1

FinacleConnect is a quarterly journal on banking technology published by Infosys Technologies Limited.

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Scaling business
challenges
with technology
Welcome to the launch issue of FinacleConnect, the
quarterly newsletter from Infosys! As the global economy
strengthens and banks enter the new year on an upbeat
note, FinacleConnect aims to bring to you the latest
business and technology trends, views and opinions
impacting the banking industry.
The events of the past half decade, right from the Y2K
bug to the economic downturn, have significantly affected
the business of banking. And accordingly, the role played
by technology too has evolved. From being considered a
support function a few decades ago, technology moved to
the forefront during the dotcom era and is finally being
pragmatically viewed as a critical enabler for banks to
operate effectively. The importance of technology was
further underlined when even during the cost cutting drive
in recent years, banks realised that prudent investments
in technology were essential to compete successfully in a
globally networked world.
In this first issue therefore, we discuss how technology
has transformed banking and how most technology
decisions in banks are increasingly business driven. We

have also tried to understand from leading industry

practitioners and analysts, how they view the role of
technology in banking - now and in the future. For, such
issues will continue to gain relevance with time. The thought
is succinctly captured in the words of Bo Harald, head of
electronic banking at Nordea. In his conversation with
FinacleConnect, he says, Technology is a big enabler, but it
should not take the drivers seat. Not only in banking,
but in society at large, a technological solution must meet a
business goal.
Going ahead, FinacleConnect will continue to address critical
aspects of technology in banking and how banks can harness
technology to better service their customers. We hope
you will enjoy this issue and look forward to receiving
your feedback.
At the dawn of a promising new year, FinacleConnect wishes
its readers a very prosperous and progressive 2005!

Girish G. Vaidya
Senior Vice President and Business Head - Finacle

Re-invigorating the bank

Technology enabled transformation

Investment in technology has become mandatory as it has become

a competitive necessity to deliver innovative products and services.
Technology has always played an essential role in banking. Right from mainframe-based
core processing systems developed well over half a century ago, to the relatively recent
Internet banking phenomenon, the banking industry has always been at the forefront in
absorbing new technologies. But with increasing globalisation, competitive pressures,
regulatory requirements and the current economic scenario focusing on cost reductions,
technology has moved from an auxiliary position to the vanguard and is playing a more
strategic role within the banking organisation.
Realising that IT strategy needs to be closely aligned with business goals in order to derive
maximum benefits from technology investments, banks are now carefully deploying
technology to meet their key business objectivescompetitive differentiation, innovative
product development, customer retention and operational efficiency.

Some of the key areas where this change is

its online customers are more profitable than its

evident are in the delivery channel management,

offline customers, which has fuelled the banks

including the physical branch and in the area of

aggressive online strategy. What distinguishes

core banking.

this strategy is the way the bank has fully

Self-service technologies

Not only has the bank deployed enabling

developments, there has been a strong emphasis

technologies to ensure a high standard of online

on self-service banking in recent years. Estimates

banking service, but has also effectively

by analyst firm, Celent, suggest that delivery

responded to customer feedback. For instance,

channels account for about one third of a banks

the online enrollment process was simplified

total IT spending on consumer banking products

from five screens to one screen and uses the

and services.

customers Social Security Numbers. Similarly,

alternative to brick-and-mortar bank branches.

However, telephone banking, call centres and

the bank also introduced a text chat feature during

online banking and many of Bank of Americas
banking centres now feature online banking
kiosks, where customers can log on to check a

thing is not about

the Internet have brought about a paradigm shift

technology; it is

present a low-cost means of delivering banking

While customer preferences for individual

services to a customers doorstep. Banks are

delivery channels vary across regions, industry

focusing on moving non-critical banking

experts are unanimous that providing multiple

want to make

transactions, such as cash withdrawal and

delivery channels is no longer an option; it is an

deposits, funds transfer and standing instructions

imperative. Effectively implemented, a multi-

with technology,

to these delivery channels. This leaves the high

channel strategy promises greater customer

cost bank branch to focus on face-to-face high

satisfaction, increased operational efficiency and

value transactions.

higher profitability. At ICICI Bank in India,

the change you

Bank CIO.

in the way banking is conducted today. They

Banks that have consciously and intelligently

invested in delivery channel technology have
gained tremendously from this strategy, as is
the case with Bank of America, which has
achieved unprecedented success in online
banking. The bank accounts for over 30 percent
of the US online banking market, having more
than doubled its online customer base from 4.7
million customers at the end of 2002 to over 11
million customers today. In addition, it is gaining
more than 350,000 new active subscribers and
150,000 new bill payers every month.

66

improve customer satisfaction and profitability.

Buoyed by customer demand and technological

A few decades ago, ATMs were the only

The important

embraced the online channel as a means to

balance or pay a bill.

nearly 50 percent of all transactions take place

through ATMs. The banks multi-channel focus
has helped propel it to become the second largest
bank in India, in less than half a decade, despite
having less than 5 percent of the number of
branches owned by Indias largest commercial bank.

