BPR -Syndicate Bank

INDEX

Introduction: ... 2

Company Profile: ... 3

Reason for BPR Initiative: ... 4

Scope and Time frame: ... 5

Team Involved: ... 7

Project Design: ... 8

Supporting Tools and Techniques ... 10

Impact of the project “as is: and "to be": ... 12

Conclusion and Recommendations: ... 13

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Introduction:

Business process reengineering (often referred to by the acronym BPR) is the main way in which organizations become more efficient and modernize. Business process reengineering transforms an organization in ways that directly affect performance. The analysis and design of workflows and processes within and between an organization. A business process is a set of logically related tasks performed to achieve a defined business outcome. Re-engineering is the basis for many recent developments in management. When Syndicate Bank went in for a Centralized Banking System, it knew that the system would have to be accompanied by business process re-engineering (BPR). The coupling of BPR and IT transformation has helped the bank save crores of rupees while launching a slew of products.

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Company Profile:

Syndicate Bank was established in 1925 in Udupi, the abode of Lord Krishna in coastal Karnataka with a capital of Rs.8000/- by three visionaries - Sri Upendra Ananth Pai, a businessman, Sri Vaman Kudva, an engineer and Dr.T M A Pai, a physician - who shared a strong commitment to social welfare. Their objective was primarily to extend financial assistance to the local weavers who were crippled by a crisis in the handloom industry through mobilising small savings from the community. The bank collected as low as 2 annas daily at the doorsteps of the depositors through its Agents under its Pigmy Deposit Scheme started in 1928. This scheme is the Bank's brand equity today and the Bank collects around Rs. 2 crore per day under the scheme.

The progress of Syndicate Bank has been synonymous with the phase of progressive banking in India. Spanning over 80 years of pioneering expertise, the Bank has created for itself a solid customer base comprising customers of two or three generations. Being firmly rooted in rural India and understanding the grassroot realities, the Bank's perception had vision of future India. It has been propagating innovations in Banking and also has been receptive to new ideas, without however getting uprooted from its distinctive socio-economic and cultural ethos. Its philosophy of growth by mutual sustenance of both the Bank and the people has paid rich dividends. The Bank has been operating as a catalyst of development across the country with particular reference to the common man at the individual level and in rural/semi urban centres at the area level.

The Bank is well equipped to meet the challenges of the 21st century in the areas of information technology, knowledge and competition. A comprehensive IT plan is being put in place and the skills and knowledge of the Bank's personnel are being upgraded through a variety of training programmes to promote customer delight in every sphere of its activity. The Bank has launched an ambitious technology plan called Centralised Banking Solution (CBS) whereby 500 of our strategic branches with their ATMs are being networked nationwide over a 4 year period.

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Reason for BPR Initiative:

1. To adopt centralized banking system (CBS)

2. To improve the productivity of the bank and its customers.

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Scope and Time frame:

The bank formed a business council with five non-IT members (three were general managers and two were from functional departments) and one IT member. The bank came up with a business model and processes to deliver anywhere, anytime banking and an MIS that would provide both tactical and strategic information.

The bank had two alternatives:

1. Implementing core banking by carving out a small area in existing branches while keeping the existing branch automation system intact so that only new customers would get into the core banking set-up.

2. To go in for a wholly-centralized system.

KPMG interacted with the bank’s business council at this stage. The decision was taken to go in for a core banking system where the bank would totally migrate to the new system as it was felt that splitting into two systems would pose too many accounting issues. Return on investment (RoI) was defined in terms of the cost of doing business (retaining existing customers would become difficult if the bank did not go in for core banking) and in terms of the investment that had to be made. Detailed evaluation procedure was laid down before selecting FLEXCUBE from i-flex. This included floating a request for proposal (RFP) that specified the volumes in terms of the number of accounts and transactions and conducting detailed product walkthroughs where the bank looked at functions, business, technology and the overall cost of the solution.

