SBI Core Banking

Some Rights Reserved Author: Sarthak Ganguly

Project on SBI Core Banking

September 8

2010 Name : Sarthak Ganguly

Dept: Computer Science and Engineering

Roll: 071200101084

Dr.B.C.Roy Engineering College

Project on Network and

System Administration A study on the networking and security aspects of

a massive corporate network

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 and flexibility of their product offering to customers. Particularly in today’s

highly 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 such as ATMs and Internet banking, thus pioneering the

concept of Anywhere Banking, and eliminating the concept of branch banking. With features like real-

time transaction processing coming into effect, customers can experience the benefits of “real-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 products 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 embarking on the process due to a number of “pain areas” related to

the adoption and roll-out of technological platforms:

Long implementation periods

Standard banking technology software solutions were largely inapplicable to individual organizations. As

a result, the tailoring of the solution and its roll-out for the organization 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 challenge in

the environment of keen competition and slim margins. Senior management 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, absorbing technology was a challenge on its own.

Ease of training and ease of use was a critical component that determined the success or failure of any

solution.

Connectivity

Given the sheer size of the Indian market in geographic terms, it was inevitable that connectivity at

broadband levels could not be expected at every branch. The solution needed to be able to work even in

areas with poor or intermittent Internet access.

High costs

High upfront investment was in many cases an inhibiting factor for investment.

2 SBI Core Banking

Legacy systems

A large number of banks were operating on homegrown 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 Page

Core Banking, What it is

Core Banking Solutions 4

SBI Core Banking, The Beginning

State Bank of India Core Systems Modernization

Drivers for the Bank

Challenges for the Bank

Vendor Consortium Selection

Tata Consultancy Services and TCS BaNCs

Initial SBI Core Systems Modernization Project

State Bank of India Full Branch Conversion

Critical Success Factors

6

Network Architecture 13

Physical Architecture

Distributed System Components

Core Banking System Components

15

Security Architecture

Organizing Structure of IT

Enabler

Enforcer

Auditor

18

Financial Network Services(FNS)

Built and Deployed Using Micro Focus Technology 22

Benefits

Increased delivery channels

Open Technology Platform

Lowest Price Performance Ratio

23

TCS BaNCs

An Overview 25

Further Improvement 43

Conclusion 44

References 45

Bibliography 46

4 SBI Core Banking

Core Banking, what it is

Core Banking is normally defined as the business conducted by a banking institution with its retail and small business customers. Many banks treat the retail customers as their core banking customers, and have a separate line of business to manage small businesses. Larger businesses are managed via the Corporate Banking division of the institution. Core banking basically is depositing and lending of money.

Nowadays, most banks use core banking applications to support their operations where CORE stands for "Centralized Online Real-time Exchange". This basically means that the entire bank's branches access applications from centralized datacenters. This means that the deposits made are reflected immediately on the bank's servers and the customer can withdraw the deposited money from any of the bank's branches throughout the world. These applications now also have the capability 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 transaction 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 the datacenter only at the end of the day (EoD).

Normal core banking functions will include deposit accounts, loans, mortgages and payments. Banks make these services 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 prepare for growth. Implementing a modular, component-based enterprise solution ensures strong integration with your existing technologies. An overall service-oriented-architecture (SOA) helps banks reduce the risk that can result from multiple data entries and out-of-date information, increase management approval, and avoid the potential disruption to business caused by replacing entire systems.

Core Banking Solutions is new jargon frequently used in banking circles. The advancement in technology, especially internet and information technology has led to new ways of doing business in banking. These technologies have cut down time, working simultaneously on different issues and increasing efficiency. The platform where 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 different branches of bank and then interconnected by means of communication lines like telephones, satellite, internet etc. It allows the user (customers) to operate 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 system 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 general ledger systems and reporting tools. Strategic spending on these systems is based on a combination of service-oriented architecture and supporting technologies 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 number of branches; it opened its 10,000th branch in

2008. The bank has 84 international branches located in 32 countries and approximately 8,500 ATMs.

Additionally, SBI has controlling or complete interest in a number of affiliate banks, resulting in the

availability of banking services at more than 14,600 branches and nearly 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. Therefore, the bank built an extensive branch network in India that

included many branches 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 tradition of "banking inclusion" recently led India's Finance

Minister P. Chidambaram 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 the 1990s, the Indian economy began a period of rapid growth as the

country's low labor costs, intellectual capital, and improving telecommunications technology allowed

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

implemented modern centralized core banking systems and electronic delivery channels that allowed

them to introduce new products and provide greater convenience to customers. As a result, the private-

sector banks attracted middle- and upper-class customers at the expense of the public-sector banks.

