Preface

From the Editors Desk

Evolving Trends in Core Banking Transformation (CBT)
01. Customer Expectations and Next Generation Banking 05
02. Survival Driving Core Banking Transformation (CBT) 13
03. How to Write a Winning Business Case for
Core Banking Transformation (CBT) 21
04. Realizing Value from a Core Banking
Transformation (CBT) Initiative 29
05. Web 2.0 Transformation Strategy for Banks 37
Challenges Faced in Core Banking Transformation (CBT)
06. Overcoming Organizational Change Management Challenges
in a Core Banking Transformation (CBT) Program 45
07. Technology and System Integration Challenges of a
Core Banking Transformation (CBT) 53
08. Core Banking Implementation Challenges for a
Global Bank in a Multi-country Environment 59
Implementation of Core Banking Transformation (CBT)
09. Reliable Implementation Frameworks for
Core Banking Transformation (CBT) Programs 67
10. Core Banking Transformation (CBT)
Methodology for Implementation 75
11. Portfolio Analysis for Migrating Legacy Applications to a
New Core Banking Platform 85
12. Products and Services Innovation-led
Approach to Transformation 93
13. Core Banking Transformation (CBT)
Bank in a Box (BiaB) Approach 99
Contents
CORE BANKING
TRANSFORMATION
Technology Insights for the Financial Services Industry
Since banking is a highly competitive service industry where customers
vote with their feet, managing change has always been critical to
successful business transformations. An increase in bank failures in
2008 has further eroded customer loyalty while simultaneously creating
increased pressure on banks to transform. In this paper, Infosys will
highlight three key organizational change challenges together with tried
and proven implementation strategies. It is only when staffs are fully
prepared and ready to transform that they effciently and effectively
implement processes and systems as designed. This is particularly
critical for customer-facing staff that directly impact customer
satisfaction and defection.
Overcoming Organizational Change
Management Challenges in a
Core Banking Transformation Program
06
Marilyn Watkins
Senior Principal
Infosys Consulting
Edie Wiley
Senior Principal
Infosys Consulting
46
of challenges and constraints unforeseen
in mature markets. This paper also includes
successful strategies used in a recent
implementation in Asia.
Drive Rapid Decisions and Create a
Sense of Urgency
The entire banking industry is and needs
to be risk averse. Banks live in a fsh bowl
under the scrutiny of the public eye and
are challenged to continuously transform to
meet ever-changing regulations, economics
and emerging market demands. The recent
banking crisis has placed increased scrutiny
on the industry and its leadership. Banks
tend to be slow to make decisions, preferring
to explore all options and weigh risks and
mitigation strategies about everything
that could go wrong before making
a fnal decision.
In ERP business transformations, the key
to success is to strike the right balance.
Leadership faces a dilemma. They must
continue to be risk conscious while at the
same time being ready and willing to drive
the rapid decisions needed to complete
Introduction
Since all organizational change involves
people, banks engaging in Enterprise
Resource Planning (ERP) business
transformations experience challenges that
are similar to other industries as shown
in Exhibit 1. They also encounter some
challenges that are unique to the core banking
industry. This paper highlights practical and
proven strategies for overcoming these
challenges. They are:
1. Driving rapid decisions and creating a
sense of urgency in an industry that is
understandably risk averse
2. Securing and mobilizing the right team at
the outset of the project and
3. Managing a smooth transition for both
employees and customers on day-one,
week-one and beyond.
Additionally, as banks expand their global
footprint into emerging multi-cultural
economies by opening new branches and
scaling through implementation of standard
processes and systems, they face a new set
Projects Fail when People are not Ready
Exhibit 1
Resistance to Change
Limitations of Existing Systems
Lack of Executive Commitment
Lack of Executive Champion
Unrealistic Expectations
Lack of Cross-Functional Team
Inadequate Team and User skills
IS staff and Users Not Involved
Project charter Too Narrow
20% 40% 60% 80% 100%
People related issues Other issues
47
actively involved with all activities that lead
to implementation and go-live. This ensures
that there is top-to-bottom and bottom-to-
top commitment to the effort. The ultimate
evidence of commitment to change is the
visible presence of a strong Sponsorship
and Change Support Program.
This occurs when Sponsors (usually Senior
Executives), those with authority and power
to legitimize the project, actively and visibly
support the program. There must be two-
way communication between the Sponsors
and this network so that information is
communicated in a timely fashion and trust
is fostered amongst the team and those in the
bank whose daily work lives will be impacted
by the change. Success is dependent upon
mobilizing ever-increasing numbers of
stakeholders as shown in Exhibit 2.
This change mobilization and acceptance
process begins with Senior Executives who
become visible project champions. One of
work that directly impacts the project burn
rate and the business case ROI. Time is
money in any industry implementing an
ERP or other core technology platform, and
especially so in banking. The speed at which
leadership can mobilize the organization
and the project team can complete the work
will directly impact the business case ROI.
