B.A.Sc. Thesis Abstracts - Year 1996

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An Investigation for the Toronto Dominion Bank on the Future of Internet Based Banking in Canada

Suneel Bhargava

This thesis was done in collaboration with The Toronto Dominion Bank. The objective of the thesis was to provide The Toronto Dominion Bank with a prospectus of what the future of Internet based Banking in Canada will be like and when it will occur. Information was collected through the investigation of world wide web homepages and through electronic mail conversations conducted with the big six Canadian Banks, the top 25 American Banks (by total assets), several localized and interstate Banks in America and various European Banks. Prepared from the research is an impression of the world wide web and its relationship in the Canadian financial community. The Internet has created a digital economy, wherein security for executing an electronic transaction is of paramount importance. Reputable banks such as The Toronto Dominion Bank have an opportunity to increase their profile and capture a very attractive demographic segment of the population using the Internet particularly the WWW. The average Canadian Internet user that is interested in Internet banking, is characterized as a young, affluent, professional. The Toronto Dominion Bank must endeavour to introduce a proprietary financial software that connects directly to the Bank and provides these WWW user accessibility to simple banking services such as account balances, histories, transfer of funds and bill payments. The security issues will be resolved by the introduction of the Secure Electronic Transaction system developed by VISA and Mastercard which is currently being test. The focus now is shifting on the time of implementation and who will be first in Canada.

Executive Summary

By the end of this decade it is anticipated that half a billion people will be connected to the Internet. The promise of an age of networked intelligence is relentlessly approaching at an expeditious velocity under the guise of the Internet. In 1995, the financial sector realized the importance of utilizing the Internet as a pipeline for providing Canadians Internet banking and electronic commerce. Innovative and strategic positioning through the design and introduction of a highly interactive proprietary electronic banking platform will maintain The Toronto Dominion Bank's position in the forefront of Internet banking technology.

The Toronto Dominion Bank is currently in the widely envied position of maintaining the best web site by any financial institution in North America. A very financially attractive segment of the Canadian population is demanding Internet banking services. For the Toronto Dominion Bank fulfilling this demand is an opportunity to increase its customer base and add strength to its philosophy, "Your Bank, Your Way" and further reduce branch banking costs.

As a minimum effort The Toronto Dominion Bank must endeavour to implement the currently available technology that allows its customers Internet based accessibility to account updates and histories. Security concerns however, plague the Canadian customer with resistance in accepting the Internet as a secure medium for interaction. This concern can be turned into trust by educating the Canadian customer via the web site or other mediums. Once more sophisticated software, hardware and digital infrastructure is developed The Toronto Dominion Bank should become an advocate of Internet banking.

Future services that could help illustrate The Toronto Dominion Bank's commitment to Internet banking can include the introduction of a co-branded VISA card and construction of virtual mall.

The Internet will forever change the landscape upon which business is conducted and the relationships between banks and customers. The success of Internet banking will not be defined by the smaller financial institutions but will be determined by financial institutions that have placed a significant importance on understanding the needs of its customers.


Outsourcing: Evaluating a Potential Business Strategy for the Royal Bank of Canada

Nadia Bharwani

Outsourcing is clearly the buzzword of the times. The "virtual corporation" is being built on its foundation Everyone is talking about it, and some consider it the ultimate business solution. Influencing factors in the outsourcing decision include downsizing, stringent cost controls, productivity improvement efforts and rapid advancements in technology. Outsourcing offers a distinct advantage because it allows financial institutions to focus their attention and resources on what they do best while giving them the latest services to support their primary business activity.

Part 1 of this thesis studies in detail the reasons for considering outsourcing as a business strategy, provides supporting cases and identifies all the potential pitfalls, critical success factors and best practices in outsourcing. It also proposes some recommended strategies for outsourcing which can be explored further by the Bank's Telecommunications group. Part 2 examines one of the recommended candidates and develops a strategy for outsourcing Royal Bank's International network.


Among the many challenges facing corporate telecommunications departments today, two new challenges have emerged during the past few years: potential competition from outsourcing vendors and profound organizational restructuring. More and more vendors are emphasizing to senior management the alternatives available to in-house communications departments and are positioning themselves as strong allies in corporate re-engineering and restructuring efforts in pursuit of greater competitiveness, efficiency and global markets. As the corporate world searches for ways to compete globally, pare payrolls and cut costs, outsourcing of non-essential functions is on the rise. Outsourcing allows companies to focus on their core business rather than their IT infrastructure.

Ironically, the banking industry was one of the most reluctant to jump on the outsourcing bandwagon. Over the past three years that trend has reversed. Hit the hardest by the national recession, today the banking and energy sectors have proven to be the leading advocates of outsourcing. Analysts say outsourcing in the banking industry alone is growing at a rate of more than 28% per year. In a 1994 Gartner Group survey, 60% of the respondents had already outsourced one or more IT functions. of these, one third were trying to improve the effectiveness of their IT efforts. According to Bill Bradway, analyst at the Tower Group, a Wellesley, Mass. consultancy, most banking outsourcing deals result in 15%-20% operational cost savings.

