The past, present and future of Indian banking
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The past, present and future of Indian banking Written by Wedaeli Chibelushi Produced by Mariana Lee
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Business Review Asia takes a look at the bank’s latest technological investments
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T
he State Bank of India has been a mainstay of Indian banking since 1806. At the grand age of 210, the public business services company has developed tens of thousands of branches and ATMs across the country. It’s renowned nationally and globally; Forbes lists State Bank in its Global 500, while the International Business Times calls it “easily India’s biggest bank”. Domination doesn’t stop State Bank from subverting traditional banking practices. The bank’s technology experts pay close attention to the changes in the fintech business services sector, and discover how developments can be deployed at the State Bank. “Digitisation”, “public cloud”, “data upgrade”, “biometrics”, “digital wallet”: some of the resulting terms when we research the bank. CTO Shiv Kumar Bhasin joined State Bank around two years ago, and has led the bank’s digital transformation ever since. Essentially, he brings the bricks and mortar to the bank. With 21 years of IT experience, past jobs at Barclays and Fidelity Services and a discernible passion for digital innovation, Bhasin is the ideal person for the job. When he started about two years back, Bhasin created the technology where programmes were conceptualised. From there, he has been driving the business and technology to further implementation of these plans. This has led to him working with the bank’s technology teams to get a selection of platforms carried out. Subsequently, he has been involved in how the entire architecture of the bank should look once all these platforms are made available.
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Banking on a Private Cloud for Agility and Scale
State Bank of India (SBI), with a 200 year history, is the largest commercial bank in India. Its origins trace back to 1806 when Bank of Calcutta was established. The SBI group today consists of SBI and five associate banks. The group has an extensive network, with over 22000 branches in India and over 190 offices in 38 other countries across the world.
Challenges • Reducing physical hardware footprint while ensuring rapid delivery of IT services • Standardization of the operating environment • Holistic view of the virtual infrastructure
sOlUTIOn • A private cloud that helps address high-volume pan-India transactions such as the LPG subsidy and Jan Dhan Yojana efficiently and cost effectively
ImpaCT • Significant reduction in operational costs and physical hardware footprint • Cloud-enabled IaaS that caters to various Line of Business requirements • High availability, scalability and reliability for business-critical applications
“SBI isn’t just the largest bank in India. Our work for government requires us to enable large-scale, Pan-India, and extremely critical initiatives like the LPG subsidy, Jan Dhan Yojana and providing a bank account to every Indian. We need to reduce our hardware footprint and VMware allows us to run these critical operations on a virtual platform. The ROI is commendable.”
sanjeev Khanna SBI, GLOBAL IT CENTRE
Cloud
Delivered with VMWARE vCLOUD SUITE® VMWARE SITE RECOVERY MANAGER™ VMWARE NSX® VMWARE vSPHERE® ENTERPRISE PLUS EDITION™
Network overhaul One such project has been State Bank’s network upgrade. Prior to the transformation, the bank was operating out of a point-to-point network, wireless links that connect two locations together through line of sight. Bhasin and his team have upgraded each State Bank branch to a 2mbps primary link. The transformation was large; it involved 85 percent of 2500 retail outlets which the bank
has across the country. One of the largest branch networks was running out of 64 kbps in the line. These network changes have improved efficiency at State Bank branches. Customers are being served faster and bank applications have become more responsive. Through State Bank, customers can now book a loan in 13-15 minutes. Previously, they’d have to wait 45 minutes to do this, and that timing would only be in a good branch. In some branches,
293,459 The total number of Employees at State Bank of India
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www.hpe.com What impact do you think the digital transformation wave will have on Indian enterprises? Digital transformation is changing the way Indian enterprises conduct business and satisfy their customers. The entire landscape of businesses is undergoing a massive change and everything is making a shift towards becoming mobile. Today’s average customer, is much more informed and demands more options than ever before. This is because of the digital wave which is transforming the way information moves and is used.
Digital technologies create an impact on businesses in three ways. In fact, these three ways define the core pillars of digital transformation and its interaction with enterprises. The approach we use drives these key outcomes for customers. First, we have the generation of new and enhanced customer experiences, which often also develop competitive advantages for many organisations. It lets you deliver products and services swiftly and securely, with an exciting and innovative user experience. An aroundthe-clock agility, real-time fulfillment, global consistency, and zero errors give
Som Satsangi - VP & GM, Hewlett Packard Enterprise India Take the example of Ola and Uber, which have not only changed the taxi services industry, but are also leaving a dent on the car manufacturing industry. As more consumers are opting for cabs instead of purchasing their own vehicle, it becomes crucial not only for the immediate industry, but also for bordering industries to understand how they can match up to today’s digital landscape. This ripple of the digital wave reaches all industries with different challenges and opportunities. What are the core pillars that digital transformation stands on
an edge to brands and let them exceed increasing customer expectations. Secondly, we have the creation of new product and service offerings – there are numerous products that are developed only because of the movement in digital and we are all surrounded by these. Digital transformation, inherently, leads organisations towards both technical and business innovation. Finally, there is an elemental operational efficiency. Being digital introduces you to enhanced interactions amongst customers, suppliers, stakeholders, and
employees. Digital workflows always tend to be faster, smoother, more secure and cost effective. They also lead to better decision, product, and operations management. How is HPE assisting businesses in taking their digital endeavor to the next level? HPE is built on a rich and ever expanding heritage of innovation, and pioneers the understanding of how IT systems interact and empower enterprises. HP is committed to enabling companies as they evolve into a digital enterprise through four key “transformation areas”. These are transformed to a hybrid infrastructure and respond to business needs faster than competitors. They combine all elements of your infrastructure and workflows seamlessly, maximising the performance, cost and effectiveness of the services you deliver. Then we focus on protecting your digital enterprise. We enable workplace productivity for richer digital and mobile experience to all stakeholders and customers. Finally, we empower the data driven organisation through analytics and insight driven business decisions. How is HPE aligned with SBI’s digital transformation journey? HPE has been a trusted technology partner for SBI for more than a decade now. Currently, SBI handles 500 million accounts and has a growth plan to reach 2 billion accounts through digital transformation. HPE, with its path-breaking hybrid infrastructure solutions, is aligned with this vision. Our objective is to help SBI in enhancing their customer experience and streamline their operations by using robust IT infrastructure comprising of HPE superdome servers and storage solutions.
