Case Study:: State Bank of India, World's Largest Centralized Core Processing Implementation

CASE STUDY:
State Bank of India, World's Largest

Centralized Core Processing Implementation
PRESENTED BY: AMRITA BISWAS

C-18
Background Of The Case
 The State Bank of India (SBI), the largest and oldest bank in India, had computerized its
branches in the 1990s, but it was losing market share to private-sector banks that had
implemented more modern centralized core processing systems.
 To remain competitive with its private-sector counterparts, in 2002, SBI began the
largest implementation of a centralized core system ever undertaken in the banking
industry.
 The State Bank of India selected Tata Consultancy Services to customize the software,
implement the new core system, and provide on going operational support for its
centralized information technology.
 Although SBI initially planned to convert only 3,300 of its branches, it was so successful
that it expanded the project to include all of the more than 14,600 SBI and affiliate bank
branches.
 The State Bank of India has achieved its goal of offering its full range of products and
services to all its branches and customers, spreading economic growth to rural areas and
providing financial inclusion for all of India's citizens.
Background Of The Company
 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 number of
branches.
 The bank has 84 international branches located in 32 countries and approximately
8,500 ATMs.
 In 1959, the Indian government passed the State Bank of India Act, resulting in the
acquisition(majority shareholding) of eight state-affiliated banks and the creation of
the State Bank of India Group (SBI Group).
 Unlike private-sector banks, SBI has a dual role of earning a profit and expanding
banking services to the population throughout 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.
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 Systems' Bank
master core banking system (now owned by Misys).
 Although the computerization improved the efficiency and accuracy of the branches, the
local implementation restricted customers' use to their local branches and inhibited the
introduction of new banking products and centralization of operations functions.
 Technology-savvy market segment viewed the public-sector banks as technology laggards
that could not meet their banking needs.
 In response to the competitive threats and entreaties from the government, SBI engaged
KPMG Peat Marwick (KPMG) in 2000 to develop 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.
Objectives Of SBI To Modernize Core Systems
 The delivery of new product capabilities to all customers, including those in
rural areas
 The unification of processes across the bank to realize operational
efficiencies and improve customer service
 Provision of a single customer view of all accounts
 The ability to merge the affiliate 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
 finding a new core system that could process approximately 75 million
accounts daily.
 the bank lacked experience in implementing centralized systems
 meeting SBI's unique product requirements that would require the bank to
make extensive modifications to a new core banking system.
Vendor Consortium Selection
Tata Consultancy Services And TCS BaNCs
Initial SBI Core Systems Modernization Project
Initial Conversion Project
State Bank of India Full Branch Conversion
The success of the initial 3,300-branch conversion for SBI demonstrated that:
 TCS had the technical capabilities to support the bank's IT initiative and
scale of operations.
 Bank personnel had the skills to adopt new processes and support the
conversions.
 The Indian customer base would react to new technology by adopting new
electronic services and demanding new, more sophisticated banking
products.
 An assembly line approach could be used effectively to support large-scale
branch conversions.
Staffing &
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commitment
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Ownership by
Focus on
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training
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Benefits of New Core Systems Implementation

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CASE STUDY:

State Bank of India, World's Largest

PRESENTED BY: AMRITA BISWAS

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