Since telecommunications service providers do not have the reputation of doing things for social reasons alone, one should ask, "What is their true motivation?" The Bank should, therefore, avoid buying into proprietary IT management systems. Many of the outsourcing deals experiencing problems today have been attributed to not spending enough time selecting the right strategic partner. In light of the potential pitfalls of outsourcing, the Bank needs to have a team in place to address each of the issues discussed and to further investigate certain key areas as promising candidates for outsourcing. Based on industry research and projected trends, the Bank should focus initially on network outsourcing and investigate the following areas in the given order: 1)Short-term outsourcing of the International network, 2)Design and installation for changes Page iii expansion, adds, moves, changes, 3)Remote LAN management, 4)Network application development, S)Data-network management.

Part 2 of this thesis explores the first of the recommended candidates and develops a strategy for outsourcing the Royal Bank's International communications network. Based on the network study, the decentralized telecommunications facilities utilized by the international business units incur very high operating costs. Thus, with the Bank's expenditures growing in this area and environments and technologies changing so Frequently a reconfiguration of facilities and services is required.

Parallel to the network study, a vendor selection process was carried out to identify the most suitable global provider that could meet and exceed the Bank's current service levels. It is recommended that considerable cost savings can be attained by combining voice, data, fax and future video services through one global telecommunications facilitator. At this stage of the project Metropolitan Fibre Systems (MFS) and Scitor have been selected to carry out trials on certain mission critical applications. The Bank will proceed with a Request For Proposal within the next 3 months to finalize the vendor selection for outsourcing the International network.

The Year 2000 Initiative: Preparation and Planning for the Conversion of Software to Incorporate Century-Sensitive Date Fields

Peter S. Tonev

This paper discusses the steps taken towards the conversion of the Royal Bank of Canada's software system to fix the two-digit year field problem. Emphasis is placed on preparatory activities beginning with initial application inventories, through conversion and test planning up until just before system-wide conversion. The activities actually carried out are supplemented by comprehensive background material on the problem compiled from numerous sources; the author has endeavoured to touch upon as many of the relevant issues as possible, including those that came out as a result of the bank's own work. In effect, this thesis serves to enlighten the reader as to many aspects of the year 2000 challenge in addition to the detailed technical implications, providing an industry wide perspective of the problem while describing how it has been addressed by a large financial institution.


The problem of ambiguous two-digit year fields in software (the year 2000 problem") is attracting more and more attention in the I.T. press as more and more companies are being educated as to the breadth and severity of the problem. There is no shortage ofinformation on it:

  • how the problem came to be
  • the fact that it is still being neglected by so many organizations
  • the size of the problem in terms of its penetration throughout legacy software systems, and in terms of expected solution implementation efforts
  • how the problem will manifest itself in the business world, ranging from simple calculation errors to entire businesses collapsing
  • typical methods used by businesses right now to address the issue

The problem's solution is also receiving much attention as CIO's realize what it will take to overcome the 2-digit year design feature which has been passed along and built upon from generation to generation of programmers. The problem's breadth and depth warrant much effort to be allocated to the process of preparation and planning, even before the detailed technical manifestation of the problem is looked at. This includes analyzing the applications which comprise the software system, and then studying the programs to determine exactly the problem's impact on them. The importance of such analysis lies in the need to come up with detailed plans which will guide the work through the next three or four years, and also to create preliminary estimates which are required to justify to management what resources are needed in the form of time, equipment, money, and manpower. Therefore, an important deliverable which should result from the analysis is a high-level, overall plan. The task was to define the scope of the project in terms of time and activities performed, and to objectify what at the project's outset was only an impression of these project parameters.

Other elements of the preparation for solution implementation includes evaluating and selecting third-party solution providers (vendors) to carry out the analyses and conversion, and also early considerations of testing and evaluating the final result of the conversion process. Bearing in mind that system-wide conversion doesn't even begin until all of the above activities are very near completion, an opportunity is presented to consider how the whole project will finally turn out given what has been learned to date through analysis and preparation, and what else may be done to ensure the remainder of the work goes as smoothly as possible.

Account Manager Database for the Royal Bank of Canada

William Lum

The Royal Bank has over 700,000 Business Banking clients. There is an equally as impressive number of Account Manager that serve these clients. In the past, it was not a priority to centrally keep track of which account managers are dealing with customers. Much of the decision making process occurred at the local level. Client data was collected locally and prices and fee were set accordingly. There was little standardization. Now there is a move toward centralized marketing strategies. Client information will continue to be collected locally, however processing and analysis will be done centrally.

There is a desire to improve the efficiency of Bank operations and hence its competitiveness. One step in accomplishing this goal is to better understand the Account Manager Network. This can be done by collecting the local data and placing it in a central location. Management wants an application that will allow them to see want what types of clients they have, how they are distributed and who manages them.

First step in the development process was to discuss with the users, in this case the managers, what they need this application to do, that is what kind of information do they need to see and how they want to see it.

