Lead

IT at the Bank of India

Outsourcing its IT requirements has helped the Bank of India focus on core issues. Megha Banduni reports

When the BOI-HP total IT outsourcing deal was announced, it was reported to be one of the biggest IT deals in the country with suggested valuations of $100 million to $150 million over a ten-year period. What led to this deal?

BOI—the Bank of India—had connected all its branches by means of LAN and WAN. It had also gone through Total Branch Automation. However, lacking a core banking system, no centralised data was available. Data in each branch could be accessed with the help of City Level Servers. The entire process was riding on the Institute of Development and Research in Banking Technology network for interconnectivity. BOI ran Novell NetWare and in-house software atop the server OS.

With a mission to provide superior, pro-active banking services to its customers while providing cost-effective responsive services to others in its role as a development bank, BOI signed on with HP to deploy a core banking solution (CBS) from Infosys in 2004. Unique about the deal was the fact that the bank effectively handed over its IT keys to HP. Along with rolling out a CBS, HP was also involved in providing solutions for consulting and integration, customer support and managed services, business intelligence, business continuity (BC) and availability, disaster recovery (DR), network management and systems management. HP did everything from training end-users and migrating data to providing post-migration support and IVR support. For BC and DR, HP took care of data replication and tested the DR set-up every three months. Thus, the CBS turned out to be the best possible solution to meet the bank’s requirements. The CBS roll-out happened in 550 branches over 475 days.

BOI is involved in many aspects of banking including commercial and personal banking, corporate banking, overseas banking, capital market and merchant banking; it has specialised branches for asset recovery, small scale industries, hi-tech agricultural finance, lease finance and treasury, hence deploying any technology at BOI is a very critical task.

Anywhere, anytime banking

"BOI was one of the earliest banks to outsource its ATMs. Outsourcing its IT applications ensures that managed services providers have skilled and qualified professionals to manage its infrastructure" - P A Kalyansundar General Manager, IT Bank Of India

The very first motive of the bank was to concentrate on its core banking activities and offer best-of-breed services to its customers through various delivery channels that would ensure anywhere, anytime banking. Says P A Kalyansundar, General Manager, IT, BOI, “Today, customers need an anywhere, anytime banking facility, and want transactions to be done through various delivery channels. In such a scenario traditional banking was not feasible, hence the need to have a core banking solution was felt to meet customer needs and deliver better services.”

Apart from such issues, BOI had other concern areas such as implementing and managing an IT transformation initiative around core banking and data warehousing, and reducing the total cost of ownership (TCO). Implementing a customer-centric infrastructure to improve existing customer service levels was another area of concern. Business continuity had to be maintained at all times. Further, the bank wanted to move to the next level of IT enablement through the implementation of a CBS, thereby making a major shift from branch automation to bank automation.

Choosing the right partner

The bank decided that it needed to concentrate on its core competencies. It therefore evaluated the option of choosing an IT partner to manage all its infrastructure and application requirements including an IT transformation around core banking. “We came out with a transparent tender. Many IT companies participated as it was an open process. Finally, we chose HP because of the HP-Infosys combination,” informs Kalyansundar.

HP manages the servers, desktops, network devices, Web servers, storage and the servers that run the CBS. It is also providing the application services for Infosys Finacle and the Oracle Financial Service Architecture DWH (data warehouse) product. Overall, it is HP’s responsibility to maintain and upgrade the software for core banking, telephone banking, Internet banking, DWH and the like for the entire tenure of the project.

In the first phase 750 branches, which accounted for 80 percent of bank’s total business, were covered under the CBS roll-out. “Earlier, it was decided that HP would complete this roll-out by 2007. But they managed to finish it a year ahead. Today, more than 800 branches are covered and we plan to reach 1,000 branches in a couple of months,” adds Kalyansundar.

BOI was working on plain vanilla Intel servers and continues to do so. At the branch level, PCs run a browser-based front-end and the Oracle database forms the back-end.

For a bank with so many branches around the country, it was definitely a challenge for HP to ensure that the bank’s entire chain of activities and operations ran smoothly especially during prime banking hours. Hence, HP decided to set up a data centre for BOI to ensure business continuity for core banking operations.

Kalyansundar states that HP is the single point of contact for BOI. Everything is handled by them. As for the choice of Finacle from Infosys, a benchmarking exercise was carried out jointly by HP and Infosys, and the performance of Finacle was tested using HP Integrity Superdome servers.

Outsourcing is not a new concept for BOI. It was one of the earliest banks to outsource its ATMs. Outsourcing of its IT applications now enables the bank to not only focus on its core business activity but also ensure that managed services providers have skilled and qualified professionals to manage its infrastructure. Besides, Kalyansundar points out that they have just outsourced the technology part—everything else remains with the bank.

Business agility

The CBS roll-out helped the bank deliver products/services faster, making BOI ‘business agile.’ It also enabled the bank to focus on core business activities, reduce the TCO, and build a high level of predictability for future cash flows. Besides, the bank benefited in terms of increased productivity, standardisation, and consistent service levels and customer experiences.

The actual benefits of the programme are expected to accrue over a period of time, but the top management envisions that deploying the said systems will provide BOI a unified customer view, aid scientific decision-making, and result in faster time-to-market. Further, by outsourcing IT operations and management, the bank can now focus on its core business activities for competitive advantage, and at the same time get best-of-breed industry-standard services from HP, for whom IT is a core function.

Long-term benefits

As part of the project, HP will implement and manage a data warehouse and document imaging solution, and provide integrated channel management including tele-banking, Internet banking and ATM. The contract also envisions building and managing a data centre, DR site, helpdesk and call centre. HP will also manage IT infrastructure, supply and maintain technology products including servers, desktops and peripherals across the branches, and provide asset refresh and obsolescence protection for IT assets.