HPE Vision Be our customer’s trusted advisor and the industry’s leading provider of hybrid IT solutions; built on the secure, next-generation, software-defined infrastructure that will run customers’ data centers today, bridge them to multi-cloud environments tomorrow and enable the emerging intelligent edge that will power campus, branch and loT applications for decades to come.
customers were not able to book any loan at all during the working hours. The results of the transformation are available for all to see. Customers are physically able to note the changes that have taken place within the bank’s network. To support the network, State Bank is building what could become of the largest private clouds in the banking, financial services and insurance (BFSI) industry. Bank applications will be hosted on a commodity hardware, and the bank has developed 15,000 virtual machines (VMs) and various other critical applications to serve wealth management customers and financial inclusion applications. Branch servers are currently hosted at 25,000 outlets. The company is moving those branch servers from each branch to a data centre. Each branch server will be hosted on the private cloud. State Bank is looking to achieve this target by mid-2017. Bhasin is also working on a transformative programme to deploy a Microsoft public cloud. The State Bank of India will have collaborative tools like Skype, Skype Chat, Skype video call and Yammer to replace WhatsApp. Being a financial service, the bank can’t use a public messaging service for exchanging any public information.
‘The State Bank is moving those branch servers from each branch to a data centre. Each branch server will be hosted on the private cloud’
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Connected | Disruptive | Digital In the increasingly connected and digital world. Tech Mahindra is partnering with Banks, Financial Services & Insurance companies (BFSI) to disrupt conventional process into customer centric business models. With the customer at the core, we enable relevant customer experiences and relationship journeys through Digital Transformation and ensure unparalleled Operational Excellence for the BFSI of the FUTURE. Connect with Tech Mahindra to learn how BFSI industry need to analyse the impact of digital disruption through 3 lenses – Products, Data & Services, Business Operating Models and Business Process Automation – and identify concrete measures to transform & thrive in a digital world.
Infrastructure changes The bank aims to achieve a serviceorientated, minimal management architecture. However, the transformation requires initial physical infrastructure changes. For instance, updating the ATM network requires significant human effort. If the bank is to make all these changes, a person has to visit each and every kiosk. That is a very large transformation. The State Bank of India is looking to deploy a very large switch in infrastructure to make the
existing infrastructure more resilient. Any physical strife will be worth it – after the transformation ATM screens can be updated and various applications will be deployed in the ATM kiosks. This will result in an intimate, dynamic ATM experience for State Bank consumers. Due to improved technology, the switches will take less time than previous ones. Customer experience Bhasin traces State Bank’s technological efforts back to one
‘Customers are being served faster and bank applications have become more responsive. Through State Bank, customers can now book a loan in 13-15 minutes’
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41 BILLION The annual revenue in US$ State Bank of India
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core value: customer service is our priority. The bank respects its customers and fellow associates and vows never to take the easy way out. State Bank wants its customers to receive a swift, yet comprehensive service. Bhasin’s team is working to create a digital bank where the customer doesn’t need to have any human interaction (apart from some regulatory requirements). This digital bank will have a financial support store marketplace digitising the bank and back office processes end-to-end. The paper will be taken out of the processes and end-to-end the processes will be fully digitised. Currently, the bank doesn’t have bespoke customer relationship management software, but developing it is part of Bhasin’s transformation plan. The State Bank is deploying a CRM software across the bank and also across its subsidiaries, such as insurance and SBI Capital Markets, SBI General Insurance and SBI Life Insurance. Bhasin’s team hope to achieve this target by mid-2017. Cyber security To State Bank, improved customer service is synonymous with increased security. The bank is quite conservative about security. It uses very advanced levels of firewall, as well as intrusion detection systems, various antiviruses and malware detection softwares. State Bank has an advanced level of security operation centres
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which monitor more than half million events per minute. These centres capture every perimeter device which detects observed cyber-attacks in the Indian sub-continent. Not only does State Bank have a rigorous internal security network, it works with the Indian government to receive early warnings of any untoward activities which are experienced by others that could happen to the bank as well.
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Overcoming obstacles Existing in the public business services domain and affiliating with the Indian government comes with challenges, as well as advantages. The State Bank has to follow a plethora of public business services rules which are very bureaucratic. State Bank has expertise in technology. Most of these people are bankers who have taken banking jobs and moved into technology. Bhasin’s
team is very small, but have huge expectations. How will State Bank overcome this challenge? It plans to set up a separate IT subsidiary in the future so that the market competitiveness in the IT section of the bank can be maintained. State Bank is a 200+ year old bank - running a large network of outlets makes it very difficult to be agile and nimble, but it is trying very hard to make that happen.
Future fortunes The first phase of the transformation will be complete by the middle of next year. By that time, the bank will have its entire network and infrastructure upgraded. Bhasin has huge aspirations for the bank –he wants it to be modernised, digitalised and working on blockchain by 2019. Technology keeps upgrading itself and things are very fast paced. Every six months technology is changing, so State Bank will keep upgrading in these areas.
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www.sbi.co.in