Indian Bank goes aggressive on digital transformation

PSU banks, once considered as laggards in adopting newer tech is increasingly taking a progressive approach in adopting cutting edge IT. While private banks are way ahead in terms of technology adoption, the PSU ones are breaking away from the traditional and conservative mindset in sourcing new technologies. The Internet has redefined banking and with most of the banking now becoming ‘self-service’ either through a net or mobile banking. Clearly a bank today is a huge technology organization and very little room for a conservative approach.

Indian Bank, one of India’s leading PSU banks is taking an aggressive approach in adopting new technologies. In a recent interview to DATAQUEST, Sanjeev Sethi, AGM, Indian Bank, walks through the bank’s IT organization, its sourcing approach and its collaboration with VMware. Meanwhile Jagjit Singh Arora, Senior Director - Sales, VMware India shares the solution highlights and the RoI Indian bank has accrued out of VMware’s offerings. Excerpts.

Can you give a sense of the bank’s IT journey so far?

Sanjeev Sethi (SS): We started with core banking around 12 years back. To be honest, our approach to IT, by and large, has been conventional and conservative; this might be because of an element of skepticism to newer tech and its ability to secure our digital assets. But that mindset is fast changing. While we still remain conservative, but our perception has changed with vendors offering state of the art secured solution suited for BFS. Nevertheless, we do complete testing of any IT solution pre-deployment and do extensive relevance mapping.

Now from that perspective, when we look at the VMware virtualization initiative in the bank, we were probably a late adopter. Initially, the adoption was meant for a test environment. We wanted to leverage virtualization, identify use cases, find the stability in that environment and then take the next step forward for our production workloads.

Moreover being in the public sector our tech selection goes through a lot of iterations and due diligence on all the solutions available in the marketplace. Finally, we zeroed in on VMware. Our experience over a period of time on this platform has been phenomenal. The impact has been transformational and this transformation has ushered in a huge uptime tweak for our IT infrastructure. It has also made our IT more agile, flexible and given us the much-needed tech leverage and elasticity to pro-actively respond to the business challenges.

You mentioned about transformation. If you look at the pre-VMware scenario, typically how do you judge the maturity level of that infrastructure as you mentioned that as a PSU bank, you have taken a conservative approach to IT procurement?

SS:Well in terms of the pre-VMware infrastructure environment, any downtime would typically take from a couple of hours to a couple of days. Overall it would result in probably 7% to 8% downtime annually across various applications which were customer facing. Eventually, it would have a business impact directly as well as indirectly. Now there were a lot of intangible benefits that we have derived, post virtualization and collaborating with VMware.

Coming to the Core Banking solution can you talk more on that?

SS: In core banking, the majority of the banks in India are running on 3 platforms, one is from TCS, other is Infosys and the third is from Oracle. We are on TCS platform, which is called as Banks 24. The robustness of that platform is well tested and the kind of benchmark that has been published openly on the various forums on this platform is available in the market. As far as the platform is concerned, it is very robust but today banking is not traditional core banking alone anymore. The banking has spread and with the advent of net banking, mobile banking and much more and hence we need a judicious blend of technologies.

With this digital transformation you are talking about would you be exploring a move to a software-defined ecosystem?

SS: We are actually looking at it and we have started exploring the options. We are starting the implementations and running pilots. As mentioned earlier, our conventional and traditional approach still remains and what has changed is our perception. We always adopt technology after doing a good time tested approach and we start with some test cases and then move on to the production environment. We are on that journey and we look forward to software-defined state in the times to come.

In this entire process how security topped your agenda?

SS: Being in BFS, security plays a prime role considering the kind of threats and attacks, which have been happening, in the recent past. In fact, the government has created special cells to monitor security on a day-to-day basis. We do frequent security audits and do a through complete due diligence on the state of security of our digital assets. And in that perspective also, we are collaborating with VMware and looking at a couple of security solutions that they are offering. And I believe that security obviously has to be looked at in a two-fold context. One from ensuring that the bank systems are secured, second obviously securing the other end - the customer's end point is also equally important.

What we have observed today is that a lot of attacks are happening through phishing and spam emails. So it is equally important to ensure that the customers are educated and aware of the threats and how to overcome those. And Indian Bank has been a pioneer in some of those initiatives. Just to put across an example, Indian Bank was the first bank in the industry to offer a product to our customers, mobile app basically, which provides the customers an option to lock their debit cards, credit cards, and their net banking accounts and a lot of value added ATM driven services.

Will newer tech help in better NPA management?

SS:In terms of PSU banks, there are lot more challenges. From that perspective, obviously, the efficiency improvement is an outcome of the digital transformation journey. The NPA journey does not start once the account is opened or the funds are transferred to the customers, but it starts even from the time the customer applies for a loan because the evaluation of the customer’s capability, the cash flow, the success of the project has to be determined at that stage. In terms of managing NPA, technology is a big enabler.

What are your priorities for the bank’s IT organizations in terms of tech adoption as we move forward?

SS: Well in terms of business initiatives, we have to keep pace with the market. The payment systems are undergoing a transformation. The payment banks have brought in a lot of challenges and we are looking at a lot of options to collaborate. In terms of pure IT initiatives, there is a further consolidation that we are looking at. We are studying what is being implemented at some of the other organizations and the benefits that it has brought about. And probably we will be looking at leveraging the same at our bank in terms of improving the manageability as well as the security perspective of the bank.

From the vendor side can you give a peek into the solution deployed at Indian Bank?

Jagjit Singh Arora (JSA): Indian Bank has deployed vSphere with Operations Management Enterprise Plus, 54 Nos across two datacenters in Chennai and Hyderabad. The primary datacenter Chennai hosts around 75 Virtual Machines both Tier-1 & Tier-2. All the virtual machines are replicated to DR (Hyderabad) through VMware vSphere Replication and orchestrated using VMware Site Recovery Manager. Some of the important applications include Oracle RAC & Standalone DB, Application Servers etc.

Can you talk about the tangible ROI and benefits Indian Bank has accrued?

JSA: Post adopting VMware Virtualization, Indian Bank has been able to bring down the physical footprint on both its datacenters that are co-located in a Service Provider premises. This has enabled them to save on the hosting costs. Apart from that, they have been able to regularly check the status of the BCP-DR using VMware Site Recovery Manager, which was a real challenge when they were completely physical. This has helped them be aware of the status of DR be ready and confident before disaster strikes.

On your collaboration with Indian Bank?

JSA: VMware and Indian Bank started the journey of digital transformation where we assisted them in creating a robust secure IT environment. We helped them achieve 100 percent network uptime which enables their customers to be connected 24x7. This can become a complex process, however, VMware simplifies the management by consolidating the infrastructure.

What is your view of digital transformation in the BFS sector?

JSA: Businesses today are changing the way they operate to keep pace with digital transformation. The fundamental fact is that digital transformation is a software-driven revolution. The need of the hour for financial organizations is to embrace digital transformation and seize the opportunities offered by mobile cloud and digital workspace technologies to streamline business processes, enhance customer experiences, and reduce costs. To ensure this transformation is successful, organizations need to focus on security owing to the nature of financial services. Handling financial data of customers puts security in the spotlight, especially with the necessity of adhering to the finance industry’s regulations. VMware NSX’s micro-segmentation capabilities enable organizations to ensure the safety of customer information and, helps with compliance and regulations.