BANKING INFORMATION SYSTEM

TECHNOLOGY AND BANKING

Tasks Common to Both

Banking

Information Storage Processing Transmission

Technology

Innovative Risk Management

Complex Credit Calculations

Global Operations

Pervasive Branch Network

Mass Transaction & Items Processing

Focus aspects of Commercial Banking now are:

BANKS BUSINESS

LOANS & MISC. SERVICES

Core Banking (CBS)

MIS & Intranet

ATMs
POS Terminals and Cash dispenser

RAISING DEPOSITS

Electronic Banking Any Branch Banking CRM

Corporate Network

Card Management Document Management

Risk Management

Resource Management

BANKS BUSINESS

Financial Technology Infrastructure

Data Center to host servers for: CBS ATM/Financial Switch Internet Banking DW/DM/CRM/MIS etc. Back-office Application E-mail Servers, Internet Server, Enterprise-wide Network & Networking Equipment Security Systems Systems at Branches/RO/ZO/CO Depts. Supporting Systems Disaster Recovery Site & Business Continuity

Structured Financial Messaging System

Central Server at IDRBT

Bank-1 Gateway Bank-2 Gateway Bank-n Gateway

.....

......

Branch-1 Branch-2 Branch-n

Branch-1 Branch-2 Branch-n

Branch-1 Branch-2 Branch-n

SBI HISTORY
State Bank of India (SBI) is the largest banking and financial services company in India by revenue and total assets. Its a state-owned corporation with its headquarters in Mumbai, Maharashtra. SBI provides a range of banking products through its vast network of branches in India and overseas, including products aimed at non-resident Indians (NRIs). The State Bank Group, with over 16,000 branches, has the largest banking branch network in India. SBI has 14 Local Head Offices and 57 Zonal Offices that are located at important cities throughout the country. It also has around 130 branches overseas.

Changes brought in IT
Late 1990s More than 8000 branches either on decentralized systems or manually operated, Main Frame / Mini Computers used at CO/LHO/ZO for backend operations. Internet Banking Facility for individuals. All ATMs of State Bank Group networked.

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Changes brought in IT
2001 - KMPG appointed consultant for preparing IT Plan for the Bank. Core Banking proposed, FNS, CS, COMLINK selected 2002 All branches computerized but on decentralized systems,
Core Banking initiative started

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Changes brought in IT
2008- more than 6500 branches (95% of business) on Core Banking Solution (CBS), Internet Banking facility for Corporate customers More Interfaces developed with eCommerce & other sites through alternate channels like ATM & Online Banking All Foreign Offices on Centralized Solution BPR initiative to realign business process with changes due to IT

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Changes brought in IT
Large Network as backbone for connectivity across the country Multiple Service Providers for providing the links BSNL, MTNL, Reliance, Tata & Railtel Multiple Technologies to support the networking infrastructure Leased lines, Dial-up, CDMA & VSATs

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TBA - Distributed System Components

Branches

Banking Application Diskless nodes LAN OS, Database Internet-Banking ATM

User Control Officer

System Administrator

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CBS - Core Banking System Components

Branches Datacenter
Application Developers Desktops, Branch Servers WAN, Internet Alternative Channels

Core-Banking Application OS, Database Internet-Banking ATM

Branch User/Admins

Network Administrators
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System Administrators

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Organization structure of IT
DMD(IT) CGM (IT) CIO DMD (I&A)

CGM (I&A)

GM (ITSS) DGM (ITSS) AGM (ITSS)

GM (IT) & CISO

GM (I&A)

Application Owners

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Organizational Structure of IS
DMD(IT)
GM (IT) & CISO
AGM (ISD) Information Security Officers FUNCTIONS Consulting Monitoring Compliance

2003 - Information Security consultant appointed for Information Security Initiation 2004 - Information Security Department setup headed by GM (IT) & CISO and supported by CISA qualified ISOs ISSSC setup by the Board
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Objective of IS
To provide banks business processes with reliable information systems by systematically assessing, communicating and mitigating risks, thereby increasing customers trust on the bank and achieving world class standards in information security.

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SERVICES PROVIDED BY SBI INTERNET BANKING

E-Ticketing SBI E-Tax Bill Payment RTGS/NEFT E-Payment Fund Transfer Third Party Transfer Demand Draft Cheque Book Request Account Opening Request Account Statement Transaction Enquiry Demat Account Statement Donation

ELECTRONIC FUND TRANSFER

The Funds Transfer facility enables you to transfer funds within your accounts in the same branch or other branches of SBI. You can transfer aggregating Rs.1 lakh per day to own accounts in the same branch and other branches The Funds Transfer facility also enables to transfer money to trusted third parties who are SBI account holders. For transferring money into other banks RTGS & NEFT is used. For a fund transfer of Rs. 2 lakhs & above RTGS (Real Time Gross Settlement) is used. In NEFT (National Electronics Fund Transfer) there is no minimum limit for fund transfer.

