Case Study

TJSB’s core banking push

Thane Janata Sahakari Bank's CBS implementation on a HP platform has helped the bank reduce its operational costs and has given it a unified view of interactions with customers through multiple delivery channels says Akhtar Pasha

Established in 1972, the Thane Janata Sahakari Bank Ltd. (TJSB) is the youngest Cooperative bank to get scheduled status from the RBI. In 1995, TJSB became the leading cooperative bank in India. Today it has 40 network branches and two Extension Counters. The bank has an installation base of 40 ATMs and serves 7.5 lakh customers.

Subodh Nagwekar, CIO, TJSB, said, “Today we have a nice story to tell the world on how a small cooperative bank can come close in matching the services with large private banks. We have achieved this with meticulous planning and vision.”

He continued, “In 2003 we realized that we needed technology to achieve growth and meet the demands of today’s tech savvy customers. Our planning started from this and we planned our growth map for the next five to seven years.”

Giving strategic direction to growth

In recent years, TJSB, like all others, had been facing new competition with each passing day. Retaining market share and profitability, while enhancing its brand image, have been important business drivers for the bank in the medium term. Therefore, TJSB saw a clear need to move towards a process-driven, service-oriented architecture by scaling up its IT infrastructure and business offerings. Additionally since the RBI had stopped issuing fresh licenses to open new branches in 2003, TJSB took the M&A route to speed up growth and acquired Sadguru Janjli Maharaj Sahakari Bank and Navjeevan Nagrik Sahakari Bank.

Nagwekar explained that given the bank’s growth plan, a distributed environment was ruled out and an integrated approach seen as necessary to solve its critical/technical issues. The Bank needed to scale up to address the challenges of operating in a highly competitive business environment. The decentralized branch banking approach did not quite work in the current business scenario and so a contemporary technology-based core banking solution was the need of the hour. TJSB’s focus was to cut the cost of operations and focus on business development and market-share enhancement through customer-centric operations at branches. “We thought a wider service delivery strategy was a must-have to increase the client base and enhance market share and profitability through organic and inorganic growth,” said Nagwekar.

Planning for DR and BC

The bank realized that the CBS implementation would only be complete with a comprehensive disaster recovery mechanism. The process involved the following steps—identifying DR sites to ensure the safety and security of the new Core Banking infrastructure.

Going online

With the aim of supporting rapid growth through M&A and to achieve its long-term business targets the bank decided to go online to increase internal efficiency with an e-mail application and an intranet portal. TJSB needed to improve its intra-branch and departmental communication by making the whole process more speedy, efficient and inexpensive. The services to customers also had to become much prompter thereby contributing to customer delight.

The bank was looking at an intranet portal that would help in distribution, sharing and assimilation of efforts to a great extent. In addition, going online would also mean improved decision-making and productivity.

Business transformation with CBS

TJSB started its IT initiative in 2003 with a review of the existing infrastructure, which indicated that from the long-term perspective to improve customer service and efficiency and for the expansion of branches, resource optimization was necessary. Therefore, there was a need to centralize the basic operations, which would be possible by implementing a Core Banking Solution (CBS). According to Nagwekar, the bank’s in-house committee and management executives along with branch executives sat down for a review of all the processes that are currently running in the bank. Once a detailed project plan was adopted, the project kicked off in November 2004 and in early 2005 the bank issued the purchase order for a Core Banking Solution.

For TJSB, implementation of technology was a major business decision and it was not just about automation. It meant a transformation of the way the bank does its business. Therefore, TJSB managed change through business process reengineering. The business plans of the bank formed the key parameter for evaluation of a product’s suitability. The functions and features provided by the software were mapped to the bank’s business requirements. The TCO of the project was worked out and analyzed. The challenge was to grow revenue faster than the underlying cost base and create a scalable back office that would enable the bank to reduce operating cost as business volumes grew.

TJSB collaborated with Hewlett-Packard to deploy information technology infrastructure and applications in September 2006. The project team focused on mapping the bank’s business requirements with the product’s offerings and a detailed gap document was created. The gap document covered issues of migration strategy, business reengineering and expeditious ‘Go-Live’ requirements and resulted in prioritization of requirements from among the product gaps.

The implementation

Nagwekar said that performance, scalability, uptime, reliability and investment protection have been key aspects while deciding on the IT infrastructure. InfrasoftTech’s had a long-standing relationship with TJSB and therefore they chose the vendor’s OMNIEnterprise CBS. HP was chosen as a referred hardware platform for business transformation. The CBS was deployed on HP servers at TJSB’s data centre. InfrasoftTech implemented the Core Banking Solution by migrating 24 branches and offices, and then moved on to the process of migrating the Head Office’s operations on to a single enterprise-wide centralized banking solution. The bank’s operations spread over four cities have now been migrated to running from its data centre in Thane.

