Bank-in-a-box: An innovative, easily deployable solution that is revitalizing the banking sector

By: Ramaswamy Venkatachalam is the Managing Director of FIS, in India and South Asia

In its early days, the bank-in-a-box solution was primarily deployed by non-banking financial institutions that wanted to transition from a lending only model to a deposit-taking firm. Even until recently, it was considered a good option for small banks that did not have the capability to master the complexity of integrating multiple technologies and solutions. However, new banking formats and increasing competition, customer expectations, and regulatory requirements have pushed banks to enter the market quickly with the right customer solutions. As a result, large banks are also adopting the model and working with strategic partners to retain a sharp focus on their core business.

The bank-in-a-box is an integrated solution set that supports the transformation of core banking operations using a service provider or third party developed interface. It is scalable and cost-effective, and includes internet and mobile banking, deposit and loan products, payment solutions, ATM and POS switching, regulatory and MIS reporting. The software can easily be used by non-IT specialists to develop new products. The suite acts as a complete technology solution spanning across multiple delivery channels, between front- and back-office, including reconciliation and settlement.

Typically, the hosted core banking platform (based on the SaaS model) is provided by the application service provider. This could take the form of cloud-based hosting or on-premise hosting services. The solution includes infrastructure maintenance and support including hardware, storage, networking, security, audits, etc., in a dedicated or shared environment. The bank-in-a-box service provider also monitors the technology infrastructure health, based on the bank’s policies and takes preventive and corrective measures as required. Front/back office support including a centralized contact center, and voice and back-office operational support are also provided. This includes technology support to automate customer-focused business, transaction and payment processes.

A pre-mapped form solution reduces the total cost of ownership, providing cost certainty to clients, ultimately adding value to the product. This also provides a baseline to help expedite future implementation costs and timelines.

Institutions that can benefit from the bank-in-a-box model

Small finance and payment banks are making a foray into the Indian banking sector. With a small investment capital, these institutions can greatly benefit from the bank-in-a-box model. Through the SaaS model, they can not only avoid high capex costs but also optimize technology investments, thus achieving high growth with low customer acquisition cost.

Non-banking financial institutions (NBFCs) looking at venturing into the deposit-accepting segment can also benefit by deploying this model. It enables them to enter new markets without large-scale investments in technology, human resource, etc.

Small co-operative and regional rural banks (RRBs) can leverage the bank-in-a-box solution provider’s expertise and economies of scale. They can easily scale up or shift operations in-house as their business expands.

Large commercial banks can also benefit by incorporating the solution suite and focusing on their core business. They can easily leverage opportunities in regional expansion and shift to new markets more nimbly as compared to the traditional expansion method.

Organizations that have got the new paradigm right

Globally, many financial and non-financial institutions such as cooperative banks and lending institutions have benefitted from the bank-in-a-box solution. They have successfully implemented solutions that are a combination of core banking, channels and payments. In the process, they have been able to enhance their business value and increase their customer reach.

The solution set enables financial institutions to improve sales and service processes in the branch, call center, and back-office operations, helping increase revenue growth, efficiency, productivity, and customer loyalty, while controlling total cost of technology ownership. Some of the other benefits it delivers include:

Increased speed to market (generally six months )

Minimized up-front capital expenditure with click rate pricing

Enhanced cost synergies out of acquisitions providing early cost/income improvements

Reduced regulatory investment overheads and time to market for product offerings

Significant operational efficiencies through outsourced transaction processing

Lower costs on the launch of niche products

Containing costs while accelerating time to market

Thebank-in-a-box is an innovative, low-cost, and easy to deploy solution that enables financial institutions to adapt their business needs to the capabilities provided by the solution. The business value offered by bank-in-a-box solution providers includes:

Implementing a solution where a significant portion of assets is owned by the service provider

Delivering low cost processing by leveraging the service provider’s economies of scale

Deploying a repeatable model to enable expansion of product range and footprint

Accelerating performance and compliance

Delivering a strategic roadmap aligned with the bank’s business goals

According to Suveer Kumar Gupta, CEO and MD, Shivalik Bank, their bank has been working with FIS, a leading global provider of the bank-in-a-box solution. He highlighted that his bank is pleased with the ease of configuration and use. This solution provided interoperability and scalability, and supported their expansion plans and strategy for introducing new products and services, while enabling effective compliance with regulations.

Foster growth in new markets and consumer segments with a lean, agile solution

In light of increasing customer expectations and competitive pressures, banks are looking at deploying solutions that are tailored to their unique business needs. Deploying bank-in-a-box solution enables financial institutions to provide solution-based banking services at reduced cost. These solutions are customizable, cloud-ready, flexible and easily scalable, with an agile customer-facing system. Banks can leverage them to divert their teams and funds from operations towards innovating and enhancing service capabilities. With an end-to-end integrated solution, financial institutions can be more nimble in exploring untapped and un-banked market segments and improving their top and bottom line. Moreover, with the rising number of mobile devices users, financial institutions can use bank-in-a-box solution to extend their services through the mobile channel. This would not only ensure cost savings for the institutions, but also help reduce risk.