cease to make sense when a student steps into real world work experience. Not all, but most.

However, this is changing now. Academia and industry have been able to work through this lack of complementing knowledge & skills.

By collaborating together, which makes academia to offer the courses, learnings & skills that actually assist in building the workforce talent required by business industries. Either those are leadership skill, technical, mechanical skillset, communication, finance, tech, marketing etc.

What Emirates NBD did? They brought this concept to their business. By launching the digital lab. Where students and experts work together on projects or products, deriving innovative financial solutions.

This not only bridges the gap of learning theories & implementing them in real life work experience but also lets financial institutions have fresh perspectives on different innovative solutions.

While students contribute their perspective and ideas at Emirates Digital Asset Lab, in return they get hands-on experience in cutting-edge technologies such as blockchain and digital assets.

This makes Emirates NBD play a role of catalyst which enables sustainable innovation in the regions banking landscape.

Not only this, but they also introduced the Future Leaders Outreach Program, where the aim was to integrate academic institutions into the digital asset ecosystem.

University of Sharjah and Higher Colleges of Technology are their initial academic partners. Both are key players in shaping the future of digital talent.

Students get access to high-end learning experience, where they get to learn from experts and industry leaders from companies such as PwC, Fireblocks, R3 and Chainaysis.

Future Leaders in Digital Assets (Crypto in Retail Sector)

Usecase: Brings access of crypto in retail sector.

Challenge:

When the talk of digital assets surfaces in financial industry, cryptocurrency is the synonymous term.

Traditional banks usually do not incorporate these digital assets due to lack of compliance & regulations for these emerging finance related products.

But since UAE is becoming a global hub and there is increasing demand for digital assets by consumers. So, Emirates NBD recognized this need of offering seamless crypto trading experience within its digital banking ecosystem.

Solution

Emirates NBD partnered with Aquanow: A global virtual asset service provider. It is licensed by Dubai’s Virtual Assets Regulatory Authority (VARA).

Aquanow provides crypto infrastructure, that enable users to buy, sell and trade cryptocurrencies seamlessly within the app named Liv.

Then it also partnered with Zodia Custody: A digital asset custodian company which ensures secure storage of customers’ digital assets.

This partnership of Emirates NBD with Zodia Custody & Aquanow in the form of integration, lets users to manage both traditional and digital assets in one platform, that is Liv X app. It simplifies the user experience and eliminates the need for third-party crypto exchanges.

Impact

When Emirates NBD launched crypto currency trading on its Liv X app, it had several significant impacts:

1. It improved customer experience, where customers can use cryptocurrencies directly through their trusted banking app. Offers them convenience and reinforces trust in digital asset transactions.

2. It increased the cryptocurrency adoption rate, when Emirates NBD made the access to digital assets easy, many customers contributed to broader adoption of cryptocurrencies in the UAE.

3. It also shows the strategic positioning of Emirates NBD. That it is at the forefront of innovation and agile to market trends.

4. It enhanced the regulatory compliance image of UAE. That is when Emirates NBD partnered with licensed entities like Aquanow and Zodia Custody.

These thoughtful & regulated partnerships prove how traditional financial companies can find innovative financial solutions. Ones that meet emerging customer requirements and stay competitive in digital age.

Conclusion: As the world began to move towards becoming digital, globally. UAE’s speed also accelerated to become global digital hub. And as digitalization paced up, demand of digital assets such as cryptocurrency increased.

Emirates NBD partnered with Licensed platforms like Aquanow and Zodia Custody, offering products, without the need for third-party crypto exchanges.

Investing in the next generation: Digital Assets Lab (Emirates NBD)

Innovative Strategy of Emirates NBD — Invest in the next generation of Emirati talent.

What do they aim to achieve:

1. Create pathways for young Emiratis to develop cutting-edge skills.
2. Launch high-potential ventures.
3. Drive the UAE’s digital economy.

They plan to achieve it by partnering with:

1. National Digital Talent Incubator (NDTI).
2. Digital Asset Lab’s Future Leaders Outreach.

Their vision is to bridge the gap of knowledge, expertise and skills between the current decisionmakers, market experts, emerging technologies and future leaders. So, their economy stays resilient and talent ready to shape the future.

It's not just about training the Emiratis to become future leaders but also to offer them real world opportunities in commercial projects, learning to raise capital and receive recognition on national platforms such as Future 100.

Also, partnering with academic institutions, industry pioneers and government entities, making an effort to nurture the future innovators and entrepreneurs. Ones who will transform the UAE’s economy.

This strategy of training the Emiratis to become future leaders, aligns just right with the UAE government’s goal of building the digital economy led by UAE Nationals.

The program of Emiratis Development under the National Digital Talent Incubator (NDTI) has supported 17 startups with focus in different domains: AI, payments, micro-lending, B2B, marketplaces, and sustainability.

Wherein they conducted 100 partner sessions that involve key stakeholders and participants, ensuring that they gain real world insights and opportunities to accelerate their growth journey.

With passage of time, NDTI received many applications, that reflected the growing interest and reputation of the incubators. Some of the alumni got selected in Future 100, marking the efforts of UAE.

And Emirates NBD keep investing in early-stage innovation in National Digital Talent Incubator, to support the UAE’s thriving startup ecosystem.

What’s ahead for Emirates NBD in Banking?

They have made an accord on the idea, that it is innovation that will lead and make financial landscape thrive in future. It will become the sole element of competition, when matter reaches the point of achieving competitive edge.

Where they will work with technologies such as AI, blockchain, embedded finance and open banking to solve novel finance related challenges. Whether it is about access to formal financial services, achieving agility or adapting to new technology seamlessly.

They aim to be prepared and swift with it.

The characteristics that make Emirates NBD a potential leader in financial services across the region:

1. Strong track record in digital transformation.
2. Profound fintech collaborations.
3. Customer-centric mindset.

Their future plan framework:

1. Create impact through innovation.
2. Make strategic partnerships.
3. Craft culture of continuous learning.

In this way they are ensuring that their existing efforts pick up on momentum and create new platforms for growth.

Besides all this, they have inculcated forward thinking in their approach towards banking which is weaved around:

1. Collaboration.
2. Purpose.

Not only this but they also want to redefine banking, take it ahead of UAE, in other regions. Empowering people, communities and businesses to do better.

Source: https://lnkd.in/d7jcf6sq

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Review & Analysis

This financial case study is about Adobe Inc. and its objective to increase its subscription revenue using financial analytics.

First let’s understand the business of Adobe.

Adobe provides creative digital experience to its consumers.

It’s a global company and with time expanded business into different domains. Increased it’s number of revenue streams by offering different products.

Adobe has four types of revenue models:

1. Subscription (SaaS).

2. Recurring Revenue.

3. Enterprise Solutions.

4. Other Streams.

Under Subscriptions revenue model. Adobe is earning by selling SaaS (Software as a service) products. Such as:

→ Adobe Creative Cloud:

▪ Photoshop,

▪ Illustrator,

▪ Premiere Pro etc.

→ Adobe Experience Cloud:

▪ Marketing,

▪ Analytics,

▪ Commerce.

Under Recurring Revenue model, Adobe earns steady & predictable income from:

→ Cloud-based subscriptions (Shifted from one-time license sales).

Under enterprise solutions, Adobe earns by offering corporates solutions such as:

→ Digital marketing

→ Customer experience management

→ Analytics tools for businesses

Under other Revenue streams, Adobe earns by providing following products & services:

→ Document Cloud (Acrobat & PDF Services)

→ Stock assets

→ Specialized AI features

Comprehending the business and the revenue models, gives insight about the products & services that the company offers and the particular category of customer persona for each product & service.

The common theme found among the products & services offered by Adobe hence the recurring revenue models designed around those themes are:

a. Digital

b. Creative

c. Customer focused

d. Contemporary

e. Intelligent solutions

f. Convenience products & services

All the products & services designed were curated around these above mentioned themes.

This means, if their customer is tech savvy & creative, there is 70% possibility that, the particular customer segment would make a purchase from Adobe, given Adobe wins over its competitors in all other remaining factors.

Adobe did not have a revenue problem. They had several revenue streams based on different products & services they offered.

Intrinsically, they did not have apparent problem. But since they work on improving customer experience and offer better digital experience products, they wanted to achieve that by working on revenue, reducing the costs.

Adobe wanted to work on improving the customer experience, by understanding customer’s experience with their products & services. Once they are able to understand the customer experience with their products & services, Adobe could draft some strategies and optimize it all.

It means, this time Adobe chose to not launch an additional product or service rather they tried to understand their customers, and their interaction & experience with Adobe’s product.

So, they selected few factors and worked on it to optimize overall work including customer revenue and customer lifetime value, factors such as:

1. Churn rate

2. Customer behavior

3. Regional performance

Let’s discuss these factors first:

• Churn rate is the percentage of customers that left after using the product or service.

• Customer behavior is the behavior of customer, their approach and attitude towards the particular product or service.

• Regional performance is the performance of different products & services by same company region wise. Regions could be within the same country or the collective regions that are referred to in context of continents.

When churn rate is high, it means recurring revenue has reduced, and it decreases the customer lifetime value (CLV).

The motivation to find out customer behaviour is to ascertain how customers move from one tier to next. Let’s say if a customer upgrade, Adobe would want to find out if what let the customers upgrade to higher product plan.

This crucial insight gives Adobe idea of their customers buying behaviour with their products, if which features derive more income.

However, evaluating the regional performance tell Adobe about the market. The strengths, the weaknesses, the pricing strategies, marketing strategy and product strategies.

How well their work is complementing the market ecosystem. Whilst simultaneously giving Adobe opportunity to learn about market in depth.

1. How does market performs on its own.

2. What happens (changes) in market when Adobe’s product & services compete.

3. How market ecosystem behaves/reacts when Adobe’s customers choose Adobe’s advanced level product, switching from basic.

Insights such as these become valuable for Adobe to plan and strategize better.

→ Make accurate predictions about how many customers would leave subscription.

→ Make accurate prediction about all the additional sale opportunities for variety of products & services.

→ Make efficient & targeted promotion campaigns.

→ Create just right pricing tiers, one’s that earn enough profit for seller (Adobe) and also that customers are willing to pay for it.

→ Get more revenue from each user (Average revenue), such that user happily pays for it.

Strategic Actions

Adobe’s finance & analytics team used following strategies to optimize their overall work including revenue.

They used following strategic actions:

a. Churn Prediction Models

b. ARPU Segmentation

c. Dynamic Offer Optimization

d. Revenue Forecasting with Seasonality Adjustments

a. Churn Prediction Models

Adobe’s team created Churn Prediction Models based on the customer data available to them.

They curated it using customer data points.

For example:

1. Customer usage behaviour of Adobe’s products & services.

2. The usage amount of Adobe’s products & services.

3. Customer interaction data available to Adobe in their support department.

Using these three data points, Adobe deployed machine learning tech to create Churn Prediction Models. So that it can predict subscriber churn risk.

Based on customer data, these Churn Prediction Models used combination of following factors to make predictions about subscriber churn risk.

Factors such as:

1. Frequency of tool usage.

2. Time since last login.

3. Payment issues.

4. NPS (Net Promoter Score).

b. ARPU Segmentation

Adobe wanted to find out the customer segment with highest average revenue per user.

So, Adobe created a list of customers and created clusters based on:

→ The type of product/service they subscribed to/made a purchase.

→ Created a segment based on location.

→ Industry wise i.e. Education and Enterprise, such as students/learners or professionals/corporate products.

→ Device ecosystem, such as the type of devices customers would be using to use Adobe products & services and then creating clusters based on those devices.

All this effort to find out highest Average Revenue growth potential and how much sensitive are these customers to prices, how does any change in price creates an impact on customers behaviour to make a purchase.

c. Dynamic Offer Optimization

Third strategy used by Adobe was Dynamic Offer Optimization.

It is about making offer (product/service) efficient and just right for the particular customer segment.

How did Adobe do it?

It began by conducting some actual tests on their products & services offerings.

For example, they offered products for students.

And they wanted to test, at which price their student customer segment would make a purchase and at which price would leave the offer.

Think of it as Adobe trying to find the boundary price for their products & services.

So, they tested various other variables in offer along with pricing for their different customer segments.

Variables such as:

a. Annual vs. monthly plans

b. Creative cloud + Adobe stock combination

c. Location

Before making such a test, Adobe used regression analysis (a statistical tool to evaluate the relationship between two variables: dependent and independent).

Why Adobe used regression analysis?

So that it can find out how change in price of products affect the conversion and retention. What does this mean?

It means to find out:

→ If they kept their price same will certain customer segment would make a purchase?

→ If they increased their price will that particular customer segment make a purchase or not?

→ If they decreased their price, will that particular customer segment make a purchase or not?

Same goes for Retention:

→ If Adobe kept their price same will the existing customer segment would still make a purchase from them or not?

