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Before we dive deeper into how to test investment banking applications , it's
important to understand this domain first. So, we will first learn the Investment
Banking domain terminologies, which will help you understand the test cases easily.
We have also included sample test scenarios of various testing types like database,
security, and performance testing of an investment banking application.
Investment is nothing but saving money in a way that will get you returns for it in
the future (short-term or long-term). Saving money in accounts will not generate
any benefits. Instead, one should invest the money in options like Mutual Funds,
Bonds etc., which yield returns in the future.
One needs to invest money in order to earn returns and generate returns to meet
their monetary goals in life. In other words, we can say that one should invest to
meet the cost of inflation (Inflation means the rate at which the cost of living
increases in future).
The important rule for all investors is to invest early, regularly and for the long
term, not short term.
One can either invest in Physical Assets such as real estate, gold/jewelry,
commodities (seeds, crude oil, natural gas, metals etc.,) or in Financial Assets
such as fixed deposits with banks, provident/pension fund etc., or in securities
market such as shares, bonds, debentures etc.
Savings Bank Account: This is nothing but saving our funds in regular bank
accounts. For such savings, the interest rate will be very low, approximately the
interest rate varies between 4% � 5% p.a.
Money Market or Liquid Funds: This is another option for short-term investment
which gives better returns than the above-mentioned savings account. However, the
interest rate for Money Market Funds will be lesser than the fixed deposits.
Fixed Deposits with Banks: This is a better investment option with a bit higher
interest rates when compared with the above two options. Fixed deposits are also
named as term deposits. The investment period for this option starts with a minimum
period of 30 days.
Apart from the above short-term investment options these are a few of the Long-term
investment options,
Post Office Savings: This is saving our money in the Post Office under various
types of schemes. The risk involved in this is low. The interest rate for this
option is 8% per annum. The interest amount for this option is paid monthly and the
maturity term is 6 years.
Public Provident Fund: Another main long-term savings investment option is Public
Provident Fund. The interest rate for this option is about 8% p.a and the maturity
period is 15 years.
Company Fixed Deposits: This is a different kind of investment option in which we
can invest for short-term (6 Months) to medium-term (3 � 5 years) with a company.
The interest rate will vary from 6% � 9% p.a. The interest amount will be paid
monthly, quarterly or annually.
What You Will Learn: [show]
The main role of the Investment Bank is to act as a mediator between the companies
(who are interested in selling their securities / shares) and the individuals (who
are willing to purchase the same).
Investment bank operates in two ways � �buy side� and �sell side�.
�Buy side� includes services such as buying shares for investors whereas �Sell
side� includes underwriting the stock and selling the shares to the investors from
companies.
Suppose an investor wants to buy 50 shares of ABCD Company. Then he will consult an
Investment bank where the stock broker places an order for the same and delivers
the shares to the Investor.
Suppose a Company PQR plans to issue new shares of stock in IPO then the Investment
Bank verifies the shares and sells the same to their Clients. This way PQR Company
raises funds by issuing their stock.
3) Face value of a Share: The amount or value (used during buying or selling)
allotted to a share by the company.
4) Issue Price: The price of a company�s shares at which they are available in the
market. When these shares are traded in the market the price may be below or above
the issue price.
5) Initial Public Offering (IPO): This is nothing but selling the securities or
shares of a company to the public for the first time in the market.
Example: Suppose a Company X has 100 shares. The current market price of each share
is $50. Then the market capitalization of the Company X is $5000.
8) SEBI (Security and Exchange Board of India): An authority that makes sure
whether the buyers and sellers behave in a proper way in the market. So that they
get their desired profits. There are different security and exchange
boards/commissions as per the country.
10) Bid Price: Bid Price is the rate at which the buyer is ready to buy the stock.
11) Ask Price: This is the price at which the seller wants to sell his stock.
12) Futures: A future contract is an agreement between the buyer and the seller in
which the stock of future delivery is transacted at a particular price.
For example, if you want to purchase a March future contract of XYZ Company then
you have to do that at the current price available in the market. Let�s say that
the March futures are trading at $100 per share. By the time the contract expires
(last day of the contract in March month) the price of the stock may not be the
same. It may be $95 or $110. Based on these price differences investors makes
profits in the markets.
