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CBS and Postal Department

Dr(Mrs.) Hemalatha Diwakar


Agenda
 Background -Postal Bank functions
 Introduction to CBS
 CBS components
 Benefits
 Suggestions
 CBS life cycle
 Conclusion
Background
Current products
 Savings Account
 Recurring Deposits (RD)
 Time Deposits (TD)
 Monthly Income Scheme (MIS)
 Public Provident Fund (PPF)
 Kisan Vikas Patra (KVP)
 National Savings Certificate (NSC)
 Senior Citizen Saving Scheme (SCSS)
Postal Bank
 Number of postal bank branches:1.54 lakhs
 Software used : Sanchay Post
 Total number of branches having it:9000?
 Cash certificates : CC bridge
 Pairing of cash certificates issued and
discharged by Directorate of Accounts
Postal) in circles : Patram
 Accounts s/w used at circle level: CPACT
SAVINGS SCHEME: PROFILE (AS ON
31.03.2007)
Name of scheme Total accounts Total amount Deposited
in Rs.millions
Saving Accounts 64,342,873 185,648.7

RD Accounts 67,027,234 602,300.4

TD Accounts 12,429,827 367,124.6

MIS Accounts 24,921,140 1,894,389.7

NSS Accounts (87 & 92) 812,853 48,607.6

PPF Accounts 2,111,082 194,563.2


Sr. Citizen Savings Scheme 752,260 222,843
(SCSS)
total 172,397,269 3,515,477.2
Post Bank Post Bank Post Bank
Branch Branch Branch

Post Bank
Branch Post Bank
Post Bank Branch
Branch

Post Bank Post Bank Post Bank


Branch Branch Branch
Probable problem areas
 Semi automatic consolidation of data. It may take
weeks to know the business position of the
different products in the entire bank.
 Data correctness, currency??
 validation controls , security controls normally
lacking in such environments.
 Is the s/w used audited?.
 Audit –while
– buying,
– customizing and
– at every time when changes/modifications made.
Probable Challenges of current System

 Such software (whether bought or developed)


does not take care of all situations.
 Lack of expertise ( at the vendor as well as the
buyer) to suggest what one needs and
comprehend at various stages of system
development such as user requirement
specification, testing and implementation. As a
result, the deficiencies in the software stay with
the system.
Probable Challenges of current System
 Systems requirements, Design and development lacked
vision for growth or expansion making it impossible to take
care of new business products or business situations.
 Possibility -Since DOP users were not familiar with
computerized systems , they were not able to visualize and
articulate requirements effectively.
 Using the system for some period resulted in lacunae
surfacing in the system which were difficult to fix
 Limitations due to the operating system, technology used
for development , data files used and the environments in
which they are developed make it difficult to maintain and
carry out enhancements.
 Systems automated manual functions but did not introduce
process improvements.
Probable Challenges of current System

 Incidence management, business continuity plan


and Disaster recovery are crucial for any banking
business as they are dealing with finance.( we
include IT as well as paper based documents).
Normally this is present to a very limited extent.
 Security not only for Information systems but also
for paper documents, people and processes within
the system needs to seamlessly integrated
What is needed in the current
scenario?
 A robust system centralized banking system s/w that will
be implemented at maximum business yielding bank
branches (HPO, SPO, Branch?).
 A highly secured computer network connecting all these
branches with a data center to house the CBS and other
related systems.
 At the remaining branches a compatible scaled down
banking s/w.
 Both are compatible for data consolidation, at the
accounting level too.
 Disaster Recovery site in place.
 Business continuity Plan in place.
 More ……
CBS scenario

Post bank Branch


Post bank Branch
Post bank Branch
Post bank Branch
Post bank Branch

HPO/Post bank Data Center


Branch
Post bank Branch
Post bank Branch
Post bank Branch
Post bank Branch

Post bank Branch

Data flow
Title Function Description
Accounts Maintenance Functions General
(General) Account creation and association with different products, interest rates and transaction limits
Customer Accounts Maintenance with authorization
Security Register Maintenance General
Functions Approved Security/collateral Master Maintenance
Consolidated Updation for Securities/collaterals
Facility to link the securities to limits or to accounts, with definition as to whether primary or
secondary collateral
Security Register Maintenance with details like Charges Information, Margin, Insurance
Information, Income/Expenses Information and so on
Central Limits Maintenance General
Facility to maintain limits for customers or for accounts
Facility to maintain multiple limits for single accounts
These limits can have its own normal and penal interest rates