→ If Adobe increased their price, will the existing customer segment would still make a purchase from them or not?

→ If Adobe decreased their price, will the existing customer segment would still make a purchase from them or not.

Now these are many possibilities with just two factors:

→ Determining Price change impact on Conversion

→ Determining Price change impact on retention

But the problem was there were countless other factors that could influence their research work such as marketing, competitor activity.

So to isolate and find just the impact of prices they used statistical tool and did the test of Regression Analysis.

What did this do? It isolated the affect of all other variables (marketing campaigns, competitor activity, product features, seasonality) on conversion and retention of customers. And only allowed price changes to show its impact.

It means, to work with data, and increase the price with certain numbers and study the impact if customers converted or left?

Statistically, it means telling you what impact sales showed when price was changed, evaluating them all at one unit.

Let’s say if price changed by one unit, what impact it creates on sales / conversions / retention.

Here, price is independent variable and sales / conversion / retention dependent variable.

Adobe used this level of strategic financial work to optimize its products & services for their unique customer segments.

Studying / researching its own products & services their variables and how changes in these affect the sale and customer behaviour to make a purchase or upgrade a purchase or leave.

d. Revenue Forecasting with Seasonality Adjustments

Fourth strategy used by Adobe was making revenue forecasts by adding season based factors as well.

For example. Adobe created the usual revenue forecasts.

And then added the data of seasonal trends.

Let’s say it is creative week celebration across the country. The revenue would increase. But this revenue would incur because of seasonal trend.

So, in addition to usual revenue forecasts, Adobe would also add in seasonal trends to see how those seasonal trends affect the Adobe’s Revenue Forecasts.

Same goes for macroeconomic indicators. It’s about incorporating economy related data into revenue forecasts, such as inflation rate, interest rate etc.

Same goes for marketing calendar data. It’s about incorporating marketing related activities data into revenue forecasts data. Marketing calendar data may include all the expenditures related to marketing activity, and expected future revenue driven by potential leads.

What this did for Adobe financial analytics?

Adobe was able to align marketing spend with future revenue that they may recognize.

Think of it as thinking and analyzing revenue holistically, with reference to different changing variables such as seasonal trends, macroeconomic factors and internal variables that are linked to external variables indirectly, such as marketing calendar data.

Adobe used following financial metrics and formulas to optimize subscription revenue:

1. Monthly recurring revenue → Revenue that is sure to be generated from users on monthly basis.

2. Churn rate → Tells number of customers (in percentage) left in a particular time duration.

3. ARPU (Average Revenue Per User) → Tells the revenue that get assigned to each customer after distribution of total revenue to all customers.

4. Customer Lifetime Value (LTV) → This calculates the total revenue generated by customer on its entire user relationship time with Adobe.

The usage of these formulas to optimize subscription revenue tells about the focus of Adobe and its understanding of ways to optimize revenue through these financial formulas and metrics.

Such as finding out about

1. Monthly recurring revenue

2. Number of customers leaving after using the subscription

3. Amount of Revenue generated by each user on average.

4. All the possible profit that is likely to be generated by subscriber during its average lifetime use of subscription services.

If all these are themed, we can say, Adobe studied in detail:

1. Revenue → Monthly revenue, Average Revenue

2. Customers → Customers leaving

3. Revenue & customers → Profit generated from customers during their entire lifetime.

Formula’s were:

1. MRR (Monthly Recurring Revenue) = Total Active Subscriptions x Average Revenue per Subscription.

2. Churn Rate = (Customers Lost during Period / Total customers at Start) x 100

3. ARPU (Average Revenue Per User) = Total Revenue / Number of Active Users.

3. Forecast Accuracy (%) = Accuracy = [ 1 — ( I Forecast — Actual | / Actual ] x 100

4. Customer Lifetime Value (LTV) = ARPU x Gross Margin x Average Customer Lifespan (months)

The results of all the deployments and strategy implementations were:

a. The number of customers that left after subscribing, that number reduced. It was due to their proactive and intentional campaigns to ensure that customers do not leave after subscribing and convert into their long-term customer.

The number reduced by 2.3% year-over-year.

And to achieve this, they improved their products & service offerings and influenced the customer to become their long-term business revenue source.

b. The average revenue per user (ARPU) grew in significant percentage.

They were able to achieve this growth number based on the research work they did in their revenue generation and their existing customer base.

They were able to identify their existing customer segment, the one’s who had inclination towards making a more purchase from them. → They knew this because they had studied their customer financial behaviour and generated insights,

This way they were able to sell those particular customer segments more. In return they spread the total revenue among all users and this led to increase in Average Revenue Per User (ARPU).

Besides this, based on their research on customer segments, they determined the potential of high paying customers. And then not only they optimized prices of products & features but also recognized their requirements and sold them more.

This way their global ARPU increased by 7.1%.

c. With targeted efforts, the subscription revenue increased and covered 94% of total revenue.

The 94% revenue equals to $17.4 billion in numbers.

And this improved the predictability as well.

This tells that revenue became their main source of earning.

d. Their ability to forecast improved and they were able to make forecasts with 90% accuracy.

They were able to achieve this by making curating their financial models, making refined adjustments on seasonal factors.

Seasonal factors can be referred to those that usually occur during seasonal trends.

Conclusion:

Adobe was able to improve its revenue and increase it exponentially by doing financial analysis of its subscription data and customer data.

This strategy showed how Adobe was able to harness the potential of data in improving long-term revenue growth and increasing the value of customer.

In this strategy, Adobe focused on three things and then combined their results to evaluate the total impact:

a. Created churn prediction model → to evaluate how many customers left.

b. Tested offers → worked on it’s pricing strategies (optimized prices).

c. Improved revenue forecasting → By working on data minutely to the very smallest of detail, Adobe was able to improve forecast accuracy.

With all this, Adobe refined its monetization strategy, i.e. it was able to monetize its products & services in optimal way. And ensured that its old users stay and keep making purchase from them.

This case of Adobe can serve as a classic example for all those trying to learn how SaaS (Software as a solution) companies can optimize their revenue.

It’s simple subscription economics with advanced level financial insight. It means generating advanced level financial insight on available data at the intersection of finance and customers. And then working on subscription science in detail, combining it with customer level demographics and financial behaviors.

The end.

Review & Analysis by Rimshah Rehman.

If you have made it to the end and would like to discuss, share thoughts or just want to add, I am happy to learn 🙌.

DM me, drop a comment, or email me at: rimshahrehman@gmail.com

Source document: https://lnkd.in/dhBBhmcR

Note: In first two written work, the fact-based part is brainstormed with AI.

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The article was originally posted on August 24, 2026, 07:15 PM on another platform → First Draft (to be edited). Posted here on August 24, 2026, 08:16 PM.

Review & Analysis

Brief about company, its background and challenges:

Helen of Troy Ltd is an American company. It deals in consumer products worldwide.

It sells products in housewares, health & home, and beauty industries.

They have maintained the market presence in following places: Africa, Europe, North America, Latin America, Middle East, and Asia Pacific.

Some of the renowned brands in portfolio are Vicks, Braun, PUR, OXO, and Honeywell.

The company was doing relatively well, but then in first quarter of fiscal year 2024, company began to observe decline in demand and perhaps a shift in consumer behavior.

In business & economics, demand determines the growth of business. The greater the demand, the higher the production and the sales.

Shift in consumer behavior is about change in their purchase preference. And there can be countless reasons, perhaps, they found better product, alternative solution, better prices or great quality. The list goes on.

These could have proven profound challenge for Helen of Troy Ltd company, regardless, they did well.

Their financial results were strong due to strategic improvements they made in ‘Working Capital Management’.

Working capital is the difference of current assets and current liabilities.

Positive working capital interprets that company would have sufficient assets even after all its short-term obligations are paid off.

And having a continuous additional working capital assists organization in making effective short-term investment decisions.

Helen of Troy Ltd worked to improve their results by improving working capital management, especially inventory optimization.

Since Helen of Troy Ltd is global consumer products company. The inventory items they would be having at their company or associated places: raw materials, work-in-progress goods (partially completed goods), finished goods, merchandise stock (retail items for resale), low-turnover SKU’s (products that needs optimization), excess/overstock (surplus items), supply chain buffers (safety stock kept to absorb demand or lead-time variability).

All these listed items under inventory can be categorized as part of current assets in working capital.

And optimization of inventory implies, thinking ahead, taking care of customer requirements, the whole journey of product along with supply chain is scrupulously planned, forecasted, calculated and measured.

It ensures, if any losses that may arise due to these are reduce to none or at least to a merely negligible level.

This straightens out many lines across the board, the stock management, customer demand, close-to-accurate forecasts, cost reduction, proactive approach, improvement in revenues, better customer/business services and eventually great financial results.

Inventory optimization reduces costs. And the effort that goes into optimizing inventory results in creating efficient & effective systems, processes & procedures.

Those systems, processes and procedures could be around:

• Digitalization of stock data into systems.

• Automating tasks, whether it is forecasting demand, sales or sourcing for next week, month or season.

• Using new tech/automated machines to optimize work in stock storage places, such as picking up inventory and then storing it safely in storage.

• Putting all things in order in such a way that they are easily retrievable.

• Keeping records and staying updated on stock health.

• Being updated just in right time to replenish the stock, considering the stock demand forecast and sales to be made based on forecasts or orders.

The list goes on. When all such processes, systems are automated, updated and digitalized, it lets company to prevent losses that happen due to excess of stock or mismanagement or miscommunication.

This level of inventory optimization ensures that nothing gets swayed and everything is absolutely taken care of. It optimizes their operational capabilities to the best. Then as a result, liquidity improves, cash flows improve. It let company to make strategic short-term investments. And let’s them generate better profits.

They worked to optimize inventory. And this led them to improve all the other connected systems & operations to it. Such as:

→ Improved cash flows

→ Increasing profits

→ Better operational system

→ Reducing excess inventory

→ Improving customer experience

→ Ensures product availability

This simple idea to optimize inventory, becomes core part of company’s transformation strategy.

Because in the process of optimizing inventory, Helen of Troy Ltd transformed their whole company stock storage facility, all the systems/processes/procedures associated with it.

This transformation strategy also assisted them to be proactive in their approach, led them to maintain financial stability in an unpredictable market.

Strategic Actions

Helen of Troy Ltd took strategic financial and operational actions to improve inefficiencies in working capital. Which eventually became part of whole transformation strategy.

Their focus was on:

1. Inventory Optimization — Operational strategy

2. Supply Chain Adjustments — Operational strategy

3. Restructuring and Cost Reduction — Financial strategy

1. Inventory Optimization

As discussed earlier in detail how one can optimize the inventory. The possible and probable ways.

However, these following mentioned ones lists the ways Helen of Troy Ltd company used to optimize inventory.

a. They might review whole inventory of all the brands of the company.

The review may include:

• Checking availability of stock.

• Reviewing health & life of stock.

• Checking replenishment requirements of stock.

• Seeing if rearrangement is required.

• If old stock needs to be discarded.

• If enough storage is available for stock that may arrive in some time.

b. The team identified the products with low demand, hence less turnover (low-turnover SKU’s).

Those products would became excess in stock. Therefore they would be required to reduce and move out of storage place.

Here, they tried to optimize inventory and solved this problem by doing better demand forecasting and replenishment planning.

________

SKU → Stock Keeping Unit

It is an identification code assigned to products or items within the inventory.

It assists in tracking products for following purposes: Sales, stock, management and logistics.

Example:

• A blue, size-S Nike shoe has one SKU.

• A red, size — L Nike shoe has two SKU.

The same T-shirt with different size or color will have different SKU.

_________

Possible ways to forecast demand of customers for the products, so that inventory could be optimized:

1. Create a historical record of all past sales.

2. Evaluate sales with respect to different frames, weekly, fortnightly, monthly, quarterly, half-year, annually, seasonal sales wise, at particular occasions or instances when sales soared or declined, and with respect to different economic indicators such as inflation, interest rate, market volatility, competitor products demand / new launch.

3. With all the data available create a number of demand forecast tables:

a. Forecast demand with contemporary sales record and add some continuous growth percentage. → This would evaluate and add up new sales.

b. Forecast demand with historical sales record. Those would be varying number and add a similar percentage change as in previous years. → This would evaluate and forecast sales retention.

c. Forecast demand with historical sales + contemporary sales record, here add continuous growth percentage with compounding growth percentage. -> This would evaluate and forecast cumulative demand for retention of sales, the consistent continuous growth, and compounding growth percentage.

Now that sufficient data is available to do better demand forecast, Helen of Troy Ltd can evaluate the difference in demand forecast to actual sales.

They can plan for stock replenishment and inventory optimization, accordingly.

Replenishing only the required at the minimum and creating several subsequent plans for replenishment.