Some information the managers wanted to see included items such as, numbers of clients, number of borrowing clients, dollars authorized, dollars in deposit, dollars in revenue, type of relationship: Relation, Portfolio, Information only, Type of business: Commercial, SME, Personal, type of industry, and Amount of risk involved. In addition to this client information, the managers also wanted the ability to view Account Manager profile information, which include, Name, Phone number, Account Manager Number, equipment available, who they report to, and what geographic locations they belong to. Much of this information was found in existing databases or could be derived from other information, but there lacked any medium by which it could be viewed quickly and painlessly.

With design specification and a small extract of information from the various databases design of an interface began. The extract was comprised of two files. One containing client information and the other containing Account Manager Information. Using this smaller database a simple interface, by which a Manager can view the database, was created. This was done in Focus for Windows, a database management system. The database was created with simplicity and functionality in mind. Occupying much of the screen is the output tool. This is a window through which all the data will be displayed. If the data does not fit on with in this window scroll bars will appear and by clicking on them you will be able scroll through to see the rest of the data. To the right of this window are all the controls. There are three radio buttons and three push buttons. The radio buttons were used for the level indicator so that the level of information displayed is always evident. The display parameters, Information type and field to be sorted by, were also in the form of radio buttons. These were chose because it clearly shows the user what options are available. And there are the push buttons that are simply activated by clicking on them. There are times when a mouse may not be available or the user prefers key commands. That is why a menu bar was included it contains all the functions found on the screen and a few other less frequently used ones.

With the introduction of this very essential tool to management many benefits can be realised. Now we can obtain account manager profile and client list easily and simply, improving Bank daily operation. With these profiles we know what kinds of clients we are serving are where they are. So we now can create targeted marketing strategies that focus on keeping present client happy or can focus on bringing in new client types that the Bank currently lacks. Within the account manager profile is a field that indicates the type of equipment available to the them. This information can be used to see what is available and what needs to be upgraded or replaced.

This database system is a much needed tool. The Account Manager network is not understood very well and this must be rectified. Management can't make effective decisions without an accurate picture or their organization. One needs a great deal of information to describe an organization. This information must be compiled into a clear and readily available form or the information is useless. This is what the Account Manager Database does.

Software Control Design for the EXCEL-407 Memory Tester at Celestica

Franciscus B. Partaamadja

This thesis project is concerned with the upgrading program of all of Celestica's memory tester controllers. The controllers presently in use are slow, technologically obsolete, and their maintenance costs are high. The project involves upgrading software and hardware parts of the controllers. Currently, the testers are controlled by a VXI resource controller running in an OS/2 version 1.3 environment. The test programs are written in a proprietary high level language called ETL.

Based on Celestica's needs, it was determined that to address the present system's shortcomings, better hardware and software must be designed. First, all the VXI controllers will be replaced with PC compatible computers equipped with an interface card. The interface card is designed to use an industry standard ISA bus. Second, the ANSI C programming language will replace ETL. This part involves the migration of the ETL test programs, their library files and the graphical user interface design for the controller. Third, the operating system for the controller will be upgraded from OS/2 version 1.3 to OS/2 version 2.1 or higher. All the programs are written in the C language under OS/2 version 2.1 environment. The test program library is compiled using CSET2. All the improvements mentioned above were implemented except the graphical user interface and the migration of all the test programs to the ANSI C language.

Option Flexibility Management

Adam Adamcewicz and Ali Qureshi

In most cases, traditional capital budgeting methods, (i.e. return-on- investment, internal rate of return, and even net present value), are sufficient when determining whether or not to make a particular investment. While these methods focus on minimizing the financial risk of a given investment, they tend to understate the strategic value of a given investment. The focus of this thesis was to determine an alternative justification approach that utilized real options theory. Options Flexibility Management or OFM was a relatively Unknown mathematical modeling technique with which researchers attempted to address some of the methodological considerations of its application in terms of usability and accuracy. The intent in this work was to build the best model that encompassed both the financial and strategic risks of a given investment using case study results. A project was selected and the option to defer investment was examined on a trial basis. The end result was mixed. The project on its own passed the investment criteria without having to value the option, (the net-present-value was positive), however in the presence of uncertainty, the option to defer the investment became a potential alternative. A proven methodology could be derived from these and future results which could be used in conjunction with current methods. Option Flexibility Management (presented its' variety of forms throughout this work) provides the practitioner with an easy to apply decision tool that aids in making the most appropriate decision.

Skills Inventory Management System

Cezary Domanski and Thomas Peralto

The purpose of this project was to examine one of the significant problems many companies are facing in today's fast paced industry. The problem is utilization and maintenance of human resources personnel related data. The project's objective was to develop a methodology that would allow the organization to deal with this problem and to Create an interface to a computer based database. A Skills Inventory Management system was developed to enable the HR department or any other manager in the organization to query a personnel database for required information, and to be able do this in easy and efficient manner. The details, requirements and specification of the system have been accomplished with the goal that these results (or product developed to resolve the problem) may be applied in a number of organizations that have similar needs, or in organizations that wish to improve their human resources management.