Refreshing the branch

The high degree of attention placed on self-service
technologies, however, does not lessen the
importance of the physical branch. In fact, the
physical branch is essential for a successful multichannel strategyit enables bankers to provide

According to a recent report by analyst firm

quality face time to their customers. Hence, banks

TowerGroup, Bank of America has found that

are renewing their branches to offer high-end

selling and advisory services. The aim being to

development of innovative products, enhancing

create more time and space to sell sophisticated

customer experience by responding to customer

and high value services to customers, such as

requests in a uniform manner through any

wealth management products and loan products.

delivery channel, and boosting profitability

In keeping with this, several banks are changing

through increased cross selling. A multi-channel

the look and feel of their branches to create more

architecture that enables enterprise-wide risk

retail environments, places where customers can

management and eases the audit process also

be enticed to stay longer and hopefully discuss

improves a banks ability to comply with

and buy new financial products. Three years

regulatory requirements.

back, Abbey, UK High Street bank, re-invested

According to a report by TowerGroup on

in its bank branches by introducing the

Huntington Bank of the US, replacing the

revolutionary concept of cappuccino banking

fragmented and siloed delivery channel

A multi-channel

(having Costa Coffee outlets within some of the

architecture with an integrated solution has

banks main branches) to enable customers to

helped the bank improve customer service and

a rc h i t e c t u re t h a t

have coffee while banking. In the US too, leading

increase sales. However, achieving multi-

banks like Bank of America have created new

enables

channel integration is not simple. A global

branch designs and service styles to cater to

survey conducted by Celent at the beginning of

different customer needs.

2004 on multi-channel integration capabilities

In the process of re-designing their branches,

at banks across North America, Europe and

many banks are also revamping their obsolete

Asia Pacific revealed that although many banks

branch technology infrastructure to provide

support multiple channels, integration between

branch employees with the tools they need to

these channels is not high.

a u d i t p ro c e s s a l s o

be more sales-effective. Some of the main criteria

While some banks have channel-specific

a branch solution should fulfill are easy

i m p roves a banks

business logic, meaning that data is not

integration with legacy systems, extensibility

consistent across channels, other banks have

to other channels, flexible architecture, and

the same platform across channels but lack data

customisation capabilities.

integration or support for a specific channel.

w i t h re g u l a t o r y

Multi-channel integration

Typically, banks have integrated transactional

r e q u i re m e n t s .

While developing each delivery channela

enterprise-wide
risk management
and eases the

ability to comply

data, but not contact information. While

critical ingredient for multi-channel success is

most respondents of the survey optimistically

the concept of a unified view to make

estimated their integration projects would

customers sales and service experience

be completed within three years, Celent expects

consistent across all delivery channels. Integration of the disparate technology systems
across various delivery channels helps increase

that megabanks and large regional banks would

actually have to dedicate the next five to seven
years to develop a fully multi-channel

operational efficiency as it removes duplication

environment. Smaller banks may, however,

of technology systems and reduces maintenance

be able to complete projects at a much quicker

requirements.

pace.

In addition, multi-channel integration helps banks

Getting to the core

gain competitive advantage through rapid

The one area that takes up a banks maximum

77

technology investments in terms of time, effort

Santander, the largest bank in Spain and one of

and money is the core banking solution. Forming

the largest banks in the world, is also in the

the backbone of a banks IT infrastructure, the

process of replacing all of the groups core

core banking solution contains records of all

solution in the Spanish market. According to a

customer transactions and the processing of

report by Celent on core banking replacements,

those transactions. Most of the leading global

Santanders aim is to generate cost savings of no

and regional banks have mainframe-based core

banking solutions that were developed way back
in the 1960s and 1970s.

less than 250 million euros annually. Celent

estimates that the total savings that are achievable
with a core solution replacement project lie in

The inflexible architecture of these solutions does

the range of 5-8 percent of the total non-interest

not enable banks to introduce new products

expenses, which can have a profound effect on

without first making changes to the software code.

the overall profitability of any bank.

Besides causing delays in product launches, these

solutions also pose challenges with respect to

The report labels Santanders project as one of

integration with the banks other ancillary

the most extensive and ambitious core solution

flexibility,

solutions and providing customers with a unified

replacement projects underway in the banking

view of their financial information. Not surpr-

industry, globally. It also states that along with

i n t e ro p e r a b i l i t y

isingly, all of these put together make maintaining

cost reduction, the main aim of the bank is to

these legacy applications prohibitively expensive.

increase revenuesthrough more effective cross

High efficiency,

and low cost,

the only option
is to re p l a c e
t h e s e c o re

banking systems.

For banks that have deployed inflexible vendor

selling, better customer relationship management,

solutions too, the situation is quite similar. Their

increased service quality and better leveraging

core solutions usually exist in a siloed enviro-

of multi-channel strategy.

nment that is further exacerbated by mergers and

End game

acquisitions. Industry experts suggest that some

banks have over a hundred disparate banking

No longer just restricted to the operations

applications running simultaneously.

department, technology is driving the business

of banking today.