Possible ways to forecast demand of customers for the products, so that inventory could be optimized:

1. Create a historical record of all past sales.

2. Evaluate sales with respect to different frames, weekly, fortnightly, monthly, quarterly, half-year, annually, seasonal sales wise, at particular occasions or instances when sales soared or declined, and with respect to different economic indicators such as inflation, interest rate, market volatility, competitor products demand / new launch.

3. With all the data available create a number of demand forecast tables:

a. Forecast demand with contemporary sales record and add some continuous growth percentage. → This would evaluate and add up new sales.

b. Forecast demand with historical sales record. Those would be varying number and add a similar percentage change as in previous years. → This would evaluate and forecast sales retention.

c. Forecast demand with historical sales + contemporary sales record, here add continuous growth percentage with compounding growth percentage. -> This would evaluate and forecast cumulative demand for retention of sales, the consistent continuous growth, and compounding growth percentage.

Now that sufficient data is available to do better demand forecast, Helen of Troy Ltd can evaluate the difference in demand forecast to actual sales.

They can plan for stock replenishment and inventory optimization, accordingly.

Replenishing only the required at the minimum and creating several subsequent plans for replenishment.

The second strategic operational action, to optimize and work through inefficiencies in working capital, is Supply Chain Adjustments.

It is all about maintaining strong relationship with Suppliers and other stakeholders connected, directly or indirectly.

They include:

1. Collaboration with suppliers.

2. Renegotiating lead times.

3. Discussing changes in lot sizes.

Company can collaborate with suppliers on many things, including renegotiating lead times and lot sizes.

Other points of collaboration could be:

a. Working on timelines for the specific SKU’s in demand.

b. Discussing about inventory health during supply.

c. Collaborating on live dashboards, tracing shipments together all the way from production to on way to the time it reaches storage place → to maximize delivery efficiency.

Renegotiating lead times & lot sizes could be:

a. Changing timelines of certain products based on their demand.

b. Making request to arrange for some products to be delivered earlier than discussed previously → per pre-defined mechanism.

c. Making request to increase production of few/certain products because their demand increased.

All these steps ensure that supply chain becomes more responsive and cost effective.

Since, all the systems/procedures are put into place to reduce friction and all the points of hindrances. Which makes supply chain more responsive.

Because the demand is being continuously evaluated and analyzed for different products, the losses then observed are reduced to minimum or zero. All compensating for the cost, eventually.

The third strategic financial action is restructuring and reducing costs.

Given all the work going on with inventory optimization and supply chain adjustments, some restructuring is already done. Like how when inventory was being optimized per the demand forecast, the storage space was kept up to date at all times. Minimizing the losses and reducing the costs.

That restructuring and cost reduction was indirect, a secondary outcome of a primary action.

Whilst doing restructuring and cost reduction intentionally as primary strategic financial action. It involves:

1. Launching a business transformation initiative → specifically focused on streamlining operations.

• Automating & digitalizing end-to-end employee and user journeys.

• Finding hindrances and challenges, addressing them actively to make the work journey seamless & flawless.

2. Optimizing headcount (resources).

• Creating clear draft for work that needs to be done.

• Finding the tasks that can be automated and digitalized.

When work is optimized, less resources are required, comparatively.

3. Optimizing overhead control.

• Streamlining processes.

• Standardizing workflows.

• Integrate technology → applying analytics & identifying inefficiencies,

• Optimizing workforce per the work demand.

• Manage vendors & supplier relationships effectively.

• Segregating costs per product to make effortful evaluations.

• Make operations model lean, reduce management layers, work efficiently.

4. Improving cash flow margins.

• When processes are streamlined, it improves margin between operating cash inflows and outflows.

• Since overstaffing is monitored, costs reduce.

• Deploying strategy of faster receivables and extended payables.

• Optimizing headcount, improves revenue per employee, reducing costs, hence improving operating cash inflows, comparatively.

To track the overall performance of Helen of Troy Ltd in the area of working capital optimization, few key working capital metrics are evaluated, such as:

1. Inventory Turnover Ratio

2. Days Inventory Outstanding (DIO)

3. Cash Conversion Cycle (CCC)

Inventory Turnover Ratio tells the number of times inventory was replenished in a year or certain time duration.

Usually the new inventory is stocked (replenished) when the products/items are sold or if the inventory is not in good condition.

This can be evaluated by following formula:

Inventory Turnover = Cost of Goods Sold / Average Inventory

Cost of Goods Sold is the total amount of cost incurred on a product or per SKU.

Where as average inventory is calculated when all the inventory in stock, available at the end of year is added with the beginning inventory of that year and the sum is divided with two in number.

Average inventory = Beginning Inventory + Ending Inventory / 2

When Cost of Goods Sold is divided with Average Inventory it gives the total amount of times inventory was replenished.

Why is this important metric to evaluate, because it tells about the operational efficiency of the company and their idea of handling cash flows.

If the Inventory Turnover Ratio is high per the industry standards, it reflects that they are not holding stock and selling it quickly, matching the demand.

Whereas if the Inventory Turnover Ratio is low per the industry standard, it shows there are stock management issues and they are not efficiently managing them.

Assuming the following benchmark within the industry:

- Fast fashion retailers → Exceeding 10–12

- Consumer goods firms → Helen of Troy ranging 4–7

Picking up numbers of Helen of Troy Ltd from their published financial data ( https://lnkd.in/ds5bg__F ) :

COGS = $993,259,000

Beginning Inventory = $395,995,000

Ending Inventory = $452,615,000

Average Inventory = 395,995,000 + 452,615,000 / 2

Average Inventory = 424,305,000

Inventory Turnover = 993,259,000/424,305,000

Inventory Turnover = 2.34

It tells that Helen of Troy Ltd replenished inventory 2.34 times in a year. A collective number for all the consumer products. However, if the same is evaluated per product category, the results may differ.

It can be interpreted that Helen of Troy Ltd was not that efficient or reached their goals of inventory optimization as yet. Which is a work in process, where all the strategies and all things are put into works.

Second financial metric for evaluation is, Day’s Inventory Outstanding (DIO).

It shows the time inventory was kept in stock keeping place before it got sold.

This number tells if the operations are swift and efficient. Complementing the prevailing demand of the customer for the product kept in stock.

It is possible, there is demand of product by the customer but because stock management is not that efficient, the days inventory outstanding number as a result, appears more.

And less number in days inventory outstanding (DIO) could interpret for different answers, few of them could be: more demand and efficient stock operation system, less demand and efficient stock operation system, more demand and inefficient operation system, etc.

The formula is:

DIO = (Average Inventory / Cost of Goods Sold) x 365

When average inventory is divided with cost of goods sold and multiplied by 365 days, the number denotes DIO (Days Inventory Outstanding).

Showing how long has the stock been kept ever since it was purchased and until it got sold.

Putting in data of Helen of Troy Ltd company for the years 2024–2.

Average Inventory = 424,305,000

COGS = $993,259,000

DIO = 424,305,000 / 993,259,000 x 365

DIO = 155.922 days.

The number interprets that on average, it took Helen of Troy Ltd ~155 days to keep the inventory after purchase and make a sale.

It means the inventory was sold at least once and replenished twice in a year. Making the stock available for next year.

Third financial metric to evaluate working capital efficiency is Cash Conversion Cycle (CCC).

It shows the time company takes to convert goods into sales (cash).

This number tells how good is company at demand forecast, achieving the target of sales, and then eventually the collections & payments process.

The better & faster the collection as per industry standard defined structure, the better liquidity. Similarly, for the payables.

In the case of Helen of Troy Ltd company, where they were working on improving working capital efficiency. Finding out how many days it would take to convert goods into cash and then working on it component by component to make improvements. Such as achieving a better number in Cash Conversion Cycle (CCC).

It all led them to transform their internal operations, making them effective, efficient and lean.

The formula for Cash Conversion Cycle (CCC):

CCC = DIO + Days Sales Outstanding (DSO) — Days Payable Outstanding (DPO)

Some estimated numbers from Helen of Troy Ltd company (https://lnkd.in/dTX_jVDt)

Days Inventory Outstanding (DIO) = ~166.6 days

Days Sales Outstanding (DSO) = ~ 58.1 days

Days Payable Outstanding (DPO) = ~ 77.9 days

CCC = DIO + DSO + DPO

CCC = 166.6 + 58.1–77.9

CCC = 166.8 days

The number shows that it took Helen of Troy Ltd ~ 166.8 days to convert goods into cash. It includes all the days beginning from the day materials were procured, to the time sales were made, reducing that time from the days payable outstanding (DPO).

It shows absolute number of all the goods that have been converted to cash, showing the liquidity position of the company.

It interprets that at least twice a year goods are sold and cash is collected, improving the short-term liquidity stability of the company.

The outcome shows that the Earning Per Share (EPS) $1.94 exceeded the expectation for the one’s evaluating (investors). It interprets one of the two things, either the net-income increased and number of shares remained same. Or the net-income remained same or decreased, simultaneously, number of shares also decreased. Deriving the end result more or less same.

Since Revenue showed decrease, it means the net income did not increase, rather the number of shares reduced, diluting the net income spread over the number of shares.

However, improved Gross Margin shows that company worked on their cost structure quite effectively & efficiently. This means they have worked in detail on their various consumer products, optimizing costs for each product line.

To evaluate this individually, it appears the operating margins increased, signifying that they were able to successfully reduce expenses and their operations became leaner.

And they have more free cash flow (FCF), because they optimized their inventory with close to better demand forecast, hence improving liquidity

This tells how the Helen of Troy Ltd company compensated with shifting consumer demand & behavior. They expected reduced revenues, but since nothing could be changed and transformed over night, they tried to work on what can improve & transform, making an effort to make it efficient.

They worked on inventory, made operations leaner, which reduced costs & expenses. Therefore, even when their revenue dipped, they tried to maintain EPS with total number of shares. Whilst improving Gross Profit Margin, Operating Margin, and Free Cash Flow (FCF).

Some stats from Case Study are:

1. EPS → $1.94

2. Revenue → $474.7 million year-over-year of 6.6%

3. Gross Profit Margin → 380 basis points to 45.4%

4. Operating Margin → 8.6% increased from 6.7%

5. Free Cash Flow → Low inventory holdings, robust receivable collection practices

Conclusion

Helen of Troy’s Limited company used working capital management strategy to its advantage when consumer and market behavior began to shift, due to changing macroeconomic factors.

Deploying working capital management strategy improved efficiency after inventory was optimized.

Keeping the stock based on demand forecast, reduced the inventory.

Whilst simultaneously increasing the supplier collaboration added to the efficiency. And this optimized the whole process.

As a result, their operations improved, various operation and investment related financial metrics showed great numbers, despite the overall decrease in revenue.

Regardless, their cash flows improved because of efficient inventory storage system in place. Improving overall profitability and strengthening liquidity.

Two factors played key roles:

1. Financial Analytics

2. Operational Discipline

And both these factors are used to drive shareholder value.

[The end].

Analysis & Review by Rimshah Rehman.

If you have made it to the end and would like to discuss, share thoughts or just want to add, I am happy to learn 🙌.

DM me, drop a comment, or email me at: rimshahrehman@gmail.com 🙏

Source document: https://lnkd.in/dhBBhmcR

Keywords:

#CaseStudy #HelenOfTroyLtd #WorkingCapitalEfficiency #MarketChallenges #Demand #ConsumerBehavior #WorkingCapitalManagement

#InventoryOptimization #InventoryItems

#ReducingCosts #TransformationStrategy #Digitalization #Automation

#StrategicActions #FinancialActions #OperationalActions #WorkingCapital #OptimizationInventory #InventoryReview #SKUTurnover #StockManagement #Logistics #ReplenishmentPlanning #Forecasting

#HistoricalRecord #PastSales #DataAvailability #MarketVolatility #GrowthPercentage

#StrategicAction #Suppliers #LeadTimes #Collaboration #SKUs #SupplyChain #CostEffective

#Restructuring #ReducingCosts #SupplyChainAdjustments

#InventoryTurnoverRatio #DaysInventoryOutstanding #CashConversionCycle #CostsOfGoodsSold

#AverageInventory

#Collections #PaymentProcess #Transform

#EPS #NetIncome #Revenue #GrossMargin #OperatingMargin #Costs #FreeCashFlow

#ManagementStrategy #Supplier #Operation #Revenue #Profitability #Liquidity #FinancialAnalytics #OperationalDiscipline #ShareholderValue

The article was originally posted on May 20, 2026, 09:41 PM → First Draft (to be edited). Posted here on June 06, 2026, 11:35 PM.

I have been meaning to learn and read about Islamic Banking, exploring the concept of Interest-Free banking or Ethical banking ever since long it has gained momentum. Not only in Asia but in other continents too and is spreading fast. Which is good thing, that people / consumer get the interest-free finance.

