25 years of Digital transformation - Silverlake Axis
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FOREWORD 25 years of Digital Transformation Back in 1989, Silverlake was launched upon Mr Goh Peng Ooi, our Executive Chairman and Founder’s conviction that the mathematical SILVERLAKE AXIS 25 years of Digital Transformation Group Theory was the best approach to building core banking systems. Today, we are a multibillion dollar organization operating in over 20 countries across Asia/Pacific and Middle East. In celebration of our 25 years in providing core 2 The Journey Toward a Digital Economy Transformation banking software to financial institutions, we have partnered IDC Financial Insights to share our story in The way forward this booklet. I want to take this opportunity to thank all for Silverlake Axis 6 case study Bank Islam Brunei Darussalam is to expand from our customers, partners and ‘Silverlakers’ for their trust Core Banking to and support throughout this journey. 10 case study Bank Muamalat Malaysia Digital Economy The way forward for Silverlake Axis is to expand Transformation from Core Banking to Digital Economy Transformation Partnerships. 14 case study CIMB Group Partnerships. We have ventured beyond our strength in Core Banking and we now deliver collaborative Digital 20 case study OCBC Bank Economy offerings that cut across the banking, insurance, payment, retail and logistics industries. To all our esteemed customers, we look forward to our continued 26 Staying Ahead and Breaking New Ground partnership over the next 25 years. To our potential customers, we look forward to starting our next 25 year journey with you. Dr Raymond Kwong CEO and Group Managing Director Silverlake Axis Limited 1
25 years of Digital 1989 Transformation Silverlake axis 1999 The Journey Toward a Discovering New Capabilities Digital Economy Transformation Unlimited Opportunities for Innovation Over its 25-year journey, Silverlake Axis has built an impeccable track record of successful core banking implementations. Founded in 1989, Silverlake Axis has delivered operational excellence and enabled business transformations 2000 Milestones 2009 at over 100 organizations across Asia, including Unlocking New Through 40% of the largest banks in Southeast Asia. Opportunities Conquering New the Last Since 1989, Silverlake Axis Over these last several years, the Group has ventured beyond its core banking strength, rapidly Shores Decade has provided expanding aggressively through acquisitions and core banking partnerships to reinvent capabilities and broaden software its horizon into new industries and markets. enabling Recent acquisitions include Merimen Group, a 2010 key financial cloud-based software as a service (SaaS) platform for insurance companies, and Cyber Village which 2014 institutions Quantum offers converged self-service banking solutions Transformation across the across Web and mobile platforms. Both transactions were made in quick succession in mid-2013. Solutions that Power the Digital region to grow In December 2014, Silverlake Axis acquired Economy and transform. Finzsoft Solutions, an Auckland-based financial technology company which develops and implements core and vertical specific solutions for banks and financial institutions. Finzsoft Solutions serves to further expand its geographic reach into the Australian and New Zealand markets. Such value-accretive investments further strengthen the Group as a leading provider of digital economy solutions and services to major organizations within the banking, insurance, payment, retail and logistics industries. 2 3
25 years of Digital Transformation Silverlake Axis’ Journey 2014 • Acquired Finzsoft Solution Limited (A provider of solutions for banks & financial institutions in New Zealand & Australia) • Acquired Merimen Group (Insurance Claims & Policies Processing 2013 Software as a Service Platform) • Acquired Cyber Village Sdn Bhd (Mobile & Internet Solution) Silverlake Axis’ Digital Economy • Disposal of Silverlake Axis (Beijing) Co. Ltd. 2012 • Entered Africa Market • Transferred from Catalist to the SGX Mainboard 2011 • Acquired IIPL (Enterprise Payment & Integration Platform) Capabilities Banking Solutions • Acquired Structured Group (Structured Software Maintenance & Project Services) Silverlake Axis’ Digital Economy Transformation Silverlake Axis has an expanded portfolio of 2010 • Acquired QR Group (Retail & Logistic Solution) is driven by the Silverlake Collaborative Capability solutions covering all aspects of the financial and Intelligence Model (SCCIM). Solutions are subsector. Silverlake Axis’ banking solutions include: • Transition to Catalist sponsored-supervised regime 2009 • Acquired remaining 75% stake in Silverlake Japan (formerly known as configurable to meet a set of business objectives SBI Card Processing Co. Ltd.) • Silverlake Axis Integrated Banking Solution (SIBS) and empower transformation and business agility. 2008 • Signed technology partnership The Group’s SCCIM technologies enable the • Silverlake Axis Integrated Islamic Banking with Zafin Labs financial, business, and social relationships for Solution (SIIBS) • Appointed as Microsoft Gold Certified Partner • Invested in Unisoft/Global InfoTech, China today’s digital world, delivering these through the 2007 • Expanded licensing of SIBS into Capital Markets Industry four core pillars centering round Collaborative • Silverlake Axis Cards System (SCS) • Expanded licensing of SIBS into Shared Services Outsourcing Business • Acquired Silverlake’s Banking Software Business Computing, Mobility, Intelligence and Cloud. • Silverlake Axis Enterprise Payment Platform, and 2006 • Entered Japan Market • Invested in SBI Card Processing Co. Ltd., Japan • Collaborative Computing • Intelligence • Cyber Village Converged Internet and Mobile • Entered Middle-East Market Silverlake Axis Collaborative Silverlake Axis’ business Platform. Architecture provides for intelligence technologies 2005 seamless collaboration are driven by its strength in These platforms provide high-performance banking between its suite of banking, the single view of customer insurance, payment, retail information (CIF) capability and digital innovation straddling core applications 2004 • Established Beijing office technologies, and to every across geographies and and integration, enterprise-to-enterprise component of contemporary channels, allowing for collaborations, and omni-channel services. • Listed on the SGX Sesdaq technologies, connecting consistent and real-time 2003 • Entered China market agnostically across new synchronized experience • Entered Sri Lanka market and existing platforms and and information flow. With The Group continues to expand its range of solutions applications. the advent of the digital beyond the financial sector to meet the needs 2002 economy, these customer- centric engagements further of major organizations in the retail and logistics • Mobility Technologies from the incorporate unstructured industries. 