Overcoming the Challenges of Modernizing Core Banking Systems Banking Vietnam, an IDG event Anselm De Souza Vice-President, Asia Pacific Sales System Access Limited, Singapore 17-19 th May 2006, Melia, Hanoi, Vietnam Agenda • Introduction • Key Questions – Why Change – Selection Criteria • Overcoming the challenges – Key Success Factors – Case Study – the Vietnam International Bank Introduction Key Questions • Why were Vietnamese banks taking extended period to roll-out their core systems • What were/are the challenges Vietnamese Banks faced when modernizing core systems? • Is this situation specific to Vietnam? • How can we do it better? Questions to ask • Should we change? Why? • How do we choose? What are the criteria? • How do we prepare for change? Should we change? Why? Vietnam Banking Environment Overview Vietnamese Banking Environment - Overview • Vietnam economy grew 8.4% in 2005 • State’s 10-year Development Plan for the Banking Industry – Adopt international banking and business best practices – Better corporate governance – Market-based monetary management – Modernization of common systems – Promote Public Trust in the banking system Vietnamese Banking Environment - Overview • The World Bank’s initiative to modernize the Vietnam Banking Industry • Vietnam is still largely unbanked – 45% of money in cash – >50% of local business transactions done outside the banking system – Only 1.3 Million Bank Accounts Rationale for Acquiring New Core Banking Systems [...]... Replacement of Legacy CBS • • • • • • Entry of foreign competition Increase Customer Sophistication Adoption of international best practices Delivery of international banking products Faster go to market More stringent regulatory requirements Rationale for Replacement of Legacy CBS Time is of the Essence! Opportunities for growth in the banking sector are so big that “local speculation in banking shares... initial paid-up capital of 50 billion VNDs  At the beginning of 2005, chartered capital had amounted to 325 billion VNDs  5th Largest Joint Stock Bank in Vietnam  Goal to achieve very challenging growth targets for the next 10 years “Our bank has set out a plan to expand the current branch network of 34 branches, grow total assets, grow the number of customers, and widen range of products and services... viability  Financial Viability  Number of implementation sites  Industry Reference  Years of existence  Commitment to technology and retail industry  Integration with other systems …evaluation and summary of findings Functionality VE TI A TR S Total Cost of LU IL ownership Numeric Scoring Methodology – A Mathematical Model 10 Technology 8 10 6 8 4 2 6 based on the evaluation criteria 10 6 4 8 Package... Office Selection Criteria • Price – Minimal Customizations on International CBS product – Short Implementation Time Multi-dimensional criteria for SW package evaluation & selection Functionality  Transaction Management  Information Management  Risk Management  Etc… Technology Total Cost of ownership  Support of Databases  Cost of Software  Support of Middleware  Cost of Hardware  Support of. .. from among several international banking vendors including the Top 5 global solution providers • Track record of successful project delivery On-Time and On-Budget • Domain Knowledge and Understanding of VIB’s business What VIB looked for in a partner “We are a bank, and project delays are very costly The opportunity costs of any delays usually erode any benefits of the initially competitive financial... This plan will ensure VIB attains a balanced portfolio of assets to strengthen the banks financial stability, a diversified sources of income as it achieves its growth targets” Mr Trinh Van Tuan, VIB Chairman The Major Objectives • Rigid & Short Implementation Time Frame • “Big Bang”, simultaneous Live sites VIB Selection Criteria • Legacy Core Banking System – Aging technology that cannot sustain... of the initially competitive financial proposition and more We want a partner who will deliver on their promise After thorough reference checks and site visits, the VIB team found that customers of System Access spoke highly of the company’s immense desire to work closely with the bank and deliver in the given timeline.” Mr Trinh Van Tuan, VIB Chairman Project Approach • Both parties agreed on “Bank... of Hardware  Support of Operating Systems  Consulting Cost  Support of Hardware  Cost of Integration Implementation and support  Support of presentation layer  Toolset to facilitate Evaluation Criteria  Pre-configured Solution Architecture  Supportability  Maturity  Availability of implementation and support consultants  Reliability  User Training  Ease of Use  Support for multiple languages... Technical Scalability Professional Service Standards and Management Support Other Key Issues Faced Partner Issues Product Issues  Choosing the right solutions partner  Language and cultural barriers  Coordinating Team members separated geographically  Support international banking product offering and also local practices and processes  Local language support  Rapid implementation How the eventual vendor... to Package 2 2 each criteria Package 3 2 – A Balanced Score is 2 computed 4 6 8 10 Implementation and support 2 4 6 Package 4 4 6 8 10 8 10 Vendor viability Architecture How to over come these challenges? Challenges • To reduce evaluation process – more time to implement • To implement clear & objective evaluation scoring system • Look beyond the typical focus – Product Fit • Technical • Functional . Overcoming the Challenges of Modernizing Core Banking Systems Banking Vietnam, an IDG event Anselm De Souza. extended period to roll-out their core systems • What were/are the challenges Vietnamese Banks faced when modernizing core systems? • Is this situation