But what happens that more so, in the implementation and interpretation of some concepts because of varied opinions on the matter. And how the concept is approached. The functional implementation seems to mismatch from the core principles, based on which whole foundations of a systematic systems are established.

So, to learn and work on it, I have picked up a learning material, A book named Islamic Banking — A Practical Perspective by Kamal Khir ▪ Lakesh Gupta ▪ Bala Shamungam. Published by Pearson Longman in year 2008.

I would be sharing my studying notes/observation here. One’s that would appear contradicting to the core principles of the two: the foundations of Interest-Free and the function of financial institutions in implementation.

Since, I myself am learning, any and all corrections would be welcomed wholeheartedly. Always happy to learn & improve 🙌.

Edits for easy perusal of this live draft:

1. June 04, 2026, 01:32 PM — Studying Islamic Banking. Exploratory research into the concept.
2. August 03, 2026 11:02 PM — Growth of Islamic Finance, Banking Scope and Customer base.
3. August 04, 2026 07:41 PM — Definition of Islamic Banking

4. August 12, 2026 12: 59 AM — Discussion on Shariah principles

1. June 04, 2026, 01:32 PM — Studying Islamic Banking. Exploratory research into the concept.

Studying the Islamic Banking, the concept the perspective. Exploratory research into the concept. To be later translated into a series of articles.

Chapter 1: Introduction to Islamic Banking

The paragraph quote’s: “The operation of Islamic Financial institutions are based on a profit and loss sharing principle. An Islamic bank does not charge any interest for the financing offered to customers but rather participates in the yield, resulting from the use of funds. On the other hand, depositors get their share from the bank’s profit based on a pre-determined ratio.” — Islamic Banking, A Practical Perspective.

The concept of profit and loss sharing seems apt and its application in Interest-Free Banking.

However, when it says that ‘Bank does not charge any interest for the financing offered to customers but rather participates in the yield, resulting from the use of funds. On the other hand, depositors get their share from the bank’s profit based on a pre-determined ratio’.

Here the concept seems to dwindle from its core principle and perhaps generating the favorable interpretation, followed by letting it into functional implementation.

What does this mean is that when banks offer financing to customers, banks are not charging interest on the financing that banks are providing to customers. But asking them to participate (it could mean sharing their part or something from their own for the benefit they are getting by using the funds, in the form of financing from the bank).

Now, here in this part the very concept of ‘asking to participate because they (customers) have used the funds for financing is incorrect’. Why? Because it interprets per the principle of very practice. Which translates into, no money creation over money, rather on some sort of trade.

Trade happens when tangible or palpable things are involved. Some commodity is sold or purchased, against which earnings are earned.

When no commodity is involved, the participation is earning money over money. Which is in principle prohibited.

Assuming some financing is being done, which would involve some commodity. A person assisting Person B in purchasing some asset. In return person A ask for additional funds for assistance in purchasing the asset. That in principle will not be the trade.

Trade happens when person A sell something to person B. Person B purchases from person A at defined and fair price value. Either in lum-sum or in installments. It could be the base value of commodity plus the certain amount of profit that the seller would keep. The fair percentage of which would be defined and would not necessarily be more than 5% or 10% of total fair-price value.

So, this interpretation of principle for Islamic Banking (Interest free banking) per the principles, written in the quoted words does not seem right. Where the participants are asked to participate because they used the funds.

2. August 03, 2026 11:02 PM — Growth of Islamic Finance, Banking Scope and Customer base.

The paragraph quotes: “With the growth of Islamic finance, banks are now introducing various riba-free products and services to expand the banking scope and customer base.” — Islamic Banking, A Practical Perspective.

Islamic finance has gained popularity with time because of its very riba-free products and services. In essence, the underlying system in Islamic Finance is such that it benefits both the bank and the customer equally.

The concept of riba-free products & services entails that banks will not charge interest, the additional money on the funds deposited by the customers. Rather, both parties would reap the benefit of investment returns.

However, it also implies that bank may deduct the service charges incurred on the riba-free products & services. One’s that would be enlisted as the rightful earning of bank. How? Because bank’s did made some expense while making investments of funds of both the parties (the bank & customer).

Therefore, while profit & loss is shared, the expenses incurred by bank side in the process is also shared and charged from customers in the form of fee.

This concept of Islamic finance, where riba-free products & services are offered proved to be successful and gradually, various banks began to adopt it, expanded their banking scope. Once they expanded their banking scope, it increased their customer base too.

The customers who would not normally invest or deposit funds in conventional banks due to non-riba free concept. They would happily invest funds in Islamic banks, one’s offering riba-free products & services. Hence increasing the customer base of banks too.

3. August 04, 2026, 07:41 PM — Definition of Islamic Banking

An Islamic bank is a financial institution that operates with the objective to implement the economic and financial principles of Islam in the banking arena. Islamic banking has been defined in a number of ways.

The definition of the Islamic bank, as approved by the General Secretariat of the Organisation of the Islamic Conference (OIC), is stated in the following manner:

“… An Islamic bank is a financial institution whose statuses, rules and procedures expressly state its commitment to the principle of shariah and to the banning of the receipt and payment of interest of any of its operations…” — Ali Sarkar, 1995

According to the Islamic Banking Act 1983, Malaysia an Islamic bank is “…a company which carries on Islamic banking business, Islamic banking business means banking whose aims and operations do not involve any element which is not approved by the religion of Islam…” — Islamic Banking Act, 1983

From the above definitions we can summarize that Islamic financial institutions are institutions that are based on Shariah principles. This shall include but not be limited to the following Islamic principles:

1. The avoidance of riba (in the broad sense of unjustified increase or interest);

2. Prohibition of gharar (uncertainty, risk, speculation);

3. Focus on halal (religiously permissible) activities; and

4. More generally the quest for justice and other ethical and religious goals.

In essence, Islamic banking operations are based on the Islamic principles for financial transactions, i.e., risk-sharing and prohibition of products and services having riba and profit and loss-sharing are major features, ensuring justice and quity in the economy. — Islamic Banking, A Practical Perspective.

Concept of Islamic banking entails, that financial institutions will carry out their transaction business on the Islamic principles of finance and banking.

Islamic banking has been translated by relevant experts in different ways.

The OIC approved definition of Islamic Banking states that a financial institution will be considered a Islamic Bank if its policies and procedures reflect the compliance to shariah principles. And that its financial operations would not take or receive the interest in any form.

However, the definition of Islamic Banking per the Islamic Banking Act 1983, Malaysia states. A company which calls itself Islamic Bank will be considered Islamic Bank if its objectives and operations are in full compliance with all the elements of religion of Islam.

This means if a bank has certain objective. That objective should follow the Islamic Principle. Think of how the law works in Saudi Arabia. Kind of no decision is fixed per law; all is governed & decided by the shariah boards (of justice) there.

Similarly, if a bank has certain operations (think of functions as well), that should also be in compliance with the religion of Islam.

The definition approved by OIC is partly broad and partly specific, mentioning the interests and prohibiting it expressly.

Whereas the definition by Malaysian Act 1983, is taking the specific (aims & operations) into broad (which is, do not involve any element which is not approved by the religion of Islam).

When it comes to aims & objective and operations, it's not just one element of interest. Then comes many different things in scope. Even, how to do business, applying the core Islamic principles of doing business, the conduct of employees, the way things should be, it’s more like complete code of doing banking business in Islamic way.

4. August 12, 2026 12: 59 AM — Discussion on Shariah principles

These definitions tell us that Islamic financial Institutions are governed on Islamic fundamentals. To be precise, the Shariah Principles.

Think of Shariah as a guide to conduct the financial matters in a proven right way.

The usual financial business encourages interest and benefits the person charging interest, while the giver is at loss (in principle).

Shariah principle guided way of business neutralizes this impact of imbalance. Where on party keeps getting rich by earning interest and other party in agreement keep paying the interest and principle amount for longer term. Which from perspective of Shariah principle is incorrect and unjust.

Therefore, the first & foremost principle of Shariah for financial institutions is Prohibition of interest.

In Islamic terms, the interest is termed as riba.

It is defined as an unjustified increase of interest.

And therefore, the principle states, to avoid riba.

It means to conduct all business financial transactions independent of riba. The terms of agreement be such that both parties benefit, no riba is involved. And both parties get justified funds.

[In next will discuss the rest].

Brief:

This case study is about Dell Inc. It is an American technology company selling computers.

Manufacturing and selling computers require a lot of capital. For all the purposes, to ensure demand-based stock is available and nothing extra goes to waste.

Dell solved this by implementing Direct-to-Consumer sales model.

Per this model, Dell source inventory to assemble only when the product is ordered.

Two points to note here:

→ Dell is taking orders direct from the customer (retail or corporate).

→ Dell is selling directly to the customer (retail or corporate).

It reduced several middles level layers to two only, the manufacturer and the ultimate consumer.

Working capital optimization strategy:

The reduction in middle level layers meant less expenses, more cost savings, deriving more revenue.

In addition to this it was also about working on user journey.

They found a solution to efficiently manage cashflows through working capital optimization strategy. After deploying this strategy, it also solved & improved the overall user journey.

Working capital is the difference between Current Assets & Current Liabilities in Balance Sheet Section of the company.

Balance Sheet is one of the financial statements of the company, it tells about the financial health of company at any given point in time (assumed, it is updated).

Working Capital in equation form: Current Assets — Current Liabilities.

The positive number (Working Capital) means the company has sufficient cash (or assets that can be easily converted to cash) to pay its short-term obligations (payables etc.).

And the negative number means otherwise, explaining that a company is not able to pay its short-term obligations effective immediately.

For example:

Company has, Current Assets = 100,000 and Current Liabilities = 40,000, the working capital would be = +60,000.

Working Capital = +60,000, shows that company has this much amount in excess after paying its short-term obligations. It is a good indicative number for working capital & cashflows.

When company has positive working capital, the cash flows are in better position. Those additional cash flows can be utilized to make short-term unplanned investments when the opportunity arises. It often gives company a competitive edge that extends towards long-term benefits.

[Note: Having excessive working capital is not always good indicator in finance, because different companies have different capital structures, size and nature of business. Therefore, it varies for each company/sector/industry. And working capital cannot be evaluated independent of all the other factors in financial statements.]

For Dell Inc. deploying ‘working capital optimization strategy’ changed how they work and did their business. It increased their revenues, decreased the costs and changed the way they interacted with the customers and suppliers.

Concept of Negative Cash Conversion Cycle

Dell managed cash flows & maintained liquidity, effectively.

After receiving order and payment from customers (retail), the inventory sourcing request was made to suppliers. And the payment was made as per industry standard payable time duration.

In this process, because of fast cash collection and delayed payment time duration, the days required to convert sales into cash reduced to less than 0 (negative). Therefore, the cash conversion cycle is called Negative Cash Conversion Cycle.

As a result:

1. It reduced the inventory stock, all the management required to maintain it & the expenses that came along with it.

2. It sped up the Cash Conversion Cycle.

3. Increased liquidity.

4. Reduced reliance on external financing.

The negative cash conversion cycle strategy worked well for Dell. It freed up cash for strategic investments and improved overall financial performance.

With this they were able to achieve sustainable competitive advantage among all its competitors. And also, by managing operations (through working capital strategy) effectively.

To manage working capital efficiently, Dell worked on the components of Current Assets and Current Liabilities. The evaluation process of components is called comprehensive analysis.

Those components are part of the following formulas:

1. Inventory Ratio

2. Days Sales Outstanding (DSO)

3. Days Payable Outstanding (DPO)

4. Cash Conversion Cycle (CCC)

Inventory Turnover Ratio is calculated to find out how efficiently inventory is managed.

The formula for Inventory Turnover is:

Inventory Turnover = Cost of Goods Sold (COGS) / Average Inventory

Inventory Turnover Ratio tells how many times the inventory was replenished within a year. Companies with different business nature have different replenishing requirements.

Those who sell well, tend to replenish more. While those who do not sell much but well (think of high-end products) they replenish less in quantity but high in volume.

The term Cost of Goods Sold (COGS) refers to the costs of producing goods for example, labor, materials etc.

This cost is usually recognized when the sale is made.

The term average inventory means total available inventory at the end of the year.

The formula to calculate the average inventory: Beginning Inventory + Ending Inventory / 2

The amount tells the total inventory available at the end of the year.

When this amount is compared against the total cost of goods sold amount, the answer tells the number of times the inventory was replenished in that year.

For example: To find out the number of times the inventory is replenished in a year for a retail fashion industry.

Cost of Goods Sold = 500,000

Average Inventory = 100,000

Inventory Ratio = 500,000/100,000

Inventory Ratio = 5

Here, Inventory Ratio is 5, it indicates that this particular retail fashion company replenishes its inventory five times in a year.

