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SBI Core Banking Project on SBI Core Banking Name : Sarthak Ganguly Dept: Computer Science and Engineering

Roll: 071200101084 Dr.B.C.Roy Engineering College September 8 2010 Project on Network and System Administration A study on the networking and security aspects of a massive corporate network Some Rights Reserved Author: Sarthak Ganguly

1 SBI Core Banking Introduction Meeting New Market Demands Banks and financial services organizations have long recognized the advantages of deploying technology to improve the value, speed an d flexibility of their product offering to customers. Particularly in today’s high ly competitive banking industry, core banking technology is a vital element that helps a bank differentiates itself. This is especially true on the retail front , and allows banks to offer many new technology driven channels to customers suc h as ATMs and Internet banking, thus pioneering the concept of Anywhere Banking, and eliminating the concept of branch banking. With features like realtime tran saction processing coming into effect, customers can experience the benefits of “r eal-time banking” and no longer need to wait days or weeks for their transactions to be completed. Another key advantage of technology is the significant decrease of product development and testing lead time, leading to faster launch of new p roducts for the bank – enhancing the organization’s innovativeness and agility. The Business Challenge While most banking organizations in India clearly recognized the advantages of deploying technology, they continued to hesitate before embark ing on the process due to a number of “pain areas” related to the adoption and rollout of technological platforms: Long implementation periods Standard banking tec hnology software solutions were largely inapplicable to individual organizations . As a result, the tailoring of the solution and its roll-out for the organizati on was a long and often drawn-out period. Return on investment (ROI) Making the very significant capital investment required for a technological package was a c hallenge in the environment of keen competition and slim margins. Senior managem ent and shareholders demanded a clear quantification of the ROI involved, which was difficult to accurately evaluate and compute. Technology absorption rate at India’s rural branches Particularly in branches located in India’s rural areas, abso rbing technology was a challenge on its own. Ease of training and ease of use wa s a critical component that determined the success or failure of any solution. C onnectivity Given the sheer size of the Indian market in geographic terms, it wa s inevitable that connectivity at broadband levels could not be expected at ever y branch. The solution needed to be able to work even in areas with poor or inte rmittent Internet access. High costs High upfront investment was in many cases a n inhibiting factor for investment.

2 SBI Core Banking Legacy systems A large number of banks were operating on home grown and inefficient, mutually incompatible legacy systems. Migrating the data and investment in some of the legacy equipment needed to play an important role in the plan for any new solution.

3 SBI Core Banking Contents Topic Core Banking, What it is Core Banking Solutions SBI Core Banking, The Begi nning State Bank of India Core Systems Modernization Drivers for the Bank Challe nges for the Bank Vendor Consortium Selection Tata Consultancy Services and TCS BaNCs Initial SBI Core Systems Modernization Project State Bank of India Full Br anch Conversion Critical Success Factors Network Architecture Physical Architect ure Distributed System Components Core Banking System Components Security Archit ecture Organizing Structure of IT Enabler Enforcer Auditor Financial Network Ser vices(FNS) Built and Deployed Using Micro Focus Technology Benefits Increased de livery channels Open Technology Platform Lowest Price Performance Ratio TCS BaNC s An Overview Further Improvement Conclusion References Bibliography Page 4 6 13 15 18 22 23 25 43 44 45 46

