Efficient application of financial management software of DIV

09:17-01/12/2017

The Finance Module (FM) of the Financial Sector Modernization & Information Management System Project (FSMIMS) came into operation in December, 2016 and its performance has been being exploited by the Deposit Insurance of Vietnam (DIV) to professionally support the "Capital and asset management", improvethe financial capacity and risk forecast for financial operations. The Financial Management Software under the FM is the existing as well as future application software system of the DIV. During the project implementation, the computerized functions of the FM were mentioned in the documents of URD, SAR, UM... for the purpose of instructing ways to operate the application software. Following the roadmap, the Draft Regulation on Software Management and Application would be issued in the third quarter of 2017. This article discusses the practical application of the Financial Management Software inthe DIV.

Introduction to FSMIMS Project, Finance Module and Financial Management Software

The FSMIMS Project is funded by the World Bank (WB) and designed for three beneficiaries including the State Bank of Vietnam (SBV), the Credit Information Center (CIC), and the Deposit Insurance of Vietnam (DIV). The overall objectives of the project are to improve operational capability in line with international standards on the basis of modern IT and to strengthen institutional capacity of the beneficiaries. Specific objectives of the Project in the component of the DIV are: i) improving the efficiency of depositors' protection; ii) strengthening information sharing among agencies; and iii) helping the DIV become an advanced deposit insurer. Components of the application software system implementation of the Project include: Risk Monitoring, Resolution,Finance, Information Management, and Back Office. In recent time, the DIV has tried to complete all tender packages, as well as to install and integrate ICT system into advanced business processas committed to the World Bank onthe closing date of the Project.

The Finance Module is one of the main modules of the DIV’s application software system , which aims at supporting the operationof capital and asset management, and ensuring data security. The Finance Module includes Financial Management Software, OBIEE/BI Reporting System, and advanced analytic software namely Oracle Advanced Analytics (OAA). The DIV’s Financial Management Software is a software system running on Windows operating system which is responsible for financial management, allowing users of 5 departments (FundManagement and Investment, Finance - Accounting, Research and International Cooperation, Deposit Insurance Premiums Collectionand Reimbursement, and Supervision) to use the same database to perform 3 business operations and 12 processes.

Operations in Financial Management Software

Three major operations utilizing the applications of the Financial Management Software include Investment Management (General Functions, Processesof Investment Planning, Outright Purchase, Outright Sale, Non-term Deposit and Term Deposit at the SBV, Repurchase, Resale, Borrowing, and Debt Securities Issuance); Financial Planning; and Proposal onthe Deposit Insurance Coverage Limit . In the Investment Management, the Department of Fund Management and Investment directly interactswith all 9 out of 9 processes. In particular, the processes of Outright Purchase, Outright Sale, Non-term Deposit and Financial Planninghave been regulated in the Law on Deposit Insurance (the Law) and applied in practice. The processof Borrowing has been regulated in the Law but hasn’t been applied yet because there has been no demand for loans in practice. The other ones including Term Deposit, Repurchase, Resale and Debt Securities Issuance are future processes.

Overview of FinanceModule - businessoperations

Practical application of several processesin Financial Management Software

As Financial Management Software is used focusedly at the Headquarters, the exploitation, use and management on it have to be ensured continuous and safe, and consistent with approved paper documents. Databases of Financial Management Software are managed under the regime of confidentialdocuments regulated by the DIV: the users of Software data (including staff from the departments of Fund Management and Investment, Finance and Accounting, Research and International Cooperation, Deposit Insurance Premium Collectionand Reimbursement, and Supervision) are granted accounts and passwords to exploit and use the data within the scope they are entitled. Assessing the applicability in practice according to "S.M.A.R.T" criteria (Specific, Measurable, Achievable, Realistic, Time/Cost Limited), the Financial Management Software basically meets all 5 criteria.

Interaction between "Fund Management" and other operations in the FM

 

Processof Investment Planning: The process allows updating and viewing of market information, reporting of investment limit for the purpose of setting up and managing investment plans (buy/sell) quarterly, biannually, annually or on demand; managing of investment limit and estimatingof income. The software allows the DIV to adjust the investment plan when there is a change in the sources of cash inflow and outflow, resulting in changes in the amount of idle capital for investments or changes in policies or other requirements on investment. The software particularly allows the assessment of risks ofinterest rate and liquidity. After the user inputsthe data, the system will calculatethe idle capital for investment so that the user can confirm and pass it for further control and approval, which ensures implementation at every step in the process is appropriate with the right and responsibility according to the authorization.