In the Case of Dell Company, their numbers for year 2025 are as following:

1. Annual Cost of Goods Sold (COGS) = 74.317 billion (Source: Macro Trends https://lnkd.in/di3A3jJg)

2. Average Inventory = 5.169 billion (GuruFocus https://lnkd.in/dn9i4U-C)

Inventory Ratio of Dell for year 2025 = 74.317 billion / 5.169 billion

Inventory Ratio of Dell for year 2025 = 14.38

This 14.38 shows that Dell replenished its inventory in year 2025 approximately 14 times.

For Dell this is a successful number, showing they are doing better than many companies in different industries.

As their working capital optimization strategy (negative cash conversion cycle) and their business model of Build-to-order, worked and proved to be successful.

Days Sales Outstanding (DSO), another financial ratio that Dell’s finance team used.

It measures average payment collection duration after the sale has been made.

The average number of days it takes to collect payments from the buyers.

For seller, it will be recorded in accounts receivable (payment collection). And the time duration is derived from Days Sales Outstanding (DSO) formula, the number of days.

The formula for Days Sales Outstanding (DSO) is,

DSO = (Accounts Receivable / Total Credit Sales) x Number of Days

Account Receivable = Total amount yet to be received, after sale has been made.

Total Credit Sales = Total amount of sale made.

Number of Days = Since this is annual calculation, the total number of days taken would be for whole year, which is 365.

When the amount, which is yet to be collected is evaluated on per unit basis against the total credit sales made, in reference to the time duration since the amount is yet to be collected, the result gives Days Sales Outstanding (DSO) number.

If the days sales outstanding (DSO) number is higher, it means, the cash collection is slow, and their cash flows are not being managed, effectively.

If the days sales outstanding (DSO) number is low, it means, the cash collection is fast, their cash flows are being managed effectively. Enabling company to make short-term investment decisions, with facing shortages in liquidity.

For example, in the case of Dell Company their data for year 2025 is as follows:

1. Accounts Receivable: 10.2 billion (https://lnkd.in/dQFZWsaG)

2. Total Credit Sales: 95.6 billion (https://lnkd.in/d3gpzsr7)

Number of Days: 365

As per this data, their Days Sales Outstanding (DSO) would be:

Accounts Receivable / Total Credit Sales x 365

DSO = 10.2 / 95.6 x 365

DSO = 38.94 or ~ 39 days

This DSO number for Dell is comparatively less than other similar hardware companies. For them, usually the number is 50–60 days.

Days Payable Outstanding (DPO) measures the amount of time that a company takes to pay the suppliers.

Suppliers are the partners of Dell. They provide Dell with all the components to assemble the customized product.

It’s order-to-delivery workflow would be:

1. Customer sends customized computer request to Dell.

2. Dell receives the request along with payment.

3. Dell then sent the requirements of finished components to different suppliers.

3. Once Dell receives the products from suppliers on credit.

4. Then it assemble the whole product in one piece.

5. And sends to the customer.

6. All while Dell has the amount on hand in cash form, forming sufficient liquidity.

7. And then Dell pays the amount to supplier later on as per industry standard payable time or even extended payable times.

8. The peculiar advantage here is of collecting funds upfront from customers. Something that makes all the difference.

The formula for Days Payable Outstanding (DPO) is,

DPO = (Accounts Payable / Cost of Goods Sold) x Number of Days

Accounts Payable = Total amount yet to be paid, after sourcing order has been received.

Cost of Goods Sold = The total cost it took to create a product or service, which is to be sold later on.

Number of Days = Since this is annual calculation, the total number of days taken would be for whole year, which is 365.

Account payable is evaluated on per unit basis against the cost of goods sold amount, in reference to total number of days in each year.

If the days payable outstanding (DPO) number is higher, it means, the cash availability is for longer time, and their cash flows are being managed effectively.

If the days payable outstanding (DPO) number is low, it means, the cash availability is for shorter time, and their cash flows are not being managed effectively.

Enabling company to make short-term investment decisions, without facing shortages in liquidity.

Cash Conversion Cycle (CCC) measures the amount of time company takes to convert inventory into sale and then eventually into cash flows.

The formula:

Cash Conversion Cycle (CCC) = DSO + Days Inventory Outstanding (DIO) — DPO (Days Payable Outstanding)

Explanation: To find out the time it takes to convert cash, all the time is added. Beginning from the time sale is made and days it takes to collect that sale payment (DSO).

And in that time duration, number of days are also added where the inventory is sourced to make a sale, until the sale is made, the number of days that inventory remains outstanding (DIO).

Once all this time is added, then the number of days it takes for a company to pay to suppliers (DPO) is deducted from all the added numbers. Which gives the result of number of days it takes to convert resource inputs into cash flows (CCC).

In the case of Dell, they are collecting payment after sale, upfront. So, for them the Days Sales Outstanding (DSO) would be 0. And for Days Inventory Outstanding (DIO) data, Dell only source components from suppliers after customer has ordered to assemble a customized laptop.

Therefore, the Days Inventory remain outstanding will be equivalent to the time customer placed the order and the day it is delivered to customer. The difference in number of days would be no more than 7 perhaps (a tentative number).

And since Dell pay to its suppliers long after it has sourced the inventory, the payment time to suppliers/vendors is usually 50–60 days.

And if all these numbers are put into the formula:

CCC = DSO + Days Inventory Outstanding (DIO) — DPO

CCC = 0 + 7–60

CCC = -53 days

The answer — 53 days for cash conversion cycle (CCC) indicates that its a Negative Cash Conversion Cycle.

Implying, that the sale amount gets instantly converted into cash the moment sale is made, regardless of when the payments are made to suppliers.

And this very result of getting Negative Cash Conversion Cycle, creates competitive edge for Dell.

If actual data from Dell Technologies put into the formula, per Dell’s financial disclosures (Oct 2025 Quarterly):

It would be:

- DSO = 45.18 days

- DIO = 30.17 days

- DPO = 109.22 days

The formula:

CCC = DSO + DIO — DPO

CCC = 45.18 + 30.17–109.22

CCC = -33.87 days.

Numbers taken from: https://lnkd.in/dcykm9Yv

Answer is Negative Cash Conversion Cycle (-CCC) = -33.87 days.

After comprehensive analysis of Dell’s working capital components was done. It generated following insights.

1. Their inventory levels reduced exponentially, when they:

a. Implemented Just-in-Time (JIT) inventory system.

b. Maintained strong supplier relationships.

2. They deployed the Direct Sales Model method, it assisted them in:

a. Accelerating receivable collection.

b. Effectively lowering the DSO.

3. For payments Dell tried to increase its payments term: paying late (with extended terms) to suppliers. This increased its Days Payable Outstanding (DPO).

And the combination of all three:

• Lean inventory management system,

• Direct sales model and

• Paying suppliers after a long time.

This all-led Dell to achieve Negative Cash Conversion Cycle (CCC).

Core strategies implemented by Dell

Some of the core strategies they implemented, were:

1. Just-In-Time Inventory

It is about sourcing inventory only when its needed. That means the moment customer places an order, Dell sends request to components supplier.

There must be some forecasts kept and demand evaluated, according to which they would keep just the right amount of inventory.

Implementation of this method:

a. Reduce the excess stock

b. Reduce the storage costs

c. Align production of laptops with customer demand

These are the apparent costs that reduced. While all the associated costs also vanished away when these costs were reduced.

Such as costs that goes in hiring of extra staff for maintenance, the extra assets that would have been required otherwise, the extra utility charges that would have otherwise incurred, the extra labor payments that a company would have made.

All such costs reduced when they implemented efficient Just-In-Time Inventory strategy.

Another core strategy that Dell implemented to achieve the results was, Direct Sales Model.

In Direct-Sales Model method, companies tend to sell directly to customers.

It means by passing all the layers in between, such as Distributor, Wholesalers, Middleman, and Retailers.

So lets say a usual manufacturing company would manufacture a product, then would sell it to distributor, who would sell it to wholesaler, and then wholesaler would sell it to retailer. Then retailer would sell it to the consumer.

What happens in this cycle of product creation by manufacturer, getting through all the layers in middle and then to the customer?

→ The purchase price of the product increases for the buyer.

→ The expiry life of product (assuming its perishable) gets less when it reaches the ultimate customer.

→ And it takes more time to reach the customer (market) after it has been created in the manufacturing industry.

But all this changes, when a manufacturing company directly sells to the customer.

What benefits does the manufacturing company and customers gets,

For manufacturing company:

→ They are able to sell directly to customer.

→ Forecast precise demands.

→ Able to know about customer preferences, incase it plans to launch a new product line.

→ Reduce costs exponentially because of better demand forecasts & demand cycle.

→ Able to collect sales amount instantaneously and having less receivables to record on books.

For customer:

→ Purchase product at best cost-effective prices.

→ They receive best quality product.

→ Incase of any damages, the replacement & refund times are faster.

→ In case of any questions about the product or service, they can communicate directly to the manufacturer.

Direct Sales Model (DSM) method is famous among manufacturing and assembling industries, such as Dell in this case, because of its benefits.

Although, for Dell it worked because they were making online sales and therefore, they did not have to make a lot of investment in physical stores/outlets. And as discussed earlier, in addition to Direct-Sales-Model strategy, Just-In-Time Strategy, complemented it just too well.

It made sales fast and efficient, sales amount was collected way too fast, and they got to know their customers in person.

Third core strategy of Dell is Supplier Relationship Management.

This strategy is also a strategic choice for Dell. It aligns just right with the other two strategies of Dell. Just-In-Time Inventory and Direct Sales method.

This one complements the other two.

For Dell, half of the business model is dependent on Supplier Relationship Management.

The better the business relationship, the better the business model thrives.

Since Dell implemented Just-In-Time inventory and sourced inventory on time. It is crucial that the timing of requesting the inventory and acquiring it, is maintained.

From Dell’s side it would be made sure at all times, because for them their business depends on it. However, for supplier, vendor, its business too but for them Dell is another client in their portfolio.

From Dell’s perspective its crucial to maintain supplier relationship well because it is tied to their core business model.

For Supplier, Dell is a client. If they do not happen to provide even one order on time to Dell. Supplier’s business would keep thriving (assuming it had many other clients as Dell). But for Dell, it would affect its whole business line, every part of the business.

Therefore, for Dell maintaining Supplier Relationship Management is of utmost importance.

This strategy includes:

→ To maintain payment terms, one’s that are favorable to Dell and thoroughly negotiated.

→ Maintaining supplier trust. It could be ensuring that payments are decided earlier, be paid timely and in an absolute manner.

→ And the supplier relationship journey is well-looked after. Making it frictionless & seamless at all interaction points.

Building on these foundations, maintaining Supplier Relationship Management, Dell can also negotiate on extended payment terms, as and however suitable to both the businesses, per the prevalent industry standard.

The last core strategy that Dell used was Technology Integration.

The term appears rigid, sturdy and a jargon, but quite interpretive in its implementation function.

It simply means to connect all things and everything in Dell business and the systems/frameworks, with Technology.

Since the core of Dell’s business relies on efficient inventory management with respect to time, and maintaining relationships with all stakeholders, especially suppliers and customers.

Suppliers for sourcing inventory in just right time and customers for receiving orders and delivering them timely.

To achieve this level of efficiency, it would have only possible to do so with real-time data systems.

One’s that can track inventory in real-time. And process orders simultaneously.

All such automation is possible by deploying classical AI and Machine Learning.

Also, this tech is most suitable for pattern recognition and making accurate predictions. Complementing the business model and nature of Dell’s business.

When all processes and systems are digitalized and automated, the process would be to:

1. Receive orders online from customers.

2. Those online orders receiving interface would be connected with the inventory management system.

3. Updating in real time the receipt & confirmation of demand.

4. The inventory management interface would process the request.

5. The request would land at supplier interface, where an order would be placed to supplier.

6. Once confirmation is received from supplier on date and time of delivery, the same would be communicated to customer, on user interface.

With all this preliminary work going on, where all the interfaces would be connected among themselves, similar to forming a chain like connection.

The other layers/interfaces would add up where its required, such as processing of payments → connecting with financial institutions, and for replenishing inventory → connecting with the exclusive supplier interface which works merely for replenishment purposes and responds just-in-time.

This sort of technology integration becomes game-changer for businesses like Dell, adapting to ‘Order-to-Build’ business model.

This also means, maintaining equally well relationship with Technology vendors/suppliers/business partners. Since everything is based on tech, it also becomes one of the crucial aspects for doing business. Because all the orders are coming from online requests, most of them other than corporate ones. But even the corporate ones would be later on processed on system.

Having & maintaining 99.9999% up-time in technology, ensuring it is available at all times, up & ready for conducting business, will also be one of the challenges and also the competitive edge.