4 SBI Core Banking Core Banking, what it is Core Banking is normally defined as the business conducted by a banking institut ion with its retail and small business customers. Many banks treat the retail cu stomers as their core banking customers, and have a separate line of business to manage small businesses. Larger businesses are managed via the Corporate Bankin g division of the institution. Core banking basically is depositing and lending of money. Nowadays, most banks use core banking applications to support their op erations where CORE stands for "Centralized Online Real-time Exchange". This bas ically means that the entire bank s branches access applications from centralize d datacenters. This means that the deposits made are reflected immediately on th e bank s servers and the customer can withdraw the deposited money from any of t he bank s branches throughout the world. These applications now also have the ca pability to address the needs of corporate customers, providing a comprehensive banking solution. A few decades ago it used to take at least a day for a transac tion to reflect in the account because each branch had their local servers, and the data from the server in each branch was sent in a batch to the servers in th e datacenter only at the end of the day (EoD). Normal core banking functions wil l include deposit accounts, loans, mortgages and payments. Banks make these serv ices available across multiple channels like ATM, internet banking, and branches . Core Banking Solutions Core Banking solutions are banking applications on a platform enabling a phased, strategic approach that lets people improve operations, reduce costs, and prepa re for growth. Implementing a modular, component-based enterprise solution ensur es strong integration with your existing technologies. An overall service-orient ed-architecture (SOA) helps banks reduce the risk that can result from multiple data entries and out-of-date information, increase management approval, and avoi d the potential disruption to business caused by replacing entire systems. Core Banking Solutions is new jargon frequently used in banking circles. The advancem ent in technology, especially internet and information technology has led to new ways of doing business in banking. These technologies have cut down time, worki ng simultaneously on different issues and increasing efficiency. The platform wh ere communication technology and information technology are merged to suit core needs of banking is known as Core Banking Solutions. Here, computer software is developed to perform core operations of banking like recording of transactions, passbook maintenance, and interest calculations on loans and deposits, customer records, balance of payments and withdrawal. This software is installed at diffe rent branches of bank and then interconnected by means of communication lines li ke telephones, satellite, internet etc. It allows the user (customers) to operat e accounts from any branch if it has installed core banking solutions. This new platform has changed the way banks are working. Gartner defines a core banking s ystem as a back-end system that processes daily banking transactions, and posts updates to accounts and other financial records. Core banking systems typically include deposit, loan and credit-processing capabilities, with interfaces to gen eral ledger systems and reporting tools. Strategic spending on these systems is based on a combination of service-oriented architecture and supporting technolog ies that create extensible, agile architectures.

 

 

 

5 SBI Core Banking SBI Core Banking, the beginning The State Bank of India is the oldest and largest bank in India, with more than $250 billion (USD) in assets. It is the second-largest bank in the world in numb er of branches; it opened its 10,000th branch in 2008. The bank has 84 internati onal branches located in 32 countries and approximately 8,500 ATMs. Additionally , SBI has controlling or complete interest in a number of affiliate banks, resul ting in the availability of banking services at more than 14,600 branches and ne arly 10,000 ATMs. Unlike private-sector banks, SBI has a dual role of earning a profit and expanding banking services to the population throughout India. Theref ore, the bank built an extensive branch network in India that included many bran ches in low-income rural areas that were unprofitable to the bank. Nonetheless, the branches in these rural areas bought banking services to tens of millions of Indians who otherwise would have lacked access to financial services. This trad ition of "banking inclusion" recently led India s Finance Minister P. Chidambara m to comment, "The State Bank of India is owned by the people of India." A lack of reliable communications and power (particularly in rural areas) hindered the implementation of computerization at Indian banks throughout the 1970s and 1980s . During this period, account information was typically maintained at the local branches with either semi- automated or manual ledger card processing. During th e 1990s, the Indian economy began a period of rapid growth as the country s low labor costs, intellectual capital, and improving telecommunications technology a llowed India to offer its commercial services on a global basis. This growth was also aided by the government s decision to allow the creation of private-sector banks (they had been nationalized in the 1960s). The private-sector banks, such as ICICI Bank and HDFC Bank, altered the banking landscape in India. They imple mented modern centralized core banking systems and electronic delivery channels that allowed them to introduce new products and provide greater convenience to c ustomers. As a result, the privatesector banks attracted middle- and upper-class customers at the expense of the public-sector banks. Additionally, foreign bank s such as Standard Chartered Bank and Citigroup used their advanced automation c apabilities to gain market share in the corporate and high-net-worth markets. State Bank of India Core Systems Modernization Drivers for a New Core System SBI had undertaken a massive computerization effort in the 1990s to automate all of its branches, implementing a highly customized version of Kindle Banking Sys tems Bankmaster core banking system (now owned by Misys). However, because of t he bank s historic use of local processing and the lack of reliable telecommunic ations in some areas, it deployed a distributed system with operations located a t each branch. Although the computerization improved the efficiency and accuracy of the branches, the local implementation restricted customers use to their lo cal branches and inhibited the introduction of new banking products and centrali zation of operations functions. The local implementation prevented the bank from easily gaining a single view of corporate accounts, and management lacked readi ly

 

 

 

 

 

 

