My Impressions of CBS training at NIBM: Day 1

Last week I was at Pune, Maharashtra, to attend a training programme on Implementation of CBS (Core Banking Solution): Challenges and Road Ahead at National Institute of Bank Management (NIBM).

NIBM is an institute, which is engaged in conducting training programmes related to various aspects of Bank Management. In the recent years as Banking is mostly dependent on technology, of late NIBM conducts a number of programmes related to Banking Technology.

As at Federal Bank, where I am working, we are in the process of moving over to CBS, it was my pleasure to attend such a programme, especially because of the opportunity to interact with those bankers who have actually seen, and worked in a CBS model.

To start with, there were some minor inconveniences, as the train in which I was traveling reaches Pune by midnight. But unlike smaller towns in India, Pune was very much live even at that time, and for me getting an auto to NIBM was breeze. Thankfully, the auto fellows were also co-operative. So, comfortably reached the NIBM campus by 1:00 am on 2^nd March 2006.

I was pleasantly surprised to have the bed tea delivered in the room by early morning. After my tea, I just roamed around the campus for a morning walk! It was a refreshingly different place with a lot of trees and big sounds of birds in the early hours of the morning. I started thinking; probably NIBM was fortunate to have sufficient space (I understand, it is over 60 acres) to accommodate the campus. Today, can you ever think of sufficient land for such a campus even in a small town, let alone a big city like Pune!

Most of our Banks start at 10:00 am in the morning. (Also, I understand that in places like Mumbai, it is often 10:30). So, it is customary for even training programmes to start by 10:00. But at NIBM, it was different – it starts by 9:00 am. Not surprisingly, some of the participants – especially from nearby places – hadn’t reached when the programme started. Later on, I understood that, it was rather because their banks had chosen to send them at the last moment – often as a replacement of someone else who was expected to the attend the training.

Our coordinator for the programme was Shri. Deepankar Roy, a young faculty member of the institute. But, he started with a lot of warmth. He quickly surveyed the expectations of all the participants – 14 in number, who were a mix of Bankers and IT people, those from Banks that have implemented or implementing CBS, those who are just in the process of finalizing the CBS vendor, and those who have finalized the vendor and are starting the implementation process. His presentation 2^nd March morning session was CBS Conceptual Framework, Opportunities & Challenges helped all the participants to be on an even ground – a challenging task, but Deepankar did it well.

One idea, which was stressed in his presentation (and I liked the way it was presented), was the importance of Business Process Re-engineering before implementing the Core Banking Solution. Typically, Banks are very eager to customize the CBS product, even to the extent of killing the product! This is dangerous; Banks will lose on two counts:

· An opportunity to adopt best of the breed processes is lost

· Customization not only takes up initial time, becomes an overhead in maintenance – especially when the core product is revised.

Hence he suggested that Banks classify the Systems & Procedures into:

· Critical (must have)

· Semi-Critical (should have)

· Not critical (nice to have)

Of these, only the critical items need be considered for customization. The other two warrants a change in the process. An important concept, beautifully explained. I hope all the Bankers will make use of the advice.

That afternoon was reserved for Shri. B.M. Nair, Deputy General Management (IT) at Union Bank of India. Union Bank had started implementing the Finacle – the CBS solution from Infosys, almost three years back, and has already completed over 800 branches by now. So, it was a pleasure to listen to his experiences in the sessions titled CBS Project Management and CBS Current Challenges

While Shri Nair discussed various aspects in the CBS selection, procurement and implementation process, the real take away for most of us, were in the areas of lessons learnt in the process. I will discuss some of these here.

In the area of architecture, he mentioned at least, they have erred in the following areas:

1. Initially started with Branch Servers. Later on, they found that it was sheer waste of resources! They couldn’t get the initially intended benefit of offline functionality.
2. A report server was not planned. Later on, they have learnt the hard way that it is just not practical to generate reports from the production server. Reports consumed a lot a of CPU resources, and held up the other work.
3. Did not plan for an OLAP tool. In retrospect, they think that they should have procured one right at the beginning. It would have taken out a lot of trouble in analytical reports.

Now, what do I think about these? First point, anyway, was not avoidable in those days when they started implementing the CBS. No one was sure about the network availability or stability, and whichever vendor, suggested a local server at each branch. I agree that now, it may not make much sense for small Banks, especially with the Finacle solution. Of course at State Bank of India, and the architecture of FNS solution, it is still a need to have branch servers. With the third solution – Flexcube from iFlex – now it is better to implement with a centralized Branch Server. (Here there is an additional server in the Central Data Center, doing the role of Branch Server). The participant from Syndicate Bank, Shri Shashi Sekhar Praharaj also vouched this. At Syndicate Bank, earlier, they were implementing with a branch server, but now longer does.

The second and third points, relating to MIS and analytical reports is very much valid. It is rather unfortunate that in these areas there is still a gap in the way Banks think, often neglecting the obvious about MIS.

Shri Nair also shared his experiences with upgrading from earlier version of Finacle to the latest. As those of us in IT are very much aware, this area is a real nightmare, which Shri Nair described, took about four months and was more difficult that the initial implementation! This was mostly surprising for those participants who were from the Business side of Banking.

And also, over a period of time Banks have to come to terms with some hard realities:

· There should be a total control over customization, especially documenting each decisions and changes.

· A formal version control tool should be implemented for the customization related scripting.

· Invariably, there is high turn over of IT staff, especially in the areas which requires specialized skill.

Finally, he concluded by saying that when all banks are going the CBS way, what will really make the difference is how effectively the IT is managed, and quoted Alvin Toefler who said “The illiterate of the 21^st Century will not be those who cannot read or write, but those who cannot Learn, Unlearn and Relearn.”

Indeed a very satisfying day.

I will give impressions of the following days in later posts in this blog.