For those willing to read article posted on IT Strategy by Dell, it can be read here: https://learning.dell.com/content/dam/dell-emc/documents/en-us/2023KS_Gupta-IT_Strategy_for_a_Technological_World.pdf?utm_source=copilot.com

Summarizing it: What Dell did was incredibly out of the box, applying some novel business model, never thought of before in the industry that Dell operated.

Essentially, it reduced the layer of literal manufacturing of components. And use that edge to create a new business model: order-to-build.

Per this business model, Dell was able to optimize its working capital strategy. As a result, many transformative changes took place.

→ Dell was able to implement lean inventory management system.

→ No stock management was required, because only the most essential stock was kept, that too when customer placed an order.

→ Their operations streamlined.

→ Because their Cash Conversion Cycle was negative (due to upfront cash collection amount), they had more cash flows.

→ It led Dell to fund its internal operations without borrowing or reduced level of borrowing, which led to reduced costs in borrowing.

→ Because of all the cash available, they were able to redirect and use it for short-term financing such as Research & Development and into market expansion.

All this gave Dell strategic financial freedom for short term financing. It improved their liquidity position, earned profits fast.

That earning profits fast, added all the edge. They were supposed to earn them, but earning them fast, made them do their business with impetus.

And because of this, Dell appeared as a leader not just in technology, but in operational finance efficiency.

Because Dell connected all, the tech, the inventory, the orders received from customer. It created a business model, but along with it the system/process/framework as well. It made Dell to become efficient in its operation.

It is concluded that Dell achieved operational excellence.

Everything that Dell did, in terms of deploying strategies, creating management systems, improving processes, using strategic business model, and then weaving it all in technology to create seamless user journey either for internal or external stakeholders.

It all translated into Dell’s long-terms success.

→ Dell worked on its working capital management.

→ Used financial analytics.

→ Managed inventory, receivables and payables.

→ Gained strategic cash flow advantage.

All this was achieved in seamless manner by aligning financial strategies with operational processes.

[The end.]

Analysis & Review by Rimshah Rehman.

If you have made it to the end and would like to discuss, share thoughts or just want to add, I am happy to learn 🙌.

Drop a comment, or email me at: rimshahrehman@gmail.com 🙏

Source document: https://lnkd.in/dhBBhmcR

Keywords:

#CaseStudy #DellIncs #WorkingCapital #OptimzationStrategy #AmericanTechnology #Manufacturing #Capital #InventoryManagement #Demand #DirectConsumerSales #PersonalComputer

#Order #Concept #CashFlow #SuppliersSupply #SimpleTerms #Customers #Payments #Retailers #Wholesalers #InventoryStock #Collection #ClearingPayments #BusinessPractices

#Strategy #Expenses #CostSavings #Revenue #UserJourneys #Solutions #WorkingCapital #CurrentAssets #CurrentLiabilities #BalanceSheet #FinancialStatements #InventoryTurnoverRatio

#CurrentAssets #CurrentLiabilities #InventoryTurnoverRatio #AverageInventory #DaysPayableOutstanding #FinancialRatio #DellsFinanceTeam

#UpfrontCashCollection #CostOfGoodsSold #DaysSalesOutstanding #ComprehensiveAnalysis #Insights #DellsBusinessModel #Liquidity #CoreStrategies #JustInTimeInventory #Laptops #CustomerDemand #ExcessStock #StorageCosts #LabourPayments #Assets

#DirectSalesModel #Customers #Distributors #Wholesalers #Retailers #SupplierRelationshipManagement #StrategicChoice #DirectSalesMethod

#DellsCoreStrategy #TechnologyIntegration #Interpretive #ImplementationFunction #DellBusiness #Suppliers #MachineLearning #BusinessModel #OrderToBuild

#Outcomes #BusinessModels #ManufacturingComponents #OrderToBuild #WorkingCapitalStrategy #CashConversionCycle #ResearchAndDevelopment #MarketExpansion

#OperationalExcellence #CompetitiveAdvantage #Strategies #ManagementSystem #StrategicBusinessModels #StrategicCashFlow #FinancialStrategies

The article was posted on May 07, 2026, 10:15 PM → First Edit.

Reading up on the National Financial Inclusion Strategy (2024–2028) — Link: https://lnkd.in/dggQSBUv. I realized, the progress is not instant. Rather clubbed together in small chunks. One forming the base for another. Preparing for the next step. A slow and gradual process but definitely worth it.

The concept of Financial Inclusion is about providing access to Formal Financial Services to all segments of society, regardless of whichever segment they belong to.

Formal Financial Services include seamless access to individuals and businesses, in following finance categories:

1. Payments
2. Savings
3. Credit
4. Investment facilities

The ultimate goal is to develop the economy, steer it forward towards growth.

Achieving the goals mean covering atleast 9 of the 17 Sustainable Development Goals (SDGs) of United Nations.

Those nine SDGs include:

1. Poverty Eradication
2. Hunger Alleviation
3. Health Improvement
4. Gender Equality
5. Economic Empowerment
6. Job Creation
7. Innovation Support
8. Infrastructure Development
9. Inequality Reduction

Once financial inclusion goals are achieved, it would ultimately achieve the SDG goals.

Ever since year 2015 till date, three NFIS documents have been published.

The latest one with timeline extending to year 2028.

The main goal of NFIS (2024–2028) is to reduce the gender gap by 25% atleast. And bring Financial Inclusion number to 50% (incase of men & women).

It means, at present the gender gap is 75%, when it would reduce by 25%, the gender gap would reach at 50%. Where the number of men and women would become equal in workforce.

The report shows that percentage of Adult population having bank accounts in Pakistan, is as following:

16% → 2015 (Sixteen percent in year 2015).
64% → 2023 (Sixty-four percent in year 2023).

The first two NFIS (2015 & 2023) policies leveraged the new technologies, to achieve the above mentioned numbers:

1. Supportive Regulatory Frameworks and
2. Enhanced Public Private Partnerships

Their aim was to achieve, the ease of access and use of formal financial services, through following initiatives of State Bank of Pakistan:
1. Asaan Digital Account (ADA)
2. Asaan Mobile Account (AMA)
3. Raast (RAAST)

After implementation of these initiatives, the number of women’s financial inclusion in the country increased.

The numbers noted by December 2023 were:

1. 2018 → 13 million women owned 1 bank account.

Reducing gender gap to 47%.

2. 2023 → 31 million women owned 1 bank account.

Reducing gender gap between men & women to 34%.

If adult population with bank accounts are evaluated in different years.

It is observed on available data that total adult population with bank accounts in year 2008 was around 10.5% — 11%.

Which increased & improved to staggering 64% in 15 years, that is year 2023.

It shows how deliberate efforts improve the numbers and set the trajectory, align them with national policies of the state.

The gender gap reduced from 47% (2018) → 34% (2023).

The difference in percentages for both male & female in these years are:

Male: 70% (2018) → 23% (2018).

Female: 81% (2023) → 47% (2023).

Since improvement was observed, NFIS 2024–28 was introduced.

The aim of NFIS (2024–28) was to:

1. Tackle challenges in implementing financial inclusion.
2. Invest in digitalization: for innovation and find new solutions to improve financial inclusion.

NFIS (2024–28) goals were to improve financial inclusion.

They aimed to achieve this by implementing following strategies:

1. Working on availability of formal financial services.
2. Using secure and easy digital financial services.
3. Improving ecosystem for priority sector financing.
4. Strengthening capabilities of both financial institutions and consumers.

They were focused on following segments:

1. Underserved areas.
2. Unserved areas.
3. Vulnerable segments (Women, youth and disabled persons).

In areas such as SME, Housing, Agriculture, Microfinance and Sustainable finance.

At the intersection of above-mentioned segments and areas, they wanted to alleviate the low-income & under privileged population segments, to reduce the gender gap.

What is now called a Financial Inclusion journey, it began back in year 1956, when State Bank of Pakistan’s SBP-ACT 1956 was launched.

The aim was to have a thriving economy, either through:

a. Credit management within the economy or.
b. By provision of loans to agricultural, commercial & industrial sectors.

It was achieved when they introduced the ‘passbook system’ and ‘enhanced finance access to large agricultural population’.

After these various initiatives were introduced from time-to-time:

1. SBP ACT 1956.
2. Private sector work (1980).
3. Microfinance Institutions Ordinance, 2001.
4. Development Finance Group (DFG), 2006.
5. Branchless banking, 2008.
6. NFIS 2015.
7. NFIS 2023.
8. SBP Initiatives.
9. Banking on Equality (BoE) Policy 2021.
10. NFIS (2024–2028).

Following SBP ACT 1956, in year 1980 private sector aimed to promote access to micro-credit within the country, through:

a. Orangi Pilot Project.
b. Aga Khan Rural Support Program.

Then, when Development Finance Group (DFG) was established in year 2006, it launched Financial Inclusion Program with FCDO (formerly DFID UK). As part of the program, they wanted to enhance capacity and improve financial sector, making it more inclusive. Providing equitable and efficient financial services to different segments.

Then came year 2008 and formal foundation for branchless banking was set. State Bank of Pakistan introduced special regulations, introduced provisions for banking services, and leveraged the capabilities of large network of agents of mobile network operators.

Introduction of Branchless Banking Regulations kept things moving. It met the requirements of financial users who preferred banking independent of location.

Seeing the results and improvements along with the areas that could better complement the Branchless Banking, concept of Financial Inclusion was incorporated. All while also evaluating economic requirements of the country.

National Financial Inclusion Strategy (NFIS) 2015, was launched. Its aim was to make reforms in financial system. Reforms that would make financial system of the country more agile, digital and inclusive.

The approach worked. As part of its achievement Public Private Partnership Platforms were launched. They gathered more than 65 diverse financial institutions under one united platform. Something that changed the landscape of financial inclusion.

One major achievement of NFIS 2015 was opening of accounts remotely under Branchless Banking. Which led access of formal financial services to underserved and unserved segments, increasing percentage of financial inclusion.

Then NFIS 2018 (second edition) was launched, based on first one.

While some of the notable achievements of NFIS 2023 were:

a. Huge achievement numbers were set for financial inclusion.
b. After this, 65 million active accounts were recorded making digital transactions.
c. By year 2023, 20 million women owned accounts.

Financial inclusion meant providing enabling environment so that everyone could contribute and make financial system equally stable.

It means the financial system will not only be shaped by a particular group. But will be a product of the efforts of all. The very thing that would make it peculiar and user friendly.

They found a way (think of strategy) to do that. First they began with identification of WAYS to enhance following:

a. Increase access.
b. Increase usage of various financial services.

Financial services such as:

i. Digital payments
ii. Access to finance
iii. Low-cost housing
iv. Interest Free (Islamic) banking

And they were all weaved around the theme of:

a. Broad financial inclusion: Considering all, leaving not a single segment or sector out.

b. Promoting digital financial services: Letting more and more people to use digital financial services.

c. Leveraging technology: Using technology to make financial services more and more accessible.

Time and again SBP has been trying to improve financial services, improving the access and usage.

Few key initiatives taken by SBP in this regard were:

1. ASAAN Mobile Account Scheme.
2. Digital On-boarding Framework.
3. RAAST.
4. Roshan Digital Account (RDA).
5. Licensing Framework for Digital Banks.

With all this they wanted to improve and reduce the gender gap. So that equal financial & economic opportunities are accessible to all. It means when financial inclusion is improving gender gap within the economy is reducing.

Then came year 2021 and Banking on Equality Policy (BoE) was introduced. It had clear objectives and aims to achieve.

i. Reduce gender gap ratio within the financial sector.
ii. Set targets to achieve.
iii. Enable better financial environment for women.
iv. Ensure they are tantamount to men in both categories such as customers and staff members.
v. Beside of it all, they tried to make policies and procedures that are inclusive.
vi. And with these notable efforts, the gender gap indeed reduced from 47% (2018) to 34% (2023).

While financial inclusion was part of the initiative, they added customer awareness in the mix. As that would also complement and enhance the efforts of imparting financial management skills among denizens, such as:

1. Sikka Bakaida
2. National Financial Literacy Program for Youth (NFLP-Y).

Those financial literacy program initiatives were designed for following areas:

1. Rural
2. Peri-Urban Area

Results:
i. 3.2 million people (beneficiaries) were trained.
ii. Of these 58% were women.

Where depositors increased both in terms of numbers and percentages.

If this whole journey is deduced and evaluated. One reaches the understanding that it is not a 100% planned sojourn, rather a vision. One that reaches its culmination after one achievement leads to another with improvements being added on the way. A rationale which is calculated and journey measured.

So, if Financial Inclusion journey is mapped from year 2015 to year 2023, it deliberates if how the focus is shifted gradually incorporating different themes within them. Which becomes apparent when curated initiatives take the conclusive form.

Listed below is the journey of Financial Inclusion in four different time frames:

2015–2017 idea: Improve banking financial system for all.

a. Digital initiatives taken: Verification system, remote account opening, pension payments.
b. Innovative and specialized products: Quota dedication.
d. Financial Literacy & Awareness: National financial literacy program.