The " Tabs Groups " in the Planning and Investment Process

Processof managing the Portfolio of Outright Purchase and Outright Sale: The process allows and manages requests of adding, editing, deleting, managing information and results of bidding contracts; contracts of bond trading on the secondary market; contracts of retail purchase; and contracts of securities selling. In this process, the software does not allow users to edit or delete the contract’s information when its result is already entered or the result has been in the mode of pending/ waiting for approval/ approved to ensure the compliance with the authority of every entitleduser. When the principal/ interest comes, the software will process (confirm information in the function "Confirm information from ERP") and update information in the functions of Searching, Managing Contract and Securities Settlement Schedule to set up commondata for buying bonds on primary market, secondary market and retail purchases.

 "Outright Purchase Portfolio when interest is paid/ contract is settled" and "Securities Buying and Selling Portfolio"

Processof Managing the Portfolio of Non-term Deposit at the State Bank of Vietnam: The process allows users to add, edit, and delete information of non-term deposit accounts, enter dataof money  inflow and outflow, and changes inaccount information. Inthis process , the software requires the information sharing of the Finance - Accounting Department in case of transferring information from CDIS-FM to ERP: If the information transferred from the system is different from the information in the approved written investment plan, the Finance-Accounting Department shall promptly notify the Department of Fund Management and Investment before entering them in the accounts. If the interest amount paid by the State Bank to the DIV is different from the estimated interest amountbythe system, the Finance - Accounting Department also has to promptly notify the Department of Fund Management and Investment before entering them in the accounts. The steps in this processare illustrated in the diagrams below.

Difficulties when interacting with the Software and solutions

Coordinate to integrate the system inthe Outright Purchase and Sell Procedure and Non-Term Deposit processes: The business functions of  each department have their own typical featuresand requirements while the application of the Financial Management Software to those functions must ensure interconnection among the departments. Asthe new system is put into operation and exploitation, it is difficult to avoid "mismatch" points. Therefore, it would take time and the close coordination between relevantdepartments and the Department of Information Technology in order to overcome those difficulties. In addition, the software users should be cooperative and compliant to regulations. Specifically, there should have a unified regulation on the time of closing and opening the system, the coordinating time between the two operations of  Accounting and Fund Management to ensure the consistency between the data on the system and the actual information on paper documents.  

Users’ Psychology and Habits: Besides technical difficulties, those are the psychology and habits of users thatbe invisible difficulties for the coordination and compliance with technical steps in business processes,. The software, whether new or old, simple or complex, witha friendly interface or not- if not used frequently – the applications of the software will "always be new". Frequent interaction will help users from getting used to the software to exploiting it effectively and proposing innovations, corrections and amendments of errors, and filling the gap between the oretical design and practical exploitation.

The FSMIMS Project in general and the Finance Module in particular have contributed to realizing the objective of "modernizing" DIV's information management system. The Financial Management Application Software positively supports the DIV in capital and asset management, contributing to ensuring data security and continuity of capital management on IT platform. After a period of being exploited and operated, the Financial Management Software has been actively supporting investment management. Making the fullest use of technical infrastructure  for the efficient application of capital management software (data entering, searching, setting up and managing investment plans and capital resources, etc.) will help in saving maximum time and resources of the DIV, improving users’ skills, creating psychology and habits of exploiting IT to support professional operations, realizing S.M.A.R.T criteria and contributing to ensure the sustainability of the Project and the feasibility of the Software.

 

REFERENCES:

- 22/5/2017, Department of Fund Management and Investment, 2nd Draft of the Regulation on Software Management and Application.

- 03/2017, Department of Fund Management and Investment, 2nd Draft, Roadmap of Compiling Regulation on Software Management and Application.

- 11/2016, Document of Authorization version 3 – Finance Module (FM).

- DIV, 10/2016, Finance Module (CDIS – FM).

- 8/2016, User Manual Document – FinanceModule (FM).

- 2015, User Requirement Document (URD) – Finance Module (FM).

- DIV, 2015, Introduction of  Financial Sector Modernization & Information Management System Project (FSMIMS).

- International Development Advisors LLP, 08/2014, Financial Sector Modernization & Information Management System Project (FSMIMS) - Change Management Support to DIV.

- 2013, NRI, Workshop on New Business Processes.

DIV’s Research and International Cooperation Department