ELECTRONIC FUND TRANSFER

RTGS & NEFT system of fund transfer facilitates money transfer between SBI account & accounts in other banks & vice versa in India RTGS- this transaction happens on real time & gross settlement basis. NEFT- In this transaction happens in batches 1.) 6 settlements on weekdays - at 09:00, 11:00, 12:00, 13:00, 15:00 and 17:00 hrs. 2.) 3 settlements on Saturdays - at 09:00, 11:00 and 12:00 hrs. SWIFT (Society for Worldwide Interbank Financial Telecommunication) is a means of secure international financial messaging.

MAJOR CUSTOMERS OF INSTANT FUND TRANSFER IN SBI

Food Corporation of India
Instantaneous transfer of funds, at 3000+ branches eliminating delays & reconciliation issues

ONGC
Online vendor payments across the country enabled by SBI

IOC

Same day credit to IOC for Dealer transactions across the country either online or through sweep facility Ministry of Agriculture All Pay and Account offices under the Ministry are making Vendor payments electronically through our CMP. This is shortly being extended to Department of Revenue (MoF) & Ministry of External Affairs.

PAYMENTS OF SOCIAL SECURITY BENEFITS

SBI is working with the Govt. of Andhra Pradesh to enable payment of Social Security Pension and payment of stipends under the National Rural Employment Guarantee Scheme (NREGS) Over 1 mm No Frills savings account have been/are being opened in the names of the beneficiaries, into which the Govt. benefits are paid SBI Tiny Cards based on smart Card technology provided to the beneficiaries who can withdraw money/deposit money by simply swiping their SBI Tiny Cards on a hand-held device with the Business Correspondent/Business Facilitator in their village. SBI tied up with INDIA POST for this purpose SBI is also working closely with Govt. of Rajasthan in the Bhamashah scheme for upliftment of families below poverty line SBI Tiny Card to enable Payment of insurance premium Payment of SIP Mutual Funds Recharging of Mobile phones

RECEIPTS
Online Tax Accounting System (OLTAS) / Electronic Accounting System in Excise and Service Tax (EASIEST) Online Direct Taxes Collection of Govt. of India (Income Tax / Corporation Tax etc) Banks are reporting transactions through electronic strings to RBI for funds settlement and to the website of TIN of CBDT for update of Assesse data Data extracted at SBIs state-of-the-art data centre at Navi Mumbai the same day and processed funds settled on the next day itself Enabling Govt. to view their collection of Direct Taxes throughout the country on a daily basis Central Excise & Service Tax Collection is done similarly

RECEIPTS
E- FREIGHT
New facility started with Indian Railways

E-TICKETING
Railway ticketing through the banks Internet banking process Booking of railway tickets through internet banking. Nearly 20% of tickets sold on only western railway is through e-ticketing or e- rail.

Facility of e-payment of freights to corporates Nearly 100 corporates have been covered in this system.

RECEIPTS
Cyber Treasury
Technology partnerships with various State Governments

Centralised Settlement and Reconciliation of PPF

PPF transactions takes place at all 4500 branches hits the Banks centralised system Simultaneously
Timely settlement of funds with RBI MIS to the Govt. to enable Govt. to monitor & better manage its liquidity

Large number of small value taxes commercial tax, VAT, CST, etc. remitted by public through internet Remitters get a cyber receipt

Project running in 6 states, MP, Haryana, Chhattisgarh, Gujarat, Rajasthan

Electronic MIS is provided to the State Governments

ADVANTAGES TO CUSTOMERS
It is convenient. It isn't bound by operational timings. There are no geographical barriers. Services can be offered at a miniscule cost. Check your transactions at any time of the day, and as many times as you want to. Getting quarterly statements from the bank, transferring funds to outstation, and other such activities can be done free of charge through online banking.

ADVANTAGES TO BANK
Very low setup cost. Capability to cater to a very large customer base. Saves a lot of operational costs. Adds to the baseline. Banks san offer a lot of personalized services to their customers. Reduction of burden on branch banking.

ADVANTAGES & DISADVANTAGES OF E-BANKING

ADVANTAGES
Check account balances and track recent account activity
Transfer money between accounts Authorize electronic bill payments

DISADVANTAGES
Need an account with an Internet Service Provider (ISP)
Security concerns, like hackers accessing your bank accounts Original setup for bill paying time is time-consuming but will ultimately be a time-saver Switching banks can be more cumbersome online than in person

Issue stop payment requests

Apply for auto, mortgage, home equity, student, or personal loans

Receive investment product and service information

Must have basic computer skills and Internet knowledge

Must be comfortable using a computer

Technology Vision of the RBI

Desk Top Decision Making Capability Centralised Database Management System Enterprise Knowledge Management System

Desk Top Analytical Capability Offsite Supervisory Systems Integrated Forex Management System Human Resource Information System

Desk Top Transactional Capability Integrated Accounting System Integrated Government Accounting System Currency Operations System

Securities Settlement System

Integrated Establishment System

The pre-requisites for Technology

Planning for disasters

Increased operational risk Business Continuity Planning

Business Process Re-engineering Human Resource Empowerment

DISASTER RECOVERY SYSTEM

Its a replica of CDC(central database collection) Many banks have 100% replicated remote DR sites,automated protocols and processes and dedicated trained staff. Disaster management involves: (i) pre-disaster planning, preparedness, monitoring including relief management capability, (ii) prediction and early warning, and (iii) damage assessment and relief management.