*Cheque Functions General, Issue Cheques


Cheque Printing (Range of Accounts)
Stop Payment acceptance and revocation Processing
Charging and collecting charges for the above actions
Transfer Cheques between Accounts
Enter Cheques Rejected at Counter

Savings Account / Current General, Opening of Accounts, Maintenance of accounts with authorization
Account A/c with or without cheque facility, Multiple products for savings bank definition with
Modification or product parameters
Key parameters includes, minimum balance to be maintained,
Define parameter for number of withdrawals allowed for any period and controlling of interest
payment if required, interest methods,
Inactive and dormancy period definition for marking accounts
Facility to define some charges for a/c dormancy, maintenance, opening closure if required and
so on
Facility for pass-sheet / passbook definitions
Facility to Deduct Tax at Source for a customer or for an account
Over Drafts granting facility if required with exception and also to reserve the amount along with
Overdrafts granting
Facility to specify Normal and Penal Rate of Interest for a casual Over Drafts
Title Function Description
Term Deposit General, Facility to define term deposit products (Fixed deposit, Cumulative or re-
Functions investment deposit, Recurring deposit and Flexi-Fixed deposit), Facility to handle
Certificate of Deposits and notice deposits , Facility to define term deposit products
with (amount as parameter, period as parameter, account numbering differently,
interest methods, the deposit and the interest amount flow details definition,
Automatic renewal, Receipt printing facility with inventory control, links to flexi
deposits, Overdue marking and so on)
Loans & Advances General, Different types of user definable Loan products (Housing loan, Vehicle loan,
Functions Education loan, and so on), Facility to bring up set of documents required for a
particular loan and allow entry for indicating whether obtained or not and to capture
date of submission
Outward Clearing General, Cleaning Transaction Code Maintenance, Clearing Reject reason Code
Functions Maintenance, Outward Clearing – General, Maintain Outward Clearing Zone
(creation of new zones with parameters, amendments to parameters, marking the
zones deleted if not required) Maintain parameter for direct credit to the account with
un-cleared status or credit to clearing account and subsequently credit to the
account as clear balance

Inward Clearing Inward Clearing Functions, Open Inward Clearing Zone


Functions Maintain Inward Clearing Zone, Inward Clearing Transaction Maintenance,
Mark/Revoke/Inquire Pending instruments
Facility to grant casual overdrafts at each instruments processing level,
Facility to carve amount for instruments that have been passed in the process
Interest General, Interest code definition, Interest code for base plus differential definition,
Computation Period based, Slab based and Amount based interest definition
* Applicable for all Definition of interest preferential at customer level for all accounts and bill level for
modules wherever specific bill
interest in involved
Title Function Description
Charges module Facility to compute and collect charges based on events
Facility to collect charges in different currency other than the account currency
Facility to collect fixed, percentage, formula based and slab based charges
Facility to define discount on charges at customer level
Exhaustive charges reports
Standing Instructions General
Functions Standing Instruction Maintenance with definition for condition for execution
Types of standing instructions such as fixed and variable
Carry-Forward List Maintenance
Specify the number of times the SI is to be carried forward
SI accepts instructions from a customer for transfer of funds either through simple debit
or credit of one or more accounts or for periodical remittance by way of Drafts, Mail
Transfers or Telegraphic Transfers
Facility to send letters to customers on executed SIs
SWEEPS Facility to define Sweep between operative and term deposits and between two
operative accounts
Facility to utilize the pool funds among accounts participating in that pool/sweep
Facility to define the order for sweep
Facility to include or exclude accounts from participating in Sweep
Reference Master Data General Master Data
Maintenance Bank Table Maintenance
(Reference File Maintenance Branch Table Maintenance
Functions) Service Outlet (SOL) Information maintenance
Service Outlet Set Maintenance (groping logically the SOLs)
Facility to Maintain Instrument Details
Datacenter and Service outlet level calendar maintenance
General Operations General
Open Transfer Transactions
Stop Transfer Transactions
Close Transfer Transactions
Upload Image data into Host
Title Function Description

Support Functions Anywhere Signature Retrieval


Teller Wise Cash Position Inquiry (for one teller or for
others also)
List for Signature Display
Change of user’s application password
Change System Password
Protect Application Password
Email Maintenance