Failure to create a sense of urgency means
loss of business agility, increased project
costs, and erosion of business benefts
needed to retain and grow customer base
and proftability.
Infosys believes that a critical success
factor from an organizational viewpoint
in ERP business transformations is having
a strong network of Sponsorship and
Change Support across all roles and levels
of the banking organization affected by the
change (for example, Branch Executives,
Tellers, Accountants, Customer Service
Representatives). The network creates
word-of-mouth sense of urgency and is
Building Change Commitment
Exhibit 2
Stakeholder Acceptance Process
Awareness Engagement Commitment Ownership
TargetAcceptanceArea
Senior
Executives
Governance
Business,
Customers
Partners
SMEs Super
Users and
Supervisors
Impacted
groups
Awareness Engagement Commitment Ownership
Awareness Engagement Commitment Ownership
Awareness Engagement Commitment Ownership
48
the challenges in the banking industry is
focus and change capacity as most executives
are juggling competing business, regulatory
compliance and project priorities while
simultaneously driving innovation to cater
to customer segments that are no longer
predictably homogeneous.
At a recent banking business transformation,
there were four competing projects and the
management was acclimating to a new CEO.
The project to deploy Finacle, Infosys Core
Banking Product in Asia was started at the
same time as the development of a detailed
business case. Needless to say, the business
case was not well understood and it was
diffcult to get executive access and approval
on communications because they did not have
an integrated cross-project plan, let alone an
integrated communications strategy and plan
to reinforce the business case.
Lastly, the project leaders were already in
action and reticent to take the time to complete
the Organizational Change Management
(OCM) and communications planning
Building Banking Staff Change Commitment through
Communications Aligned to Project Phases
Exhibit 3
Deploy
Test
Build
Design
Envisioning
Deployment Plan Communications Strategy
Phases Messaging
A
w
a
r
e
n
e
s
sE
n
g
a
g
e
m
e
n
tC
o
m
m
i
t
m
e
n
t
O
w
n
e
r
s
h
i
p
1
2
0
D
a
y
s
P
r
o
d
u
c
t
L
a
u
n
c
h
Each release will require a customized communication plan and strategy to ensure clear and
consistent messaging
Stabilize
I
l
l
u
s
t
r
a
t
i
v
e
work. The wrong message was sent to the
staff that saw silo projects to consolidate
the back offce, start up new branches,
rebrand recently acquired banks, and get all
banks onto a common system versus each
projects contribution to a strategic plan to
grow the business by expanding the global
footprint and standardizing processes
and systems.
Infosys applies fve key strategies to build
and maintain project sponsorship, change
acceptance and drive decisions. First,
it is critical that an executive business
sponsor (change champion) is appointed
for the business transformation project,
empowered to make decisions and incented
through alignment of personal performance
incentives to manage project deadlines and
deliver project outcomes. The sponsor is
visible and communicates the business
case to the staff so they can understand
the big picture.
Second, a business case together with an
overall change strategy and plan including
49
OCM, status is managed and reported along
with scope, budget and schedule in weekly
project status dashboard reporting.
Secure and mobilize the right team at
the outset of the project
Another critical success factor in all
business transformations is having the right
people involved early at project inception.
Commitment and ownership of changes
comes only through participation so it is
better to stack the deck in the beginning.
The right people are those who are informal
leaders and subject-matter-experts who have
extensive personal networks and whose
opinions are trusted by their peers and others
throughout the organization. They are in the
best position to gather information, validate
process and job impacts, offer insights on
change risks, role model the changes, advocate
for the project and persuade others to change.
They are also the best people to identify real
problems early in the project life cycle.
integrated communications strategy and plan
must be created during project inception.
This will drive banking staff engagement
and messaging through to and after go-live
as shown in Exhibit 3.
Third, a rapid decision making process
and rapid decision team with executive
sponsorship and authority to make decisions
are established at project initiation. Team
roles and responsibilities, decision authority,
and escalation criteria are shared publicly at
project kick-off and communicated to all
banking staff and management.
Fourth, all plans for sub-projects, for
example the OCM plan, are integrated
with the overall project plan and to identify
key events and deliverables that require
decisions (example, approval of a project
communication to banking staff).
Fifth, to ensure visibility and timely
management of all decisions at a Project
Management Offce (PMO) level including
Managing Change in a Global Non-Homogeneous Market
Exhibit 4
50
more knowledgeable about tax, regulatory,
language and currency requirements.
Managing readiness and a smooth
transition for employees and
customers on day one, week one
and beyond
Since there is rarely a chance to make a
second positive customer impression, day-
one, week-one through -three and month-
one staff preparations are critical to
making a smooth employee and customer
transition. There is a high probability for
confusion as staffs transition from the
old to new processes. The probability
is even higher in emerging economies
because the starting point is often from
hand-written books to an automated
technology platform. Failure to implement
a comprehensive readiness plan results in
unnecessary business risks. Banking staff
may also act out their dissatisfaction
in customer interactions if they are
unprepared. This could result in customer
dissatisfaction or defection; fnancial loss;
and/or reduced productivity.