6 SBI Core Banking available information needed for decision making and strategi c planning. The advantages in products and efficiency of the private-sector bank s became increasing evident in the late 1990s as SBI (and India s other public-s ector banks) lost existing customers and could not attract the rapidly growing m iddle market in India. In fact, this technology-savvy market segment viewed the public-sector banks as technology laggards that could not meet their banking nee ds. As a result, the Indian government sought to have the public-sector banks mo dernize their core banking systems. In response to the competitive threats and e ntreaties from the government, SBI engaged KPMG Peat Marwick (KPMG) in 2000 to d evelop a technology strategy and a modernization road map for the bank. In 2002, bank management approved the KPMG-recommended strategy for a new IT environment that included the implementation of a new centralized core banking system. This effort would encompass the largest 3,300 branches of the bank that were located in city and suburban areas. The State Bank of India s objectives for its projec t to modernize core systems included: • The delivery of new product capabilities t o all customers, including those in rural areas • The unification of processes acr oss the bank to realize operational efficiencies and improve customer service • Pr ovision of a single customer view of all accounts • The ability to merge the affil iate banks into SBI • Support for all SBI existing products • Reduced customer wait times in branches • Reversal of the customer attrition trend Challenges for the Bank The bank faced several extraordinary challenges in implementing a centralized co re processing system. These challenges included finding a new core system that c ould process approximately 75 million accounts daily — a number greater than any b ank in the world was processing on a centralized basis. Moreover, the bank lacke d experience in implementing centralized systems, and its large employee base to ok great pride in executing complex transactions on local in-branch systems. Thi s practice led some people to doubt that the employees would effectively use the new system. Another challenge was meeting SBI s unique product requirements tha t would require the bank to make extensive modifications to a new core banking s ystem. The products include gold deposits (by weight), savings accounts with ove rdraft privileges, and an extraordinary number of passbook savings accounts. Vendor Consortium Selection Recognizing the need for large-scale centralized systems expertise, SBI sought p roposals from a number of vendor consortiums that were headed by the leading sys tems integrators. From these proposals, the

 

 

 

7 SBI Core Banking bank narrowed down the potential solutions to vendor consorti ums led by IBM and TCS. The TCS group included Hewlett T Packard-based Financial Network Services (FNS) and China Systems (for trade finance). Although SBI favo red the real-time processing architecture of FNS s BaNCs system over that of the IBM consortium s memo post/batch update architecture, the bank had several conc erns about the TCS consortium proposal. They included the small size and relativ ely weak financial strength of FNS (TCS would eventually purchase FNS in 2005) a nd the ability of the UNIX-based system to meet the scalability requirements of the bank. Therefore, it was agreed that TCS would be responsible for the require d systems modifications and ongoing software maintenance for SBI. Additionally, scalability tests were performed at HP s lab in Germany to verify that the syste m was capable of meeting the bank s scalability requirements. These tests demons trated the capability of TCS BaNCs to support the processing requirements of 75 million accounts and 19 million daily transactions. Tata Consultancy Services and TCS BaNCs Tata Consultancy Services, headquartered in Mumbai, India, is one of the world s largest technology companies with particular expertise in systems integration a nd business process outsourcing. The company has more than 130,000 employees loc ated in 42 countries and achieved revenues of $5.7 billion in fiscal 2008. Altho ugh TCS has long been a leader in core systems integration services for banks, a fter it purchased FNS in 2005, the company also became a leading global provider of core banking software for large banks. The BaNCs system is based on serviceoriented architecture (SOA) and is platform and database independent. In additio n to SBI, TCS BaNCs clients include the Bank of China (installation in process), China Trust, Bank Negara Indonesia, India s Bank Maharashtra , National Commerc ial Bank (Saudi Arabia), and Koram Bank (Korea). TCS has also expanded its US fo otprint with the opening of its largest resource delivery center North America ( near Cincinnati, Ohio) that can house 20,000 personnel. The company is seeking l icense and implement the BaNCs system in North America and recently completed a major plan effort to ensure that the BaNCs system meets US regulatory and compli ance requirements. Initial SBI Core Systems Modernization Project The contract for the initial project was completed in May 2002; 3,300 branches w ere to be converted by mid-2007. TCS immediately began a six-month gap analysis effort to determine the required software changes to the BaNCs system. The chang es included installing required interfaces with more than 50 other systems as we ll as making enhancements to support the bank s product requirements. These prod uct requirements were separated by customer segment to allow the vendor and bank to begin conversions before all the needed modifications were implemented. They placed a priority on the needed changes that would allow branches with high-net -worth individuals and then corporate accounts to be converted as soon as possib le.