The project began in August 2001. The bank viewed it as an opportunity to reinvent itself. A business blueprint was created before the project began. The first branch went live on December 15, 2001. Pilots were undertaken at six branches in six weeks by January 2002. The first was in Mumbai, which accounted for two of the six pilots, Delhi accounted for another two while Bangalore and Manipal had one each. After this came the launches of new delivery channels. ATMs were launched in February 2002 and today Syndicate Bank has 75 ATMs with 50 on the anvil in the next three to four months. For customers, the big boost has been the introduction of ATMs. Murthy cites the example of an ATM that was installed at the Central Railway Workshop in Matunga, Mumbai. 4,000-plus employees at the railway workshop now use this ATM and thanks to it they no longer spend an hour or two visiting the branch. The

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project began in August 2001. The bank viewed it as an opportunity to reinvent itself. A business blueprint was created before the project began. The first branch went live on December 15, 2001. Pilots were undertaken at six branches in six weeks by January 2002. The first was in Mumbai, which accounted for two of the six pilots, Delhi accounted for another two while Bangalore and Manipal had one each. After this came the launches of new delivery channels. ATMs were launched in February 2002 and today Syndicate Bank has 75 ATMs with 50 on the anvil in the next three to four months. For customers, the big boost has been the introduction of ATMs. Murthy cites the example of an ATM that was installed at the Central Railway Workshop in Matunga, Mumbai. 4,000-plus employees at the railway workshop now use this ATM and thanks to it they no longer spend an hour or two visiting the branch.

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Team Involved:

Syndicate Bank has joined Bank of India, Union Bank of India, Indian Bank and United Bank of India in creating a branded ATM network called CashTree. This countrywide network is expected to have 3,000 ATMs by end-March 2004. The telebanking launch (IVR) went live in July 2002, followed by Internet banking in January/February 2003. The data centre is based at Reliance Infocomm in Mumbai. Disaster recovery is being set up in Bangalore. Wipro Infotech is doing the network management part. Bandwidth has been purchased from BSNL and MTNL.

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Project Design:

The bank had multiple systems. Operations were automated using different systems. The data from these had to be moved into the centralised system being deployed. Since we are going for core banking, just dumb migration won’t do. Data migration needs considerable thought.

There was a project director from the bank’s side. The steering committee included senior executives from IBM and i-flex. The committee formed and met for three to four weeks, during which time all decisions were taken. To back up the efforts of the steering committee, another committee was constituted, headed by an internal GM. The bank has spent Rs 35 to Rs 40 crore on deploying its CBS. 55 branches are already on the CBS, with 10 to 15 more in the pipeline.

Beyond the IT component, Syndicate Bank brought much more to the table in terms of:

1. Branding—All branches on the CBS follow the same colour scheme (counter colours, etc.) and layout (floor design). The lobby space is greater than that occupied by the staff.

2. Real single-window—Customers can approach officers seated at any desk.

3. Uniforms—The bank has introduced uniforms for its staff. Women wear maroon saris while for men it is a white shirt, tie and black trouser combination.

4. Data enrichment—The bank captures a greater amount of information about its customers today

A high-tech bank within a bank

Syndicate Bank plans to have 225 branches on the CBS by March 2004. This will cover 75 cities and account for business worth Rs 25,000 crore. The idea is to create a high-tech bank within a bank. 1,500 branches will remain outside the CBS, of which 645 are rural branches, many in areas where there is no regular supply of power. The bank has plans for these branches as well. The manual system will continue to be used from 10 am to 2 pm in areas with chronic power problems. Employees will key in transactions in the afternoon, and that will be sent on a daily basis to the regional office over a VPN. The first pilot branch for this scheme is up and running in Chennai.

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The bank has signed up with Billpay and is launching its bill payment service next month. It has also tied up with Bajaj Alliance for collecting insurance premiums. The CBS lets the bank pass on the premium on the same day. Similarly, it can transfer tax collections on the same day.