Standard practice in ERP banking
implementations is to develop training that
includes new processes and solutions with
emphasis on the most frequent customer
transactions. Infosys takes this one step
further. It is critical in banking that customer-
facing staffs like Tellers have an opportunity
to role-play situations that are most likely to
occur within the frst 30 days after go-live.
The Infosys OCM team uses the business
acceptance test scripts to identify the most
frequent and common as well as the most
complex scenarios (for example, deposit of
a large check in the amount of $10K written
on a foreign bank). One-time and interim
processes also become the subject of role
In banking business transformations, core
banking project team members are most
often assigned based on availability. A major
handicap is self-created if the bank doesnt
guarantee people jobs after the conclusion
of the project. Lack of an executive sponsor
champion, a safety net in the form of job
security or any other upside to project
participation is a deterrent to the right
people volunteering or being selected by
management to the core project team. This
decision is short-sided and does not serve
the long term interests of the bank. The
real travesty is that it is the people who run
the project who are in the best position to
become leaders in the company post go-
live because they know the system and have
developed capabilities and soft skills to
excel in other roles. Specifcally, they have
developed skills to lead under pressure,
facilitate, constructively resolve issues, deal
with diffcult people, and address timelines
and unsolvable problems.
We recommend two key strategies to
secure and mobilize the right team. First,
banks need to de-risk core project team
participation through executive sponsor air
cover and guaranteeing jobs after project go-
live. They also need to establish performance
contracts with these same individuals to
incent delivery against agreed-upon project
goals and deadlines. Second, it is critical that
the project team secure in-country Subject
Matter Experts (SMEs) to provide advice
on culture and customer expectations. This
is especially true in emerging economies
(for example, Vietnam) which are culturally
different than mature markets such as the
United States. Banking staff (for example,
Tellers, Marketing, and Operational staff)
who were born in the country know what
customers want from a bank. They are also
51
to attend training. In mature markets in
the United States, there are more options
for cross-training and rotating staff from
branch to branch. In emerging economies
in Asia, branded or co-branded banks
are often actually separate legal entities
and have unique country requirements
(example, language and cultural norms like
customers tolerance for wait times) so you
cant as easily do cross-training or rotate
staff between banks.
Lastly in emerging economies like the
project discussed, readiness preparations
had to compensate for the fact that there
was no secure postal system infrastructure
to deliver new checks and passbooks to
customers. In mature countries, new checks
and passbooks are mailed a week prior to
go-live, whereas in emerging countries,
back offce staff (from Accounting and
Marketing) were trained as customer
greeters and provided hands-on service.
When a customer walked in, they would
introduce themselves to the customer,
give them a welcome kit, ask what services
the customer needed and offer to provide
personalized service. The greeter would take
them to the right person and if the lines got
too long, they would offer refreshments and
snacks to make sure no customer ever felt
abandoned.
plays. Key to day-one preparation is the staff
not only learning the transactional details but
simultaneously learning how to anticipate
and manage the customers reaction during
the interaction. They learn how to diffuse
and manage diffcult customer situations
which may arise as customers adjust to the
new processes or have a frst time bank
experience.
In the banking transformation project
highlighted, three weeks were spent in
role plays after work, providing staffs an
opportunity to experience scenarios on a
cumulative day-by-day basis starting with
day one. Customer scenarios were defned
and classifed based on customer awareness
measured from go-live on day one. Red
alerts covering the most probable customer
scenario role plays in the frst two weeks
(such as issuing new checks both through
the system and physically) were based on
the assumption that most customers would
come into the bank within the frst two
weeks. Orange alerts (example, a customer
brings in an old passbook and the teller must
be able to cross-reference and locate the
new passbook account number) described
customer alerts most probable in the
next two weeks. This helped the Tellers in
particular develop muscle memory and get
really comfortable with the new processes
and systems before they had to use them in
a real customer interaction.
Another key to successful readiness is
designing, scheduling and delivering
training around existing work requirements,
especially for customer-facing banking staff.
Given the intense training requirements for
Tellers together with limited backfll staff,
training was conducted in the evenings and
on Saturdays. Tellers were also paid overtime
52
ultimately the effectiveness of the customer-
facing banking staff using the new ERP
systems and processes that will positively
impact the customers experience during
the change. Banking staff who understand
the project from the outset and are well
prepared in advance through an integrated
change program are in the best position to
deliver to the customers, and who in turn
deliver business results to the bank.
Conclusion
Increasingly as banks expand their
geographic footprint and through
globalization banking customers choose to
work and live outside their own country, the
customer demographics and expectations
become increasingly non-homogenous. This
increases the complexity of change already
arising from tax, regulatory, language,
currencies and language differences. It is