2001 Group facilitates customers’ data from social media, mobility strategies by intelligent sensors and Silverlake Axis’ providing mobility through other customer interactions Ecosystem of Partnerships banking partnerships 2000 • Expanded into rest of Asia and into Middle East devices, experience and information. Over 40% of the largest banks in Southeast Asia with Bank Islam context. This converged currently run on SIBS with it being the core system Internet mobile platform • Software as a Service Brunei Darussalam platform partner of choice for 3 of the 5 largest in Brunei, Bank 1999 • Regional operations span Southeast Asia: from Cyber Village In tandem with demands Malaysia, Singapore, Thailand, Indonesia, Vietnam offers transformational for more dynamic and ASEAN super-regional financial institutions. It Muamalat and CIMB features across key cost-effective technology also has a pristine 100% success rate for project in Malaysia, and industry sectors to help 1998 architectures, Silverlake implementations of over 100 core banking, payment OCBC in Singapore. organizations manage the Axis built and acquired digital experience for their technologies to provide and retail solution migrations in Asia and Middle customers. Its omni-channel shared resources, software, East, and is compliant with 20 countries’ banking 1997 real-time synchronization and information to across Web and mobile organizations on demand ecosystem which includes e-government, financial enables operational agility, through a pay-as-you-go, exchanges, and payment gateways. With its 1996 • 16 banking clients in short span of 7 years increases customer utility-style model. The extension into the insurance, retail and logistics convenience, and thereby Group offers such delivery of engages them across their hosted services (Software as arena, the Silverlake Axis ecosystem will also 1990-1995 ecosystem from acquisition, a Service) over the Internet expand to ensure it brings critical business expertise to upsell and retention. for the motor insurance and resources to meet the needs of its customers. industry though Merimen’s 1989 • Founded in Malaysia by Mr Goh Peng Ooi eClaims and ePolicy engines. 4 5
I D C Case Study 25 years of Digital On the Mobility Track Transformation Bank Islam Brunei Darussalam BY THOMAS ZINK While mobile banking has become a standard for most banks in the region, most Solution banks still struggle to move beyond plain vanilla Snapshot transactional services and, more importantly, with its monetization. Today, there is a clear shift Organization toward adding new forms of mobile payments and Bank Brunei Darussalam a mobile commerce capability to embed loyalty Operational Challenges and rewards management. Driving customer centricity and operational excellence by upgrading The biggest potential for mobility in financial core systems in order to empower digital services lies in the convergence of big data and channels to cater changing customer needs, mobility resulting in a personalized, contextual, and compliance requirements and improve cost real-time interaction with the customer. Clearly, this efficiency and competitive positioning. will have the most impact on marketing and loyalty management, but it will also benefit merchant Solution acquisition, transaction banking, and customer Implementation of Silverlake’s Digital service. While some banks have made impressive Economy Model Suite (SDEMS) as well as progress in this regard, the industry still stands only its Mobility Lifestyle Ecosystem Backbone at the beginning of this journey and IDC Financial (MLEB). Insights expects considerable investment, as well as solid returns, in the next five years. Project Duration In this case study, IDC Financial Insights 20 months looks at the implementation of Silverlake’s Digital Economy Model Suite (SDEMS) as well as its Benefit Mobility Lifestyle Ecosystem Backbone (MLEB) in With a target market for digital banking Bank Islam Brunei Darussalam (BIBD). SDEMS is services estimated at 45,000 payroll a customer platform that allows a bank to deliver customers, the app was downloaded more all business services to its customers across all than 36,000 times in 2013. The mobile channels in a consistent manner. It also delivers application has unlocked new revenue sales and service support capabilities to customer- sources for the bank, adding mobile top- facing staff and delivers a consistent channel ups and merchant discount fees as well as experience across both self-service and manned increasing utilization of credit and debit channels. cards through a better positioning of its reward and loyalty program. 6 7
25 years of Digital Transformation SITUATION OVERVIEW The mobile application was soon enriched with Figure 2 The transformation program, which BIBD launched enhanced rewards redemption for bill payments and Silverlake Digital Economy Model Suite in 2011 in partnership with the Silverlake group, set top-ups, allowing customers to use reward points for the bank on the journey toward customer centricity instant redemption or making payments with reward and operational excellence. The bank invested in points at merchants. a large-scale program to upgrade core systems The bank also launched a digitized merchant Silverlake Customer Platform Silverlake Card System enhancing product sets and processes, improving acquiring platform for mobile payments at retail technology infrastructure focusing on getting outlets and introduced state-of-the-art ecommerce business intelligence right, and boosting IT security and mcommerce features to optimize functional Sales & and business continuity. possibilities of mobile banking. The latter allow USERS Devices Presentation Integration Aggregation Issuing Services A core section of BIBD’s Transformation customers to pay at selected merchant online stores Customer Holdings Card directly from their bank accounts or with reward Product Application Program (see Figure 1) lies in its Mobility and Digital PC Socket Services Personalisation Card Embossing Economy Engagement Program with the main points via quick response (QR) codes on BIBD Online. (HTTP) Credit Approval Customer CRM Tablet Card Activation Profile Info/Balance objective to bring digital services to its customers, Merchants are also provided with a market- Loyalty & Rewards Execute Campaign making it the first bank in the country to provide leading cash management feature that allows them Kiosk Card Distribution Reload Generic Search comprehensive banking services on mobile devices to monitor online transactions via online banking Customers Browser Product Pricing Call Center PC (smartphones and tablets). from the time a transaction is authorized until Transaction Card Management Collections Drill-down transactions are settled. Web Services The bank sought to address challenges and Phone (XML) leverage opportunities driven by changing market Finally, a mobile advertising platform using Cross-sell/Up-sell Dashboard Acquiring interactive content and the push (marketing) Smartphone forces such as customer needs, compliance Channel Services Statements Application Account Creation requirements, and the need for higher cost messaging capabilities put BIBD into a strong Strip/EMV efficiency, business consolidations, and competition. position to engage its customers. It helps the bank Chip Reader Products & Risk Terminal Creation Clearing/ to reach out to the relevant target market with Transactions Management Settlement