In order to meet modern day goals of high

efficiency, flexibility, interoperability and low
cost, the only option is to replace these core
banking solutions. Undoubtedly, replacing a core

Banks cannot avoid

investments in technology because it has become

a competitive necessity to deliver innovative
products and services. What they can do is to
deploy the technology, keeping customer

banking solution is a difficult task, but the returns

requirements and business goals in a proper

are high and a few progressive banks such as the

perspective. For banks that have the vision to

Citigroup and ING have taken the all important

utilise technology intelligently, the rewards are

step. ABN AMROs Indian subsidiary too

considerable, including transforming their entire

has gained tremendously by replacing its

business. n

core banking solution with Finacle from

Infosys. This has enabled them to reduce

Merwin Fernandes

operating costs and improve overall efficiency.

Vice President & Global Head

(refer case study on page 22)

Sales & Marketing - Finacle

Understanding
technology for innovation
Bo Harald, Executive Vice President and
Head of Electronic Banking at Nordea, is
said to be one of the most influential
technologists in the banking area. Involved
in Nordeas electronic banking initiatives
from the very beginning, he has seen the
banks Internet banking customer base
grow to 4 million accounts with
the worlds highest number of electronic
payments and bill payments. Harald,
a frequent speaker on Internet and
e-business, was awarded the Finnish
Ministry of Transport and Communications first award for promoting the
information society and electronic
services.
The largest financial services group in the
Nordic and Baltic region, Nordea has
regularly received plaudits for its electronic
banking services, the most recent being
the global award for best use of IT in retail
banking from The Banker magazine.
In a discussion with Rekha Menon,
Research Analyst of FinacleConnect,
Bo Harald spoke at length on the banks
strategy and the role of technology in
ensuring business benefits.

10

Nordea has received several awards for

e-banking for individuals was launched in 1982.

electronic banking. Please explain the

This was all PC banking and we had nearly a

technology initiatives that have made this

quarter of a million e-banking customers before

possible.

the Internet came into the scene in 1995. We

have been gradually introducing other services

Technology is used in all parts of the bank

like equity trading in 1988, real-time e-payments

retail banking, wholesale banking, as well as the

in 1996 and e-loans and B2C e-billing in 1998.

technology that I am responsible for, and that is

electronic banking, which reaches all areas of the

Nordea has 10 million retail customers and

bank. One of the main reasons why the bank has

1 million corporate customers, out of which over

been so successful is that we started electronic

4 million bank online. We are to the best of our

banking very early (1979) and had time to let it

knowledge, global leaders in the number of

Technology is

mature. In addition, we have very good solutions

e-payments which, we believe, is still close to

that are very user friendly and simple, in fact

double the size of Bank of America. 90 percent

a b i g e n a b l e r,

you can say we have made it clinically simple.

of student loans, 36 percent of consumer finance

We also have a very high level of security. For

and 24 percent of mortgage applications in

but it should

instance, we still use the same log-on method

Finland are paperless.

not take the

a unique number assigned to them and through

that was introduced in 1982. Each customer has

The second stage of the electronic revolution

has been the introduction of e-identification and

the post they get a list of passwords that have

drivers seat.

other e-business services, where customers login

to be used one by one so every login is a different

to other commercial services such as utilities

Not only in

combination of passwords, which is very secure.

banking, but

security because they have experienced it

also in society

and continually added value.

at large.

It is important to understand what technology

needed such as when filling out tax returns or

can do but it should not be behind the steering

checking pensions and health reports. Our next

wheel. It should take a back-seat. You have to

big focus is on business-to-business electronic

understand what customers can take in and

invoicing which is also receiving a strong push

support that. It is very important. There is a

from the government.

through the Internet banking service. They can

We have not had to convince our customers about

then use their Internet banking passwords to

sign agreements with the service provider. This

themselves. We have built the very best systems

very clever saying that people do not want to

service is even used to access government services

online, where a high level of authentication is

do what is good or profitable in the first instance,

In your opinion, what is the role played by

technology in ensuring success?

they want to expand from what they are already

doing because they are used to it. To start
something totally new is a big challenge.

Technology is a big enabler, but it should not

take the drivers seat. Not only in banking, but
also in society at large, a technological solution

What are the main highlights of Nordeas

electronic banking journey?

must meet a business goal. If the technology

deployed does not relate to customer requir-

Finland has been the laboratory of electronic

ements strongly enough or build on existing user

bankingit has a very good payments

habits, it cannot be sold and will be useless.

infrastructure. We launched our corporate

An innovation is a reality, only if a critical mass

e-banking service way back in 1979 and private

of users can use it.

11

Often it is a case of reusing existing technology

manual transactions, there is more time for

for new purposes. And the more important

relationships

thought is that, this is reusing existing experience,

Plus all the new services like e-invoicing,

building on habits of customers. Because what

e-business cannot be sold through the post.

they have done before, they can do now for an

People do not have time to read it all.

and

advisory

services.

additional purpose. The last service adds much

more than the previous one, so it becomes an

Are there any final thoughts you would like

to share with us?

exponential value curve for the customer. This

provides economies of scale both for the

bank that can sell more to the same relationship

Technology is your best friend and most

and the customer who can buy more from the

dangerous enemy. If used in the right way,

Technology is your

same relationship.

it makes anything possible. But, you have to

best friend and

Society is getting more electronic. If the tools

if you try to do everything that technology

to make it electronic are the same as electronic

allows, then it confuses your customers,

most dangerous

banking that a customer is used to, then the

it becomes too complicated, too expensive,

transformation will be that much more fast, easier

and you may lose the confidence of your own

enemy. If used in

and cheaper.

organisation.

