Core transformation key to mobility for Asian Banks


Asian banks continue to make the push into modernising and transforming core systems to improve their services and keep up to speed with customer needs.

As many regions across Asia have been picked out in the past for having ‘older’ core systems, according to a forecast by IDC Financial Insights up to 31 per cent of banks in the region would effect significant changes to their existing core banking systems by 2016.

A bank’s core system is the system that supports all the functionalities and services the bank offers, from mobile, online, branch networks and all the services that are attached to the products they offer.

Asia in particular showcases the varying stages of overhauling or transforming these core systems across different markets, both mature and developing.

Earlier this month, Tisco Bank in Thailand announced an upgrade to its core banking system, while. Bank of China announced the completion of its core upgrade in late 2013, making it easier for customers to apply for internet banking and enhancing security for customers.

Malaysia’s AmBank successfully implemented their RM600 million core banking system replacement in November 2013, in order to be more relevant to their customers who are increasingly turning to mobile, according to Anthony Chin, Senior General Manager, Head of Strategy and Transformation, AmBank.

“The core banking system replacement was a critical component for the bank. It enables us to achieve the rest of our goals around digital modernisation, customer segmentation, and trying to be a different bank and more relevant to customers,” he said.

In February 2014, CIMB in Malaysia ran into some teething problems during the Chinese New Year, before successfully implementing its RMI1.1 billion core system upgrade, with users taking to Twitter to vent their frustrations. The program, implemented in Malaysia, Indonesia, Singapore and Thailand was aimed at installing a single regional IT and operations framework across all of CIMB entities.

India’s ING Vysya Bank underwent a core system transformation because of customer demand to use more technology-based services such as mobile banking. ING Vysya launched their mobile banking system in late 2013, which included a shopping and payment platform, along with traditional transaction banking capabilities, according to Dharmaraj Ramakrishnan, Head of Core Banking Unit at ING Vysya Bank.

“The ING Mobile app will be a game changer in the way mobile banking is offered in India. As people increasingly start using mobile phones for shopping, bill payments, this will become the fastest growing area,” according to Ramakrishnan.

In Singapore, UOB refreshed their core banking system by creating an integrated regional operating and technology platform, to improve productivity, enhance risk management and provide a seamless customer experience. The refresh has already been implemented in China and Thailand, according to Gilbert Chuah, Executive Director, and Head of Internet Channels, UOB Group. 

“We believe in the approach of build it one time, and deploy it many times… From our experience with China and Thailand, we are seeing that by taking this approach, we are able to reduce our cost by two thirds, and also take half the deployment time,” said Chuah.

Too expensive not to simplify

According to Gilles Ubaghs, Senior Analyst, Financial Services Technology at Ovum, the drivers for banks to replace their core systems and infrastructure are multiple, and they include the cost of maintaining older legacy systems becoming more expensive, and obsolete, as well as the need to simplify complex existing systems.

“Older mixed core systems are increasingly complex systems as overtime more-and-more products and functions have been added in, making the whole bank architecture more complex and difficult to manage. This can make things not only expensive to run and manage, but can increase the chances that things go wrong in catastrophic ways,” said Ubaghs.

However there are challenges in implementing new systems according to Ubaghs, these include the pressure of adapting to rapidly shifting regulatory environments across regions, lower operating costs and introducing higher levels of customer centricity; Something Ubaghs suggests will enable better up-selling and cross selling opportunities.

“Newer platforms can greatly enhance the speed of launching new products and services, rapidly and really targeting customers in ways which were not possible before…This goes beyond consumers as well, with even more staid areas of banking on the institutional and corporate side wanting better levels of service and product features,” he said.

According to Ubaghs, the big challenge is implementing these upgrades, as the banks cannot really shutter operations, the reason he sites as why projects can often become expensive and delayed. Something CIMB in Malaysia experienced when users took to Twitter when unable to access their accounts and banking services.

“It is a bit like a mid-air refuelling with planes if you had to actually build one of the planes in the sky while flying and then ensure it had a full tank,” he said.