SOMNATH MENON, THE GROUP CHIEF OPERATING OFFICER AT AL AHLI BANK OF KUWAIT
Digital transformation is more than adding a software wrapper for a new digital channel or digitising parts and pockets of an organisation or business. Truly digital transformation requires a cohesive and holistic approach that makes a bank ready for the digital channels of the future, equips a bank with the required agility to respond to market changes, and helps a bank tap into new possibilities, while ensuring minimum disruption to business.
What was ABK’s vision that led to the massive technology transformation programme? Were there specific challenges that made the move necessary?
ABK has historically operated using a large application footprint, including many vendors for different products, in addition to many other home-grown systems. Most of these were on ageing versions, many more than even 15 years old, needing an urgent revamp.
In line with its drive towards simpler banking and a futuristic digital focused outlook, ABK embarked upon its technology transformation programme. The bank was looking for an integrated solution as opposed to upgrading the multiple disparate systems to their latest versions. After a detailed evaluation of three leading industry players, ABK chose to partner with Infosys and implement the full suite of Finacle Core Banking platform.
The Finacle implementation included the entire integrated set of modules covering CRM, loans, deposits, trade, treasury, payments, mobile banking, retail and corporate internet banking and loan origination.
This transformation was not restricted to the Core Banking System alone—it also included building the infrastructure for the future with a new middleware from IBM and also the Finacle Operational Data Store from Infosys for data analysis and reporting. The most important reason for ABK to embark on this huge transformation project was the need to start with a robust and stable core system, which could work nimbly with the ever growing and dynamic technology environment.
ABK wanted to increase digital banking-led business growth with a digital engagement solution suite to make banking simpler and more intuitive for our customers, while ensuring security.
ABK wanted to enhance both its online and mobile banking experience with new features such as cardless withdrawal, unified login credentials, mobile bill payments and iTunes card purchases, biometric authentication for Android, touch ID for older Apple devices and Face ID for iPhone X, instant pay, and recurring and scheduled transfers.
All these features are now available and in addition, the Finacle Mobile Banking Solution helped ABK make its mobile banking more convenient and secure.
Banks adopt different kinds of digital transformation agendas. In your opinion, what are the important aspects of a technology transformation?
The ABK journey can be best described as an example of a text-book core banking transformation, even on a multi-country scale.
The governing rules that defined the programme were—limit customizations; minimise service disruption; freeze enhancements to the legacy system. These three rules governed every aspect of the programme. It was imperative to complete the rollout within the timelines agreed and below the estimated budget.
The teams worked to ensure minimum/no effort overrun with optimum automation, proven methodologies, clear definition of scope to prevent scope creep and significant change requests, and strong governance for timely action. Transformation projects of this nature require buy-in, governance and monitoring. The buy-in from all parts of the bank is essential and cannot be seen as a technology initiative only.
To achieve this, a cross functional core project team, representing all business areas, support and operation units was set up to drive and incorporate all system functionalities. A multi-layered Governance system was built through different committees, from the ground right up to the Board levels. This enabled constant monitoring of the project, with agile problem resolution and quick adaptation to market and regulatory changes.
ABK works with all suppliers as partners and not as vendors. The precursor to choosing a partner is a systematic evaluation and verification process, with adequate proofs of concept and if necessary, reference calls/visits to earlier clients.
Once a vendor is chosen and terms are agreed, then ABK works with them as partners, with the clear understanding that the bank’s success is their success and so there is great motivation for everyone to complete the project successfully. One of the unique governance models that ABK implemented was the Partner Steering Committees (PSC).
The PSC was held every month, where the senior management from all the partners were present and the progress of the project was reviewed. The objective was to jointly agree on the solutions for any roadblocks to progress and ensure a clearly defined RASCI (Responsible Accountable Support Consult Inform) for all the partners involved.
This has been hailed as a very fair and progressive model by all partners. According to one of the studies, there are 350 plus new technology transformations that are signed up every year globally. However, less than 20 per cent of them reportedly get to declare a within-budget, within-timeframe successful rollout, delivering the business benefits that have been committed.
ABK achieved the entire transformation well within budget and the agreed timeline, which we understand is rare in the region. The underlying principle for this large transformation project is best described by an old adage of the English army—Seven P's—Proper Preparation, Planning Prevents Painfully Poor Performance.
How have things changed since the modernisation, in terms of ease of use/ cost savings/benefits to customers?
The positive impact that the technology transformation has had on its customer base is perceptible. The active subscribercount of the internet banking platform doubled within six months of the launch.
A few immediate benefits that customers got to experience post rollout include: single registration across channels; card-less cash withdrawals; instant pay P2P services; and integrated corporate internet banking for cash management, payroll uploads, liquidity management, trade finance.
As part of its standardisation initiative, ABK’s Egyptian subsidiary also migrated to the Finacle internet banking platform, and the UAE subsidiary launched the internet banking channel. As stated earlier, ABK had a large, varied and fragmented application landscape.
The consolidation of 79 different systems to Finacle suite of products with a multi country deployment helped the bank save 33 per cent infrastructure costs. The bank has also been able to drive a faster time to market for its new product launches, higher levels of straight though processing, reduced manual intervention with better controls, real-time monitoring of limits, consolidated cost centrebased reporting, and a higher degree of customer satisfaction.
Two big initiatives which are widely appreciated by the online and mobile banking customers are the ‘global view’—which allows a customer to view all their accounts with ABK across geographies with one login; and the ‘limitless account statements view’—which allows the customer to see all their transactions right from the date of opening their account with the Bank.
Looking to the future, how do you see the digital aspects of banking evolving? What are your technology focus areas for the next five years given your larger vision for the bank?
Customers are always looking for convenience for all their banking needs, and we at ABK are focused on growing the customer experience.
Digital banking allows customers 24/7 access to their accounts. As the world moves towards the Internet of Things, banking will have to transform to embrace new and emerging technologies, drive greater self-service and enable customers to perform more and more transactions without manual intervention.
This means banks will have to quickly accept and adapt to the changes to meet the customer expectations consistently and effectively. ABK has adopted the concept of making banking simpler. The bank constantly enhances its technology and adapts its processes and practises to drive simpler banking which reflects in the interactions customers have with the bank.
With a robust and updated core banking platform, ABK is now set to accelerate its digital journey. Our digital strategy for the next three years is called “A2 B2 C2”—Artificial Intelligence, Automation, Blockchain, Big Data, Cloud, Cybersecurity. Robotic Process Automation (RPA) has been launched for a number of processes and is growing.
We are now live on the Blockchain platform for payments and working on other blockchain initiatives. In fact, we have a large number of initiatives against each of the digital strategy objectives that will be implemented over the next few years. As early adopters of digital technologies, we are always striving for techdriven excellence so that our customers get the best experience from ABK.