 

 

 

 

 

 

 

8 SBI Core Banking Before the first conversion in August 2003, TCS and HP create d the data processing environment for SBI. The primary data center was establish ed on the outskirts of Mumbai and a backup center. After the second round of cha nges, the system and processes were functioning smoothly, and management believe d the branch conversion could be accelerated. An assembly line approach was then employed in April 2006 to speed the branch conversion process: • Branch personnel were responsible for data scrubbing and cleaning of their customer information on the existing system. • Branches were notified three months prior to their conve rsion date to begin "mock," or test, conversions using a specially created test version of the BaNCs system. • Branches performed several test conversions to ensu re the actual conversion went smoothly. As the new core banking system was rolle d out across the SBI branches nationwide, a special process was introduced in th e nightly batch window to add the new branches. The process increased batch proc essing time approximately 20 minutes and typically included adding branches in g roups of 50. This additional process, of course, was unnecessary upon completion of the rollout and has since been removed from the nightly batch window. TCS an d local area branch managers oversaw the conversions, and the bank s circle (reg ional) heads formally reported the status to the chairman s office. By employing the assembly line approach for branch conversions, SBI was able to convert 1,20 0 branches in April and May 2006, completing the initial 3,300-branch conversion two months ahead of the original schedule. The milestones for the initial core systems implementation project are included in the SBI and affiliate banks core systems modernization time line in Exhibit 2.

 

 

9 SBI Core Banking Exhibit 2 Time Line of State Bank of India and Affiliate Banks Core Systems Mod ernization (2000–09) Source: Tata Consultancy Services (TCS) State Bank of India Full Branch Conversion The success of the initial 3,300-branch conversion for SBI demonstrated that: • TC S had the technical capabilities to support the bank s IT initiative and scale o f operations. • Bank personnel had the skills to adopt new processes and support t he conversions. • The Indian customer base would react to new technology by adopti ng new electronic services and demanding new, more sophisticated banking product s. • An assembly line approach could be used effectively to support large-scale br anch conversions. TCS and HP then conducted another scalability test in Septembe r 2006 to determine if the system could process SBI s entire base of 100 million accounts (excluding the affiliate banks, which use a separate processing enviro nment) with sustained peak online throughput of 1,500 transactions per second. T hey conducted the test at HP Labs in Cupertino, California, using two 32-CPU HP 9000 Superdome

 

 

 

10 SBI Core Banking application servers and two 32-processor Itanium Core HP Int egrity servers for the database. The test achieved a sustained peak real-time tr ansaction rate of more than 1,575 transactions per second, meeting the projected processing demands of SBI. Additionally, batch tests were run for both deposits and loan account processing. The month-end batch process for loans required 1 h our and 5 minutes, and deposit processing was completed in 2 hours and 27 minute s. These benchmarks were audited by Ernst & Young, and the test results are high lighted in Exhibit 3. Exhibit 3 State Bank of India Scalability Test of TCS BaNCs System for Full Bran ch Conversion Source: Tata Consultancy Services (TCS) Critical Success Factors Large-scale core systems implementations are typically the most costly and risky IT projects undertaken by banks. Failures of core systems projects are not unco mmon at large banks and result in both financial impact and lost business opport unities. Further, failed projects lead other banks to delay needed core systems replacements because they measure the risk of failure against the potential bene fits of a new system.

11 SBI Core Banking TowerGroup believes that several critical factors contribute d to the success of the SBI core implementation effort: • Senior management commit ment. The project was driven by the chairman of SBI, who met every month with th e information technology (IT) and the business sector heads. The chairman monito red the overall status and ensured that sufficient resources were allocated to t he project. TCS senior managers were thoroughly committed to the project as well and periodically met with the SBI chairman to review the project status. • Staffi ng and empowerment of project team. The core banking team consisted of the bank s managing director of IT acting as team head and 75 business and IT people sele cted by the bank. TCS also staffed the project with approximately 300 IT profess ionals trained on the BaNCs system. Importantly, the SBI business people were vi ewed not just as contributors to a key project but as future bank leaders. This team reported to the SBI chairman and was empowered with all decision-making aut hority. • Ownership by business heads. The regional business line heads were respo nsible for the success of conversion of their respective branches and reported t he status to the chairman. Thus, the business heads objectives were aligned wit h those of the project team. • Focus on training. SBI used its network of 58 train ing centers across India to train employees on the new system. TCS personnel fir st educated approximately 100 SBI professional trainers, who then trained 100,00 0 SBI employees at the centers; the remaining employees trained at their respect ive job sites.

