My Impressions of CBS training at NIBM: Day 2

On the second day, when everyone was thinking about the CBS implementation challenges, the focus shifted to Graduating Beyond CBS, with a session by redoubtable Prof Sharad M Padwal. Prof. Padwal, was till recently a consultant with iFlex Solutions. He had a long career at NIBM itself, was one of earlier advocates of technology in Banking, the right way.

Naturally, the session started with a detail look backwards into technology implementations in Indian Banks. Prof. Padwal was very serious, but yet humorous while describing some of aspects like interference of trade unions and the role of the regulator. He lamented that a number of forces worked together to even exclude the word “computerization” in banking discussions. It was rather known as “mechanization”! He went on to discuss a number of other “wrongs” in the Indian Banking Technology.

As we participants were absorbed in his lucid description of the events one after another, rarely did we notice we had reached CBS. On the topic, he stressed the importance of a few things like:

· Avoiding shadow balances and all the channels referring to the same balance for transactions.

· The need for MIS requirements to be part of the CBS requirement specifications.

· While choosing technology, considering aspects like neutral hardware platforms, and scalability requirements.

· Thinking about the technology solutions as a whole – not as bits and pieces like CBS, treasury, trade finance – but an integrated fashion.

· Need for integrating (and if not already part of the current implementation plans, at least foresee the need) with SWIFT, RTGS, ACH etc.

· Importance of Security Management System – sometimes banks are painfully caught unaware on these issues.

· Capabilities for Data warehouse, Business Intelligence, Customer Relationship Management and Artificial Intelligence.

Prof. Padwal was forceful in his arguments that without these, CBS implementation will be far from complete. It is surprising that some banks after three years of CBS, are coming up with RFP for MIS! Also, among Indian banks there is focus on reaching the numbers rather than having a holistic solution to actually serve the customers better.

While the CBS implementations in Indian Banks haven’t yet started thinking end to end, he mentioned that a bank in China is already implementing SAP – an Enterprise Resource Planning solution. This made me wonder whether SAP already has core-banking modules in it, to which Professor was affirmative in his answer. So, will the IT vendors, a couple of years from now, come and tell the bankers that CBS is legacy? Or, was the Professor saying “The Best way to predict the future is to invent it!”

Two more points on Prof. Padwal :

1. He is no doubt a thought leader in Banking Technology. Readers can also look at his article Skill gap in IT in Indian Banks.
2. Though he came with a neat PowerPoint presentation, for almost the whole session of over an hour and a half, he didn’t use it! But still he was effective. This reminded me of the article PowerPoint is Evil, on which I had read on the web. While I do not want all presenters to avoid PowerPoint presentations, I urge everyone to read that article.

Not only is State Bank of India the biggest bank in India, but it has the largest CBS implementation in the world, whether it is in terms of number of branches, or the volume of transactions. So, it was appropriate that sessions by Shri V Sankaran, Deputy General Manager, State Bank of India was included in the programme.

Shri Sankaran’s sessions broadly concentrated on areas like Roll out Challenges, Beyond CBS Perspectives, Scaling up Issues, Disaster Recovery and Business Continuity Planning.

State Bank’s journey was quite impressive. Though initially, they wanted into implement in a limited way in about 3000 of the more than 9000 branches of the bank, later they revised their plans to implement in all the branches. Further, they have implemented CBS in all branches of all the Associate Banks.

The challenges faced by the Bank group were compounded by its sheer size. For one, the decision on the vendor had to be solely based on the scalability factors. That necessitated a lot of work on building in the required functionality. Also, bank did not plan for Business Process Reengineering at the outset. This created associated problems, which Shri Sankaran would definitely recommend other banks to foresee.

Some noticeable aspects in the SBI implementation strategy are:

· They are rolling out a faster pace. While every other banks waits for a weekend to roll out new branches, SBI group does that on weekdays and gives the migration team a holiday on Sundays!

· Adopted e-Learning. They have implemented this through NIIT one of the leading developers of e-Learning packages. It is a very compelling option for those banks that envisage a fast rollout, though it may be costly for smaller banks. Most of the problems in CBS implementation are related to lack of awareness among users.

· They have implemented CA Unicenter for Service Desk. And every query of user is supported online through a web interface.

· They have implemented a near site with synchronous replication of database, apart from the disaster recovery site (with asynchronous replication). As there is a time gap (to the extent of 20 to 30 minutes) in synchronization between main Data Center (DC) and the Disaster Recovery (DR) site, there could be loss of transaction data in case the DC is down. This could to adversely affect point in time recovery. A near site will avoid such a problem.

Various other challenges like those in Infrastructure, Software and Hardware procurement process, vendor management etc. were discussed. Shri Sankaran asserted that theory does not translate very faithfully to practice. Any technology implementation is essentially a Change Management process. This has to be handled with finesse, balancing the People-Process-Technology trio well.

At the end of the forenoon sessions, not only were we contended, but hungry! So, as on the previous day, we had a sumptuous lunch.

Post lunch sessions can make you sleepy, but not with Shri. Ram Sambasivan from HDFC Bank Ltd handling the session on Data Centre Management. It was for the first time NIBM has invited a representative from a new generation private bank. After the public sector giant SBI, it was welcome change to listen to seasoned technology implementers.

Shri. Sambasivan took the participants through various aspects in data centre management including:

· Dealing with multiplicity of vendors

· Documenting the various aspects in day-to-day processes and operations and managing to have clear-cut ownership for each process, even it is the most mundane of the activities. More important, ensuring that it is happening as planned.

· Handling various non-IT activities – disaster recovery planning is not just having a DR site, or some UPS systems or generators. It also includes handling the rodents and pests! After the torrential rains and floods in Mumbai last July, they have learnt a lesson or two – never have any server in the ground floor, do not have generators etc. in the basement, and plan for everything. Would they have got diesel to run generators from bunks, or trucks to transport diesel, had the power failed?

· Over a period, the number of applications running goes on increasing. So plan for the data center space accordingly. For HDFC, now they are having over 550 servers in their data center, running various applications.

· Initially, everybody thinks that they can manage the backups manually. But, backup cycle is a very routine process and the operators could make mistakes, which can have fatal consequences. So, it is always appropriate that backup and restore process is automated. So also is the routine report generation.

· Use of appropriate media for backup is important. He opined that DAT is not reliable and recommended going for LTO – this is not only reliable, but there is tremendous savings in the number of tapes and the time taken for backup.

While concluding, he urged all the bankers to think forward to meeting the international standards in IT implementation. He also recommends going for ITIL methodology, as it is going to be mandatory in future, especially in the context of Sarbanes-Oxley Act in US.

It was indeed a good and balanced day.