Content Streaming Solution Overview interactive content, promote new products and Employees ATM/CDM Cards Unit Management Merchant Management While Silverlake’s forte lies in its core banking services, and educate customers in an easy way. Passbook Mobile Wallets Credit Policy proposition, SDEMS (see Figure 2) and MLEB were functionally separated from the core platform FUTURE OUTLOOK QR/Bar Code MLEB* Reload Services Sales Compliance Common application Services BIBD’s mobile application took the small Brunei External Authorization to ensure that business capabilities driving the Reader Fulfillment Application Transaction Messaging Processing Management customer experience are flexible and can be aligned market by storm. With a target market for digital Gateways Fraud Detection Trust Account across all users and channels. banking services estimated at 45,000 payroll Merchant POS (SMS, email) AMLA Credit Payment Exception/Dispute This setup provides customers with a customers, the app was downloaded more Help/FAQ & Chargeback Blacklists consistent “look and feel” across all digital and even than 36,000 times in 2013. Given BIBD’s strong IVR Payment Partners < External > Transaction Suspension position as the country’s largest bank, there is still Exceptions Regulatory Reports nondigital channels, while giving the bank flexibility Messaging GL Entries/Accounts in the back office facilitating security governance, considerable upside potential within its existing RFID Management MIS Management customer base and beyond. Its new customer- Other Protocols (e.g. Mobile SMS) Syndication platform administration, and introducing a “build once, deploy everywhere” concept for business centric strategy has set BIBD apart from its Islamic Payment Gateways HSM Identity – various Authentication Methods and Access Directory Management services. This customer experience is what sets competitors and puts it into an excellent position to BIBD apart from the typically fragmented frontline further expand its market dominance. * Please refer to Technology White Paper (Rev. 4): A Universal Mobility Enabler for Mobile Internet Commerce, October 2013 experience of the competition. The mobile application has unlocked new revenue sources for the bank, adding mobile many. BIBD’s approach to build a consistent channel Figure 1 top-ups and merchant discount fees as well as experience across both digital and traditional increasing utilization of credit and debit cards channels will largely benefit the customer Deployment of BIBD Mobility and Digital Economy Engagement Program through a better positioning of its reward and experience and help the bank to manage its loyalty program. Moreover, it comes with intangible operations more efficiently by allowing it to flexibly benefits of lower operational costs, for instance, by adapt to change and implement new products. April OCTOBER January November December offloading transactions from the branch to low-cost IDC Financial Insights expects that more 2012 2012 2013 2013 2013 channels and higher customer satisfaction, which banks will move toward an orchestrated channels eventually may benefit the acquisition and retention strategy, playing into the specific strengths of Project Kick-off BIBD Mobile Digital Merchant Enhanced Reward Mobile Advertising of customers. each channel while allowing customers to define Banking Platform Redemption Platform their experience according to their individual This Silverlake Axis- Application Enable payment at For bill payments With interactive CONCLUSION preferences. sponsored IDC case study (IDC #FI020822V) was first merchant outlets via and top-up services content and push Mobile is moving to the core of channel distribution published in February 2014 and republished here with mobile devices messaging of banks, yet it remains only one channel out of permission. 8 9
I D C Case Study 25 years of Digital Leaping into a Bold New Phase Transformation Bank Muamalat Malaysia by Michael Yeo Bank Muamalat Malaysia, headquartered out of Kuala Lumpur, Malaysia, is a fully fledged Islamic Solution financial institution providing Shariah compliant Snapshot services and products. Founded by an amalgama- tion of Islamic banking assets from three legacy Organization institutions in 1999, the bank was the second Bank Muamalat Malaysia Berhad full Islamic bank to be incorporated in Malaysia. Operational Challenges DRB-HICOM of Malaysia is the current majority Total replacement of an ageing core banking shareholder, with Khazanah Nasional Berhad also system that could no longer meet both holding significant interests. The bank currently external and customer requirements – while has over 60 branches and 250 ATMs spread across still maintaining Shariah compliancy. Malaysia. Assets at year-end March 2014 stood at Solution approximately US$5.5 billion. To develop and integrate a new Shariah Bank Muamalat operates under dynamic compliant modern and future-ready core market conditions, against a backdrop of strong banking system via a ‘big bang’ approach. domestic and global demand for Islamic banking products. Being one of the smaller banks in Project Duration Malaysia and serving specific demographics in its 18 months customer base, the bank’s proposition to its existing customers has had to remain somewhat distinct Benefit to that of the largest banks. The bank’s Islamic Master customer information file (MCIF) foundations give rise to perceptions of a trustworthy in place, quicker turnaround times, reduced and socially conscious financial partner which time to market for products and reduction serves its customers with diligence and fairness in in errors and risk for the bank. Increased its proceedings. competitive standing in the Malaysian New market opportunities abound as banking market. customer-banking requirements have evolved. Over the last few years, the bank has continuously adapted to meet new customer expectations. Today, its branch-based services have given way to a multi- The Challenge Bank Muamalat’s existing infrastructure before the channel approach, with an eye on delivering an core banking infrastructure refresh was somewhat “omni-channel experience” of consistent customer unique. Being a product of historical mergers of experience across the telephone, ATM and online/ other banks meant that its mainframe core was mobile channels. These customer requirements, parked next to that of another bank. This sharing coupled with the ever-evolving industry regulations, of physical space presented an issue. While still dictated the need for a new core banking operating on separate systems and although there infrastructure. Thus began the process of searching was no sharing or intermingling of data between for the correct technology solution and partner who the banks, this situation no longer met with Bank could support them in their next phase of growth. Negara’s security and risk requirements. It became imperative that a new core banking system was needed to meet regulatory compliance and for new business growth. 10 11