2018–2019: Focus shifted to Innovation, all while keeping digitalization efforts along.

a. Digital initiatives taken: Innovation Challenged Facility (ICF) and National Payment Systems Strategy (NPSS).
c. Priority Sector Financing: Digitalization of land records.

2021: When digitalization improved a bit and picked up the pace, emphasized focus was placed on Inclusion and Equality. Catering the small medium sectors more.

a. Digital initiatives taken: Raast, Asaan Digital Account (ADA) and Asaan Mobile Account (AMA).
b. Innovative & Specialized Products: Banking on Equality (BoE) Policy.
c. Priority Sector Financing: National SME Policy.

2022–2023: It was observed that in addition to digitalization, the focus was also placed on shares/investments, promotion of interest free banking, solving storage related supply chain problems, and credit lines.

a. Digital Initiatives Taken: CDNS Digitalization, CDC integration with Raast.
b. Innovative & Specialized Products: Promotion of specialized islamic finance.
c. Priority Sector Financing: National Credit Guarantee.

In this visual of info-chart shown below, it shows how different banking metrics in Pakistan improved over the span of time.

They showed collective improvement in numbers (all the way till year 2023) after focused efforts were made as part of financial inclusion initiatives.

Though, these numbers stacked in form of cards below, may not be mutually exclusive because of financial inclusion initiatives, rather a result of mutually inclusive efforts.

But some of them actually happened to improve because of focused financial inclusion initiatives.

These can be:

1. Number of digital transactions = 2,073.3 million.

2. Value of these digital transactions = 167.4 trillion.

3. Deposits grew to = 27.8 trillion (168% ⬆)

4. Growth in female active accounts = 35 million (224% ⬆)

What these numbers infer?

That when focused efforts are made towards certain initiatives such as increasing financial inclusion. It also means creating an indirect effect and impact on related banking metrics.

For example, the focus was to increase the number of women in financial sector. Providing them opportunities to access formal financial services. Once that avenue was provided. It also improved other financial metrics, such as increasing the collective number of transactions, value of transactions, number of branches or overall collective number of adult populations within the country.

It concludes to premise that when one thing improves, it ultimately improves other connected things as well.

Card Visuals (made on: https://flourish.studio/) shared on: https://lnkd.in/d3gxwUQz

By year 2023 gender gap was 34% and financial inclusion 64%.

If set targets are achieved by year 2028, the gender gap would reduce to 25%, while financial inclusion will increase to 75%.

They both are indirectly proportional here.

And all these efforts are in accordance with SBP vision of ‘elevating financial well-being and living standards of the people of Pakistan’.

The objective of that vision is ‘to improve the use and quality of financial services, while providing access to all’.

Per this NFIS 2024–28, the priority will be given to agriculture and SME sector, to improve the usage and quality of financial services there.

For this Action Framework is devised, which is based on five sustainable goals:

Strategic Goal 1

Ensure availability and usage of financial services in unserved and underserved areas.

How will they do that?

By trying to mobilize diverse connected stakeholders. One who share the same vision and objective.

Strategy:

a. Improve financial services access to remote areas.
b. Increase access points in those areas.
c. Development of physical and digital infrastructure.

The detailed part of the strategy would be to:

a. Do market research there.
b. Create database.
c. Curate tailored and apt financial solutions.
d. Prepare related documentations.
e. Map it all.
f. Devise further expansion plans based on available data.
g. Encouraging banks to participate in fulfilling the plans.
h. Arrange and assist in financial literacy campaigns.
i. Organize financial/entrepreneurship skill-based trainings.
j. Test the financial solutions devised, to see if they work/complement.
k. Simultaneously, work on development of payment systems infrastructure.
l. Work on focused implementable plan to create digital ecosystem.

As part of NFIS 2024–28, the Strategic Goal-2 is, Promoting secure and Easy Digital Financial Services:

When we think of providing financial services to underserved and unserved areas, the goal is not only to provide financial services but the ones that are easy and secure as well.

Something that could be easily achieved through the concept of Digitalization. Because it reduces time & distance, increases speed and provides an ability to connect across the globe just instantly.

Users can:

1. Make swift payments.
2. Manage financial wellbeing through: Savings, investments, credit.

The collective end result of which would be:

a. Encouraging economic growth.
b. Reducing poverty.

Something that would only be possible when one can leverage the digitalization tool potential to improve digital financial inclusion.

Ways to do that would be:

1. Increase digital payment access points across the board, for all within the economy: customers, merchants, retailers etc.

2. Increasing focus and promotion of research in payments, fintech and technology areas.

3. Develop encouraging framework, policies and procedures that are favorable to achieve digital financial inclusion goals (providing formal financial services) through digitalization.

4. Conduct feasibility studies for new innovative solutions and ensure their compatibility. All while keep upgrading the infrastructure, ensuring that it gets ready and prepared when new tech based innovative solutions are introduced.

5. Provide formal financial solution services for underserved and unserved sector by integrating it with participating financial institutions.

6. Work on Regulatory Sandbox to evaluate and test the innovative solutions in controlled test environment.

Strategic Goal 3: Strengthen priority sector financing ecosystem.

They aim to improve this by introducing lending based products & services. Encouraging so much so among businesses in banks that it becomes routine in Priority Sector Financing.

In addition to this they are also taking into consideration the latest developments on economy and technology side. Then based on this evaluating the current practices in their respective businesses, such as Agriculture, SME, Housing, Microfinance and Sustainable finance. So that they can match it with the evolving trends and market needs. This alignment would be achieved as part of Specific Strategic Actions.

Besides, nothing can serve the objectives of financial inclusion better than trying to focus on ways to let low-income population gain access to formal financial services through microfinancing.

This microfinancing can serve as a way to alleviate masses to better socio-economic status.

Something that would not only boost the large part of economy but would also assist in improving the purchasing power of goods & services, creating a positive impact on value of currency.

Because these small businesses are the ones with access to remote areas where major brand products or services do not have access or reach.

The flow/hierarchy of Microfinance sector would be as follows:

1. Microfinance Banks (MFBs) regulated by SBP.
2. Microfinance Institutions (MFI’s) regulated by SECP.
3. Rural Support Programs (RSPs).

MFB’s (operates through) -> Branchless Banking (outreach Potential) -> BB Agents, Mobile Wallets.

MFB’s (Partners with) -> Telecom operators (increasing footprint). — -> It is the essential key driver in improving financial inclusion.

How NFIS 2024–28 plans to improve the microfinance sector?

1. Digitalization of existing services.
2. Boosting liquidity for the sector.
3. Developing scorecard-based financing.
4. Strengthening partnerships with commercial banks.
5. Reducing operating costs.

To promote Priority Sector Financing Ecosystem as part of Strategic Goal 3:

1. Ensure to make digital lending services accessible for all individuals and micro enterprises, in a more systematic way.

2. Streamline existing microfinance facilities through collaboration, make them more aligned to evolving requirements of emerging markets.

3. With digitalization, the aim is to reduce the costs of lending products and services, all while aiming to improve the customer outreach.

4. To ensure all untapped sectors are catered for the microfinance services. Introduce interest-free lending products & services, for those aiming for interest free financing services.

5. Take several initiatives to ensure that microfinance sector remains sustainable and robust in its growth. Those initiatives could be providing guidelines, establishing credit guarantee/risk sharing facilities, arrangements for funding, promoting micro-insurance products & services, create deposit protection mechanism, promote financial inclusion in microfinance sector under the umbrella of National Credit Guarantee Company (NCGC).

All in all its about creating and improving not just the microfinance services or promoting microfinance sector but also to try and enable such ecosystem that it flourishes for a longer time. Assist in improving the overall economy, making the process continuous and more of available platform to cater the growing immediate requirements of short-term micro financing for small & medium enterprise businesses.

Strategic Goal 3: Enhancing Priority Sector Financing (Agriculture Finance).

Why Agriculture financing became a huge part in financial inclusion?

It can be deciphered from the statistics, that connect agriculture to economy directly and indirectly.

⚡Directly:

1. It contributes one-fourth of the GDP.

2. Provides employment to more than one-fourth of the population.

⚡Indirectly:

More than half of Pakistan’s population is dependent on agriculture sector for their businesses and jobs.

Therefore, SBP introduced the financing products for agriculture sector. The aim is to encourage and support the underserved areas in this sector. So that it can do better. And these existing numbers improve a bit.

✔Impact it will create:

1. Pave the rails for sustainable economic development.

2. Reduces poverty.

3. Increases food security.

◼ Some innovative and meaningful efforts made in this regards,

1. To improve agriculture financing numbers, encouraged the digitalization of agriculture land records.

2. Assist and plan with them the collateral management.

3. Prepare thoughtful scorecards, considering the agriculture sector dynamics.

4. Learn, assist and design better risk management strategies for disaster/climate related adverse effects.

◼ Some digitalization initiatives that can make agriculture financing easier:

1. Digitalize land records.

2. Integrate land data with banks to streamline finance disbursement processes.

3. Digitalize warehouses and all the work therein.

4. Make agriculture financing absolutely digital at all points of customer interaction, from the stage of onboarding to the stage to disbursement.

5. Enable, equip and encourage farmers to use mobile apps for their financing & banking requirements.

6. Launch agriculture related services, to better guide farmers on their farming, land, crops etc for better farming processes. All while increasing their agriculture finance outreach as well.

🌿A brief conclusion: Improve farming and all the related processes through guided mechanization and digitalizing all financing requirements end-to-end.

Strategic Goal 3: Enhancing Priority Sector Financing (SME Finance).

SME’s are Small and Medium Enterprises. They are not large and established businesses. Therefore, comparatively more in number and contribute most. They are located in remote and semi urban areas, where access of large & international level established businesses is not found.

So, these Small & Medium level enterprise businesses become the main source of medium for public to contribute their economic activity and improve the Gross Domestic Product (GDP) percentage.

Statistics show:

1. Total number of SME’s: 5 million.

2. Employing the labour: 80% non-agriculture labor force.

3. SME’s contribution in GDP: 40%.

4. SME’s contribution in exports of Pakistan: 25%.

5. SMEs’s availing financing from banking sector: 155,000/5,000,000 (3.1%).

With these numbers it could be established that if focused efforts are taken and they are doubled in numbers. It would significantly improve the overall economy and macro-economic factors.

So, assuming if the numbers of SME’s are doubled from 5 million to 10 million till year 2028.

Other possible macroeconomic indicators based on realistic adjustment growth, would improve as following:

At 5 million SME’s contribution in GDP is 40%
At 10 million the contribution to GDP would most probably be 50%+.
Similarly, the contribution to exports might increase from 25% to 35%+.

And if focused efforts are made then the numbers of availing financing facility by SME sector would improve significantly.

This tells us how potentially well SME financing could improve the economic structure only if the focused efforts are made. Such as this NFIS 2024–28 document of SBP.

Some measures taken to make SME financing accessible and improve overall macroeconomic numbers:

1. Digitalize SME financing from start-to-end.

2. Use latest technology to make processes faster & seamless.

3. Take actionable and measurable steps to make it more inclusive.

4. Raise awareness among startups/SME’s of formal financial facility availability at banks and similar microfinance institutions.

In brief: When the numbers of small & medium enterprises improve significantly, it improves the overall macro-economic factors, such as GDP. Also, when focused efforts are made to increase the numbers thoughtfully, such as ensuring it is easy, accessible, people oriented, inclusive, the outcome is establishing a thriving & sustainable SME ecosystem.

Strategic goal 3: Enhancing Priority Sector Financing (Housing Finance).

When housing finance is encouraged, it also encourages other related activities related to financing, Such as construction of homes and buildings. And in that process, it lets the constructors to get several buyers and purchasers in its creation,

As a result, economic activity boosts. Since people are employed, employment rate increases. When payments are issued, it adds more money within the economy.

Also, improving an overall happiness factor among masses.

Making this part of NFIS 2024–28, increases the focused efforts in this domain, hence solving one of the large adhesive factors in this large ecosystem.

Some of the initiatives taken in this domain are:

1. Exploring innovative financing solutions for low-cost housing and SME financing.

2. Study the international and local business landscape related to housing finance solutions.

3. Encourage digital score card for housing finance.

4. Encourage and promote green housing finance policy.

Strategic Goal 3: Priority Sector Financing (Sustainable Finance).

There have been a lot of talks, conversations and insightful discussions among intelligentsia on matters related to climate change.

In essence, in financial institution, it is about rethinking how smart and innovative financial solutions can benefit finance industry overall. Not just by spending more, but by trying to mitigate the risk of loss. Which can be loss of some infrastructure or stock intensive businesses. Like how heatwaves and torrential rains spreads destruction.

Making any form of financing more risky.