InfrasoftTech along with the Bank’s IT team completed the task of branch migration by March 2006. The migration of the Head Office was completed by September 2006. Since then, HP has been working with TJSB cohesively to put in place best practices and ensure maximum uptimes for all business operations. The notable feature of OMNIEnterprise is that it is one of the few solutions in the world that can offer branch operation continuity for the local customers, should the connectivity circuits with the host application fail for any reason. The engineering parameters of OMNIEnterprise have been reviewed by Ernst & Young while its reliability performance testing has been undertaken jointly with Intel and HP.

For the Core Banking Solution, the Bank used HP RISC base servers, the RP3440 with a cluster of EVA4000 SAN Storage and Oracle 10g. The merger of Navjeevan and SJMB in 2007, plus the data sharing with TJSB meant an increase in new/concurrent users of the CBS application and the database. Since the bank had limited storage capacity, one more HP UNIX Server, a RP3410 with an EVA4000 was installed to support the disaster recovery site for CBS.

The Bank identified and recognized the importance of information security and undertook risk classification of all of its information assets to take adequate countermeasures to mitigate risk. A detailed security analysis pre- and post-CBS implementation was done by the bank independently. To ensure the safety and security of the new core banking infrastructure for the benefit of the bank’s customers, employees and the management, to securely run their business with the new technology, TJSB sought the services of a Security Consulting company, having professionals with BS7799 Assessor, CISA, CISSP, CCNA and FCA qualifications and having expertise in Banking/Finance domain, in the area of design, implementation and audit of information systems security and networks. The activity was carried out based on BS7799 and COBIT standards.

Nagwekar said, “Training all of our 300 users was a big task. We spent quite a bit of time explaining why we are implementing CBS and the objectives of the project. We had to explain each and every process that was undergoing change.” Post implementation all the changed processes started commercial operation from day one.

With a strong foundation of products, systems and processes, and the implementation of CBS, the Bank saw immediate results. The new technology helped TJSB become quicker, more efficient and customer-centric. Optimum resource utilization helped the branches to focus on more crucial issues like sales and innovative products.

This business transformation and CBS initiatives help TJSB achieve cost advantages while also enhancing its operational metrics and customer satisfaction levels to derive significant business benefits in the prevailing competitive banking environment in India.

Today there is centralized monitoring of credits because of which it has become easy to track leading and improve credit recovery. Nagwekar said, “The rate of payment default has dropped significantly because of the centralized monitoring of credit.”

Post the CBS implementation, the customer base has increased from 3.75 lakhs prior to CBS to approx 7.5 lakhs, thanks to CBS and also because of the acquisition of another bank namely Sadguru Janjli Maharaj Sahakari Bank and Navjeevan Nagrik Sahakari Bank (their branches) the acquired branches of which were also moved to CBS within a record time of three months. The number of branches grew from 24 to 42.

Nagwekar added that a consolidated centralized IT infrastructure any peak in transactions. For example the number of transactions increased significantly from 35,000 to 78,000 per day.

IT as revenue model

Since the IT infrastructure has sufficient capacity, TJSB had started hosting applications for other small cooperative banks. This strategy will help the bank to get some additional revenues. For example it has hosted the CBS of Kalyan Janata Sahakari Bank Ltd., supporting 14 branches. Nagwekar said, “Since we have spare capacity and the successful hosting of CBS of Kalyan Janata Sahakari Bank Ltd has given us confidence to sign up two more cooperative banks.”

TJSB increasingly enhanced the Bank’s customer service levels post implementation of the CBS. Centralization of back-office processing has reduced response time on customer service requests and is showing optimized staff utilization. Today, TJSB’s customers enjoy state-of-the-art technology-enabled services. The ATMs across branches and offsite locations are now working fully networked with centralized core banking database. TJSB is now in a position to provide fully online banking services from multiple delivery channels like branches, Internet, ATMs, Extension counters, on SMS-Phone-Fax thus creating a truly valuable customer experience of anywhere and anytime banking.

Future plans

TJSB has some aggressive growth plans. It plans to open new branches in Karnataka and Gujarat as the new licenses to open branches has been relaxed by

RBI. The bank is expecting five more licenses from RBI. Other plans include having a HRMS system so it all HR related and payroll systems can be consolidated and streamlined. It would be in line with Employee Self Service wherein any employee can log into the system to access their personal details as well as apply for leave online.

akhtar.pasha@expressindia.com