Sometimes we complicate things in a bid to increase their perceived value and charge a premium. The financial services sector has effectively used the complexity smoke screen to much success for decades making us shy way from demanding better services and transparency.
Cryptocurrencies such as Bitcoin have given the sector a scare having brought to the fore new possibilities that have served to demystify the bank. Other players have also come to the dance with micro and nano credit services that need nothing but a mobile phone to start on a journey of value exchange. Also, the recent heist at the Bangladesh Bank that was primed to steal just under one billion dollars using malware that compromised Society for Worldwide Interbank Financial Telecommunication (SWIFT) infrastructure and the malpractices reported in our local banking sector that have seen some entities closed another placed under receivership is enough to make one fall back on using their mattress to keep their hard earned money.
The Central Bank of Kenya should at any one time know the state and condition of any of its licensees and not have to rely on submitted reports from executives or auditors whose jobs may rely on how well they can spin a narrative and work the pivot tables in Excel. We live in the age of big data and fast data and with service providers such as Oracle, IBM, Temenos among others, that the CBK has not made a requirement of this real-time reporting infrastructure or built their own specialized watchdog gateway is frankly unnerving.
Here is the thing, money does not move physically day to day in the many may imagine it does when you bank your check, do an electronic funds transfer or effect something over the counter. It is electronic meaning that the actions have to be effected on a database which has ACID properties.
Wikipedia breaks down these properties well;
- Atomicity requires that each transaction be “all or nothing”: if one part of the transaction fails, then the entire transaction fails, and the database state is left unchanged. An atomic system must guarantee atomicity in each and every situation, including power failures, errors, and crashes. To the outside world, a committed transaction appears (by its effects on the database) to be indivisible (“atomic”), and an aborted transaction does not happen.
- Consistency ensures that any transaction will bring the database from one valid state to another. Any data written to the database must be valid according to all defined rules, including constraints, cascades, triggers, and any combination thereof. This does not guarantee correctness of the transaction in all ways the application programmer might have wanted (that is the responsibility of application-level code) but merely that any programming errors cannot result in the violation of any defined rules.
- Isolation ensures that the concurrent execution of transactions results in a system state that would be obtained if transactions were executed serially, i.e., one after the other. Providing isolation is the main goal of concurrency control. Depending on the concurrency control method (i.e., if it uses strict – as opposed to relaxed – serializability), the effects of an incomplete transaction might not even be visible to another transaction.
- Property ensures that once a transaction has been committed, it will remain so, even in the event of power loss, crashes, or errors. In a relational database, for instance, once a group of SQL statements execute, the results need to be stored permanently (even if the database crashes immediately thereafter). To defend against power loss, transactions (or their effects) must be recorded in a non-volatile memory.
Audits of all major financial systems in the country should be done in real-time with thorough decision models on the watchdog gateway to detect and escalate any anomalies such as fraud or malpractice. I dare say that parts of this live audit should be made available to the public with a fluid scoring mechanism on the performance of players so that every action taken in the business has a direct and immediate impact of a key metrics that are visible to everyone.
To restore trust in the sector we need to follow the money in real time.