Therefore, until better and robust solutions are found for climate related challenges. Till that time, Central Banks can promote adoption of green banking in finance sector, which is proven to be sustainable and promotes better economic progress.

This means that the regulators encourage farmers to adopt climate friendly practices and use climate friendly products in their business & farming. Once they do that, then financial institutions would cater and develop products that would assist farmers and agriculture sector to avail the climate smart SME financing solutions.

Collectively, following initiatives can be taken by financial institutions:

1. Research best practices on climate smart SME financing solutions.

2. SME financing teams to work with relevant stakeholders to gather insights and design better products.

3. Create credit scoring model for climate smart agriculture financing.

4. Work towards building awareness of banks on these climate smart agriculture financing products for farmers.

5. Launch awareness campaigns for farmers, where they can be assisted in developing climate-smart agricultural practices.

Strategic Goal 4: Making institutions more capable.

How can that be done?

1. By updating regulatory frameworks with the changing pace of business landscape.
2. Ensuring that financial institutions also match the same level of upgrades.
3. Their staff are trained and competitive adapting to the changing dynamics.

All this can be done with the availability of robust data and analysis. One would make policymaking effective.

Three possible ways that it can be done:

1. Policy & Regulatory Framework, and Infrastructure Development.
2. Capacity Building.
3. Enhancing Data Collection and Analytics Framework.

Policy & Regulatory Framework, and Infrastructure Development:

a. Central banks make these to create rules, practices and processes that financial institutions follow. So that enabling environment is created that ensures financial inclusion.

b. Keep updating Microfinance Institution frameworks to make them relevant with changing lending environment, both locally & globally.

c. Conduct study on interest-free banking.

d. Review all regulatory frameworks and keep updating them from time to time.

e. Work on financial inclusion and financial awareness programs through dedicated Youth Financial Inclusion Strategy.

f. Work on Banking on Equality (BoE) Policy that specifically focuses on women and their access to formal financial services.

g. Work on creating a detailed digital financial literacy strategy that focuses on creating digital literacy and awareness for all segments of society.

In conclusion: It is about ensuring that frameworks, policies and regulations are updated continuously as per the requirement of changing landscape, prudently. So, that they are relevant. It would ensure that the institutions are competitive, strengthened and resilient.

Strategic Goal 4: Making institutions more capable by,

1. Building capacity:

The fundamental way one can build capacity of financial institution is by training their employees. Equip them better with knowledge, skills and expertise. Because it is at the behest of people that organizations and institutions flourish. Introduce systems, lead them towards innovative solutions.

Also, this would sufficiently cover the goals under NFIS 2024–28.

Some of the ways that can be done:

a. Develop standardized content on different financing types and train employees.

b. Share the idea and knowledge of interest-free banking with government officials and ministries.

c. Conduct trainings/workshops on banking conduct & consumer protection of regulated entities.

d. Create accessible knowledge sharing hub, where employees can read, and skill-up their skills on emerging finance related trends.

2. Enhancing data collection & analytics framework:

Another way that regulator can build capacity of financial institutions is by doing focus work. Which means working on available data and then analyzing it to find the gaps and underserved & unserved segments. So that the targeted actions can be taken, such as:

a. Define the data / the terms, ensure they have singular meaning & understanding both in domestic & global markets.

b. Apply green approach when it comes to matter of drafting tax related frameworks & policies.

c. Conduct finance survey from customers and determine the demand & ongoing trends/preferences.

d. Conduct study to find out about the consumer behavior and their demand about finance products & services. Also, what do they think about available formal financial services.

e. Track the financial inclusion numbers with different factors and in reference to the time.

f. Develop financial inclusion dashboard that provides visual presentation of numbers on the financial inclusion indicators/results.

In conclusion: One of the core features that showcases resiliency of institutions, usually surfaces when focused work is done to build the capacity of institutions. Something that can be done by ensuring that policy & regulatory frameworks are relevant & up-to-date, employees are trained to build their capacity, incorporating data to make informed decisions.

Strategic Goal 5: Working on consumer protection, empowering them and increasing awareness.

Financial inclusion is not just about providing formal financial services to underserved & unserved segments. Rather doing all that but in addition to improving their financial literacy and taking into consideration the consumer protection, as well.

Therefore, central bank like SBP is keen to cover that aspects of formal financial services so that the trust and confidence of customers improves.

Along with that some measures under the domain of consumer protection, have also been taken to address the new type of risks that arise as the processes evolve with time.

And SBP is using the very medium of digital channels to reach wider audience to raise financial literacy and awareness.

Such as:

1. Guiding a particular customer segment through web post or video tutorial of, ‘how to open an account?’

2. Encourage use of digital channels.

3. Reach wider audience through social mediums.

4. Do campaigns in unserved and rural areas.

5. Conduct awareness sessions on different banking products/services.

6. Design customized programs for women specifically to increase their participation within the economy.

7. Work with media firms to improve the usage of digital channel such as Raast, with their ads and messaging.

8. For working on financial literacy at the very grass root level, develop curriculum and inculcate the financial learnings in their courses (chapters).

Conclusion: Work on financial inclusion but with the addition of following two factors in the mix: financial literacy (raising awareness) and ensuring consumer are well protected, as new types of risks emerge. To achieve these aims they are using digital mediums, media firms so that wide range of audience can be reached. And encouraged. guide, train, to use formal financial services. All while keeping specific focus on increasing the number of women.

Document reference: https://lnkd.in/dggQSBUv

Key words:

1. NFIS 2024-28
2. Financial Inclusion
3. Formal Financial Services
4. Finance Access
5. Economic Development
6. Sustainable Development Goals
7. Reducing Gender Gap
8. Adult Population
9. Bank Accounts
10. New Technologies
11. Supportive Regulatory Framework
12. Public Private Partnerships
13. Reduced Gender Gap
14. Digitalization
15. NFIS-2015
16. NFIS-2023
17. Investment
18. Innovation
19. Strategies
20. Digital Financial Services
21. Ecosystem
22. Underserved
23. Unserved
24. Vulnerable Segments
25. Privileged Population
26. Gender Gap
27. SBP ACT 1956
28. Economic Activity
29. Credit Management
30. Agricultural Loans
31. Commercial Loans
32. Industrial Sector Loans
33. Passbook System
34. Micro Projects
35. Financial Services
36. Branchless Banking Regulations
37. Financial Users
38. Reforms
39. Financial System
40. Agile
41. Public Private Partnership Platforms
42. Diverse Financial Institutions
43. Digital Transactions
44. Enabling Environment
45. Financial System
46. Particular Segment
47. User Friendly
48. Identification
49. Access
50. Digital Payments
51. Low-Cost Housing
52. Segments
53. Digital Financial Services
54. SBP
55. Usage
56. Key Initiatives
57. Asaan Mobile Account Scheme
58. Digital Onboarding Framework
59. Raast
60. RDA
61. License Framework
62. Policies & Procedures
63. Financial Sector
64. Literacy Program
65. Depositors
66. Percentages
67. Financial Inclusion Journey
68. Focus Shifted
69. Conclusive Form
70. Pension Payments
71. Specialized Products
72. National Financial Literacy Program
73. Priority Sector Financing
74. National Payments Systems Strategy
75. Digitalization Of Land Records
76. Visual
77. Info Chart
78. Banking Metric
79. Mutual Inclusive Efforts
80. Digital Transactions
81. Value
82. Deposits
83. Active Female Accounts
84. Collective Number
85. Indirectly Proportional
86. SBP Vision
87. SME Sector
88. Action Framework
89. Sustainable Goals
90. Connected Stakeholders
91. Digital Infrastructure
92. Market Research
93. Database
94. Expansion Plans
95. Financial Literacy Campaigns
96. Strategic Goal
97. Digital Financial Services
98. Time, Distance, Speed
99. Globe
100. Swift Payments
101. Financial Well Being
102. Savings
103. Investment
104. Credit Poverty Reduction, Financial Inclusion,
105. Digital Payment Access Points
106. Priority Sector Financing
107. Ecosystem
108. Lending
109. Products And Services
110. Latest Developments
111. Micro Finance
112. Sustainable Finance
113. Specific Strategic Actions
114. Low Income Population
115. Digital Lending Services
116. Microenterprises
117. Systematic Way
118. Microfinance Facilities
119. Alignment Strategy
120. Emerging Markets
121. Customer Outreach
122. Interest Free
123. Lending Products
124. Financing Services
125. GDP
126. Agriculture Sector
127. Under served
128. Businesses
129. Land Records
130. Score Cards
131. Adverse Effects
132. Digitalizing
133. Macro-Economic Factors
134. Construction
135. Homes
136. Buildings
137. Economic Activity
138. Employment Rate
139. Happiness
140. Focused Efforts
141. Adhesive Factors
142. Finance Solution
143. Digital Score Card
144. Sustainable Finance
145. Talks &Conversations
146. Insightful Discussions
147. Intelligentsia
148. Climate Change
149. Innovative Financial Solutions
150. Infrastructure
151. Robust Solutions Research
152. Launch Awareness Campaigns
153. Update Regulatory Frameworks
154. Business Landscape
155. Upgrades
156. Effective Policy Making
157. Infrastructure Development
158. Micro finance Institutions
159. Building Capacity
160. Fundamental Way
161. Knowledge
162. Skills & Expertise
163. Standard Content
164. Interest Free Banking
165. Taxonomy
166. Green Documentation
167. Data Analytics
168. Consumer Protection
169. Financial Literacy
170. Consumer Protection
171. Digital Channels
172. Raast
173. Grass Root Level
174. Financial Learnings

Originally posted in parts at:

1. https://lnkd.in/dpKFj3BU
2. https://lnkd.in/dQngziZf
3. https://lnkd.in/dnd4-Kus
4. https://lnkd.in/d5EizznM
5. https://lnkd.in/dn4MVDsc
6. https://lnkd.in/dwM5rtTk
7. https://lnkd.in/dkS759kD
8. https://lnkd.in/d2Ac6SgD
9. https://lnkd.in/dQuNvwXz
10. https://lnkd.in/dF-Y7dFA
11. https://lnkd.in/d4ZubQ6C
12. https://lnkd.in/dGAt54d9
13. https://lnkd.in/dpS_Ykmv
14. https://lnkd.in/dzsQgHXR
15. https://lnkd.in/dM2T4QeF
16. https://lnkd.in/dxKU75ub
17. https://lnkd.in/dXV7NBaC
18. https://lnkd.in/dpBt8zQw
19. https://lnkd.in/dkYqFSyi
20. https://lnkd.in/d7VvPAin

(Note: To be thoroughly edited again).

So, while I was reading some resource material on DFI and DFS on SBP website, I came across this circular of Raast P2P: https://lnkd.in/dx4aCDqW.

It had a very nicely done table (Image 1 attached below). It showed how well banks are equipped to adapt for new technology, systems or infrastructures, when they are introduced for first time in banking industry.

Since we have good banking industry and also a big one (in terms of numbers of banks), it is imperative to observed that only one bank was able to deploy Raast P2P on all three different channels simultaneously at the time of its launch. The channels are: Mobile App, Internet Banking and facilities such as, Over the Counter — OTC. Whilst all the other banks qualified either for one or two channels to offer Raast P2P to their customers.

Reason?

Why other banks were not able to deploy the new technology simultaneously to all other channels?

Because those banks were not well-equipped (prepared) or made necessary upgrades in their tech and payments infrastructure, timely. If they had done this, it would have also made their systems equivalent to international standards.

Think of AI here. When AI or famous Gen AI was launched, not many were able to harness its capabilities right on spot.

Why?

Because of the same reason → they were not prepared with their systems and infrastructure to welcome such high-tech level changes.

As a result, they could not take the first-mover advantage. Whilst others did, because they kept their systems and all things up-to-date. And also because they had intention to serve their customers better and be the best, whether it is business, employee or customer relations.

So, just to analyze it a bit better, I converted those checks to number 10 (giving them value). Then searched for recommended charts, showing how either slope or boxes forms the visual picture (Image 3) of this data mentioned below:

(Note: Thought of polishing some excel skills these days, sort of forgetting a bit of all learned. 😄)

Image 2 is the data where I put in values,

Image 3 is one of the recommended charts by excel and

Image 4 is another one of the recommended charts by excel.

The key takeaway here was, be prepared, stay updated in your systems, technology and keep it all in line with international standards.

Because when opportunity/first mover advantage knocks, it is usually received well by the ones who are prepared, with the aim of doing better, thinking about their customers, their business vision and all stakeholders.

Source (Inspiration Post): Learning

#DFI #DFS #SBP #Raast #P2P #Tech #Systems #Infrastructure #BankingIndustry #MobileApp #InternetBanking #OverTheCounter #GenAI #FirstMoverAdvantage

Initially posted on: https://tinyurl.com/4tumcnvx