04 Feb 2018

11 Steps to successful implementation of core banking solution

11 Steps to successful implementation of core banking solutionYogita Firodia

A core banking system replacement is often likened to an open heart surgery. The costs and risks — of core banking projects are high. 80% projects overrun in budget and/or timelines. Each implementation for an upgrade or a replacement is unique and comes with its own challenges and risks. A lot of the replacements end off as failed projects

Few key factors can go a long way to ensuring a successful implementation.

  1. Planning is key.

A detailed planning may take a lot of time, but it gives the implementation programme the edge of visibility, backup planning options, higher success rate, and the possibility to account for the unexpected at times.

Failing to plan is planning to fail. It is wiser to put in time upfront in proper comprehensive planning rather than trying to curb or justify the overruns later.

 

  1. Use phased approach.

Doing everything at one go increases the risk of failure.

For the first transformation, reduce new functionality as much as possible – the recommendation is to migrate the existing business on the new platform.  Once successfully moved to the new platform, the bank’s team can become familiar with the functionality and when the day to day processes are streamlined then it is advised to start implementing new functionalities. It is good idea to create small subprojects that can deliver value.

 

  1. Limit customization.

There is an inherent urge shown by most core banking projects to throw in as much modifications as possible, as it is seen as the only opportunity to get things done. Or sometimes there is rush to use the new platform and custom build solutions.

With improved technology, reduced development costs and access to any corner of world without actual physical travel has enabled lot of customizations to be effectively added in over period of time as and when needed.

The recommendation is to limit the customizations during the implementation. This reduces the risk on the project and there are better chances at succeeding at adapting the new system.

 

  1. Change business processes.

Alongwith the replacement of core banking system the bank should undertake process rationalization with work culture transformation in order to optimize the returns of a new core banking system.

Embracing new system involves tremendous effort to change both the IT division and the business team & can involve extensive user training and re-engineering of processes across the organization. A good way to combat any resistance or dissatisfaction is to bring change to current environment and equipping employees with new skills and knowledge to effectively adapt to the new technology and solution.

 

  1. Manage change control.

Scope creep is a living nightmare in any project. The important thing is to form a high level decision making body to arbitrate between different points of view, lines of business or operations and IT, vendor, third party and manage any changes very tightly. The key is to remain focused to the objective and timelines.

Another area from where scope changes can creep unnoticed is data migration. The devil is in the details and it is when individual data mapping and migration start, gaps start to emerge. Manage migration tightly.

 

  1. Identify a guinea pig – use a pilot.

If it is bank with lot of agglomerates – find a small group that can become the pilot without impacting the complete bank. Or find a small branch if branches are key interaction channels with the customer. Avoid rollout of new channels. Or use a product-wise rollout if feasible.   This will help insulate the bank from complaints and criticism about early hiccups in the new software. The customer too will be impacted to the minimum and services can run with minimal disruption.  Also, learnings in pilot can then be used to rollout the rest of bank far more smoothly.

 

  1. Expect time and cost overruns.

There will always be surprises. The trick is to plan ahead, anticipate these glitches and react quickly.

Get the visibility to management and steering committee early on and get them on-board with recommendations before the implementation starts to spiral downwards.

 

  1. Testing phase is the most challenging phase of any implementation.

Test everything thoroughly or be prepared to quickly fix glitches in the new system. Testing everything is not feasible. Attempting to do that will involve playing script for an entire year’s worth of transactions, and even then it may not be a hundred percent coverage. Also, testing can be very expensive. The answer is to find a middle ground. Ensure test scripts cover all complex scenarios and combinations of the business. Ensure that data used for testing is varied enough. And have support team of experts who are able to react fast to any problem. Fixes and solutions should be provided quickly.

The bank should also be flexible and prepared for some manual workarounds. In addition, it is important to be pragmatic at each step in this stage to differentiate between a must have fix and good to have.

 

  1. Involve all stakeholders and align all to the same objective.

There should be no barriers either between the business & development team or with third-party vendors. All stakeholder interests should be aligned with the common goal of project success. This helps build a cohesive and yet very diverse team to make it successful project.

 

  1. Pick the experts.

Organizations should have strong steering committee team with CEO/ CIO actively involved in key decision making.

Banking experts from various divisions such as finance, operations, IT should form core team dedicated to the project.

Vendors should select strong partners for implementations. People with good background of the solution and with expertise of regional banking business is essential.

 

  1. Quantify returns.

On completion of an implementation the bank should measure the effectiveness of upgrade or replacement via tangible measures such as improved margins on return on investment (ROI), reduced operating costs, revenue growths, and lower manpower costs.

Intangible measures such as market growth, retaining market competiveness, increased efficiency, business growth, improved revenue generation, better customer service also help evaluate if objectives for replacement are met.

This will also build a good case for the bank future upgrades or implementations.

Comments

  • Sujit SagarLeave a Reply
    August 29, 2016

    Really a valuable information from implementation perspective.

  • November 7, 2016

    thank you

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