When MS Raghavan, general manager, IT, Indian Overseas Bank got a call from a
senior official of another major nationalized bank on deploying IOB's in-house
developed core banking solution(CBS) called CROWN at their end, he was elated.
That was the moment Raghavan has been waiting for all these years. He had to say
no to the other bank's request as RBI rules do not permit that. "That was a
crowning moment for us. It's a kind of accreditation we got from the industry
itself which has numerous other options for CBS from some of the leading vendors
of the world," he says.
IOB developing and deploying its CBS was indeed a bold decision on the part of
the top management. But, as we travel back in time and look at how IOB has
adopted IT in its processes, it becomes clear that the bank has been a pioneer
in many instances in embracing automation. Way back in 1985 it deployed the
branch computerization using the ALPM solution. As BFSI progressed into a hot
vertical in the early 90s-thanks to the NEP and economic liberalization-IOB all
the while took a very progressive approach to IT and kept scaling its technology
infrastructure by taking an in-house development, deployment and maintenance
model. Before deploying its own CBS, in the 90s, the bank concentrated on
computerizing more number of branches and extended the ALPM solution across all
MS Raghavan, general manager, IT,
Quips Raghavan, "In early 2000, we decided that the time has come to migrate
to a contemporary IT backbone and deploying CBS was a unanimous decision. But,
we debated on whether to go for a third party CBS or develop one in-house. In
the outsourced solutions space, we observed there was the need for a huge degree
of customization and tweaking it to our requirements. Moreover, the third party
CBS solutions were developed on some common industry best practices, and hence
did not addressed our unique requirements."
With this reality check, the bank took the plunge in early 2000 to develop
its own CBS. From the very beginning, the bank had a dedicated IT staff and this
made the job a lot easier. "Domain expertise is key to any vertical product, and
our IT teams know the gamut of our banking processes. Hence, we engineered the
CBS to our requirements. So in 2003, we deployed our very own CBS called CROWN,
and rolled it out on a test basis. We found it to be a great success," he says.
The solution was developed using Sybase in a UNIX environment. CROWN has also
been certified with ISO 9001, and complies with all the quality processes
In the first phase of its product development, close to 158 people were
involved in the development. By 2009, its IT team had grown to 240 plus and its
core banking solution is doing lakhs of transactions on any given day. By 2009,
the company had also extended the reach to each and every branch with CBS. Right
now, the bank is in the process of extending its CBS to two rural banks-Pandyan
Gramin Bank and Thenkanal (Puri) Gramin Bank.
A Daring Initiative
While IOBs' initiative to develop its own CBS was received with some
skepticism in the initial stages by others in the banking industry, who termed
IT as not part of the their core business, they have long been silenced as the
solution proved to be as good as any other third party CBS solution. The bank
did face some glitches, and Raghavan dismisses it as a very minor thing compared
to the scale of operations and CROWN's ability to successfully address the
One key challenge the bank faced was when it moved to a three tiered
connectivity architecture consisting of branches, nodes and data center. In mid
2008, the bank deployed its first data center and moved towards MPLS cloud based
connectivity with a multi-vendor service provider concept. Moving all its apps
to a high-end hardware computing backbone posed some challenges, and the bank
was even shut for a couple of days while this migration happened. "It was just a
brief phase and we managed the transition pains pretty well and came out much
stronger with high-end computing and connectivity capabilities," says Raghavan.
During this time the bank adopted the hosted model, and hence created a very
robust IT backbone that is totally under its control and at the same time
deriving the benefits of a hosted environment. The bank over the last year has
developed its Internet banking suite which was developed in-house, and has
outsourced its mobile banking solutions to HCL-DUCONT.
Right now IOB is in the process of a SAP deployment to link its CBS on the
customer side, and would be providing the entire gamut of funds management to
its customers through the ERP backbone. It has also commissioned KPMG for a BPR
study and will be tweaking its business processes based on the study's outcome.
Recently, IOB has also decided on Oracle BI and the deployment will soon begin.
"In a year's time we will have state-of-the-art decision support systems (DSS)
that will give us a distinct competitive edge," says Raghavan
Looking at the nationalized banks in India, IOB is the only bank which has
developed its own CBS in-house. While its IT department has about 240 people,
some of the other banks which had outsourced CBS have more personnels in the IT
department in many instances. Says Raghavan, "While we have not exactly
quantified the tangible returns, but without a doubt our investments on software
are far less compared to other banks which have deployed outsourced solutions.
The cost, value and time we saved out of the in-house product development were
At the end of the day as we look at IOB's IT backbone, it has created a great
technology ecosystem-a CBS with e-banking/mobile banking functionality, an ERP,
a BI, and state-of-the-art data warehousing capabilities. IOB from the beginning
has thought on the lines of aligning IT with its business processes; and created
a custom specific and domain centric IT architecture that has brought in
significant cost savings and proved that in-house solutions with the right
development approach succeeds and leads to overall higher productivity.