Additionally, foreign banks such as Standard Chartered Bank and Citigroup used their advanced

automation capabilities 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 Systems' Bankmaster core banking system

(now owned by Misys). However, because of the bank's historic use of local processing and the lack of

reliable telecommunications in some areas, it deployed a distributed system with operations located at

each branch. 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. The local implementation prevented

the bank from easily gaining a single view of corporate accounts, and management lacked readily

6 SBI Core Banking

available information needed for decision making and strategic planning. The advantages in products

and efficiency of the private-sector banks became increasing evident in the late 1990s as SBI (and India's

other public-sector banks) lost existing customers and could not attract the rapidly growing middle

market in India. In fact, this technology-savvy market segment viewed the public-sector banks as

technology laggards that could not meet their banking needs. As a result, the Indian government sought

to have the public-sector banks modernize their core banking systems. 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. 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 project to modernize core systems included:

• 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 The bank faced several extraordinary challenges in implementing a centralized core processing system.

These challenges included finding a new core system that could process approximately 75 million

accounts daily — a number greater than any bank in the world was processing on a centralized basis.

Moreover, the bank lacked experience in implementing centralized systems, and its large employee base

took great pride in executing complex transactions on local in-branch systems. This practice led some

people to doubt that the employees would effectively use the new system.

Another challenge was meeting SBI's unique product requirements that would require the bank to make

extensive modifications to a new core banking system. The products include gold deposits (by weight),

savings accounts with overdraft privileges, and an extraordinary number of passbook savings accounts.

Vendor Consortium Selection Recognizing the need for large-scale centralized systems expertise, SBI sought proposals from a number

of vendor consortiums that were headed by the leading systems integrators. From these proposals, the

7 SBI Core Banking

bank narrowed down the potential solutions to vendor consortiums 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 favored 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 concerns about the TCS

consortium proposal. They included the small size and relatively weak financial strength of FNS (TCS

would eventually purchase FNS in 2005) and 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 required

systems modifications and ongoing software maintenance for SBI.

Additionally, scalability tests were performed at HP's lab in Germany to verify that the system was

capable of meeting the bank's scalability requirements. These tests demonstrated 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 and business process outsourcing. The

company has more than 130,000 employees located in 42 countries and achieved revenues of $5.7

billion in fiscal 2008. Although TCS has long been a leader in core systems integration services for banks,

after 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 service-oriented architecture (SOA) and is platform and database

independent. In addition to SBI, TCS BaNCs clients include the Bank of China (installation in process),

China Trust, Bank Negara Indonesia, India's Bank Maharashtra , National Commercial Bank (Saudi

Arabia), and Koram Bank (Korea).

TCS has also expanded its US footprint with the opening of its largest resource delivery center North

America (near Cincinnati, Ohio) that can house 20,000 personnel. The company is seeking license 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 compliance requirements.

Initial SBI Core Systems Modernization Project The contract for the initial project was completed in May 2002; 3,300 branches were 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 changes included installing required interfaces with more than 50

other systems as well as making enhancements to support the bank's product requirements. These

product 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 possible.

8 SBI Core Banking

Before the first conversion in August 2003, TCS and HP created the data processing environment for SBI.

The primary data center was established on the outskirts of Mumbai and a backup center.

After the second round of changes, the system and processes were functioning smoothly, and

management believed 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 conversion date to begin "mock," or test,

conversions using a specially created test version of the BaNCs system.

• Branches performed several test conversions to ensure the actual conversion went smoothly.

As the new core banking system was rolled out across the SBI branches nationwide, a special process

was introduced in the nightly batch window to add the new branches. The process increased batch

processing time approximately 20 minutes and typically included adding branches in groups 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 and local area branch managers oversaw the conversions,

and the bank's circle (regional) heads formally reported the status to the chairman's office.