25 years of Digital Transformation The previous solution was also complex in complexity and effort to this operation. Silverlake and seamlessly with no major glitches or errors its nature, having been constructed in a somewhat Axis’ previous experience with such similar encountered. Bank Muamalat, with their new piecemeal fashion over the years. In total, there implementations also added confidence that this banking business engine, is beginning to see the were 15 systems (mostly payments systems and method could be used to effectively bring systems benefits of their investment. Turnaround times related applications) which were used to run key online as quickly as possible. for day-to-day business have improved and new functionalities within the bank and fed into one Work began in 2013, and one of the major products are brought to market at a faster pace than general ledger component (GL). The streamlining issues to be first tackled were the multiple customer before. Existing products and services, which need and modernization of the GL module was thus information files being used to track and record changes to parameters, can now be reconfigured identified as another critical and prioritized relevant customer information. The bank’s previous and sent back to market more quickly. Senior component of the long overdue core banking state included a number of different systems in use management at Bank Muamalat now speaks of system update. for differing business units. Customer information clearly seen reductions in data regarding deposits, hire purchases and financing errors and loss of data – likely The Solution was kept in silos across different business units a result of the simplified and Bank Muamalat’s management took the decision to and in seven different systems. Data across banks integrated architecture that is now Senior management explore a total system refresh for their core banking was extracted and cleansed from various data in place. Bank Negara’s regulatory at Bank Muamalat system and sought the help of capable vendors. Over silos and migrated to a single consistent data requirements as well as Shariah now speaks of clearly 30 global vendors responded to their request for this file for all customers. Inconsistencies in data compliancy are now fully met. seen reductions in data “rip and replace” effort. Silverlake Axis was chosen were filtered out to leave a data resource which In addition, future changes to errors and loss of data as the eventual partner due to their prior experience would enable a bankwide consistent view into the regulation from both bodies are – likely a result of the in the Malaysian market as well as their standing in relationship that the bank has with that customer. able to be quickly implemented. dealing with the product differences and terminology Opportunities for cross selling of products as well While updating the bank simplified and integrated present in Islamic financial institutions. Silverlake as groupwide visibility of customer account risk are to meet current demands was architecture that is now Axis’ record of successful implementations with no now possible. This places the bank in a stronger the primary concern, SIIBS in place. Bank Negara’s major disturbances also stood strongly in their favor position to capitalize on growth opportunities across also takes into account future regulatory requirements as well as their history of providing comprehensive its channels as well as to more clearly act upon needs and is able to integrate as well as Shariah on-site support during post implementation phases. perceived risks and to holistically mitigate them. seamlessly with new modules for compliancy are now fully Local knowledge in this instance was deemed key The diversity of systems running in the newer technologies which may to Silverlake Axis’ success. Local knowledge both background proved to be a major challenge as arise. Bank Muamalat already met. In addition, future of conventional regulatory requirements from Bank they were all fed into one common general ledger has in place dual modules for changes to regulation Negara, and from the requirements set out by the (GL). This myriad of systems and applications both consumer and corporate from both bodies are Malaysian Shariah Advisory Council on Islamic required separate teams with different skill sets online banking and will be looking able to be quickly finance related matters. for operations and maintenance. Over time, this forward to implementing a implemented. Silverlake Axis’ solution was dubbed the situation had started to become a major barrier mobile banking application in the “Muamalat Banking Solution” with the Silverlake to integration at all levels in the bank. Costs for near future. While the bank already has business Axis Integrated Islamic Banking Solution (SIIBS) maintaining such a broad range of technology had intelligence and analytics capability in-house, being chosen as the core banking framework also become unattractive. Silverlake Axis Integrated they are also looking in the future to expand on which would drive the transformation of the bank Islamic Banking Solution (SIIBS) simplified these this capability (now made easier with MCIF firmly while still adhering to Shariah guidelines. SIIBS is workflows and replaced legacy systems with the in place). The SIIBS is able to adapt to these new built and optimized on the IBM i operating system relevant integrated modules of their own solution. business demands via its modular approach and Local knowledge of At the operational level, change was (previously known as AS/400) – a tried and tested These efforts served to streamline overall system integrate them cleanly and efficiently into the conventional regulatory also much sought after. Staff at all levels of architecture already in use in multiple major complexity and the associated possibilities of new core. New technologies as they emerge, requirements from Bank the organization who were exposed to the end- financial institutions globally. failures at the multiple interaction points in the should theoretically pose no major issue for future Negara, and from the requirements set out by user interface found that the infrastructure was The solution required 18 months of work, infrastructure. At the same time, this new robust assimilation. the Malaysian Shariah inadequate. User experience was deemed lacking spanning from 2013 to 2014. Silverlake Axis, architecture also goes much further in reducing the Most importantly, the new core has seen the Advisory Council was and its overall ability to quickly configure new or together with Muamalat, decided to implement support effort and costs which were required in the bank take important steps towards its ultimate aim deemed key to Silverlake existing products was deemed to be insufficient with a “big bang” approach. All key systems and previous state. of increasing customer satisfaction and experience Axis’ success. for the growth that the bank was looking for. At applications were to be replaced in one phase and in using these pillars to increase its market the heart of the issue was the lack of a master rather than the multi-phase approach selected by The Result share. In a hyper-competitive domestic and regional customer information file (MCIF), enabling staff to other institutions. Bank Muamalat’s smaller size The system switchover from old to new took banking environment, institutions of all