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India’s
largest foreign bank, Standard Chartered Bank, has been a
slow starter on the Internet front—it only recently launched
its i-banking initiative. However, notwithstanding the late
entrant tag, the bank has taken rapid strides in this space
and has even set up its own subsidiary to take care of its
IT needs. Dominic Aranha reports
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Soumen
basu says that having systems maintained by the parent
ensures economies of scale in operations |
As
far back as 1997, Blane Erwin, director of Forrester’s
Business Trade & Technology Strategies authored a report
which predicted that e-commerce would rise from $8 billion
in 1997 to $327 billion by 2002. At the same time, International
Data Corporation (IDC) provided a more conservative projection
of electronic commerce generating $10 billion in 1997, rising
to more than $220 billion by the year 2001. More recent predictions
in September 1998, by John Gantz, senior vice president, IDC
point that this number will approach one trillion dollars
by 2002. Regardless of which projection one picks, the reality
is a significant increase of Internet commerce activity within
the next two to three years.
Given the projections that Internet commerce will grow astronomically
over the next four years, firms of all sizes have become proactive
in not only seeking out Internet opportunities, but in determining
ways to exploit this revenue generating medium. Banks too
have been bitten by the Internet bug and have now begun to
offer i-banking, or intelligent banking services as some would
like to call it. The Indian banking scene has been no different,
with tech-savvy banks such as Citibank and HDFC Bank taking
the i-path a while ago, and even slow PSU outfits like Bank
of Baroda or SBI heading down this road. But recently, the
biggest news in India’s i-banking space has come from
Standard Chartered Bank (SCB), which joined the fray with
the launch of Me Standard Chartered Online, its global Internet
banking brand.
SCB at a glance
The Standard Chartered Bank opened its first overseas branch
ever in Kolkata on April 12, 1858. Calcutta as it was known
then, was the most important Indian commercial city, and the
centre of the jute and indigo trade. With the growth of the
cotton trade and the opening of the Suez Canal in 1869, Bombay
took over from Calcutta as India’s main trade centre.
Today, the group has a combined customer base of 2.4 million
users in retail banking and over 1,200 corporate customers,
branches and sub-branches in India, which are directed and
administered from Mumbai, with Calcutta remaining an important
trading and banking centre.
IT, a business
facilitator
While aXcessPlus maybe the bank’s catchword for business;
on the IT front, it boasts of a lean infrastructure. Says
Soumen Basu, chief operating officer, Standard Chartered Group,
“As a group, we are highly conscious of what drives business
and services in the financial services arena. While products
is one thing, delivery is another. However, these cannot take
place without being backed by solid infrastructure. Stanchart’s
IT infrastructure and core systems, especially in countries
like India, which are the bigger countries in the group, are
developed and maintained by the group. There are of course
smaller systems, which are product specific and are developed
in each country. These are usually maintained and developed
using our own networks and vendors. However, very little work
is done in-house.”
Stanchart India began leveraging IT for product and service
delivery around the mid-1980’s. Initially, it used a
system called BankMaster, which was standard across the group.
It later migrated to another system called Hogan, which is
being used currently. This system, with CT-DOS as the front-end,
forms the core transaction processing system for SCB, while
Standard Chartered Grindlays uses a commercial banking system
with Finnet as the transaction processing system and Beam
as the front-end. The mainframe for Hogan is based in Singapore.
Here economies of scale come into play, since the databases
of a number of countries are based in Singapore. However,
even though the databases are based in Singapore, all approvals
are done in India itself. Says Basu, “We put a transaction
into the front-end and authorise it. It then goes into the
central database and is updated out there.” However,
once the two banks merge completely, somewhere in the next
couple of months, the latter will migrate to Stanchart’s
systems.
To better serve its needs, the bank has two IT teams an India
IT software development team and an India IT operations team.
While the former focuses on developing local systems, the
latter looks after data centres, communication lines, EPABXs,
UPS, etc the entire infrastructure on the whole. The team
also does a lot of outsourcing and is responsible for ensuring
that the local software and operations infrastructure meets
the bank’s high quality standards.
Says Basu, “The bank works closely with the Stanchart
Group to ensure that group systems are maintained and developed
for India. We have our own local systems that we take responsibility
for in the country.”
Networking
The bank currently has 18 branches (58 along with Standard
Chartered Grindlays) and 64 ATMs in 18 cities. The offices
of the bank are connected through dedicated terrestrial line
systems. Standard Chartered Grindlays has its own network.
Says Basu, “There are some locations where we use VSATs.
These are very few remote sites. The strength of the line
depends on system needs and data flow, and whether its inter
city/intra city, etc.”
