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    6.1 CBS implementation and performance of banks

    6.1.1 Introduction

    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

    except SVCBL.

    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

    management etc.

    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