core banking transformation: a roadmap to a successful core banking product implementation€¦ ·...

Core Banking Transformation:A Roadmap to a Successful Core Banking Product Implementation

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Key reasons for new core banking solutions:

• Legacy systems do not allow banks to manage the growth in business.

• A disparate set of application components undermines the efficiency of the overall solution architecture.

• Loss of competitive advantage.• Governance, risk and

compliance issues.

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Sponsorship and Stakeholders An effective and successful sponsor: • Ensures required documentation• Is involved in the solution

selection process • Ensures management support

for budgets and resources • Seeks cooperation of stakeholders• Ensures communications and meetings

are result- and task-oriented • Monitors and resolve post-implementation issues• Provides direction and guidance from initiation to

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TOM Advantages: • Provides a holistic view of the overall operations• Provides an IT governance model aligned

business objectives • Improves processing efficiencies• Facilitates better operational

risk management • Improves the return

on investment

Proposed Target Operating Model (TOM)

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The Requirements Document

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Change Management • Changes are all-encompassing.• Processes, procedures, policies, controls, roles,

service levels and business strategies will need to be addressed and involved in the project from the beginning.

• User involvement with requirements definition and scope definition will help implement change.

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Phased Implementation Approach

Three Phases• Phase 1 - Applications operated with

minimum integration.• Phase 2 - Mission critical or transaction

processing applications• Phase 3 - Data warehouse applications, non-

regulatory applications

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Phased Approached Advantages

• Helps realize the investment from stakeholder

• Demonstrates progress by the project team and stakeholders

• Increases acceptance from stakeholders• Better risk mitigation

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Data Migration The bank must ensure:• A knowledgeable team and sufficient team

members to the manage scope. • Appropriate Data cleansing/purging from

source systems. • Data definitions of both the source and

target systems should be documented. • The mapping algorithm is made. • Business user involvement is required.• Validation occurs by Business user group. • Test scripts are required at various stages of

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System Integration• Core banking solution comprised of several

applications and interfaces.• Form an integration team for mapping end-to-

end processes.

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Testing of the Target Solution To avoid pitfalls:

1. Allow sufficient time for testing. 2. Make certain acceptance

criteria is discussed in detail.3. Define clearly the entry and

exit criteria for each testing cycle. 4. Ensure link between vendor’s software unit and the

bank’s development servers. 5. Create numerous test cases and adequate testing

cycles with sufficient time for review. 6. Plan stress and a performance tests in the production

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Testing of the Target SolutionCont.

• Third-party testing vendors– Management must ensure:• The business users are involved• The testing company supplements

the effort of the business users• The ownership of the testing phase

and the eventual sign- offs• The bank’s staff does not lose out on the knowledge

gained during the testing• The monitoring and control of the testing process work

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Production Stabilization Period

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Conclusion

Key steps in implementing a core banking system:• Sponsorship and Stakeholders • The Proposed Target Operating Model (TOM) • The Requirements Document • Change Management • Phased Implementation Approach • Data Migration • System Integration • Testing of the Target Solution • Production Stabilization Period

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Q&A Open discussion

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