 

 

12 SBI Core Banking Network Architecture Like any corporate network architecture the SBI network is also based on the pri nciples of stability, security, scalability, performance and simplicity. As the following illustration makes clear, the Networked Banking pool is linked to the Stakeholders, Customers and prospects. This network Pool interfaces with the Sha red Operation Centers which in turn interact with Operating Units. The Operating units in turn interact with the associate Banks, RBI and Treasury and Risk Mana gement. All the common input after validation is then handled by the Corporate O ffice. Customer Stakeholders Prospects ATM Internet Banking Mobile Banking Help Desk Group Companies Shared Operations Centers ALM Associate Banks Operating Units Treasury RBI Product Development Risk Management Corporate Office

13 SBI Core Banking A sample deployment configuration is shown in this diagram. The solution is configured with an internal layer consisting of the application, database, mail and Intranet servers running on OMNIEnterprise features standard host connectors and all its servers are based on modular, scalable Intel proces sors to which additional host connectors can be added quite easily. Message pre/ post M processors make sure that each message received by the system is processe d and adequate modifications are made before it is forwarded to the right consum er. OMNIEnterprise uses a full featured message queue for store and forward (SFA ) processing, whereby messages are received at intermediate routing points, reco rded (stored), and then Intel Xeon processors for superior performance and avail ability, protected by a firewall. The second layer of the solution consists of a “demilitarized zone” that consists of servers that enable access to different deliv ery channels, such as the web server, FTP server, Telnet server and VPN server.

14 SBI Core Banking Physical Architecture Distributed Systems Components In general the Distributed Systems Components suffice for usual needs. But for T he State Bank Of India such a structure will have limited scalability. Usually t he general structure is as shown in the following illustration. Banking Application Diskless nodes LAN Operating System, Database Internet Banking ATM User Control Officer System Administrator Illustration: Distributed Systems Architecture To overcome the shortcomings of t he model mentioned above a new model based on the general one was designed which was later implemented. Thus came CBS or Core Banking System.

15 SBI Core Banking Core Banking System Components Data Center Branches Application Developers Banking Application Desktop Branch S ervers Alternative Channels WAN, Internet Operating System, Database Internet Banking ATM User Control Officer Network Administrator System Administrator Illustration: Core Banking System Components One significant aspect to the core banking architecture is that only the necessary permissions are granted to indiv idual officers. This is done to prevent mishaps or though unlikely, deliberate h ijack attempts from within the network. The isolation of the intranet from the I nternet is also a similar step to increase the security of the network. Each of the branches are connected by the WAN which in this case is not through the Inte rnet but an entirely new infrastructure altogether. This private secure network is used to relay between the nodes at the different branches. The data flowing o ut of the branches is not immediately stored into the main servers but remain in a data pool. This data is then reviewed automatically by auditing software and if passed the data is stored in the main servers. Even then this data can be mod ified by the network administrators but it would require the security credential s of the Chief Officer, Information Security, State Bank of India. As a result t he data security of such a network can be assured.

16 SBI Core Banking Illustration: Data Transfer Interface between secure server and the Internet

17 SBI Core Banking Security Architecture Security is perhaps the most important aspect to the network architecture. In ba nking system secure transfer of data is not only desirable but indispensable. Wh at would Core Banking be without proper security? It would have just become anot her failed and hacked network like millions of others, leading to the loss of bi llions of rupees and possibly the destruction of the Indian economy. To better p rotect the security a policy of crafted principle are used, which taken together are named as Information Systems Security. It is a pillared architecture as sho wn in the illustration below. Organizing Structure of IT Enabler Information Security Department Assess risks Define Policies, and develop Standards and Procedures Provide training & awarene ss Deploy & manage security products Define security architecture for network, d atabases & applications: Secure Configuration Docs Enforcer Application Owners / Business Owners/System administrators / IT Personnel Implement technical and pro cedural controls Manage Network, servers & applications securely adhering to pol icies, standards & procedures

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Report Incidents Act on Security Logs

