Implementing a core banking system (CBS) is complex and tricky, involving numerous stakeholders; bringing on a systems integrator (SI) can greatly facilitate the process. We offer a set of criteria for choosing a well-suited SI.

1. • Cognizant 20-20 Insights
Selecting a Systems Integrator to
Implement a Core Banking System
Given the risk and multiple stakeholders involved, banks need SI partners
that can collaborate and communicate with internal constituents and
with other third parties, and have demonstrated domain and technical
expertise aligning software solutions with business objectives.
Executive Summary tives around CBS implementation requires the
attention of many parties, each of whom brings
Historically, systems integration was largely
in a different dimension on the decision-making
a technical and an operational task. It was
process.
considered as part of the wider area of systems
engineering. However, in the last decade or so The role of an SI in a CBS project can be catego-
systems integration is considered to be a strategic rized as follows:
enabler across different levels of the business
such as systems engineering and operations, and • Provide business and product expertise:
is seen as critical in assisting senior management
decision making. >> Business expertise: An SI is expected to
exhibit a sound understanding of the vari-
Implementing a core banking system (CBS) is ous lines of business (LOBs) of the bank
a prime example of this change in the thought and the business and technology impact of
process. It often leads to a large, complex project, a CBS implementation on each LOB.
with multiple stakeholders across multiple groups >> Product expertise: An SI should provide
within the bank. The outcome of a core banking an integrated solution across multiple prod-
implementation can lead to a higher level of differ- ucts and services that are involved in a CBS
entiation in the market or an enriched customer implementation.
value proposition. Moreover, if the transition is
not managed properly it can pose serious risks >> Program management: Since the SI owns
the program, it should have a consolidated
for the bank.
view of all activities, interdependencies
Considering the high level of risk involved, and impacts of changes across the entire
coupled with the involvement of multiple stake- program.
holders, the importance of the role of a systems • Collaboration across vendor organizations:
integrator (SI) cannot be overstated. The cost,
scope, quality and importance of strategic initia- >> Vendor collaboration: An SI is the single
cognizant 20-20 insights | december 2012

2. point of contact for the bank. It is respon- • Segregate criteria into ”mandatory” and
sible for the integration of efforts across “important”: At this stage, the criteria are
multiple vendors, all of whom may be con- segregated into mandatory (i.e., those that are
tracted by the bank. absolutely essential, and the failure to meet
any of which will have an adverse impact on
>> Communication management: One of the the project) and important — criteria that, while
key responsibilities of an SI is to manage
important, are such that even if they are not
communication across vendor organiza-
met, risks arising from them can be mitigated
tions and different groups within the bank.
adequately. This is discussed later in this white
The SI is expected to be aware of all chang-
paper.
es that occur as a result of a CBS implemen-
tation and is in a position to understand • Perform initial screening of SIs: As part of
the impact of these changes on the overall the initial screening, only those vendors that
program. meet all mandatory criteria are considered.
>> Business process management: An SI is • SI finalization: After the initial screening,
responsible for the integration of interde- the important criteria are assigned risk-based
pendent functions and business processes weights. The shortlisted SIs are evaluated
of the bank and brings in substantial domain using an analytical hierarchical process (AHP)
and process expertise that are essential to or other combinatorial optimization algorithms
understanding the functioning of a bank. such as UKP.
This white paper explores the process of SI • Risk assessment and management: As
selection for CBS implementations by explaining part of this step, additional business risks are
best practices and procedures as well as criteria identified. These risks may be related to the SI
required. selected (based on the important criteria that
the selected SI doesn’t meet) and risks within
SI Selection Process the computational framework. A mitigation plan
is then created; these risks are then monitored
Banks find it increasingly difficult to differenti-
throughout the CBS implementation.
ate among SI vendors. Hence, it is recommended
that a bank use a structured decision model to
SI Selection Criteria
decide on the most suitable SI. We recommend
the following steps to choose the SI for a CBS Every bank will have a predefined set of criteria
implementation. for vendor selection based on its vendor
management principles. The criteria for selecting
• Business case creation: In this stage, the an SI to implement a CBS will be based on the
SI is expected to create a business case for same principles. The following list can be used
implementing a CBS. This could be a new as a guide where vendor management processes
implementation or an upgrade. In either case, have yet to mature.
the business case is expected to cover the
We have connected various criteria used by banks
following areas:
into four broad categories.
>> Business benefits: Such benefits could in-
clude reduced time to market for products, • Program management capabilities: Banks
improved customer satisfaction, etc. look at SI vendors as strategic partners that
can assist them in transforming project/
>> Financial benefits: Financial benefits are
program management practices. As part of
typically associated with cost reductions.
the SI selection exercise, banks expect that
Key financial benefits anticipated through
the SI vendor can deliver most, if not all, of the
the implementation of a CBS are reduction
following services:
in ongoing costs, reduction in hardware
costs and an overall reduction in total cost >> Leading-edge program management
of ownership (TCO). methodologies: Banks expect SI vendors to
bring proven methodologies, processes and
• Develop criteria for evaluation of SIs: In this tools on large program governance, project
stage, the bank develops a list of criteria for
planning and governance, change manage-
evaluating SIs. These criteria are based on the
ment and control, vendor/contract manage-
bank’s financial stability, proven track record of
ment, frameworks for quality management,
executing similar engagements, global reach,
etc.
product knowledge, etc.
cognizant 20-20 insights 2