By employing the assembly line approach for branch conversions, SBI was able to convert 1,200

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 Modernization (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:

• 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.

TCS and HP then conducted another scalability test in September 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 environment) with sustained peak online throughput of 1,500 transactions per second. They

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 Integrity servers for the database. The test

achieved a sustained peak real-time transaction 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 hour and 5 minutes,

and deposit processing was completed in 2 hours and 27 minutes. These benchmarks were audited by

Ernst & Young, and the test results are highlighted in Exhibit 3.

Exhibit 3

State Bank of India Scalability Test of TCS BaNCs System for Full Branch 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 uncommon at large banks and result in both financial

impact and lost business opportunities. Further, failed projects lead other banks to delay needed core

systems replacements because they measure the risk of failure against the potential benefits of a new

system.

11 SBI Core Banking

TowerGroup believes that several critical factors contributed to the success of the SBI core

implementation effort:

• Senior management commitment. The project was driven by the chairman of SBI, who met every

month with the information technology (IT) and the business sector heads. The chairman monitored the

overall status and ensured that sufficient resources were allocated to the project. TCS senior managers

were thoroughly committed to the project as well and periodically met with the SBI chairman to review

the project status.

• Staffing 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 selected by the bank.

TCS also staffed the project with approximately 300 IT professionals trained on the BaNCs system.

Importantly, the SBI business people were viewed 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

authority.

• Ownership by business heads. The regional business line heads were responsible for the success of

conversion of their respective branches and reported the status to the chairman. Thus, the business

heads' objectives were aligned with those of the project team.

• Focus on training. SBI used its network of 58 training centers across India to train employees on the

new system. TCS personnel first educated approximately 100 SBI professional trainers, who then trained

100,000 SBI employees at the centers; the remaining employees trained at their respective job sites.

12 SBI Core Banking

Customer

Stakeholders Prospects

Network Architecture Like any corporate network architecture the SBI network is also based on the principles 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 Shared Operation Centers which in turn interact with Operating Units. The Operating units in turn

interact with the associate Banks, RBI and Treasury and Risk Management. All the common input after

validation is then handled by the Corporate Office.

Internet Banking ATM Mobile

Banking

Help Desk

Group Companies

Associate Banks

RBI

ALM

Treasury

Risk Management

Shared Operations

Centers

Operating Units

Product

Development

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 processors 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 processed

and adequate modifications are made before it is forwarded to the right consumer.

OMNIEnterprise uses a full featured message queue for store and forward (SFA) processing,

whereby messages are received at intermediate routing points, recorded (stored), and then Intel

Xeon processors for superior performance and availability, protected by a firewall. The second

layer of the solution consists of a “demilitarized zone” that consists of servers that enable access to

different delivery 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 The State Bank Of India

such a structure will have limited scalability. Usually the general structure is as shown in the following

illustration.

Illustration: Distributed Systems Architecture

To overcome the shortcomings of the model mentioned above a new model based on the general one

was designed which was later implemented. Thus came CBS or Core Banking System.

Diskless

nodes

Banking Application

Operating System,

Database

Internet Banking

ATM

LAN

User Control

Officer

System

Administrator

15 SBI Core Banking

Core Banking System Components

Illustration: Core Banking System Components

One significant aspect to the core banking architecture is that only the necessary permissions are

granted to individual officers. This is done to prevent mishaps or though unlikely, deliberate hijack

attempts from within the network. The isolation of the intranet from the Internet 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 Internet but an

entirely new infrastructure altogether. This private secure network is used to relay between the nodes

at the different branches. The data flowing out 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 modified by the network

administrators but it would require the security credentials of the Chief Officer, Information Security,

State Bank of India. As a result the data security of such a network can be assured.

Desktop Branch

Servers

Banking Application

Operating System,

Database

Internet Banking

ATM

WAN,

Internet

User Control

Officer

System

Administrator

Application Developers

Alternative

Channels

Branches

Network

Administrator

Data Center

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 banking system secure

transfer of data is not only desirable but indispensable. What would Core Banking be without proper

security? It would have just become another failed and hacked network like millions of others, leading

to the loss of billions of rupees and possibly the destruction of the Indian economy. To better protect

the security a policy of crafted principle are used, which taken together are named as Information

Systems Security. It is a pillared architecture as shown in the illustration below.