Auditor Inspection & Management Audit Dept. Auditing compliance against policies across applications and locations Vulnerability testing Penetration testing App lication security testing Feedback to ISD on effectiveness of policies GM – General Manager AGM – Assistant General Manager Monitoring Features Online banking solutions have many features and capabilities in common, but trad itionally also have some that are application specific. The common features fall broadly into several categories Transactional (e.g., performing a financial transaction such as an account to ac count transfer, paying a bill, wire transfer... and applications... apply for a loan, new account, etc.) o Electronic bill presentment and payment - EBPP

19 SBI Core Banking o o o Funds transfer between a customer s own checking and savings accounts, or to ano ther customer s account Investment purchase or sale Loan applications and transa ctions, such as repayments of enrollments Non-transactional (e.g., online statements, check links, co browsing, chat) o Ba nk statements Financial Institution Administration Support of multiple users hav ing varying levels of authority Transaction approval process Wire transfer Features commonly unique to Internet banking include

Personal financial management support, such as importing data into personal acco unting software. Some online banking platforms support account aggregation to al low the customers to monitor all of their accounts in one place whether they are with their main bank or with other institutions. Signature based online banking where all transactions are signed and encrypted digitally. The Keys for the sig nature generation and encryption can be stored on smartcards or any memory mediu m, depending on the concrete implementation. Attacks

Most of the attacks on online banking used today are based on deceiving the user to steal login data and valid TANs. Two well known examples for those attacks a re phishing and harming. Cross-site scripting and key logger/Trojan horses can a lso be used to steal login information. A method to attack signature based onlin e banking methods is to manipulate the used software in a way, that correct tran sactions are shown on the screen and faked transactions are signed in the backgr ound. A recent FDIC Technology Incident Report, compiled from suspicious activit y reports banks file quarterly, lists 536 cases of computer intrusion, with an a verage loss per incident of $30,000. That adds up to a nearly $16-million loss i n the second quarter of 2007. Computer intrusions increased by 150 percent betwe en the first quarter of 2007 and the second. In 80 percent of the cases, the sou rce of the intrusion is unknown but it occurred during online banking, the repor t states.[5] The most recent kind of attack is the so-called Man in the Browser attack, where a Trojan horse permits a remote attacker to modify the destination account number and also the amount. Countermeasures

There exist several countermeasures which try to avoid attacks. Digital certific ates are used against phishing and harming, the use of class-3 card readers is a measure to avoid manipulation of transactions by the software in signature base d online banking variants. To protect their systems against Trojan horses, users should use virus scanners and be careful with downloaded software or e-mail att achments.

 

 

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The easiest method is still prevention of any infection. The clients are only di sk less nodes without any CD/DVD or Flash drive. Only the server is equipped wit h a hard disk. So a chance infection spreading from the client to the server is not possible. The Intranet is completely separated from the Internet by the DMZ or Demilitarized Zone, hence keeping the network safe from any outside interfere nce.

21 SBI Core Banking Financial Network Services (FNS) FNS provides end-to-end, integrated solutions for the banking and finance indust ry around the world. Headquartered in Sydney, Australia, the company addresses b usiness opportunities across Europe, Asia Pacific, Africa, Latin America and the Middle East through established regional offices in London, Seoul, Manila, Jaka rta, Kuala Lumpur, Hong Kong, Dubai, Santiago and Johannesburg. From 27 January to 21 February 2003, a multi-disciplinary team worked to demonstrate the scalabi lity and performance of the FNS solution, BANCS®, within a Windows server environm ent. Traditionally, COBOL- based critical banking software such as BANCS, runs o n a mainframe or in a UNIX environment, rather than a Windows environment, and a benchmark study of this type had not been attempted previously. “We already have eight live banking sites operating smoothly using a Windows back-end, so we knew first- hand that BANCS running on Windows was saleable and robust,” said Dean Mat heson, product development manager, Delivery Channels and Windows at FNS. “However we wanted to quantify and validate that performance using rigorous and controll ed conditions where the application and architecture could be pushed to their li mits.” The BANCS solution automates core banking functions such as deposit process ing, loans processing, loan workflow management, contingent account processing, cash accounting, electronic file transfer (EFT) witch management, department col lection and other automated banking transactions integrated across ultimo- deliv ery channels. For the benchmark, only the deposit and loan processing modules we re used. The target was to reach workloads of 500tps (transactions per second) u nder Online Transaction processing conditions and 10 million accounts per hour u nder Batch Processing conditions using a Microsoft SQL database populated with 1 2 million test user accounts. Built and Deployed Using Micro Focus Technology A 16-processor IBM series 440 was used for the FNS BANCS solution, while an 8-pr ocessor IBM series 440 was used for the Microsoft® SQL Server 2000 database. Micro Focus Application Server was used to deploy the COBOL-based FNS BANCS solution within the Windows environment. BANCS is a multi-process application that was bu ilt using the Net Express COBOL development environment and component business o bject techniques. Written in COBOL with millions of lines of code, FNS’ solution i s easily portable across platforms such as mainframe, UNIX and Windows and is in teroperable with Java and .NET.