sizes must quickly identify and prioritize customer information. meant that the big bang approach was optimal in place in June 2014 after 18 months of work, nine be innovative and seek new growth opportunities Data regarding the customer was still being kept in reducing disruption and effort involved in the switch separate data migration trial runs and four rounds where others may not yet have explored. For This Silverlake Axis- sponsored IDC case study separate file formats and systems which required over. A phased approach where relevant modules of operational readiness tests which tested every Muamalat, their new core has given them the (IDC #AP7919017X) was first multiple support skills sets interfering with the are turned on in sequence over a designated facet of the switch on process. The “big bang” leverage with which to meet new business demands published in February 2015 and republished here with creation of the much needed MCIF. period of time would have added unnecessary activation approach went on to proceed smoothly head on and find their place in the market. permission. 12 13
I D C Case Study 25 years of Digital Innovating on a Super-Regional Platform Transformation CIMB Group by Sui-Jon Ho and Michael Araneta Malaysia’s CIMB Group Holdings Berhad (CIMB Group) presently has one of the most far- Solution reaching super-regional operations in Southeast Snapshot Asia, with a presence in nine of the 10 member nations of the Association of Southeast Asian Organization Nations (ASEAN). CIMB provides a universal suite CIMB Group Holdings Berhad of financial products extending across retail, Operational Challenges commercial, investment and Islamic banking, Staying ahead of fast-changing customer needs while maintaining a strong market leadership in and expectations by extending banking services the latter two segments. Through the decade, and solutions beyond conventional delivery channels and into new geographical markets; the bank has undertaken a series of aggressive ensuring risk management and compliance. expansions, through both well-timed acquisitions and strategic partnerships. Solution Implementation of Silverlake Axis Integrated CIMB’s regionalization initiative has seen Banking Solution. success, with the bank having clocked in significant loan and deposit growth from key holdings outside Budget Malaysia. In Singapore, CIMB’s loans and deposits MYR1.1 billion (US$307 million) registered a 40% and 22% year-on-year growth for 2013 over 2012, while Thailand saw a year-on-year Project Duration growth of 12.2% and 8.1% respectively for the 20 months same period. As of 2014, CIMB Group had total assets Benefit of MYR391.6 billion (US$121 billion). The Group Launched its commoditized and more has been publicly listed on the Bursa Malaysia sophisticated financial products with main market for 27 years, and its current board minimal backend disruptions; projected of principal shareholders comprises Khazanah cumulative benefits valued at a total of Nasional with a 30.1% stake, the Employees MYR1.5 billion (US$418 million) over the Provident Fund (EPF) with 15.9% and Mitsubishi course of 10 years from going live. UFH Financial Group with 5.0%. The Challenge the bank embarked simultaneously on technology It is somewhat easy to credit CIMB Group’s integration projects as part of its overarching remarkably steep growth trajectory to the growth strategy. In this manner, more efficiencies opportune mergers and acquisition deals and and economies of scale could be obtained. New partnerships outside of Malaysia. However, what efficiencies and synergies aside, IT innovation is often overlooked is how new operations have played a particularly vital role in allowing the bank been successfully integrated into the bank’s to capitalize on its myriad expansions quickly, by core business, allowing it to take advantage of integrating once-independent entities into a single, efficiencies and economies of scale. coherent business operation. CIMB Group’s regional strategy is also unique Like many banks over the last decade, CIMB in another way: while many of its peers have focused Group was presented with manifold opportunities on channel expansions and regional outreach alone, and confronted with challenges brought on by not 14 15
25 years of Digital Transformation just the near-implosion of the financial industry during the global financial crisis, but on needing to The Solution purpose. To comply with the bank’s definitions of a regional operating model, the bank and its could be contained and managed through the resources of the region-wide enterprise. CIMB Group’s technology-centric approach to tackle the growth of demand within the consumer vendor partner decided in 2010 on the creation It was also vital that the first deployments business optimization has persisted since its last markets. On the latter, the bank saw a change of a customized core banking solution that was set key project management precedents, as well major restructuring exercise in 2006, from which in customer behavior and preferences with them based on the Silverlake Axis Integrated Banking as validated them, such that they could be applied the group’s full-fledged financial service practice becoming much more mobile as they regionalize, Solution (SIBS), but substantially redesigned to to subsequent rollouts. In Q2 2010, the bank first was conceived. Even the earliest initiatives by the with financial demands that extend beyond accommodate CIMB Group’s specific requirements instituted a 90-day pre-implementation phase to Group Information and Operations Division (GIOD) conventional channels and geographies. This as a burgeoning super-regional player. evaluate its country-agnostic Project Management were suitably ambitious for its time. Unlike many of brought upon added stress to its technology office In terms of both implementation and Office (PMO) framework, formalize both local and its peers which typically adopt short-term horizon with its core banking system hardly adapting to the usage, the 1Platform system consisted of two ASEAN-wide target operating models alongside planning, most of CIMB’s projects were initiated with fragmenting business requirements of the bank main components: their respective support architectures, and to a medium- to long-term focus, trading immediate and customers alike, let alone new drivers of risk collaborate with Silverlake Axis to benefits for business sustainability through management and compliance, emergence of new • A regional core: Built upon an enhanced perform critical high-level system innovation. While most programs-of-work in the channel touch-points, and requirements for less SIBS (Version 10) framework, this central gap analyses. initial three years revolved around calibration of data commoditized, albeit more personalized products. management, collection and archival systems, these system was co-developed alongside CIMB CIMB Group began its Despite the characteristic served only as the foundation for more complicated, in order to directly meet specific operational 1Platform migration in force by aversion of banks requirements for individual countries. As August 2010. CIMB Singapore in general to highly region-wide projects to come. its