13) Options: It is a financial contract between the buyer and seller in which the
buyer has the right to buy or sell a security at a particular price on or before a
particular date.
15) Depository: An entity that holds the securities and funds of depositors in an
account. The two depositories in India are National Securities Depository Limited
(NSDL) and Central Depository Services Limited (CDSL).
16) Mutual Funds: An entity that collects money from investors and invests the same
in various financial instruments like shares, bonds, debentures etc.
17) Net Asset Value (NAV): NAV of the fund is the cumulative market value of the
asset. NAV per unit is the net value of the assets divided by the number of units.
Buying and selling of shares in the market are done on the basis of NAV related
prices.
18) Nifty Index: It is a scientifically developed, 50 stock index, which shows the
movement of the Indian markets. It behaves as a barometer for the Indian markets.
19) Watch List: A list of selected securities. It is mainly used to monitor their
movement in the market regularly, closely or frequently.
Investment banking comprises of Front Office, Middle Office, and Back Office.
1) Front Office: This plays a major role in generating funds. The main areas of
front office are Investment banking, Sales & trading, and Research.
�Investment Banking� helps customers in raising funds in capital markets and also
suggests the companies in raising their capital.
�Sales & Trading� deals with buying and selling of stock (shares, bonds etc.,)
�Research� involves reviewing the company reports about their buy/sell ratings,
company�s prospects etc. This will help in providing advice to their clients in the
right way.
2) Middle Office: This deals with �Risk Management�, �Corporate Treasury� and
�Financial Control�.
�Risk Management� involves analyzing the market situations and informing the
clients of the risks involved in their trades.
�Corporate Treasury� is responsible for the funds of Investment Banks.
�Financial Control� tracks the capital flow of the firm and its success.
3) Back Office: This includes �Operations� and �Technology�.
�Operations� checks whether the trades have been executed properly and funds
transferred successfully.
�Technology� supports the software, data, and systems of Investment Banks.
Trade Life Cycle:
The main goal of every trade order is to get executed at a suitable price with a
minimum risk spread.
#1) From the below screen you can view the terms options (sell and buy of IBM
shares), bid price, ask price etc.,
#2) From the below screen you can view the positions, quantity and price of a
particular symbol.
#3) Below is the sample screenshot of How a Watch List of an IB application looks
like.
Test Scenarios:
Different Investment Banking applications have different software testing and QA
requirements. Below are few general test scenarios or test cases useful for testing
such applications.
Positive Scenarios:
1) The Investment banking applications have different logins for different users
like brokers, dealers, individuals or investors etc. Verify the logins of
appropriate users with their login IDs as the permissions for accessing the
application for all the users may not be the same.
For example, a broker has the permission to view the trading limits of the
individuals based on the amount/funds in the individual�s account. However, this
facility may not be available for the individual.
3) Buy Order � To test this functionality, place a trade buy order for any symbol
with some quantity like 10 or 20 etc and submit the same. Then go the orders
section and verify the details whether the order has been placed successfully or
not.
4) Sell Order � Place a trade sell order as above (buy order) and verify the
details.
5) Change Order � Go to the orders section and open any previous order or existing
order and make few changes like editing the quantity or symbol etc and verify
whether the modifications get updated or not.
6) Cancel Order � Open an existing order and try to cancel it. The order should be
canceled successfully.
Market order � Try to place a trade order for the market price and check whether
the trade gets executed for that price at the same point of time.
Limit order � Try to place an order for a particular price and check whether the
trade has been executed when the market price meets the price set by the user.
8) Check and verify whether the proper notifications or warning messages are
getting displayed for the corresponding actions.
For example, after placing a trade buy order and submitting it, a message should be
displayed that the �order has been placed successfully�.
9) Try to update the user information like email, mobile no. etc, save it and log
out from the application. Login to the application and verify whether the updated
information has been saved or not.
10) If the AUT (application under test) supports various territories or geo-
locations, check few functionalities for various locations.
11) Test the calculations part of the application very thoroughly and also, test
its localization.
12) Test the connections of the applications whether they work out of the staging
environments.