22 SBI Core Banking Benefits Solution benefits The new core system has resulted in benefits throughout the bank for both the cu stomers and the employees of SBI. For example, the new core banking system has a llowed the bank to redesign processes. It established 400 regional processing ce nters for all metro and urban branches that have assumed functions previously pe rformed in the individual branches. The bank recently reported that business per employee increased by 250% over the last five years. The bank has achieved its goal of offering its full range of products and services to its rural branches. It delivers economic growth to the rural areas and offers financial inclusion fo r all of India s citizens. Implementation of the TCS BaNCs system has provided t he bank with the ability to consolidate the affiliate banks into SBI. In fact, t he bank recently completed the consolidation of State Bank of Saurashtra into SB I. The bank has reversed the trend of customer attrition and is now gaining new market share. Completion of the core conversion project has also allowed the ban k to undertake several new initiatives to further improve service and support fu ture growth. These initiatives include the deployment of more than 3,000 rural s ales staff, redesign of over 2,200 branches in the last fiscal year, opening of more than 1,000 new branches, establishment of a call center, and an active plan to migrate customers to electronic delivery channels. The improvement in produc tivity and growth of business for the SBI Group is reflected in Exhibit 4.

 

23 SBI Core Banking Reduced transaction time Enterprise significantly reduces a bank’s mean transaction time. The solution’s single transaction engine (capable of p roviding n-level parallel processing) and multiple integrated banking modules, b anks can provide faster approval of loans, credit cards, balance limits, etc. It is certified and tested to support more than 150 banking transactions per secon d. When operating on servers running on powerful Intel ® XeonTM processors, the En terprise solution maintains a significantly higher mean number of transactions p er second. Increased delivery channels Deploying the multi-channel EEnterprise s olution means that the bank can offer a number of its services through different , non-traditional delivery channels to the customer aside from its branches. The se include Internet banking, ATMs and mobile banking, to name just a few. In-dep th customer understanding with its holistic view of customer interface history w ith the bank, the Enterprise solution gives banks a better view of the customer’s banking needs, and allows them to offer personalized, userfriendly and intuitive service packages to its customers. Standardized business processes across the s ystem The Enterprise solution is built around the modular Enterprise: step archi tecture with different modules in the solution following the same activity flow and a uniform method of transactions processing. As a result, business processes are standardized across the system, allowing for easy maintenance and upgrades. In-house technical personnel find the learning curve much shorter than with oth er solutions since it runs on the universally accepted Microsoft* server operati ng system. In addition, the solution is based on industry-recognized Intel archi tecture which is constructed for modular deployment. Hence, adding new modules a nd services is also far more intuitive and can be done quickly. Open technology platform The Enterprise solution is built on an open technology platform that su pports both Linux and Windows architectures. As a result, it is easily integrate d with most legacy equipment and systems. Its industryrecognized Intel architect ure and universal compatibility allows banks to effectively reuse their existing assets – whether software, hardware or systems. Lowest price performance ratio In tel ® Xeon™ servers featuring Intel Net Burst ® micro architecture and Hyper- Threadin g Technology, server platforms based on Intel Xeon processors provide excellent price performance ratio with faster response times, increased compute power and enhanced scalability. Built on industry standards and compliances The Enterprise solution is built on industry-recognized technologies such as Intel and Microso ft that are built with future applications and technological evolutions in mind. As a result, the solution ensures that the bank has a world-class system that c an easily be upgraded or merged with future technologies.