namesake implies, the regional core is successfully made its transition January 2009 was a turning point, as CIMB onto a simplified iteration of the disruptive projects, maintained centrally as the “single version saw the finalization of a long-deliberated core of truth.” All critical software developments core banking system in November CIMB’s technology leaders banking strategy for the Group. At that time, IT and persisted. They were to and updates are first deployed at this level; 2011 on an accelerated timeline business decision makers agreed that the bank ultimately needed to have a centralized, robust the binary files are then distributed to each due to regulatory guidelines some extent motivated by manufacturing engine capable of delivering a country for implementation, according by the Monetary Authority of the acquisition for CIMB to master data management (MDM) Singapore. CIMB Thailand’s new Thailand and the merger of standardized level of service and experience to all its conventions. core banking system became customers, regardless of market and geography. fully operational four months PT Bank Lippo and It was quite easy to perceive that the • A localized core: This alludes to the creation thereafter, and the bank followed PT Bank Niaga of Indonesia 1Platform core banking system (as it was boldly to create CIMB Niaga, which of localized capabilities for each country up on these successes with envisioned from the beginning) would prove to be the centerpiece of CIMB’s technological that CIMB Group is present in. Support for the most significant rollout of was already the sixth- endeavors for the subsequent five years. MYR1.1 local interfaces, as well as provisions for the entire initiative – that for its largest bank by assets in its compliance with domestic technology and behemoth Malaysian operations. country upon inception (and billion (US$307 million) was budgeted solely for reporting regulations are all accounted This Malaysian leg of the the 1Platform initiative, accounting for 52% of the 1Platform program involved a currently the fifth). for in these in-country business rules. amount allocated to the Group’s entire regional Technology-wise, such rules are explicitly total of five mock runs and four transformation blueprint spanning 2010 to 2015. maintained outside of the regional core by operational readiness tests before a total of nearly The bank quickly developed plans of action, utilizing SIBS “user hooks” that essentially 10 million client records were deemed ready to be with resources (both internal and external) made serves as entry- and exit-points for deeper migrated. The “big bang” migration was concluded ready. Despite the characteristic aversion of customization. The demarcation between in February 2014, with no service disruption, no banks in general to highly disruptive projects localization source codes and the regional- significant incident and well within budget. By then, (core banking projects are most disruptive, and level code libraries occurs on both a virtual MYR630 million (US$194.7 million) was attributed to CIMB’s context at that time also included economic and physical basis; when local binary files the project’s ongoing expenses. uncertainties brought about by the global financial are to be deployed, they are initially hosted CIMB Group is in the process of facilitating crisis), the bank’s technology leaders persisted. on testing/production boxes, isolated within CIMB Niaga’s migration onto the 1Platform system, They were to some extent motivated by the the database layer. which is expected to conclude by Q1 2016 and marks acquisition for CIMB Thailand and the merger of the final leg of the core banking implementation PT Bank Lippo and PT Bank Niaga of Indonesia to across the ASEAN region. create CIMB Niaga, which was already the sixth- Given its scope, the 1Platform system largest bank by assets in its country upon inception was implemented in phases, by each country in (and currently the fifth). succession. CIMB Thailand and CIMB Singapore Key Performance It was unsurprising that CIMB Group were first to undergo this overhaul. The Group’s Indicators commissioned a vendor whose geographic coverage relatively small business footprint in these countries As of 2014, CIMB Group has achieved 80% system and competency aligned with its own. Silverlake meant that both were ideal candidates for a pilot, and process commonality across all holdings Bangkok, Thailand: The 1Platform system was first implemented at CIMB Thailand and CIMB Singapore.The Group’s relatively small business footprint Axis, which already had a tried-and-tested, such that any risk, be it in operations, service affected by the 1Platform implementation. The in these countries meant that both were ideal candidates for a pilot. regionally viable solution, was contracted for this disruptions, or in the integrity of the system itself, dividends reaped from the new core banking system 16 17
25 years of Digital Transformation Looking into the Future financial enhancement for the entire region. With CIMB Group expects the potential benefits of the 1Platform core banking system CIMB Group expects the potential benefits of 1Platform’s technological and business synergies the 1Platform core banking system to become in hand, CIMB Group will emerge as a favored to become more evident in light of recent developments in the region. As the more evident in light of recent developments in candidate to support such an initiative. ASEAN Economic Community draws closer to formation, the industry has begun the region. As the ASEAN Economic Community Additionally, CIMB Group has also alluded heeding the potential for “qualified regional banking” licenses to be issued. (AEC) draws closer to formation, the industry to intentions of capitalizing on the greater regional has begun heeding the potential for “qualified data transparency proposed by the AEC. While the are two-fold, encompassing benefits for internal Benefits for customers and external regional banking” licenses to be issued – banks 1Platform architecture can already leverage on and external stakeholders. Within the bank, the stakeholders include: that conform to a set of stricter capital adequacy multi-jurisdictional data, being given the regulatory streamlined core banking system, complemented and business performance measure may soon greenlight and putting this into practice would by existing MDM disciplines have allowed the • Standardization of region-wide front-end be permitted by regulators of participating make CIMB Group, an already formidable super- bank to launch both its commoditized and more best practices leading to the delivery of nations to operate with greater freedom across regional player, well-positioned to realize its pan- sophisticated financial products with minimal consistent service experiences and near- all countries, with the goal of collaborative ASEAN “megabank” ambitions. backend disruptions. universal availability of product functions regardless of geography; The implications of this point alone are diverse: • Ability for the bank to match transactions across all product systems to a customer • Advanced parameterization rules permit though a central customer information more