Organizing Structure of IT

Enabler

Information Security Department

Assess risks

Define Policies, and develop Standards and Procedures

Provide training & awareness

Deploy & manage security products

Define security architecture for network, databases & applications: Secure Configuration Docs

Enforcer

Application Owners /Business Owners/System administrators / IT Personnel

Implement technical and procedural controls

Manage Network, servers & applications securely adhering to policies, standards & procedures

18 SBI Core Banking

Report Incidents

Act on Security Logs

Auditor

Inspection & Management Audit Dept.

Auditing compliance against policies across applications and locations

Vulnerability testing

Penetration testing

Application 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 traditionally 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 account 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 Funds transfer between a customer's own checking and savings accounts, or to another customer's account

o Investment purchase or sale o Loan applications and transactions, such as repayments of enrollments

Non-transactional (e.g., online statements, check links, co browsing, chat) o Bank statements

Financial Institution Administration - Support of multiple users having 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 accounting software. Some online banking platforms support account aggregation to allow 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 signature generation and encryption can be stored on smartcards or any memory medium, 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 are phishing and harming. Cross-site scripting and key logger/Trojan horses can also be used to steal login information.

A method to attack signature based online banking methods is to manipulate the used software in a way, that correct transactions are shown on the screen and faked transactions are signed in the background.

A recent FDIC Technology Incident Report, compiled from suspicious activity reports banks file quarterly, lists 536 cases of computer intrusion, with an average loss per incident of $30,000. That adds up to a nearly $16-million loss in the second quarter of 2007. Computer intrusions increased by 150 percent between the first quarter of 2007 and the second. In 80 percent of the cases, the source of the intrusion is unknown but it occurred during online banking, the report 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 certificates 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 based online banking variants. To protect their systems against Trojan horses, users should use virus scanners and be careful with downloaded software or e-mail attachments.

20 SBI Core Banking

The easiest method is still prevention of any infection. The clients are only disk less nodes without any CD/DVD or Flash drive. Only the server is equipped with 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 interference.

21 SBI Core Banking

Financial Network Services (FNS) FNS provides end-to-end, integrated solutions for the banking and finance industry around the world.

Headquartered in Sydney, Australia, the company addresses business opportunities across Europe, Asia

Pacific, Africa, Latin America and the Middle East through established regional offices in London, Seoul,

Manila, Jakarta, Kuala Lumpur, Hong Kong, Dubai, Santiago and Johannesburg.

From 27 January to 21 February 2003, a multi-disciplinary team worked to demonstrate the scalability

and performance of the FNS solution, BANCS®, within a Windows server environment. Traditionally,

COBOL- based critical banking software such as BANCS, runs on 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 Matheson,

product development manager, Delivery Channels and Windows at FNS. “However we wanted to

quantify and validate that performance using rigorous and controlled conditions where the application

and architecture could be pushed to their limits.”

The BANCS solution automates core banking functions such as deposit processing, loans processing, loan

workflow management, contingent account processing, cash accounting, electronic file transfer (EFT)

witch management, department collection and other automated banking transactions integrated across

ultimo- delivery channels. For the benchmark, only the deposit and loan processing modules were used.

The target was to reach workloads of 500tps (transactions per second) under Online Transaction

processing conditions and 10 million accounts per hour under Batch Processing conditions using a

Microsoft SQL database populated with 12 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-processor 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 built using the Net Express COBOL development

environment and component business object techniques. Written in COBOL with millions of lines of

code, FNS’ solution is easily portable across platforms such as mainframe, UNIX and Windows and is

interoperable 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 customers and the

employees of SBI. For example, the new core banking system has allowed the bank to redesign

processes. It established 400 regional processing centers for all metro and urban branches that have

assumed functions previously performed 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 for all of India's citizens.

Implementation of the TCS BaNCs system has provided the bank with the ability to consolidate the

affiliate banks into SBI. In fact, the bank recently completed the consolidation of State Bank of

Saurashtra into SBI.