24 SBI Core Banking BaNCs: An Overview The following screenshots show the working of the BaNCs on the client nodes. Due to security reasons some pages with sensitive information has been blurred and extensive detailing has been omitted. The implementation of the Tata Consultancy Services (TCS) BaNCs Core Banking at the State Bank of India (SBI) and its affi liate banks represents the largest centralized core system implementation ever u ndertaken. The overall effort included the conversion of approximately 140 milli on accounts held at 14,600 domestic branches of SBI and its affiliate banks. The State Bank of India is the oldest and largest bank in India, with more than $25 0 billion (USD) in assets. It is the second-largest bank in the world in number of branches; it opened its 10,000th branch in 2008. The bank has 84 internationa l branches located in 32 countries and approximately 8,500 ATMs. Additionally, S BI has controlling or complete interest in a number of affiliate banks, resultin g in the availability of banking services at more than 14,600 branches and nearl y 10,000 ATMs.

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42 SBI Core Banking Further Improvement Like any network security is a key issue. The Information Security Officers need to guard the network from future threats. Besides the technical aspects, there are physical problems which are being overcome. Most of India is still not conne cted to Internet, not many use mobile banking either. Efforts are being made to help reach the facilities of advanced banking to the remotest areas of India thr ough satellite connectivity or SMS Banking. Mobile Banking has only recently sta rted and is sure to usher in a new age of Banking Infrastructure. Since BaNCs is the largest implementation of Core Banking, the maintenance and upkeep of the n etwork requires a lot of effort. Billions of transactions are handled every mont h and every day. The validation of the End of Day messages, backing up thousands of Terabytes of data and keeping them secure is a monumental task. As a result further automation without compromising the security is stability of the network is on the cards. Due to existing tender notice regulations of the Bank further details have been omitted. The future will see more Banking options to the custo mers through SMS and Mobile Banking as well as TV cable Banking. Some of the fea tures are already being implemented but will take time to grow and develop.

43 SBI Core Banking Conclusion The implementation of the Tata Consultancy Services (TCS) BaNCs system at the St ate Bank of India (SBI) represents the largest core systems project ever underta ken. The success of this project should encourage other large banks to begin pro jects to modernize their core systems. The use of a UNIX-based platform to proce ss more than 100 million accounts daily demonstrates that tier 1 banks can use a mainframe alternative for their core processing. Although TowerGroup expects th at the majority of these banks will continue to rely on the IBM mainframe for co re processing, they can fully consider the benefits of utilizing a UNIX-based pl atform. SBI s achievement demonstrates that attention to critical factors is cru cial in implementing new core systems. The bank s senior management commitment, business line involvement, project team staffing and empowerment, and extensive employee training were all key contributors to the success of the project. Manag ement also recognized the need for a proven systems integrator that possessed in -depth expertise in both business and technology. Core systems modernization has allowed the State Bank of India to centralize computer processing and operation s functions, offer new banking products to all the citizens of India, reverse a trend of customer attrition, and consolidate its affiliate banks. Additionally, the bank can now further expand its product offerings and improve customer servi ce.

 

 

44 SBI Core Banking References Case Study: State Bank of India, World s Largest Centralized Core Processing Imp lementation Robert Hunt, Senior Research Director, Retail Banking, TowerGroup “Nex t-generation Universal Banking: State Bank of India” Cisco Enterprise Solutions “End -to-End Core Banking Solution for Competitive Advantage” Solutions White Paper, In frasoft Technologies “Customer Satisfaction Vs Service Quality” A. Krishna Kumar, De puty Managing Director (IT) State Bank of India 6th Banking Technology 2010 Conf erence & Banking Technology Awards 2009 January 28, 2010 “EXPERIENCE IN IMPLEMENTI NG SECURITY MEASURES AT SBI – A CASE STUDY” Patrick Inshore General Manager (IT) & C hief Information Security Officer State Bank of India Online Banking and Securit y http://en.wikipedia.org/wiki/Online_banking#Security Secure Banking Solution h ttp://en.wikipedia.org/wiki/Secure_Banking_Solutions State Bank of India http:// en.wikipedia.org/wiki/State_Bank_Of_India Core Banking http://en.wikipedia.org/w iki/Core_Banking Financial Network Services Micro Focus

 

45 SBI Core Banking Bibliography I thank my teachers for their guidance, my parents for their support. Without th eir active encouragement this project report would never have come to fruition. I also thank all the corporate personalities who have contributed to this projec t. A special gratitude I reserve for the staff and officers of State of India, A sansol Main Branch for allowing me to work. In the same vein I must mention Goog le for having such a wonderful search engine, Wikipedia for their superb content and the White papers mentioned in the References Section. To all those concerne d, I thank you. This project is released under the GNUv3 License.

46 SBI Core Banking