Core Banking Transformation:
A Roadmap to a Successful Core
Banking Product Implementation
- PMI Virtual Library | www.PMI.org | © 2008 Kannan S. Ramakrishnan
1
Key reasons for new core
banking solutions:
• Legacy systems do not allow banks to manage
the growth in business.
• A disparate set of application components
undermines the efficiency of the overall
solution architecture.
• Loss of competitive advantage.
• Governance, risk and
compliance issues.
- PMI Virtual Library | www.PMI.org | ©
2008 Kannan S. Ramakrishnan
2
Sponsorship and Stakeholders
An effective and successful sponsor:
• Ensures required documentation
• Is involved in the solution
selection process
• Ensures management support
for budgets and resources
• Seeks cooperation of stakeholders
• Ensures communications and meetings
are result- and task-oriented
• Monitors and resolve post-implementation issues
• Provides direction and guidance from initiation to
closure
- PMI Virtual Library | www.PMI.org | ©
2008 Kannan S. Ramakrishnan
3
Proposed Target Operating Model
(TOM)
TOM Advantages:
• Provides a holistic view of the overall operations
• Provides an IT governance model aligned
business objectives
• Improves processing efficiencies
• Facilitates better operational
risk management
• Improves the return
on investment
- PMI Virtual Library | www.PMI.org | ©
2008 Kannan S. Ramakrishnan
4
The Requirements Document
Benefits of the requirement document:
• Provides functional and technical requirements
baseline
• Common reference document for all stakeholders
• If RFP, vendor’s response becomes an input for
change management (Discussed later)
• Highlights mandatory requirements
• those mandatory items that are supported by
the current system
• those items that are not in the current
system but are mandatory for the new
system
- PMI Virtual Library | www.PMI.org | ©
2008 Kannan S. Ramakrishnan
5
Change Management
• Changes are all-encompassing.
• Processes, procedures, policies, controls, roles,
service levels and business strategies will need
to be addressed and involved in the project
from the beginning.
• User involvement with
requirements definition
and scope definition will
help implement change.
- PMI Virtual Library | www.PMI.org | ©
2008 Kannan S. Ramakrishnan
6
Phased Implementation Approach
Three Phases
• Phase 1 - Applications operated with
minimum integration.
• Phase 2 - Mission critical or transaction
processing applications
• Phase 3 - Data warehouse applications, nonregulatory applications
- PMI Virtual Library | www.PMI.org | ©
2008 Kannan S. Ramakrishnan
7
Phased Approached Advantages
• Helps realize the investment from
stakeholder
• Demonstrates progress by the project
team and stakeholders
• Increases acceptance from stakeholders
• Better risk mitigation
- PMI Virtual Library | www.PMI.org | ©
2008 Kannan S. Ramakrishnan
8
Data Migration
The bank must ensure:
• A knowledgeable team and sufficient team
members to the manage scope.
• Appropriate Data cleansing/purging from
source systems.
• Data definitions of both the source and
target systems should be documented.
• The mapping algorithm is made.
• Business user involvement is required.
• Validation occurs by Business user group.
• Test scripts are required at various stages of
testing.
- PMI Virtual Library | www.PMI.org | ©
2008 Kannan S. Ramakrishnan
9
System Integration
• Core banking solution comprised of several
applications and interfaces.
• Form an integration team for mapping end-toend processes.
- PMI Virtual Library | www.PMI.org | ©
2008 Kannan S. Ramakrishnan
10
Testing of the Target Solution
To avoid pitfalls:
1. Allow sufficient time for testing.
2. Make certain acceptance
criteria is discussed in detail.
3. Define clearly the entry and
exit criteria for each testing cycle.
4. Ensure link between vendor’s software unit and the
bank’s development servers.
5. Create numerous test cases and adequate testing
cycles with sufficient time for review.
6. Plan stress and a performance tests in the production
environment.
- PMI Virtual Library | www.PMI.org | ©
2008 Kannan S. Ramakrishnan
11
Testing of the Target Solution
Cont.
• Third-party testing vendors
– Management must ensure:
• The business users are involved
• The testing company supplements
the effort of the business users
• The ownership of the testing phase
and the eventual sign- offs
• The bank’s staff does not lose out on the knowledge
gained during the testing
• The monitoring and control of the testing process work
harmoniously
- PMI Virtual Library | www.PMI.org | ©
2008 Kannan S. Ramakrishnan
12
Production Stabilization Period
• Production stabilization period
• Post-implementation reviews, verifications,
resolve issues
• Review budget
• No disruption to the regular operations
• Involve the entire
project team in
post-implementation
phase
• Stabilization period
for each phase of
implementation
- PMI Virtual Library | www.PMI.org | ©
2008 Kannan S. Ramakrishnan
13
Conclusion
Key steps in implementing a core banking system:
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Sponsorship and Stakeholders
The Proposed Target Operating Model (TOM)
The Requirements Document
Change Management
Phased Implementation Approach
Data Migration
System Integration
Testing of the Target Solution
Production Stabilization Period
- PMI Virtual Library | www.PMI.org | ©
2008 Kannan S. Ramakrishnan
14
Q&A Open discussion
http://alfisig.wordpress.com/
- PMI Virtual Library | www.PMI.org | ©
2008 Kannan S. Ramakrishnan
15