diverse, country-specific operation file (CIF), essentially enabling a true and risk conditions to be captured, leading “single customer view” that can recognize to a safer, broader extension of straight- and reward client relationships more through-processing capabilities across appropriately (in practice, for example, multiple business lines; a customer’s credit limit can be based • Automatic product calibrations and/or on aggregated collaterals, and interest transfer can be conducted to accommodate becomes charged on aggregated utilized individual customer lifecycle transitions; limits); • Automatic fund reconciliations for bank- • Enhanced recognition of inducements and to-customer (B2C), interbank and intra- favorable customer interaction patterns, bank (treasury), including calculations and leading to more bespoke product bundling transaction documentation; with lower cost and better incentives; • Expedited application development and • Improved Group-wide data capture accuracy rollout regimes on the regional core via using e-forms and paperless client infrastructure, leading to fewer incidences documentation; and of system versioning and technological • Branch rationalization, where client discrepancies; accounts are now branch-agnostic, thus • Support tracking and monitoring syndicated allowing them to greater flexibility in loans as lead arranger and/or participating conducting interactions otherwise limited to bank; a ‘home branch’. • Accelerated time-to-market on a product level is enhanced by much faster delivery times on a channel level, through branch and digital touch point process automations; and • Overall cumulative benefits valued at a total of MYR1.5 billion (US$418 million) over the course of 10 years from going live. This Silverlake Axis- sponsored IDC case study (IDC #AP7919018X) was first published in February 2015 Jakarta, Indonesia: Silverlake Axis’ 1Platform architecture is able to leverage on multi-jurisdictional data to and republished here with achieve its ASEAN “megabank” ambitions. permission. 18 19
I D C Case Study 25 years of Digital a Truly World-Class Core Banking System Transformation OCBC Bank by Michael Araneta and Cyrus Daruwala OCBC is Singapore’s longest established local bank, formed in 1932 from the merger of three Solution local banks, the oldest of which was founded in Snapshot 1912. It is presently the second largest financial services group in Southeast Asia by assets and Organization one of the world’s most highly-rated banks, with OCBC Bank an Aa1 rating from Moody’s. OCBC was also Operational Challenges recently ranked by Bloomberg Markets as the A technology refresh that aligns with the world’s strongest bank, an accolade that holds a bank’s transformational New Horizon vision; lot of credibility given the current financial market to improve product-to-market, to improve turmoil. synergies within the Group, and increase The bank’s consumer, business, investment cross-sell. banking and other specialist financial services Solution solutions are delivered through an extensive global Continued deployment and upkeep of network of over 500 branches and representative Silverlake Axis Integrated Banking Solution offices in 15 countries and territories, including (SIBS) as the bank’s core banking platform. more than 400 branches and offices in Indonesia operated by its subsidiary, Bank OCBC NISP. Length of relationship Since 1994 in Malaysia and since 2001 in OCBC’s subsidiary, Great Eastern Holdings, Singapore is the largest insurance group in Singapore and Malaysia, while asset management subsidiary, Lion Benefit Global Investors, prides itself as one of the largest Quicker time and lower cost to market in private sector asset management companies in terms of rolling out innovative best-in-class Southeast Asia. Its private banking services are products and capabilities in Singapore, provided by subsidiary Bank of Singapore, which Malaysia and the rest of the region. OCBC ranks among the top 5 global private banks in Asia. has become one of the most prolific sources With a dominant presence in both the of channel, product, and process innovation consumer and business banking segments in in the Asia/Pacific region. Singapore and Malaysia, OCBC is among the core bancassurance providers in Singapore and features as one of the top players in unit trust distribution, and systems at that time were rigid, and it took a home loans, personal credit, small and medium- long time (and an army of programmers) to roll out sized enterprises market and the Singapore Dollar new products and services, thus retarding time to capital market. market and escalating operating costs. Then, ongoing During the late 1990s and the early 2000s, maintenance also continued to weigh down the bank, OCBC Group quadrupled in assets and total contributing to recurring expenses and reliability customers and simultaneously, in the various issues. All these were in turn, directly affecting the applications and solutions that it has acquired over bank’s efficiency and cost-to-income ratio. the years. As such, a technological transformation and While OCBC evaded catastrophic systems refresh was in order, not only to support OCBC’s failures that seemed to have plagued some of its New Horizon strategy but to assist the bank in peers, it was accepted bank-wide that its solutions gaining sustainable competitive advantage by 20 21
25 years of Digital Transformation delivering on a differentiated customer experience, and deliver innovative products to customers with a of Group Operations and Technology, felt that it was channels, CRM, branches, workflow imagining, deepen its business presence in Singapore, and shorter turnaround time. more crucial to ensure that there was an excellent risk management, data warehousing processes craft further inroads into the rest of the region. This IBM and Silverlake Axis have hitherto integration of the core banking system with all and requirements, and took stock of its existing would for instance, equip the institution to better served OCBC’s technological requirements well, incumbent working systems internally, rather than technology portfolio, emerging business demands, expand distribution capabilities in Malaysia and effectively facilitating the account, offering post- to plug-and-play the newest best-of-breed disparate and the key implementations or refresh required. capture market shares within the Islamic banking implementation support and continually improving applications and expect these to elevate the bank’s Following this extensive study, OCBC concluded and Takaful insurance markets, grow its burgeoning on its service quality. As such, the bank did not see technology platform. that the SIBS and IBM partnership had continued businesses across Greater China, and build its the need to reinvent the wheel and invest in any To this end, OCBC conducted a holistic to integrate well with all client fronting systems private banking business through Bank of Singapore. massive core banking system overhaul as part of its internal study to revisit its technology platform (the Internet, branch, ATM and mobile distribution A technology refresh would also work to latest New Horizon strategy. Instead, OCBC’s Head in 2008-2009, where it