13) The security of the application should also be tested as it contains the
personal data of the users.
14) Multi-tasking of the applications should also be tested when other apps are
open on the device.
15) Applications quality, look and feel, user friendliness etc are also to be
tested as it gains the user�s trust.
Negative Scenarios:
1) Try to place a trade order for more than the value of funds available in the
account and the order should not get placed and it should pop-up a warning message
stating that the funds are insufficient.
2) Test the �quantity of shares' feature in the application. Place a trade order
for the number of shares greater than the available quantity of shares. Trade
should not be placed as the quantity of shares requested is more than the available
quantity.
3) Try to place a trade order for a stock for which the expiry date has been
reached. The order should not get placed.
Also read => How to Classify Positive and Negative Test Scenarios
This is all the information on Investment Domain and testing tips with simple
testing ideas that I wanted to share. As always, hoping that it helps and waiting
to answer any questions you might have.
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28 thoughts on �How to Test Investment Banking Application (with 34+ Important Test
Scenarios)�
KiranS
| Reply
very good scenarios. do you have material on bfsi domain also?
pradeep
| Reply
Please put an article on �How to Test Trade Finance Application�..!
Thanks.
bharathi
| Reply
Appreciate the scenarios covered. It is very helpful. Similar logic can be used for
other domain application. Thanks for sharing.
Darshan
| Reply
Great info. most of the important scenarios and test types covered Thanks.
Geetha
| Reply
Useful article. shall we enter into live market with this knowledge?
Prashant
| Reply
Very useful article.Thanks a lot. :)
@Geeta � Only the knowledge you gained from this article is not sufficient for
trading in Live market. Additionally you need to follow the daily news on trade
market.
AlexPham
| Reply
that�s nice article. Please give more examples about trading application.
Thanks a lot!
vidhya
| Reply
nice article
Deepika Aviti
| Reply
Hi Laxmi,
Thanks alot for the article.
This is very much usefull for me. I have been searching for this kind of materia
since long.
divakar
| Reply
Very useful info, Thanks� can u send(divakar215.k@gmail.com) me resume format of
tester in Capital Market Domain??
roopesh
| Reply
thank you for this .but i want what exactly i am going to test likewise all trade
is valid or not and if we have 20k trade for the particular day then one 10k
executed then remaining 10k executes.so tell me what exactly i am test for this.
Nilesh
| Reply
Very useful can we crack interviwes wtith this much information
Santosujit Mohanty
| Reply
I have a interview from an MNC. And this article helped me a lot. Hope I get the
job.
Mehrangez V Melikova
| Reply
did u get the job >?? how did it go
Ashtesh Divakar
| Reply
Hi Laxmi,
Thank you for such an amazing article. Please answer my below query.
I�m currently working in Telecom Domain and willing to switch to Banking and
finance domain. Can you please help me in gaining the Domain knowledge which is
currently required in today�s Industry or this article is sufficient for a starter
like me.
Ankita Nadawani
| Reply
Sort & Sweet Article !
Sree
| Reply
Can you explain the mortgages in banking domain
shivakumar karjol
| Reply
This is very useful for me.
Thanks a lot�
kusum
| Reply
As you said there will be different applications used for different clients. Do you
have any article or material where we find different IB applications and their
functional flows testing and the outputs?
Would be beneficial so that we can improve our skills in our operations.
Thank you
VINCENT
| Reply
This is a serious and deeper induction inner IB application Testing.Thank you a lot
for your enlightments as Expert LAXMI.Thatis a �WEALTH� deposit!
Sushil
| Reply
Very nice and useful article by Laxmi on Investment Banking. I would like to
request softwaretestinghelp.com team to please publish similar article on Telecom
Domain (BSS), Which will guide exact work carried out by tester on telecom
projects. Thank you.
siddu
| Reply
very much helpful.can you please share some test case documents to understand more
in depth to face interviews.
Anita Sahu
| Reply
Very useful info, Thanks� can u plz send(anitasahu91@gmail.com) me resume format of
tester in Capital Market Domain?? It would be a great help.
Pramod Shejul
| Reply
It�s a very great and special information provided by you, thanks a lot�
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