DRS
Experts recommend a three-pronged DR strategy for any IT driven organization: (i) prevention, which can totally avoid or minimize occurrence of disasters, (ii) anticipation, in which likely disaster scenarios can be identified and preventive action taken (iii) mitigation in which corrective steps can be initiated at the right time to minimize the impact of disasters

Disaster Recovery Management-benifits

minimizing interruptions in operations; resuming critical operations within a specified time after a disaster; minimizing financial loss; maintaining a positive public image of the organization Bank can provide continuous service to the customers, Without seriously affecting the back end operations of the bank

CORPORATE BANKING:-

The Online SBI corporate banking application provides features to administer and manage corporate accounts online. The corporate module provides roles such as Regulator, Admin, Up loader, Transaction Maker, Authorizer, and Auditor. These roles have access to the following functions: Manage users, define rights and transaction rules on corporate accounts Access accounts in several branches with a single sign-on mechanism Upload files to make bulk transactions to third parties, supplier, vendor and tax collection authorities. Use online transactional features such as fund transfer to own accounts, third party payments, and draft issues Make bill payments over the Internet. Authorize, modify, reschedule and cancel transactions, based on rights assigned to the user Generate account statement Enquire on transaction details or current balance

NSDL Site -Pay Tax Online

Select Challan Type

Enter Challan Details

Confirm Assesses Details

Logon to OnlineSBI

How ATMs Work?

How ATMs Work?cont.

New Technologies
- Biometrics - Cheque / cash acceptation - Barcode scanning - Ondemand printing of item value - Display additional media such as phone card

- Coordination of ATMs with mobile phone - Customer specific advertising -

Weaknesses: Lack of awareness among the existing customers regarding internet banking Obsolesce of technology take place very soon specially in terms of security on internet. Procedure for applying for id and password for using services related to internet banking takes time. Lack of knowledge is found regarding internet banking in employees of SBI Implementation of newer technology is little bit complicated Employees needs training to obtain knowledge regarding I-banking

 Challenges: Maintaining Business Edge over competitors in the context of sameness in IT infrastructure Multiple vendor support is necessary for working of highly complex technology Maintaining secured IT infrastructure for business operations Alternative must be there in case of failure of system

Security Awareness
User awareness through multiple channels like intranet, training etc. e-Learning package on information security distributed across Bank Specialized IS awareness sessions for controllers Dedicated IS Security sessions during training. Observing Computer Security Day every year across the organization. Write ups on Information Security in the in-house magazines Exchange of information on threats and vulnerabilities at appropriate forums.
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Improving our IS Security

Benchmarking SBI initiatives against International Best Practices E&Y benchmarking initiative in 2006 RBI requirement under section 35 External audit of IS initiatives BS27001 certification of CDC-DRC, ATM & INB

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Challenges ahead
Retaining Bank's lead Position
Maintaining Business Edge over competitors in the context of sameness in IT infrastructure

Assured Availability
Financially critical systems increasingly depend on IT Delivery channels- no margin for downtime

Infrastructure derisking
Tie-up with multiple vendors for spreading risks due to infrastructure failures and obsolescence

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Challenges ahead
Managing IS Security
Information Security dependency on vendor inputs Complex networked environment leading to lack of Know Your - Employee , Systems & Procedures , Vendors Maintaining Confidentiality & Privacy of Data while in storage, transmission & processing.

Providing DRP & BCP in a complex technology infrastructure supported by multiple vendors

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Issues in Implementation

Less than 10% of failures are due to technical snags most are due to poor management and implementation
Resistance to change Overlooking process reengineering Project management Dedicated project teams Change management Policies People Skills & Training Basic Infrastructure telecom, power Security Privacy & confidentiality Legal and regulatory issues

Many Benefits of Technology

Increased operational efficiency, profitability & productivity Superior customer service Multi-channel, real-time transaction processing Better cross-selling ability Improved management and accountability Efficient NPA and risk management Minimal transaction costs Improved financial analyses capabilities

FINANCIAL MANAGEMENT

INPUTS
PAYMENTS RECEIPTS DATA FROM STOCK EXCHANGES OF SHARE PRICES

PROCESS
APPLICATIONS ACCOUNTING QUERY DECISION ANALYSIS CONTROL

OUTPUTS
REPORTS STATUTORY COMPLIANCE

USES
INFORMATION UPDATES OPERATION UPDATES DECISION ANALYSIS ACTION UPDATE