Database Administration Exception Code Maintenance


Functionalities Help Maintenance
Error Table Maintenance
Terminal Profile Maintenance
User Profile Maintenance
Office Account Maintenance
Account Placeholder Maintenance
Employee File Maintenance
Control and Audits Audit File Inquiry
Audit File Print
SQL *DBA Audit Table Inquiry
Exception repots, Inquiry and Approval Reports
Financial Transaction Inquiry and Report

Utilities Tax Deduction at Source (TDS) Table Maintenance


Change Customer Password
Facility to Enable/Disable Terminal
User Login Maintenance
Transfer Transaction Upload Maintenance
Clearing Transaction Upload Maintenance
Inquiries Functions – General User Inquiries
Account Ledger Inquiry
Financial Transactions Inquiry
Customer Master Inquiry
Hot Items Inquiry
Customer Accounts Inquiry
Audit File Inquiry
Customer Inquiry
System Operator Functions Day to Day operations
Service Outlets Status Inquiry
Run Service Outlets Validation Process
Initiate After Business Hours Process
Initiate SOL EOD (Service Outlet End of Day) Process
Initiate EOD Central Process
Initiate BOD Central Process
Title Function Description
In-Land Bills
Interest Computation
*Applicable for all modules
wherever interest is involved
Parameter / Master Foreign Currency Operation Related Master Data Maintenance, Maintenance of
Definition and Maintenance control Information (Common for all trade finance related activities), Bank Code Master
Maintenance
Branch Code Master Maintenance, Daily Rate Master Maintenance
Period Based Interest Maintenance
Rates Maintenance and Exchange Rates Functions, Maintain Home Currency Rate List
Definition Maintain Rate List, Rate List Printing, Rate List history Query

Forward Contract Purchase / General


Sale Contracts Book, Cancel, Amend, Close Forward Contracts with Authorization of Forward
Contracts
Change Validity of Forward Contracts
Inquiry / Reports
Documentary Credits General, Different product definition on Documentary credits (Inward / Outward,
Inland / Foreign currencies, Based on type of DC, Computation of charges)

Pre-shipment credits General, Export Order Details Maintenance


Separate Products/Scheme Definition for Pre-shipment credits
Opening of accounts on packing credits (with periodwise interest definition)
Facility to create and disburse running packing credits like a operative account
Foreign Bills General ,Foreign Bill Register Maintenance, Foreign Bills Parameter Maintenance
Foreign Bills Maintenance functions supported are (Lodging, Purchase, Realisation of
bill, Crystallization or Delinking (wherever applicable)

Trade finance
Trade finance

Title Function Description


Bank Guarantees Master Data Maintenance
Guarantee Parameter Maintenance
(Local and Foreign currency, Normal, Deferred
payment, Shipping guarantee, issuance of
solvency certificates)
User Functions
Guarantee Details Maintenance
Issue Amendments, Marking for Invoke and
Invoking with authorization including computation
of various events triggered charges.
Swift Interface Facility to Generate, Send, Modify and Re-send,
and inquiry
Print
Customer Transfer (MT100)
Advice of Payment (MT400)
Bills Acknowledgement (MT410)
CBS Architecture
DR Site

Multiple Service
WAN
Connectivity
Delivery Channels

ATM Net-banking
Retail Banking
Telebanking
Corporate Banking
Data Mobile-banking
Treasury, Investment
CBS Call Center
Modules
MIS Reporting Other CBS Branch
Modules

Hardware
for CBS
CBS Architecture

DR Site Data Center for CBS Every branch


Data will be
connected in
some way to
DC of bank.