Basu adds, “Even though both banks are completely networked,
we are still two different entities. The challenge for us
will be to complete the re-engineering of the network in such
a way that duplications and overlaps are done away with, and
the network is strengthened to support both data and voice
flow in a very efficient manner. That’s the big thing
that’s happening now and within the next 4-5 months that
job should be completed. So in the IT area, we would like
to be at the cutting edge.”
Multi-processing hub
While discussing the IT infrastructure of the bank, its multi-processing
hub at Chennai deserves a special mention. Says Basu, “We
had operations in every country although the larger countries
used similar platforms. Given the fact that technology and
communication links were improving the world over, there was
an opportunity here in terms of migrating transaction processing
into a low cost environment. What the bank saw was that more
and more financial service companies were outsourcing their
activities to vendors who were specialists and would satisfy
their requirements at lower costs. It was therefore decided
that it would look at certain destinations, where it could
centralise processing, and after a lot of deliberation, Chennai
was chosen as one of the global hubs.”
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According
to Akshay Kumar, slow and steady wins the race |
Accordingly,
a cross border transaction processing hub was set up at Chennai,
and instead of outsourcing the job to an outside entity, the
group decided to set up its own subsidiary for the purpose
Scope International. The company, registered with STPI, has
been entrusted with the task of looking after the operations
of this hub. Says Basu, “We plan to set it up as a best-in-class
entity and use it to service various countries across the
group. The tasks assigned to the company will not be limited
to data processing, but also software development and maintenance.
To achieve this purpose, the company will be staffed by specialists
and should therefore be able to give us the kind of service
we require of a better standard, using the latest technology
and at an economical cost. The setting up of this hub will
also give us economies of scale. Another benefit would be
the standardisation of the bank’s operations. Stanchart
transactions from many countries will be processed in that
hub.”
The hub already performs transactions for some countries.
In addition to this, it also serves as a base for the India
operations of the group. “Of course all local operations
cannot go to Chennai. There are certain operations that cannot
be centralised. These are not national activities, but centre
specific activities. We will migrate whatever we can to the
global hub,” Basu points out.
e-commerce
On 11 December 2001, the bank launched its i-banking venture
branded as ‘Me Standard Chartered Online’. The portal,
which employs 128-bit Secure Socket Layer (SSL), allows the
user to make third party transfers, check account status,
etc, practically everything that one can do at a branch with
the exception of withdrawing cash. People can even use the
site for account generation. Of course physical signatures
cannot be replaced, but the bank is believed to be ready for
a stage when digital signatures are approved and one does
not need physical signatures anymore.
Coming at a time when others have already made headway on
the Internet banking front, one may question the delay in
such a venture. Says Akshay Kumar, head-marketing and e-commerce,
consumer banking, India, “The bank was thinking about
e-commerce for a long time, but we decided to hold on and
see how consumers accepted these concepts. Technology has
changed rapidly over these last few years. Most people instead
of going across to a bank or ATM to check their account status,
prefer to do it on the Net, since most are connected to the
Internet for a greater part of the day. Besides, it’s
much more confidential than doing it via the telephone.”
The site was first launched internally. “The reason,”
Kumar points out, “was that once our own employees found
the site useful, they themselves become brand ambassadors
for the service. We also developed a couple of teaser campaigns
to increase awareness about the site. The punch line of these
teasers was ‘What’s in it for Me?’ A lot of
people thought it was an HR initiative in the bank. That was
the first bit, which went on for four days. We also included
it on the salary slips, as this is one piece of paper that
everyone reads. The reason we did all this was so that people
could know what the site is about, use it and then give us
vital feedback.”
The bank, according to Kumar, has gone to great lengths to
personalise the site. It even has a service ambassador. He
says, “All these services together help to enhance the
user experience. If people used to come to a Stanchart site
earlier when they could not do anything besides viewing information,
how much more would they use the site now!”
Kumar adds that the bank has benchmarked the response time
for the site in an effort to ensure that customers get the
response time they desire. He says, “The problem with
any site that uses 128-bit encryption is that it usually takes
a longer time than normal to load, but then not all banks
have this benchmarking. For secure sites, it usually takes
just a minute for the transaction to take place. Sometimes
it’s a pure ISP issue.” Kumar adds that the site,
certified by VeriSign, will also provide a facility for bill
payments at a later date.
Going forward
Says Basu, “We look at IT as a business facilitator.
The business will drive our IT needs. We are looking at IT
facilitating growth in consumer banking areas such as credit
cards, secured loans such as mortgages, etc. In terms of customers,
the bank is looking at growing business in the wealth management
area, which is really managing transaction accounts of value.
Technological developments will take place on the core systems.
These of course take place with group support as these are
maintained by the group.”
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