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 bank to undertake several new initiatives to further

improve service and support future growth. These initiatives include the deployment of more than 3,000

rural sales 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 productivity 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 providing n-level parallel processing) and multiple integrated

banking modules, banks can provide faster approval of loans, credit cards, balance limits, etc.

It is certified and tested to support more than 150 banking transactions per second. When operating on

servers running on powerful Intel ® XeonTM processors, the Enterprise solution maintains a significantly

higher mean number of transactions per second.

Increased delivery channels

Deploying the multi-channel EEnterprise solution means that the bank can offer a number of its services

through different, non-traditional delivery channels to the customer aside from its branches. These

include Internet banking, ATMs and mobile banking, to name just a few. In-depth customer

understanding with its holistic view of customer interface history with the bank, the Enterprise solution

gives banks a better view of the customer’s banking needs, and allows them to offer personalized, user-

friendly and intuitive service packages to its customers.

Standardized business processes across the system

The Enterprise solution is built around the modular Enterprise: step architecture 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 other solutions

since it runs on the universally accepted Microsoft* server operating system. In addition, the solution is

based on industry-recognized Intel architecture which is constructed for modular deployment. Hence,

adding new modules and 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 supports both Linux and Windows

architectures. As a result, it is easily integrated with most legacy equipment and systems. Its industry-

recognized Intel architecture and universal compatibility allows banks to effectively reuse their existing

assets – whether software, hardware or systems.

Lowest price performance ratio

Intel ® Xeon™ servers featuring Intel Net Burst ® micro architecture and Hyper- Threading 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 Microsoft 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 can

easily be upgraded or merged with future technologies.

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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 affiliate banks represents the largest centralized core system implementation ever

undertaken. The overall effort included the conversion of approximately 140 million 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 $250 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 international branches located in 32 countries and approximately 8,500 ATMs.

Additionally, SBI has controlling or complete interest in a number of affiliate banks, resulting in the

availability of banking services at more than 14,600 branches and nearly 10,000 ATMs.

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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 connected 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 through

satellite connectivity or SMS Banking. Mobile Banking has only recently started 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 network

requires a lot of effort. Billions of transactions are handled every month 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 customers through SMS and Mobile Banking as well as

TV cable Banking. Some of the features are already being implemented but will take time to grow and

develop.

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Conclusion The implementation of the Tata Consultancy Services (TCS) BaNCs system at the State Bank of India (SBI)

represents the largest core systems project ever undertaken. The success of this project should

encourage other large banks to begin projects to modernize their core systems.

The use of a UNIX-based platform to process more than 100 million accounts daily demonstrates that

tier 1 banks can use a mainframe alternative for their core processing. Although TowerGroup expects

that the majority of these banks will continue to rely on the IBM mainframe for core processing, they

can fully consider the benefits of utilizing a UNIX-based platform.

SBI's achievement demonstrates that attention to critical factors is crucial 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. Management 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

operations 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 service.

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References

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

Robert Hunt, Senior Research Director, Retail Banking, TowerGroup

“Next-generation Universal Banking: State Bank of India”

Cisco Enterprise Solutions

“End-to-End Core Banking Solution for Competitive Advantage”

Solutions White Paper, Infrasoft Technologies

“Customer Satisfaction Vs Service Quality”

A. Krishna Kumar, Deputy Managing Director (IT)

State Bank of India

6th Banking Technology 2010 Conference & Banking Technology Awards 2009

January 28, 2010

“EXPERIENCE IN IMPLEMENTING SECURITY MEASURES AT SBI – A CASE STUDY”

Patrick Inshore

General Manager (IT) & Chief Information Security Officer

State Bank of India

Online Banking and Security

http://en.wikipedia.org/wiki/Online_banking#Security

Secure Banking Solution

http://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/wiki/Core_Banking

Financial Network Services

Micro Focus

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Bibliography

I thank my teachers for their guidance, my parents for their support. Without their active

encouragement this project report would never have come to fruition. I also thank all the corporate

personalities who have contributed to this project. A special gratitude I reserve for the staff and officers

of State of India, Asansol Main Branch for allowing me to work.

In the same vein I must mention Google for having such a wonderful search engine, Wikipedia for their

superb content and the White papers mentioned in the References Section.

To all those concerned, I thank you.

This project is released under the GNUv3 License.

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