Was the Internet always the main delivery

Our experience is that if you start very early,

channel for Nordea? How did Nordea

then electronic banking can be developed in

respond to the predictions of the demise of

parallel with core banking. So you dont

the physical bank branch during the Internet

have to change your core banking solution for

boom?

e-banking specifically. But, if you start with

the right way, it

be very choosy on what you focus because

makes anything

possible.

e-banking very late, then your core banking

A

You are quite correct in your observation that

solution is not adapted to e-banking and you

when it was started, the Internet was just an

have a discord.

alternative channel. Then we saw that it was a

cost eliminator and income generator, because

Banks should be interested in technology very

we charged for the service and customers were

early. We try to be among the first few in the

willing to pay what was considered, a very

world. And I tell my tech team that we must

handy service.

travel out in the world and learn about new

technologies. But, you must implement it only

We have never made any predictions about the

when you really understand it. Then, it is not

demise of the physical branch. On the contrary,

part of hype, it is mature and you do it right.

our stance has been that nothing can replace

12

personal contact and personal relationships.

I would also like to stress that you cannot plan

Even if customers do all their loan transactions

the future. You will only lose time and money

over the Internet, there is always the option

if you try to predict the future. What you

to go to a physical branch and talk to someone

have to do is have a vision, make a small

face to face. We can see that the relevance of the

investment, evaluate the responses and take it

branch is going up. With the elimination of

from there. n

Core banking
replacements
Managing
risks

I arrived at the symposium half expecting last

years critical themes again. Why would
I expect a changeafter all, the world of
core banking technology had not changed all
that much in the last 18 months - or had it? A
couple of years ago, at the same symposium,
all I heard was that core banking solution
replacement was an idea whose time had NOT
come. The risks were just too great, said
experts. Others opined that the costs of such a
dramatic change in the technology infrastructure
were just too high to justify undertaking the
risk. And as I considered these views very
objectively, I realized that they were all correct.
The risks were indeed very high, costs
potentially bordering on the prohibitive and
in-house systems had indeed served the
purpose. However, what I had heard at this

years session was refreshingly different.

There was still widespread cognisance of the
risks and costs, but there was something else
in the air, an acknowledgement of the fact
that banks, irrespective of size and geography,
face the dual challenge of cutting costs
and increasing internal efficiencies, with the
ultimate aim of improving margins, which are
clearly under strain. There are visible signs of
large global and regional banks willing to take
the plunge. While some openly stated their
intentions to consider a core banking solutions
replacement, there were some others who
had already taken the first steps towards this
brave move. More than one global bank
is considering a new application if not in
their home market to start off with, then
at least elsewhere.

13

This is a significant step and I strongly believe

governance, the quality of management and

that all it requires is a couple of successful

their vision, and so on are positive indicators.

migrations before this develops into something

like a wave.
What then are the risks that banks should take

Vendors of core banking solutions are more than

just developers of another piece of software
and banks are recognising this.

cognisance of, before embarking on what is

Solution risk

clearly going to be the single biggest technology

At the end of the day, a solution is what the

initiative within the bank?

bank buys. And therefore, evaluation of the

solution itself is very important. For example,

Vendor or partner risk

Analysts rate this as the single biggest risk while

evaluating enterprise applications. After all, if

a core banking systems replacement is going to

T h e re a re

be the single biggest initiative, the solution

various

vendor. There are various questions to be

questions to be

provider should be a partner rather than a

considered while evaluating a vendor s
credentials.

c o n s i d e re d w h i l e

Some of these are:

evaluating a

imperative that the vendor is financially very

Is the vendor financially strong? It is

vendors

strong, and capable of tiding over the bad times

c re d e n t i a l s .

times.

so as to be able to capitalise during the good

benchmarking the solution features against

best practices as its geographic footprint grows.
Critical evaluation of solutions by research
analysts and consultants also can provide banks
with key insights into the solution. Banks
should also look at the vendors strategy in
future-proofing the solution for emerging
requirements.

Technology risk
It is a must that a banks partner is at the cutting
edge of technology. For example, a few years
ago, the adoption of web technologies was
considered necessaryand solutions, which had
adopted these technologies early and web-

Is the vendor committed to the business? It

enabled their systems, were clearly the more

is vital for a vendor to have a long-term view of

progressive ones. In todays environment,

the banking business just as a bank would have.

experts are talking of Web Services and a

They should understand the business, make

Services Oriented Architecture (SOA), so

regular investments to track and understand

solutions that conform to this are obviously

the business, and above all, give it the focus

more than a step ahead. There are other factors

that it deserves.

to be considered too, such as:

Does the vendor conform to quality

standards? For a software vendor, adherence
to various quality standards is of paramount
importance.

14

it is expected that the vendor would invest in

Is the solution scalable? Banks should closely

look at vendors who have performed scalability
benchmarks. However, the (real) proof of the
pudding is in the number of live sites say 500

What do others have to say? The different

branches, or where transactions volumes per

accolades received pertaining to corporate

day are more than 5 million.

