SUMMARY OF FINDINGS,
CONCLUSIONS AND RECOMMENDATIONS
6.1 CBS implementation and performance of banks
In today’s competitive business environment, with immense opportunities and
challenges, it is absolutely essential that banks utilize resources efficiently. Taking
into account these dynamics, it is important to evaluate a bank’s growth, credit
quality, strength and soundness and profitability, based on efficiency with which it
has used its human, technological and financial resources.
Present research is aimed at assessing impact of CBS implementation on business
performance and profitability. Summary of observations on field research, in
accordance with the objectives set for the research work are presented in following
text. Names of the sample banks and nomenclature used are The Vishweshwar
Sahakari Bank Ltd., Pune (VSBL), Mahesh Sahakari Bank Ltd., Pune (MSBL),
The Seva Vikas Coooperative Bank Ltd., Pimpri (SVCBL), Janata Sahakari Bank
Ltd., Pune (JSBL), Cosmos Cooperative Bank Ltd., Pune (CCBL).
6.1.2 Status of CBS implementation in the sample banks
i. Year of implementation - CCBL (2003-04) has been the first bank
amongst the sample banks to get into CBS environment, followed by
JSBL (2005-06), SVCBL (2006-07), VSBL (2007-08), MSBL (2008-
09). Entire banking operations of all the sample banks have been
centralized and they have completed three or more than three
operating cycles under CBS environment.
ii. Implementation period - Time required for implementation of CBS
by the sample banks varied between one and half year to two and half
years for the sample banks.
iii. Cost - Cost of CBS implementation of sample banks varied between
less than one crore to twenty six crores due to cost of application
software, hardware, networking equipments, Data centre
infrastructure, Disaster recovery site infrastructure. Hardware and
networking equipments purchased by all the sample banks for their
Data centre and Disaster recovery site have been of reputed
international brands with three years warranty.
iv. Procedure followed - Interviews with the officials and non-officials
of the sample banks has revealed that procedure followed by banks
were by and large in line with the standard practices followed by the
industry, except in case of SVCBL.
v. IT resources - All the sample banks have independent IT Department
to take care of CBS operations. In terms of availability of expert
manpower such as Database Administrator, Network Administrator,
Information Security Officer, Software developers, Help Desk etc. to
manage specialized IT related operations, CCBL, JSBL and VSBL
have got adequate resources.
vi. Consultants - Support of consultants was availed by all the selected
banks in the initial stage of CBS implementation.
vii. Data centre - All the sample banks have their own Data centre. JSBL
is the only bank amongst the sample banks which shares its Data
centre with other cooperative bank.
viii. Disaster recovery site - VSBL, JSBL and CCBL have their own
Disaster Recovery Sites (DRS), MSBL has shared DR site of JSBL.
SVCBL does not have its DR site yet and planning to have it shortly.
ix. Information security certification - JSBL has been the first bank
amongst the sample banks to acquire ISO 27001 and ISO 9001
certification for its Data Centre operation. VSBL has recently
acquired ISO 20000 certification for its IT Department. CCBL, MSBL
and SVCBL have their own information security policy but yet to
apply for such certification.
x. Complementary software - Among all the selected banks, except
CCBL and JSBL, the remaining banks have not yet introduced
complementary software such as Risk management, Assets and
Liability Management, Anti Money Laundering, Customer
Relationship Management, Business Intelligence, Trade Finance,
Treasury, Workflow management, Intranet etc. CCBL and JSBL have
implemented few of such software.
i. Implementation period - Implementation period of one and half
years to two years is justifiable. Time period more than this adds cost
to the project.
ii. Cost - Large variation has been observed in total cost of CBS
implementation by sample banks. It is due to size of the banks in
terms of number of branches, users accessing the application, cost of
application software, make and brand of hardware, networking
equipments and Data centre / Disaster recovery site infrastructure.
Three years warranty option selected by the sample banks while
purchase of hardware and networking equipments helped the banks to
save recurring cost on maintenance of those equipments after the
standard post warranty period of one year.
iii. Procedure followed - While matching with the standard procedure
expected to be followed by the banks during course of implementation
of CBS, it has been observed that CBS has been introduced most
systematically by JSBL followed by CCBL, VSBL, MSBL and then
iv. IT resources – Human resources available with MSBL and SVCBL,
in terms of number, is not adequate considering the future changes
bound to happen in services being offered by the banks.
v. Consultants – Involvement of consultant from beginning of the
project has helped the sample banks for systematic introduction of
CBS in their banks. However, except JSBL other banks are not
availing support of consultants on regular basis.
vi. Data centre - Data centre of all the sample banks, except SVCBL
have been designed keeping in view the best practices followed by the
industry while setting-up Data centre. Sharing of Data centre provides
additional revenue to JSBL and helps to put in practice principle of
“cooperation amongst cooperatives”.
vii. Disaster recovery site - Banks running under core banking
environment need to have Business continuity plan and Disaster
recovery policy in place. All the sample banks fulfill this requirement
viii. Information security certification - Having received certification
such as ISO 9001, ISO 27001 by JSBL and ISO 20000 by VSBL can
be considered as good proactive initiative. These certifications help
banks in standardizing their procedures relating to various activities
pertaining to Data centre, information security, IT service
ix. Complementary software - CBS implementation helps banks to
automate their day-to-day banking operations and enables quick
decision making due to availability of centralized data. However, to
improve overall performance of banks and mitigating the business
risks, implementation of complementary software is necessary.
i. Implementation period - Business Process Re-engineering exercise
prior to implementation of CBS needs to be undertaken by the banks
planning to introduce CBS. Such effort shall no doubt help banks to
complete project in time as well as to streamline the existing business
ii. Cost - Banks should not compromise with quality of software,
hardware, networking and Data centre / Disaster recovery site
infrastructure. Emphasis needs to be on safe, secure and reliable
computing environment rather than only on cost aspect. Purchase of
local made / assembled hardware should be avoided. It should be
policy of the bank to purchase only branded (Indian or International)
hardware and networking equipments with 3 years warranty.
iii. Procedure followed – After due extensive field study, standard
procedure has been suggested as a part of present research work.
Implementing this procedure shall greatly help banks to introduce
CBS in most systematic way keeping in view time-frame set by the
management and allotted budget.
iv. IT resources - MSBL and SVCBL need to strengthen their IT
Department by recruiting additional specialized manpower to take
care of important operations of IT Department.
v. Consultants - Involvement of consultant is necessary not only during
the implementation but also during post implementation period.
Consultants will be able to provide necessary input to the management
of the bank with regard to changes happening in the industry and
formulate future business strategies.
vi. Data centre - CCBL, VSBL and MSBL also may offer services of
sharing their Data centre to other banks on chargeable basis. SVCBL
needs to improve physical infrastructure of its Data Centre to ensure
that security measures are duly taken care. Data centre being heart of
core banking environment, ensuring secured data centre is absolutely
vii. Disaster recovery site - SVCBL needs to urgently initiate setting-up
its Disaster re