This document discusses key issues, challenges, and best practices for implementing centralized banking systems (CBS). It covers pre-implementation, implementation, and post-implementation phases. Some of the major topics discussed include people issues, change management, legacy systems challenges, infrastructure requirements, and critical success factors like project management skills and top management support. The document provides guidance on technology upgrades, governance, security, and ensuring business continuity during and after a CBS implementation.

1. Banking Technology
Centralized Banking-
Challenges, Implementation
and Management Issues

2. Banking Technology August 2005
In Brief
Key Issues
CBS Implementation Issues
Implementation Guidelines
Critical Success Factors
Business Continuity Essentials

3. Banking Technology August 2005
Three Kinds of Issues
• Pre-Implementation – The Groundwork required
• Implementation – What to do during
implementation
• Post-Implementation – Change Management,
BPR, Training, Maintenance
Less than 10% of failures are due toLess than 10% of failures are due to
technical snags – most are due to poortechnical snags – most are due to poor
management and implementation”management and implementation”

4. Banking Technology August 2005
The Key Issues in a Nutshell
• People issues
• Change management
• Legacy systems
• Infrastructure
• Customer Trust
• Governance
• Security
• Legal/regulatory issues

5. Banking Technology August 2005
People Issues
• At the core are –
– Resistance to change
– Career Progression
• After CBS, there is urgent need for:
– redeployment and redefinition of jobs
– New skills
– “Young Blood”
People represent the most
precious asset

6. Banking Technology August 2005
People Issues
• A typical average sized bank has 2-3% IT specialists
• Need to increase this to 20%
• about 12-15% of staff in banks are involved in
administrative activities … in tech savvy banks it is 6-
8% - PSBs to aim for 10%
Ultimately, the banker of future must be a “Technology and
Application Manager” having knowledge of technology,
application and management

7. Banking Technology August 2005
Technology Managers
Application Managers
System Administrators
Pure technical expertise
–
Network, system &
Database
administrators etc
Have banking exposure
+ technology
management skills for
critical, sensitive
applications – CBS,
delivery channels
Core Team of
Technology
Professionals. Have
mastery over the gamut
of Banking Technology
TECHNOLOGY TASK FORCE
“A lot of people have gone farther than they thought they could because
someone else thought they could.” -Zig Ziglar

8. Banking Technology August 2005
Skills Upgradation
• Attract Young Blood:
– Develop Policy for Campus Recruitment
– Establish Endowments and Chairs
– Have Regular interaction with the Academia
• Purely technical people can be recruited directly or drawn
from existing staff
• At managerial levels banks need to look at a combination
of banking as well as technical knowledge.
• Key personnel can be groomed through:
– Executive development programs
– Area intensive programs
– E-learning

9. Banking Technology August 2005
Change Management
• “Tell me and I will forget, show me and I may
remember, involve me and I will understand”
• Ushering in change is never easy
• Banks need to:
– Develop appropriate policies and procedure for
change management
– Train employees in their new duties
– Involve employees

10. Banking Technology August 2005
Legacy Systems
“During the 80s and 90s, there was not one Top 100
bank globally that could change its core banking
platform successfully” (Celent)
Major issues involved:
• Limits on capital, resources and operating
expenses
• The training required
• Risk of losing customers
• Data Cleansing and migration issues

11. Banking Technology August 2005
Architecture Evolution Processing
Methodology
Impact on Applications
Generations World India
1st
Generation
1960s 1970s-
1980s
Batch
Processing
•CCheque handling becomes
faster
• Accounting becomes more
accurate
• Back office costs decrease
2nd
Generation
1970s-
1980s
1990s Real-time and
online
• ATMs
• Credit & Debit cards
• Telephone banking
• Electronic cash management
• Authorisation process
3rd
Generation
1990s Late
1990s
and
early
2000s
Client/server
Public access
networks
• Customer information systems
• Micro marketing
• Centralised back offices
• Customer oriented front offices
• Co-operative computing
• Home banking
Technology Shifts & Implications

12. Banking Technology August 2005
Customer Trust
• Trust has been a casualty due to:
– Banking failures, stock crises
– Online environment & threats
• Banks need to diminish the falling trust levels by:
– Adopting trust mechanisms
– Minimizing financial risks
– Keeping pace with customer needs
– Simplifying products & processes

13. Banking Technology August 2005
IT Governance
Five Focus areas:
• Value Delivery – Optimising expenditure and gaining
value addition from IT
• Risk Management – Protecting IT assets and business
continuity/disaster recovery
• Strategic Alignment – Aligning IT objectives with
business objectives
• Resources Management – Optimal investment,
utilisation and allocation of IT resources
• Performance Measurement – Monitoring and
evaluating project deliverables
• IT Governance - a process by which IT in an
organisation is directed and controlled.

14. Banking Technology August 2005
Key CBS Implementation Issues
• The lengthy implementation time period
• The training required
• Risk of alienating employees
• Disposal of existing legacy systems
• Reorganization & re-engineering challenges
• High requirements in terms of skill/HW/SW/Backup
• High costs of deployment, maintenance and disaster
recovery
• Need to integrate with existing systems and interfaces
• Security problems

15. Banking Technology August 2005
Implementation Guidelines
• Project failure not only implies a bad
investment, but more significantly extensive
business losses
• To minimise these losses:
– Experience - banks have to rope in the experience of
other project implementations
– Project Ownership
– Being judgmental and prudent starting from the first
step
• Ultimately, technology projects must align with
business goals!

16. Banking Technology August 2005
Steps in CBS Implementation
1. Determining and defining the requirements for which CBS is required
2. Floating an RFP for CBS
3. Collecting and evaluating responses to identify the exact fit
4. Choosing a suitable technology partner
5. Establishing a project team for implementing CBS
6. Customizing software
7. Putting in place a Change Management Procedure
8. Establishing a Test Centre/Pilot Site
9. Constant reviewing of the project by Top Management /Steering
Committee
10.Performing strict user acceptance test
11.Devising data migration strategy
12.Conducting parallel run at the pilot site
13.Implementing the CBS at all other branches in a phased fashion
14.Applying BPR to obtain the greatest benefits

17. Banking Technology August 2005
Steps Involved in a Project

18. Banking Technology August 2005
Critical Factors for Success
• Excellent Project Management skills
• Synchronization of activities to prevent delays
• Top management support
• Prioritize activities and prevent project creep
• Sound project planning
• Identify inter-dependencies of various modules and tasks
• Define roles and responsibilities
• Define resource requirement
• Define intermediate deliverables
• Full time project management team
• Formal project review and escalation process
• Effective communication and Simple, short chain of command
• Staff continuity
• Vendor capability and commitment
• Effective switch over plan

19. Banking Technology August 2005
Business Continuity
• Business Continuity essentials:
– High impact in case of error/failure at data center
– Reduce planned/unplanned downtime
– Constant monitoring of systems
– Need to define Critical Business Functions / data
– Predefined disaster definition
– Data backups
– BCP documentation
– Robust backup/DR policy
– Provision of disaster recovery site in a different seismic
zone

20. Banking Technology August 2005
Business Process Re-Engineering
Key steps to be followed:
• Review existing business process including the
merits and demerits of the existing system.
• Benchmark the best practices in the industry
• Identify gaps/areas in the existing system that
need improvement
• Implement changes as per the standards set.

21. Banking Technology August 2005