Is it based on open and inter-operable

Positive pointers that banks should be looking

standards?

at are:

The core banking solutions will co-exist with

other internal and external applications. It is

implementation support? How many levels

important that interfacing and integration

capabilities are proven beyond doubt.

of support does the vendor provide?

n

completed?

easier part. The more difficult and challenging

to a successful implementation. An experienced

For a software

How do upgrades and enhancements come

to the bank after implementation has been

It is often said that selecting a vendor is the

part is, of course, carrying the project through

Is the vendor equipped to handle support in

different parts of the world?

Implementation & support risk

The banking world has seen many projects fail.

What is the vendors strategy for post

What do long standing customers have to

say about post implementation support?

vendor with impeccable implementation

credentials is one who has managed all

Concluding remarks

v e n d o r,

challenges well. Some of the key questions that

It is important that banks take a holistic view

banks should be asking while evaluating this

while considering the replacement of their core

a d h e re n c e t o

risk are the following:

banking platform. While the benefits of

quality standards
is of paramount

importance.

Does the product require large-scale

implementing packaged solutions built on

customisation? How will this be managed as

modern technology are all too obvious, one

part of the implementation plan?

cannot deny that such an exercise is fraught

Will the vendor make many changes to source

with risks. The risks can be mitigated and

code on-site?

manageda good starting point would be for

What is the implementation methodology

that the vendor adopts? Is it comprehensive

the bank to recognise the different risks and

consider strategies to mitigate them.

and does it incorporate aspects that are

As I said at the outset, the perspective at this

critical to the bank itself?

years symposium was refreshingly different.

What is the vendors track record with

I am confident that next year, the mood will be

implementations? A clean track record here

a lot more optimistic as it will be built on the

is a significant plus, as there are not too many

plank of successful implementations by the

vendors who can claim to not have even a

few courageous banks which have taken the

single failed implementation.

first steps. And these banks would be those

Does the vendor have experience with

which would have evaluated and managed the

different types of implementationsin

different risks successfully. n

different geographies, big bang migration as

well as phased roll-outs, etc.
A related but an equally important issue is the

Sanat Rao

post implementation support that vendors

Associate Vice President and Global Head

provide.

Product Strategy & Management - Finacle

15

ABN AMRO BankTechnology led excellence

A strategic imperative

which was based on ICBS solution from Fiserv,

running on an IBM AS/400 platform. However,

ABN AMRO bank set up base in India over

80 years ago and like other foreign multinational banks, focused primarily on wholesale
banking, to service top-tier corporate clients.
This changed in the 1990s when strategic
business imperatives and an increased level
of competition both from domestic and multinational banks in India led the bank to
look at retail banking as a key area for growth.
In an effort to strengthen its retail banking
presence, ABN AMRO acquired Bank of
Americas retail banking operations in India.

16

the existing solution was not flexible enough to

meet the requirements of a competitive consumer
banking environment, where offering a range of
products and services to customers across
multiple delivery channels is critical. With
frequent maintenance requirements, the platform
was also proving to be a drain on resources. At
the same time, the focus at the bank was on
reduction of TCO(Total Cost of Ownership)
and therefore, a mere upgrade to a newer version
of the existing, aging system would not have
met the objective. As a result, the bank decided

As part of the acquisition, the bank migrated to

to replace the legacy system with a new

Bank of Americas technology infrastructure,

generation, robust core banking solution.

Key business requirements

either during the planned End of Day (EOD)

The corner stone of a successful consumer

black out windows, unscheduled outages of the

banking strategy is to have a technology

central data center of the bank or during

platform that can offer anytime, anywhere

disruptions in branch network connectivity.

banking through multiple delivery channels like

Leveraging StraightThrough-Processing

the Internet, ATM, mobile and call centres.

(STP)

ABN AMRO required a platform that could

easily support existing delivery channels and
add new emerging channels, while seamlessly

integrating them to provide a relationship

view of customers interactions across all

Finacle enables

delivery channels.

Finacle provided an interoperable and open

architecture that ensures tight integration with
all delivery channels using standard message
protocols. The powerful STP infrastructure
ensured that a transaction such as a request for
a cheque book through the ATM is completed

Being a multi-national bank, ABN AMRO was

end-to-end without manual intervention and

also keen to adopt best practices being followed

process turnaround times are drastically reduced,

at both the

in other countries, such as the ability to roll

thus enhancing productivity and customer

out new products and services in line with

satisfaction. For instance, with Finacle,

central server

domestic market requirements. Equally

transactions at ABN AMRO like cheque book

important was the need to roll out these

and branch level

issue and account statement issue, turnaround

customisations rapidly so as to gain critical time-

times have reduced by one day each.

z e ro d o w n t i m e

ensuring that

to-market advantage. All this could only be

achieved by deploying a platform that was

Unique extensibility features

ABN AMRO is up

flexible and easily extensible so that the bank

Finacles unique Xtensibility tool kit comp-

could by itself, launch new products and

rising Scripting Engine, Workflow, and Remote

and running on

services to its customers.