Branch1 Branch n
CBS Architecture

Data Center for CBS


Data
DR Site CAP

CAP
CAP
CAP
CAP

CAP - City Aggregation Point


Branch1 Branch n
How CBS is different ?
 It completely automates all operations across
all sections in branch. (Paperless Office ? Not
yet)
 Inside a branch, every counter staff member
can handle all types of transactions. (This
may necessitate some training.) single
window concept
 Since all CBS branches are interconnected,
branch customer becomes bank customer.
 Lead time for introducing any new product /
scheme is drastically reduced as entire CBS
software is centrally managed (3 tier
How CBS is different ?
 There is hardly any time lag in reporting as all
branch-wise/consolidated bank level reports
can be extracted from central repository at the
data center.
 The branch staff is freed from the day begin /
day end / reporting related work and hence
can use this time fruitfully towards customer
service.
 The bank can have latest position of
consolidated balance sheet, P & L a/c
(Yesterdays position) to take important
decisions related with banks position.
How CBS is different ?
 The Data Center staff has to work round the
clock to ensure error-free, failsafe operations.
In fact, they have to carry out day-close
operations at say mid-night around 2.00 am
to ensure the branch operations next
morning. Then after that backup operations
are carried out.
 The branches may be operating in different
time-zones with different schedules. Hence,
there should be some support staff in Data
Center to help them in case they have any
problems.
How CBS is different ?
 The branch customer becomes bank customer.
Whichever way the customer accesses his account
(whether using any service delivery channel or
using branch), the same customer account
information will be forwarded to him.
 Instead of setting up its own Data Center, the
postal bank may hire space in the Data Centers
setup by companies like Reliance, Satyam, HCL
etc. icommunicaton links from 2 telephone
exchanges, round the clock facility management
including security, earthquake proof, fire-proof
buildings with AC, Generators with 90 days fuel
stock etc.
How CBS is different ?
 Some data required by CBS can be
extracted from the existing branch
automation systems like but there may be
requirement for data entry of some
information like customer profile information
(Like say customer family details, income
details, residence details) and this has to be
collected from the customers (who may be
unwilling to disclose this information).
Central Data Repository using
CBS Data
Since the transactional as well as master data
of all the branches is available at the Data
Center, it is very easy to set-up Data
warehouse that can be used for -
 Extracting regulatory, top management
performance reports
 To extract ad-hoc type reports
 To carry out customer segmentation analysis.
 To find out most profitable Products /
Services
CBS BENEFITS
 To find out most profitable customers.
 To find out customers where opportunities exist for
cross selling other products.
 To find out opportunities for cross-selling products
of others (like say Insurance)
 CONSOLIDATED DATA
 Accounting system
 Customer attrition
 Branch bank CBS beebfits
 Non CBS branch benefits
How CBS is different ?
The postal bank needs to carry out extensive
“Business Process Re-engineering” of
existing business processes -
1. This is essential since any redundant,
unnecessary or obsolete processes can be
eliminated and remaining processes can be
reengineered for faster, optimized automated
operations using CBS.
2.Most of the banks accept the processes as
provided in the CBS s/w as it is and change
their practices.
How CBS is different ?

This “Business Process Re-engineering” work can


be entrusted to any reputed consultancy firm
having previous experience in such work since
the bank may not have in-house resources as well
as expertise for carrying out this. However a core
team from the bank should work with them.
Second advantage of outsourcing is that you will get
the work done with impartial or neutral view.
Thereafter, the bank can select the Core Banking
Systems by usual standard evaluation method
consisting of RFP, bidding procedure and using
evaluation with the help of their IT Consultants.
ATM Multiple Service Delivery
Network
Channels with CBS Internet

ATM Internet
Switch Banking
Interface
Interface

Any Branch
Tele-
Banking Interface
Banking

Data Interface
Centre
Branch Interface Telephone
Network Network
POS
CBS Models
There are 2 popular models for CBS -
 Thin Client Model - The entire database is
located on the central database server
located in the data center and the PCs in the
branch get connected to the Data Center via
CAP/ NAP using Leased Line with
ISDN/VSAT backup.
 The Branch Server Model - There is partial
database inside the branch that can cater to
the branch customers for a day or more days
in case the branch is disconnected from Data
Center.
CBS Models
 Thin Client Model - The cost is less as there is no
need for dedicated branch server also there are
savings on RDBMS, System software related cost.
But the bank has to ensure 99.5 % uptime of
connectivity.
 The Branch Server Model - The cost is more due
to dedicated branch server, RDBMS, System
software costs. But if the connectivity is poor then
this option will still service the branch customers
for a day or more. After the link is restored then
there will be synchronization done between the
branch server and data center server using
pending transaction log files.
CBS Models
 Some Vendors offer Thin Client Model
whereas some vendors offer Branch
Server model and still some offer both
the models of CBS. When connectivity
fails, the Thin Client model cannot work.
 The bank has to decide on which model
is suitable for its branches considering
the type of connectivity available in the
region where majority of branches
considered suitable for conversion to
CBS are located.
Multiple delivery channels
Systems that provided AAA banking - Anytime
Anywhere Anyhow banking. They provided
multiple ways to the customer to access his
account
 ATM - to withdraw money at any time of day
 Telebanking - to get information about a/c on
the common telephone or even mobile.
 Netbanking - to get information about a/c as
well as to carry out transactions using the
Internet.
 Mobile banking
Multiple delivery channels
ABB - Any Branch Banking across their branches -
any branch of the bank can be used to carry out
any transaction.
Customer became bank customer not branch
customer.
All this was made possible by the adoption of the
Core Banking Solutions for centralised banking
by these new private sector banks. They had
setup a Data Center hosting CBS where entire
banks data would be stored and accessed
from. They had higher initial costs for setting up
DC & WAN.
Data Center