The success of Syndicate Bank’s deployment of IT can be linked to its commitment to re-engineering its business processes side-by-side with its IT initiatives. It has also proved that public sector banks can match, if not outdo private players while deploying IT.

Cost Savings are the ROI

Existing business processes were revamped through a BPR (business process engineering) exercise that involved doing away with the ‘Maker Checker’ concept that was part and parcel of the existing branch automation set-up.

The benefits accruing from this step were:

1. The bank was in a position to offer a single-window facility to its customers.

2. The staffing requirement went down by as much as 40 percent, driving down space requirements. For instance, the Gandhinagar, Bangalore branch, that used to occupy 13,000 square feet now takes up less than a third of that area at 4,000 sq. ft., releasing 9,000 sq. ft. In Mumbai, where real estate is at a premium, the bank has saved crores of rupees as a direct result of the greater efficiency. The bank’s Fort branch used to occupy three floors. It had another branch within half a kilometre. By undertaking BPR and deploying the CBS (Centralised Banking System), three branches of Syndicate Bank now fit into the three floors that were earlier occupied by a single one. Consequently, Syndicate Bank has been able to surrender the second building, saving Rs 3 crore of outgo. Similarly, at Nariman Point, it had three premises. This has now come down to two, saving Rs 1 crore in the process. In Chennai, a single branch occupied two floors. That’s down to 3,500 sq. ft. now and the zonal office has shifted to the branch.

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Supporting Tools and Techniques

Hardware

A high-availability cluster of two dual-CPU 600 MHz pSeries 660s with 2 GB RAM, each running Oracle and FLEXCUBE. WebSphere Application Server-Enterprise Edition V3.5 serves FLEXCUBE. HACMP (High Availability Cluster Multi-Processing) is also installed on the servers

A pSeries 620 acts as the ATM switch server, running Oracle and Oasis. The ATM switch connects the ATM network to the FLEXCUBE core banking solution. The switch software from Oasis is a standard product and sits on an Oracle database on AIX.

xSeries nodes (models 220, 250 and 370) act as application/transaction servers, running various mid-level applications, and connect the other delivery channels to FLEXCUBE.

xSeries 220 branch nodes provide an offline interface to ensure that the branches can continue to function if network connectivity is lost.

xSeries 200 servers are Intel/Dialogic-based platforms for running Syndicate Bank’s telebanking application software from Servion. These servers will be positioned at different branches across the country. The Servion telebanking solution is a customised software solution that delivers voice-based customer responses. This solution can also be used for fax services and utility bill payment services, and it is integrated with FLEXCUBE.

Storage consists of 36.4 GB Serial Storage Architecture (SSA) hard disks housed in two 7133 external disk subsystems and an Ultrium LTO scalable tape library for backup.

All the hardware, servers and storage, are mounted in 36U racks.

Software

Tivoli Storage Manager (TSM) manages storage for the entire solution while Tivoli Data Protection for Oracle ensures data protection. The middleware used includes JDBC and Java APIs for Internet banking interfaces, Merant ODBC for core banking and MQSeries.

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Impact of the project “as is: and "to be":

Before the implementation of BPR banks worked using computer oriented techniques yet no centralized functioning was there. Only Partial Branch Automation or Total Branch automation was there i.e. one branch cannot be linked to other branches or other banks.

After the implementation of CBS now Syndicate Bank can manage different branches from headquarters using the Finacle software provided by Infosys. Now, syndicate bank is raising huge turnovers and savings huge costs.

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Conclusion and Recommendations:

Syndicate Bank being a public sector faced tough competition from private banks thus implemented BPR to come at par with private sector banks. Certain changes in banking system and due to regulations of RBI also it was very necessary to implement BPR. Being a commercial bank good profits of the bank are necessary.

Recommendations:

1. Bank is still suffering competition from other banks not only private but public sector banks. Therefore, it should try to improve its services

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Bibliography:

 Cases on information technology and business process reengineering By Mehdi Khosrowpour

 http://www.syndicatebank.in