Application Interface (RAI)) provided the much

a 24x7 basis

Solution overview

to easily and rapidly add new business rules,

After intense discussions and evaluation, ABN

launch new products, and modify processes.

AMRO chose Finacle, the new generation

Using this tool kit, ABN AMRO developed a

delivery channels

universal banking solution from Infosys, to

loyalty reward programme for its customers

address its needs in core banking and consumer

wherein, the bank offers incentives like

and branches.

Internet banking spaces.

charge free demand drafts based on specific

Some of the key features that the solution

business rules like maintaining specified

offered were:

minimum balances. Such programmes have

a c ro s s e l e c t ro n i c

needed flexibility to ABN AMRO, enabling it

True 24x7 banking

Finacle enabled zero downtime at both the
central server and branch level ensuring that
ABN AMRO is up and running on a 24x7 basis

helped the bank reap the twin benefits of

customer retention and an increase in low cost
funds. Some of the modules that have been
quickly rolled out by ABN AMRO are:

across electronic delivery channels and branches.

Direct Sales Agent (DSA) Module: To track

Finacles architecture also enabled offering of

the performance of Direct Sales Agents (DSAs)

basic consumer banking services to customers

of the bank and to have customised commission

17

computation logic for the DSAs based on

predefined parameters like product type,
geography and hierarchy.
The continually changing business

Complaint and Request Tracking System

dynamics in the new age economy

(CARTS): To track customer request and

requires banks to respond with a high

complaints without manual intervention

degree of agility. Today, technology has

and assign priority based on customer profile

emerged as both the key enabler and

and request severity by seeking reference from

driver of change. We believe the Finacle

the Finacle core banking database.

universal banking solution from Infosys

Card Management System (CMS): This is a

repository of customer card information and acts
as a focal point in various events relating to cards
like issue, re-issue and maintenance. An additional
feature of this module is the ability to
communicate on an online basis for activities
like hot carding a card, activation/de-activation
of cards.

is not only functionally rich and

technically robust and scalable, but also
that its new generation architecture based
on the web paradigm, true 24x7
operability and straight-throughprocessing infrastructure provides ABN
AMRO the crucial time-to-market
advantage and business agility to gain
and retain competitive leadership in the
consumer banking space.
We are confident of achieving a very
healthy ROI on this technology project
and have already experienced various
costs savings. For instance, we have
experienced over 60 percent increase in
realization of fee-based income. Besides,
in Infosys we see a strategic partner who
has the global reach, rich experience and
expertise in financial services, and a wide
range of technology. It is this rich

A success story

repository of experience and skills that have

helped them carry out this demanding

For ABN AMRO, the choice of an enterprise

implementation project within budgeted

banking platform hinged on factors like

costs and time frames.

flexibility translating into ease of customisation,

availability of an integration infrastructure

Romesh Sobti

with multiple delivery channels and reduced

EVP & Country Representative

TCO. Finacle has delivered on all of those points

ABN AMRO, India

along with giving crucial time to market

advantage and business agility to the bank,
thus helping script a retail banking success
story. n

18

Enhancing performance by maximising

return on technology investments
Organisations today are facing intense competition to
deliver better value to their customers and stakeholders.
Typically, this is handled by developing additional
functionality through customisation and new products
deployment. Traditional response to additional requirements
is addition of H/w resources and at times, development/
deployment of applications in silos. Such constant addition
of hardware beyond a point leads to unmanageable
application/infrastructure silos with little focus on
performance. Problem is further compounded due to
tremendous increase in size and complexity of application
and infrastructure. Further, in the current economic scenario,
CIOs and CTOs are faced with the need to reduce the TCO
of all systems and deliver more value with less investment.
This article discusses how an organisation can maximise the
return on new and existing investment by getting the maximum
out of the firms IT infrastructure through end-to-end
performance tuning and management.
Functionality centric focus combined with lack of resources
and time, results in inherent flaws in the design of application
or coding style. Sometimes, application testing is conducted
with scaled down environment to just test the functionality
and not performance and eventually, performance problems
under high work load conditions are left to be faced during
production. Clearly, special attention to performance,
improvement of existing deployments is required to meet
these challenges. The benefits are manifold and not limited to
a high ROI. By ignoring these performance aspects, firms
can end up paying penalty on various fronts like damaged
customer relations, lost income, increased hardware
costs, increased development costs and cancelled projects.
End-to-end performance paradigm could be effectively used
to address the above issues.

End-to-end performance paradigm

One can define the end-to-end performance paradigm as
having a performance focus at each stage planning, design,
deployment, ongoing optimisation at all layers of the
infrastructure and application. Using end-to-end approach
on performance optimisation and management, one could have
a holistic view of entire system right from planning and
deployment to usage, constantly evolving the system to keep
meeting dynamic customer expectations / performance
targets, as indicated in Figure 1.

