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Core Banking at Deccan.qxd


  • pg 1

              Core Banking
                  at Deccan

Several larger
cooperative banks are
going in for core banking.

Smaller banks face the          N 1914, several merchants got together       Computerization
issue of cost benefit           and set up the Deccan Merchants                 Computerization in the bank started
                                Assocaition in Girgaum, Mumbai. In           with a DOS based package from Trilogy.
justification.               1917, these same merchants set up Deccan        When Trilogy went out of business, this was
                             Mercants Bank. K.D. More has been               replaced with a package from MGA. Then
One pioneer in this
                             chairman for the last 5 years.                  the MGA owner died and package support
regard is Mumbai based          The bank has a wide variety of               stopped. Then the bank selected a package
                             customers, but most of them are from the        from Infrasoft. After implementing in two
Deccan Mercants              middle class. The bank gives loans ranging      branches, the bank decided to go for a
Coop Bank which has only     from Rs. 1000 upto Rs. 2 crores. It offers 16   Windows based package, and selected
                             types of loans including housing loans,         Zenith Infotech as its vendor. Before this
9 branches. It is boldly     personal laons, business loans, rickshaw        could be rolled out further, core banking
going ahead with             loans, etc. The share capital of the bank is    started     becoming      fashionable     in
                             Rs. 3.78 crore. It has deposits of Rs. 153      cooperative banks. So the bank put a stop
core banking.                crore and loans of Rs. 89 crore. The average    to further rollout of existing packages and
                             number of monthly transactions across all       instead started searching for a suitable
Is there something that      the branches of the bank is over 200,000.       core banking package.
other smaller banks             Members are also from various                   12 packages were selected for study, of
                             businesses - vegetable, gold, etc. The bank     which 5 were shortlisted. Technology was
can learn from this bank?    has more of savings accounts compared to        the main criterion, especially a web based
Manoj Agrawal gives          current accounts. The branches of the bank      interface, so that the package would have
                             are spread over southern Mumbai, western,       a life of at least 10 years. Cost was a
the details:                 central and harbour suburbs.                    secondary criterion. Finally, Datamate from

                                                                                                          SEPTEMBER 2006
Pune based NextStep was selected. As of now data conversion is in      branches would get 128 kbps bandwidth.
progress. Initially the branches at Dadar and Girgaum will be             The bank has two consultants, Abhijit Gaikwad for technology
converted to core banking.                                             and S.B. Adsul for business. The core banking project team
   The database for the core banking package will be Oracle 10g        comprises of 6 people, three from technology and three from
and the operating system will be Windows. The bank has plans to        business.
set up a data center for the project and is searching for a suitable      During the floods, some of the branches were affected and some
location in Mumbai.                                                    of the stationery and papers were damaged. To prevent such losses
   Apart from core banking, the bank plans to also put up ATMs,        in the future, Mangesh said that the bank would go in for a
internet banking, kiosks, etc. The bank has applied to RBI for         document management system once the core banking project was
permission to set up these alternate channels.                         over, so that important documents such as loan papers would be
   About 2 ½ years ago the bank started searching for a core           saved in digital format.
banking package. It took about a year to evaluate. Simultaneously,        The concurrent audit is outsourced. A couple of years ago the
the bank also tried to rope in some other banks to jointly do core     bank had an IS audit done by Sysman Computers.
banking. But this did not work out for several reasons. First was
that the other banks did not have the same level of IT skills.        People Development
Secondly, the banks had different requirements. Thirdly, Deccan           As a part of its objective to strengthen human resources, this
was in a hurry and wanted to do this project faster, while others     year the bank has instituted best branch awards. The first prize
had planned a more leisurely pace.                                    went to the Borivali branch. The Ghatkopar (W) branch came
                                                                      second and the Dahisar branch came third. The winners are given a
Why Core Banking                                                      cash award and a trophy.
    As for the buiness reason for going in for core banking, More         The bank regularly sends it staff to training programs organized
said, “We have observed that banks like ICICI Bank,                   by VAMNICOM and similar institutes. The directors attend seminars
HDFC Bank, etc are enabling their customers                                                   and conferences. The entire staff has been
to transfer funds from one branch to another                Apart from core banking, trained on Windows and MS Office by CMS
in minutes, using core banking technology.
                                                            the bank plans to also put Institute.
We too want to offer our customers similar                                                       Branch managers are authorized to
facilities. We also want to attract the
                                                          up ATMs, internet banking, sanction loans up to Rs. 2 lakh. The papers
younger generation who is intereted in kiosks, etc. The bank has applied                      come for scrutiny later on to the board.
banking facilities like ATMs, cards, etc. to RBI for permission to set                           The bank has 31,000 members, over 1.5
Hence we have decided to go in for core up these alternate                                    lakh customers and 135 permanent staff.
banking.” This statement truly represents channels.                                           The bank also employess temporary staff for
the challenges facing the cooperative                                                         customer service, recovery, etc. Considering
banking sector.                                                                               the need to control costs, the bank has
    In terms of benefits, More expects that business will grow as the stopped recruiting new people. There have been no fresh
bank offers better services. He also expects the bank to attract      recruitments in the last 5 years.
better customers.
    The bank has budgeted Rs. 2.5 crore for core banking. Of this,    Other Developments
over Rs. 70 lakh has already been spent.                                  Considering that banks been been targeted by thieves, the
    Earlier the IT team was located at the Girgaum office. This made  bank has tightened up its security. Only ex-military persons are
it inconvenient to provide IT service to the branches located in      hired as guards. Even the branch staff has been trained. And the
distant places like Dahisar, Navi Mumbai etc. Hence the IT team has   people who have the keys to the branch and the locker are given
shifted to the Dadar office. Dadar is a convenient railway junction   first class railway pass and taxi allowances, so that they can avoid
for reaching any part of Mumbai and its suburbs. This shift has       crowds.
enabled the IT department to provide faster service to the                A few months ago, the bank tied up with HDFC Bank for RTGS
branches. This is something that every cooperative bank should be     transactions. Once the bank has implemented core banking, it
consider. The IT department needs to balance service to the           might go for an independinet connection. The bank is also setting
branches and close liasoning with the management.                     up its website www.deccanbank.com which is expected to be ready
Supporting Core Banking                                                   With regards to further business development, More said: “To
    The networking vendor has not been choosen, but considering       grow our non-interest income, we are planning to sell insurance,
that the bank is based in Mumbai and Navi Mumbai, MTNL is the         mutual funds, etc. We are talking to several companies in this
likely choice. Mangesh Amale, Manager - IT, said that the network     regard, to understand their products and identify what would be
would be based on leased lines, with ISDN for back up. The bigger     most suitable for our customers.”                                  y


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