3. >> Program management office (PMO) sup- skilling of people. The TCO is quite significant
port: Banks expect SI vendors to provide in most cases. Hence, it is imperative that the
support for functions by defining new pro- SI exhibit long-term viability.
cesses or refining existing processes as ap-
plicable.
• Cost-effectiveness: Investment in technology
and improved processes is seen by banks as
>> Work stream management: In addition to a way to attain competitive advantage. Banks
the above, banks may also expect the ven- expect SI vendors to deliver streamlined
dor to manage additional work streams. Ex- processes reducing overheads and providing
amples of these include: cost-effective services over a period of time.
»» Integration management: Drive overall Conclusion
solution integration ensuring integrity of
the solution design, interdependencies The responsibilities of an SI are viewed differently
and delivery of the end-to-end solution. across regions. In Asia, banks look at an SI as a
partner that can bring in banking expertise. Banks
»» Deployment management: Handle the are keen to understand industry-specific offerings
overall deployment planning and execu- and service/product innovations that can benefit
tion including solution delivery for dif- the bank. They also look at an SI as an entity
ferent phases of testing and rollout. An that can help them transform
SI vendor is expected to work with the their program management Banks typically
deployment managers and project man- practices, bringing added effi-
agers from other work streams in the ciencies in scale and execution.
gauge the
program to achieve the desired results. vendor’s focus and
In Europe, banks look at an SI to
• SI focus on the bank’s business segment: provide expertise in two main
commitment to
Another key parameter that banks must
consider is the focus of the vendor on the areas: product expertise, and continuously enrich
bank’s business area. Banks typically gauge the as a change agent to help them and improvise
improve internal program/
vendor’s focus and commitment to continuous-
project management processes.
on available
ly enrich and improvise on available solutions
to meet evolving banking requirements. Banks
solutions to meet
typically assess this by various criteria such as
The dimensions used by bank
evolving banking
IT organizations to evaluate
contribution of their clients to overall revenue,
core banking systems integra- requirements.
investments in the core banking space,
tors are not always the same
customer sites across the globe and the profile
as the areas that core banking SIs focus on. A
of its key clients.
large number of SIs emphasize more horizontal
• Financial stability: Financial strength and skills across multiple core banking products. On
business continuity are important attributes the other hand, banks look for SIs that exhibit
for evaluating an SI. This is not surprising, con- commitment to innovation and investment in
sidering that the payback for a core banking solutions in the banks’ areas of business, and that
system is approximately four to five years. have more focused models dealing with one or
Transforming core banking systems brings two CBS products – usually supported by a strong
about changes in operating processes, systems alliance with the product vendor.
and interfaces, and tends to involve the re-
References
• The Business of Systems Integration, Andrew Precipe et al., Oxford University Press.
• The Forrester Wave: Global Banking Platform, Q1 2009, Jost Hoppermann, Forrester.
• Trend 2005: European Banking Architecture, Jost Hoppermann, Forrester.
• Corebanking Platform Replacement, Adpar Solutions.
• Celent’s ABCD Analysis on Corebanking Products, Stephen Greer and Bart Narter, Celent.
cognizant 20-20 insights 3

4. About the Authors
Srivatsa Subbanna is a Manager within Cognizant Business Consulting, based in the Netherlands. He
has 10 years of experience with IT and business transformation projects in Europe, the U.S. and the Asia-
Pacific region. His expertise includes business analysis, process consulting and transformation using
methodologies such as Lean/Six Sigma. He holds a post-graduate diploma in management studies from
the Indian Institute of Management, Calcutta. He can be reached at Srivatsa.Subbanna@cognizant.com.
Anirvan Saha leads the Core Banking Consulting Practice within Cognizant Business Consulting. He
has 13 years of experience in consulting and software services in the retail and commercial banking
spaces. He has expertise in business process management and complex software implementation
programs in the domains of core banking, anti-money laundering, Basel II credit risk, commercial
lending, retail banking and mortgage. Anirvan holds a bachelor’s degree from IIT Kharagpur and is
a management graduate from the Indian Institute of Management, Calcutta. He can be reached at
Anirvan.Saha@cognizant.com.
About Cognizant
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