20

Figure1: End-to-end performance paradigm

End-to-end performance paradigm approach broadly involves the following stages:
Set appropriate, reasonable, tangible, measurable and justifiable performance goals
Design, architect and develop from a performance perspective
Allocate adequate capacity based on benchmarks / stress tests
Design and deploy IT infrastructure for optimum performance
Capture changing business requirements
Monitor, fine-tune and optimise on an ongoing basis
Be ready for the future
Set appropriate, reasonable, tangible, measurable and justifiable
performance goals
The best place to look for performance problems is by understanding
stakeholders requirements and user perception. Establishing a tangible,
measurable and realistic performance goal is the most important aspect as
every thing else evolves from these inputs. Obviously, these criteria need to
be established well in advance to address performance issues effectively.
Design, architect and develop from a performance perspective
Figure 2 depicts various layers of performance optimisation. Out of these,
performance focus at the design and architecture layer is the most rewarding
because any re-work on these layers after the system is already developed
and deployed can be extremely time consuming and costly. In todays
competitive market, customer needs and technology keep on changing.
Therefore, during regular performance reviews one should be open enough to
re-look at the overall design and architecture.

One can define

the end-to-end
p e rf o rm a n c e
paradigm as
having a
p e rf o rm a n c e
focus at

each stage.

Allocate adequate capacity based on benchmarks / stress tests

Adequate capacity provisioning is mandatory for any system to perform
well. Enough resources should be ensured by establishing appropriate
capacity planning / optimum deployment architecture needs through suitable
benchmarks and stress tests.
Design and deploy IT infrastructure for optimum performance
It is extremely important that all the learnings of this benchmark / stress tests
must be implemented in the final deployment.
All the infrastructure layers such as servers (CPUs, memory and I/O access
bus, cache in relation to application), storage architecture (disk drive type
and speed, cache on storage), RAID type, I/O access mechanism and

21

parallelisation, network (bandwidth and

Be ready for the future

access between servers), and WAN should be

Regular trend analysis and projections should be

evaluated with a holistic view of performance

conducted on system usage patterns and changing

and

Figure2: Optimisaton stack

not

leave

business needs. Using these trend analysis

any performance

reports, we can envisage forthcoming additional

bottleneck point.

resource requirements. This essentially avoids

After all, the stren -

surprises and the need for adhoc buying at short

gth of the chain is

notice and deployment in silos. The other

determined by its

important business benefit is that it provides

weakest link.

sufficient time to negotiate a deal, as there is no

Capture changing business requirements

time pressure to upgrade or deploy.

Each system is designed to serve a set of well-

Leveraging performance out of a deployed system

defined expectations. Therefore, each

is not a destination but, a journey. Any typical

application should be used in accordance with

deployment keeps on evolving in terms of usages,

its intended use and any change due to changing

processes and complexities; the market forces

business process should entitle a close

change business requirements which manifest into

observation of its impact on the overall system.

changes in user expectations from the system. For

Monitor, fine tune and optimise on an

instance, how a user transacts with a bank itself

ongoing basis

has totally changed over the last couple of years

Proactive and ongoing monitoring is important

(from branch banking to on the spot delivery

competition

to ensure that performance requirements are met

channels). These changes alter the importance

on an ongoing basis. Regular performance audit

of various business functions or results in

has made

and tuning of the entire system helps improve

requirements of a totally new functionality to meet

performance and availability.

business requirements.

optimally

Performance tuning is a high skill job, requiring

Fierce competition has made an optimally

expertise and experience of all five layers

performing system a mandatory requirement.

discussed above, with a holistic understanding

This is also evident from increasing requirements

system a

of the overall system to deliver best performance

of IT governance, SLA management, QOS on

tuning results. Domain knowledge to which the

performance aspects. An optimally performing

mandatory

system pertains is extremely important for quick

system not only increases customer loyalty by

and effective performance tuning. As the overall

increasing overall availability, satisfactory and

r e q u i re m e n t .

complexity increases, one should involve

reliable response from the system, but also

specialised technical resources and services to

reduces the overall investment on infrastructure

help the organisation in addressing performance

by optimally utilising the existing resources.

issues effectively. The most effective way to keep

End-to-end performance paradigm can

the system optimally tuned is to involve such

effectively be used to leverage high performance

experts to review the system performance at

and scalability from the deployed IT solutions

regular intervals. We have seen major

thereby, ensuring higher ROI and return on

improvements ranging from 20 percent to 60

existing investment. n

Fierce

p e rf o rm i n g

percent where such regular tuning exercises are

22

conducted on a regular basis, with initial visits

Rajinder K. Gandotra

showing higher improvements.

Head -Technical Consultancy Group - Finacle

Q3 revenues up 53%

Most admired enterprise

Wins global respect

Winning with ethics

Infosys Technologies Ltd.

announced financial results
for its third quarter ended
December 31, 2004.
Revenues for the quarter
aggregated $423 million, up
53% from $276 million for
the quarter ended December
31, 2003. Net income was
$112 million ($71 million for
the quarter ended December
31, 2003).

Infosys Technologies has

won the prestigious Global
MAKE (Most Admired
Knowledge Enterprises)
award, for the year 2004.
Infosys won the award for
the second time in a row, and
remains the only Indian
company to have ever
been named a Global
Most Admired Knowledge
Enterprise.

Infosys is ranked as one of

the Worlds Most Respected Companies in the
Financial Times-PwC
annual survey. Infosys was
ranked 62nd this year and
is the only Indian company
included in this elite group.
It is 37th in the list of
companies that created
the most value for its
shareholders.