analyzed its core banking, channels), and provided for the bank’s evolving better harness aggregated synergies and increase cross-sell and customer referrals among the various entities within the Group, including OCBC OCBC was the first to pioneer a mobile banking Singapore, OCBC Malaysia, OCBC Al Amin, Bank application to customers via the Apple iPad and iPhone devices in this part of the region. OCBC NISP, Great Eastern Holdings, and OCBC Securities. The Solution OCBC has been a client of IBM and Silverlake Axis since 1994 in Malaysia and since 2001 in Singapore. After an extensive nine month long assessment of the various options available in the market, and mapping back to OCBC’s long-term, regional, busi- ness aspirations, OCBC de- cided on the Silverlake Axis Integrated Banking Solution A technology refresh (SIBS) on an IBM AS400 would also work (Power Systems) Platform. to better harness Choosing the right plat- aggregated synergies form was a very important consideration. OCBC knew and increase cross- that a typical core banking sell and customer platform has a life-span of 8 referrals among the to 12 years. The big invest- various entities within ment aside, the solution the Group, including and the platform will need OCBC Singapore, OCBC to scale as quickly as the bank’s businesses wanted Malaysia, OCBC Al Amin, to, and do so in a secure, Bank OCBC NISP, Great robust and complaint man- Eastern Holdings, and ner. Given these ‘mission- OCBC Securities. critical’ requirements, the Silverlake Axis and IBM Power Systems combination stood neck and shoul- der above the rest, as testament from as many as 50 banks in the region that are enjoying the strategic alliance of SIBS sitting on a robust and scalable IBM AS400 (Power System) platform. The total migration for the Singapore operations from the Tandem system to a more flexible and cost-effective SIBS was completed in November 2001, well on time and within budget, allowing the bank the ability to enhance product delivery and transaction processing capabilities, 22 23
Banks that are pushing forward with core banking upgrades will have to integrate traditionally “noncore” areas such as data management and risk management. 25 years of Digital Transformation business requirements, especially as it maintains given the fact that today’s business environment a concerted focus on delivering a superior and is evolving at break-neck speed and industry differentiated customer experience and invests in practitioners need to react equally promptly to design delivery capabilities to gain a sustainable financial and competitive challenges, new regulatory competitive advantage. mandates, as well as collaborate with various While the SIBS solution framework with divisions on businesses and technology innovation IBM Power System remained the most apt system, and on introducing novel products and services to OCBC needed to execute a core banking refresh to remain pertinent in the market place. enhance some of the existing functionalities. Such a continued spotlight on technology at the front-end Essential Guidance system is crucial to the bank as it pursues its core Banks that are pushing forward with core banking focus of providing quality customer products and upgrades will have to integrate to their program of experience. The latest core banking modules that work their organization’s strate- OCBC continues to employ from the SIBS are the: gies in traditionally “noncore” Bank-wide Customer Information Facility (CIF); areas such as data management Financing or loans system to handle the complete and risk management. A truly From a business life cycle of loans from the application stage right modern core banking system will perspective, OCBC up to the settlement of these loans; and, Funding significantly scale up a bank’s or deposit system to craft new deposit products to capabilities in these two “hot” continues to excel in meet customer needs. areas for 2013 and beyond. A pro- customer centricity gram that neglects these areas and continues to The Benefits will create a run-of-the-mill core offer new locations, The benefits are principally measureable in qualita- system and represent a missed new channels, new tive terms, with OCBC expecting to enjoy operational opportunity for real banking products and new efficiencies, and quicker time and lower cost to mar- modernization. ket in terms of rolling out innovative best-in-class Core banking vendors such services to both products and capabilities in Singapore, Malaysia and as Silverlake Axis, with partners its consumer and the rest of the region. The SIBS continues to serve IBM, have responded and have corporate customers. its intended purpose by enabling the bank to service come up with propositions in increasingly capricious and challenging customers these same areas of risk and data/analytics — and better and faster than competitors. For instance, others as well, although some of these “others” this is illustrated by OCBC enjoying a first mover like social media or peer-to-peer functionalities advantage and appearing as technology innovators can prove to be more nice-to-have factors in by being the first to pioneer a mobile banking ap- the meantime. Banks need to understand what plication to customers via the Apple iPad and iPhone exactly their current and alternative vendors have devices in this part of the region. to offer in these new areas and how these fit in From a business perspective, OCBC continues the vendors’ view of what a “new core system” is. to excel in customer centricity and continues to offer Furthermore, how a vendor addresses the “what new locations, new channels, new products and is your ‘new’ core banking vision” question will new services to both its consumer and corporate help the bank in determining whether the vendor customers. From a technology perspective, they will fall victim to the supposed consolidation of the evolve, renew and build upon new capabilities to vendor landscape. stay relevant to business demands as it forges Finally, while cost blowouts and timeline ahead in the financial industry — all the while being extensions are common issues in core banking supported by proficient partners — Silverlake Axis projects, they will become more pertinent as core and IBM. banking projects regain momentum in Asia/Pacific. Beyond the ongoing core banking Projects will compete for skilled and experienced This is an excerpt from a implementation or refresh, the near to medium resources for systems architecture and core banking Silverlake Axis-sponsored IDC case study (IDC#AP term would see the operational and technology implementation, ultimately making core banking #AP772602W), “The Tale of teams focusing on its roadmap to align technology more painful than it should be. However, it is the Two Super-Regional Banks and Their Core Banking with business and on reviewing these plans on an adherence to the old but still relevant principles of Transformation,” published in September 2013, and ongoing basis to ensure that internal strategies project management that will keep banks on the republished here with are continually in sync. This is the bare necessity path to success. permission. 24 25
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