Data Center is the location where all data is


stored on the servers and it is the location
that is connected to branches and other
bank installations (like ATM etc.). The
Data Center has to be housed with
special facilities and it may function round
the clock. The access to Data Center has
to be controlled using different checks like
Smart Card based access control
systems, CCTV, etc.
The CBS Architecture
ATM

CBS Branch

ATM
Banks NAP

CBS Branch ASP’s NAP

ASP’s NAP
CBS Branch Service Banks NAP
Provider’s
/Bank’s
Network

Legends Data Centre for CBS


& multiple delivery
Banks NAP
Leased / ISDN Line channels
Dial Up Line
Post / Courier
CBS Branch
Leased / ISDN / DSL

VSAT antenna
Things to ponder related to Postal Bank
 Decide what products will be there in the postal bank and
what will covered by postal operations.
 Utility services, mutual funds, money transfers- may be a
overlap
 Look at what CBS gives and match it with new business
avenues that the Postal Bank is planning for.
 CBS has many modules ( deposit, lending, trade finance,
CRM, General Ledger, MIS/DSS reports)
 currently postal bank has only Depository operations.
 Is it becoming a full fledged bank in the near future?
 CBS is very massive considering what the Postal bank
needs today.
 Don’t look only for mapping the existing products of postal
bank with CBS, look for what all you don’t need but is
supplied piggybacked?( that is a very large set).
Things to take care of
 Just like BPR before CBS , BPR after CBS is needed. It will
lead to employee relocation, organizational changes.
 It is better to have a CBS compliant scaled down single
package at other non CBS branches for consolidation of
data, reports.
 About multi delivery channels- do a customer survey to find
out the response, it adds value.
 Look for using biometric based ATM as who are my
customer? Can they use ATMs as they are today.
 Mobile banking – yes, Netherlands postal bank uses for
product promotion.
 Internet banking- who are my customers? New high end
customers how I am to attract? Do a customer survey before
starting the work for CBS and channels.
Things to take care of
 Can someone develop a package/chop and make a
compact Postal CBS package?
 Information security management to be planned
for, implemented in full spirit.
 Employees education about the new technology
initiatives, e-learning is a good option.
 Have a strong project committee. involve
employees from all levels of the organization.
CBS Life cycle
 Core team formation
 Business Plan and current Technology documents.
 Justification for CBS.
 Requirement study and preparation of user requirement specification
document.
 CBS Product lookout
 Gap analysis
 RFP –evaluation metrics
 Technical evaluation
 Preparation for employee education &change management
 Training ,help desks
 Product walk through
 Comparison
 Commercial evaluation
 Product selection
CBS Life Cycle
Project Initiation/Planning
•Project Kickoff
•Core Team Formation
•Steering Committee
•Project Planning
•Communication Planning

Current System Study


•Business Plans
•Technology Plans
•Products/Services
•Business Processes

Hardware, Network Planning


Procurement
Core Team Education Site Preparation

Business Process Definition


•Gap Analysis
•Business Process Reengineering
•New Process Definition
•Data Requirements Definition
•Security and Controls definition
CBS Implementation Methodology
Customization
•Process Configuration
•Interface building (ATM,Telebanking)
•IS Security definition

Data Migration
Conference Room Pilot

Functionality testing, End User Training


User Acceptance testing
System Integration Testing

New Process
Simulation Run Implementation

PILOT and effectiveness review

Rollout and Review


conclusion
 Total comprehensive solution
 No piecemeal solution
 Benefits for delivery channels –study
 Customer study
 Business plan and future expansion- must
 Business benefits –even to no CBS
branches
 Employees, customers, business processes
 To be taken care of.