Mumbai: Certainly, the merger decision of three banking entities, namely Dena Bank, Vijaya Bank and Bank of Baroda appears to be a very laborious, lengthy and complex process – and that’s an open secret.
While the central cabinet along with the Finance Ministry and the Reserve Bank of India (RBI) have approved the government’s amalgamation decision — now starts the most critical part – the execution.
The Execution Plan & Challenges
The respective bank managements will need to plan out a time bound coordination efforts and overcome a wide range of issues and challenges, including organisational style and culture, workforce, processes, and technology or IT.
Since each of these banks has their own legacies in various aspects — right from their size to business focus, operations and functioning to social culture, customers and market presence. And that’s where the merger process will require a systematic planning and execution.
“We need to work on what would be the broad contours of the exercise along with the timelines. We also need to find out what are the areas where all three banks need more harmonization,” Dena Bank’s MD & CEO Karnam Sekar had said in an interview to a newspaper in October 2018.
Bank of Baroda (BoB), for instance, is one of the oldest banks in India, with over 82 million customers and a large workforce of around 55,000. Based in Gujarat’s Vadodara city, BoB has expanded its operations across India with 5467 branches. In its 110-year journey, BoB has also established overseas operations with 100 odd branches in 22 countries globally.
Like BoB, Dena Bank is an 80 year old banking institution based in Mumbai, Maharashtra and has around 1874 branches and close to 14000 employees. Vijaya Bank on the other hand, initially was more a south region focused schedule bank but post Indian government’s bank nationalisation drive, later it became a pan India bank with 2031 branches and 15000 plus staff.
Software – A Common Yet Complex And Critical Piece
And most of these aspects are highly visible and significant from a merger standpoint but one factor that is a common thread to all these three banks is the software or IT piece. Probably, that should be the top priority besides the legal aspect in this massive merger, in order to ensure the banking services aren’t affected across all the three banks.
Having said that, the common thread that could make things somewhat easier here is the fact that all the three banks are running on a same core banking platform Finacle developed by Infosys, although the software versions are a bit different.
Bank of Baroda runs its operations and functions on Finacle 10.2 version, while Dena and Vijaya Bank both are on a lower 7.2 version. And that certainly could play as a major technical hurdle here.
“All three banks use Infosys’s Finacle core banking solution, they have different versions of the software. While Dena Bank and Vijaya Bank are on Finacle 7.2, Bank of Baroda has recently updated to Finacle 10.2,” Sekar had said in the interview. “Similarly, all systems and procedures, and product portfolios will have to harmonize as well. Other matters like branch rationalization will also be discussed.”
Dealing With Software Upgrades
Theoretically, software upgrades are not considered a major issue, provided that the upgrade is well – planned and implemented with the help of an experienced IT team.
However, when it comes to enterprise wide software upgrades, the possibilities of technical glitches, disruption of organisation’s functioning across branches and its services can’t be ruled out. And there has been such instances in the past in India and elsewhere.
For instance, Punjab National Bank (PNB) – a public sector undertaking (PSU) bank in March 2018 had to issue a clarification against a media report claiming the bank’s branches and ATMs were facing issues because of the technology upgrade from Finacle 7 to 10 versions .
The bank although clarified that there was no issue with the software upgrade but it did try to explain a a co-relation between its large data base, the bank’s size with the software upgrade process.
“Several things had to be achieved prior to the planned upgrade. Since the conceptualisation of upgradation of Finacle 10 involves a lot many activities, including several rounds of testing, end-user trainings and several rounds of mock drills to inculcate the confidence of the end user in the branches across the country,” PNB had said in the statement.
Perhaps, PNB’s statement is short but it does explain a lot things that are involved in the software upgrade process in a bank right from the conceptualisation to execution and other aspects.
Software Upgrades – Not A ‘Tech Walk’
While, PNB’s software upgrade was within an organisation, but in the case of this on-going merger that involved relatively two mid size banks with a substantially large bank, the upgrade of Finacle software is more likely to be a complex and exhaustive exercise.
The end-to-end software upgrade could easily take around one and a half to two months or even longer duration followed by the integration of different applications such as internet and mobile banking applications, other software systems and tools, security layers and web interfaces both at the back and front-end.
Besides, the bigger challenge lies in the integration of huge volumes of data base along the connecting the data centres, disaster recovery (DR) sites, networks and IT infrastructure across the three banks and also ensuring the normal functioning and services aren’t disrupted.
The time factor in this entire end-to-end software upgrade process coupled with network and IT infrastructure integration would highly rely on the size and scale of the IT team as well as the implementation partners and their competency and experience.