Posted by: imranadeel | February 16, 2009

Challenges to the Core Banking Solutions Implementation Projects – 1

Pakistan has seen a lot of banks going for new core banking solutions in the recent past. The top scoring companies here are:

  1. Temenos T24 (Seven banks)
  2. Sungard SYMBOLS (Three banks)
  3. Misys (Two banks)

And Pakistan is not the only country in the world going for such solutions.  Banks in the Mid-East have also procured the same core banking solutions to offer a wide range of services to their customers, using the newly built integrated information systems.  Using the legacy systems, this was only a distant dream.  Consumer financing, based on the rapid increase in the number of affluent and the middle-class, forced the banks to opt for better systems and not rely on their current legacy applications – rather an archipelago of applications.

Enter these new applications – or their new versions, and the business folks were loving these apps from the word go.  There are not many vendors and implementers of such solutions, so we can be sure that they would be very very stretched for delivery.  There are tons of things that need to be changed in the basic shrink-wrapped CD/DVD.  For an Islamic country, things like deducting Zakat (annual obligatory charity of 2.5%) are not available, and the systems need to be modified.  Such modifications are done typically by some local vendor, who is implementing the solution at the bank.

And then you start seeing the problems.

Lack of Knowledge about the Proprietary Technology
Implementing people are not aware of the application and its underlying technology; they try to execute things based on what they learnt in college, using C# or Java.  Most of the core banking solutions don’t use any of these tools and platforms.

Lack of Knowledge about the Proprietary System
Implementers were not there when the application was built/engineered.  They thus do not have the idea of things under the hood.  That lack of knowledge poses a significant threat.  Though the application vendor trains its implementation partners, it is obvious that they cannot train a large number of engineers of the implementing company.  Also, the application vendors are stretched themselves for delivery, and cannot spend much time away from implementations and developing next versions/fixes/patches of the applications.

No QA Process
Due to stringent timelines and over-stretched resources, the implementers do not find it worth the while to have a QA process to ensure delivery as per the set standard; supposing that there were any defined standards at all.

Scope Creep
Scope creep occurs from the business users of the banks, as they do not have much idea about the new application, and they are used to the older application.  When they see things happening, that’s the time when they realize that they didn’t want things that way.  That brings us to the next point.

Customizing towards the Previous System
Business users can actually make the new system look, feel and act like the old system.  Worse, they may do it completely unaware.  Therefore, this question must be posed at them time and again, so that they double-check everything before they ask for it.

Unrealistic Timelines by Banks
Banks can set unrealistically ambitious timelines for the project completion.  We have seen projects running into many years of delay due to any of the reasons we’re discussing now.  Somehow each bank thinks that it has assessed the right timeline, and that it can handle things better.  But as we know in the IT world, it is either late or it’s not functioning.

Unrealistic Timelines by Implementers
To beat the competition and win the order, the suppliers of banking solutions also agree with the aggressive and unrealistic timelines – timelines that even they know cannot meet.

Lack of Implementation Resources (Functional and Technical)
Lack of resources hits the suppliers/implementers very hard.  There are a lot of banks going for such solutions; locally as well as internationally.  This brings the workforce exposed to offers from around the world.  In the case of T24, we have seen offers being extended to people who even mention the word T24 in their LinkedIn profiles.  And since the banks in Singapore, Hong Kong and the Mideast pay in USD or AED, people from Pakistan and India find it very attractive to opt for such assignments.  The local employers try to mitigate this risk by forcing the employees to sign three-years bonds with their staff before training them, but this doesn’t help much, as the new employers are happily willing to pay their remaining period’s salary to their current employer; afterall, they have to save their face in front of their client bank(s) who would be paying much higher than a bank in Pakistan would to a local implementer.

Subjugating Conditions on Consultants/Engineers
Consequently, the implementer imposes such restrictive conditions on its people that many feel disgruntled and mistrusted.  They look out for a chance to get out of there, and they usually take that too.

Cash Burnout Due to High Salaries
To counter that brain-drain, the implementer then offers high salaries to keep people on-board.  This salary is close to or equal to what an employer would offer in the Mideast or Far East markets.  This obviously strains the profitability and cash flows of the implementing company, and the management loses interest in the project.  This further fuels the downward spiral of the implementation project.

    To be continued…

    This blog is also available at



    1. […] Imranadeel’s Blog Just another weblog « Challenges to the Core Banking Solutions Implementation Projects – 1 […]

    2. […] This is a sequel to my previous entry, titled “Challenges to the Core Banking Solutions Implementation Projects – 1.” […]

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