Businessworld, a leading
Business
publication
from
India,
ranked
Infosys the most respected company in India.
(November 2004). Infosys
topped all nineteen
parameters
including
the special categories
of Most Ethical and
Most Globally Competitive
Companies.

Finacle The Universal Banking Solution from Infosys

Breaks scalability record!
The Universal Banking Solution from Infosys, Finacle, set a
new threshold in core banking scalability. This new scalability
benchmark will help large banks realise lower TCO and provide
a proven alternative to legacy systems. Finacle clocked 11,180
transactions per second (TPS) in online mode and 19,568 TPS
for batch mode, improving its own previous record of 7357
TPS for online transactions and out-performing the industry
standards by a wide margin. Ernst & Young reviewed the
benchmark test.

n Finacle

to replace mainframe based Systematics solution at

Union Bank of Philippines(UBP). Among the top 10 banks in
the Philippines, UBP is going to use Finacle to drive cost
reduction and business agility.
n National Bank of Umm Al Qaiwain, one of the leading Banks
in UAE, has signed on Finacle universal banking solution to
power its core banking, treasury and Internet banking operations.

Recent wins
n SBI selects Finacle to power its international operations. The
bank will deploy core banking, e-banking and treasury solutions
across its global operations. The deployment is expected to be
completed in a record time of 12 months in 20 countries, spread
across 3 global data centers in USA, UK and India.

Customer Speak
Finacle was successfully implemented and went live on 28th November at ABN AMRO, Taiwan. This is a major milestone bringing
next generation banking technology to support our current business and future growth. Such a smooth implementation cannot be
achieved without hard work, long hours, and of course great teamwork across the bank, and also between ABN AMRO Bank and
Infosysour Finacle vendor.
Jim Brown, Country Manager
ABN AMRO, Taiwan

23

BOOK
REVIEW
are unanimous in advocating the benefits of cross-selling and have set
aggressive cross-selling objectives, there are several challenges to achieving
success especially when trying to cross-sell across geographies.

Author : Steven I.Davis, Palgrave

Macmillian, 2004

Banking barons brew success

The past couple of decades have seen the
banking industry being transformed through the
twin forces of globalisation and competition,
combined with the ubiquitous demand for
higher levels of customer service. In their
efforts to extend their breadth of service
offerings and expand their geographical reach,
the banking industry is witnessing increasing levels
of consolidation.
In an attempt to take a closer look at the qualities
that have contributed to the success of some banks,
Davis nails down on ten leading banks, acknowledged
to be the best managed in the business, from around
the world to distil from their experience learning
that could prove invaluable.
Selected by a panel of bankologists (banking industry
consultants and analysts), this list includes universal
banks like Citigroup, HSBC and UBS, leading regional
commercial banks such as Wells Fargo, Banca Popular
Espanol and Svenska Handelsbanken, and, specialist
investment banks like Goldman Sachs. This book is
a sequel to two similar studies carried out in the
1980s and Davis also tries to contrast the results of
the previous studies with the current findings, both
in terms of the banks selected as the top ten excellent
banks and the subsequent findings.
While this list of excellent banks is skewed towards
the US and Europe, the insights provided are
sufficiently generic to be applied globally. People,
culture and leadership, are highlighted as the
qualitative features that distinguish a progressive
organisation. Cross-selling and Innovation distinctly
mark these banks services offering. While most banks

24

Those who have adopted the route of

acquisition as a means of inorganic growth
and expansion into different geographies
and wider product offerings, place the
challenge of managing size and complexity
at the very top of their agenda. According
to him, banks as large and diverse as
Citigroup, HSBC and UBS have managed
to acquire and grow successfully but states
that it is an individualistic issue. As for
cost reduction, the trick lies in maintaining
a low cost to income ratio. However, for it
to truly make difference, it ought to be in
the banks DNA.
Interestingly, one area that is barely
touched upon is technology. It is mentioned only in passing. He states,
While technology is a necessary ingredient in the delivery equation,
banks since the 1980s seem to have found acceptable solutions in
technology management, whether through outsourcing, joint ventures
or simply by managing their own systems more effectively.
While there is some truth in that statement, it may not be the entire
truthit may be presumptuous to assume that bankers may know all
answers with respect to technology and its usefulness. The book also
does not adequately dwell upon back-office outsourcing trend, core
banking replacement strategies and the debate on offshoring.
In an attempt to improve on his previous two studies on banking
excellence written a decade ago, Davis presents his own reflections on
issues of concern today and the outlook for tomorrow. As a scientific
study, Excellence in Banking - Revisited! deserves a read, and being
150 odd pages long, avoids being tedious. But, the frequent use of
quotations throughout gives the book the feel of an extended magazine
article and not an academic-like volume prepared in a research setting.
This book could have proved to be more insightful had it included
smaller banks and banks outside the US and Europe to the list of Excellent
Banks, a sentiment that is shared by the author as well. Perhaps, one
can look forward to this expanded list in Davis next book in this series
on Excellence in Banking and hope to gain a truly global perspective on
the best management practices in banking.

Rekha Menon
Research Analyst - FinacleConnect

25