National Bank used a two-pronged strategy to IT-enable
itself and support present and future business needs.
And along the way it picked up valuable information
and experience. by Soutiman Das Gupta & Rahul Neel Mani
Punjab National Bank's (PNB's)
come a long way since March 2000, when IT systems were
deployed only at 500-odd branches, and was very disparate.
Only 35 percent of the bank's business was computerized
and a number of small software packages ran on standalone
Now in 2003, PNB
has 101 branches on a WAN, deployed a core banking infrastructure,
and runs 175 networked ATMs. It has also deployed a
reliable security infrastructure that helps it conduct
transactions within its branches without worry. The
journey doesn't end here, but along the way the bank's
picked up valuable knowledge and experience.
In March 2000,
the penetration and use of IT was not very high at PNB.
The bank used seven different software, which ran on
13 different flavors of Unix, on standalone PCs. The
500-odd branches were not networked and only 35 percent
of the bank's business was computerized. The overall
expertise in IT among users was low.
The Central Vigilance
Commission (CVC) issued a directive to the bank to computerize
at least 70 percent of its business by December 2000.
This prompted the bank to work out a strategy to tackle
the daunting task in the short period of time.
A SWOT analysis
was performed and it produced the following results:
- The bank personnel would
be able to readily embrace the use of IT.
- An existing pool of qualified
knowledge-based personnel would contribute largely
to the IT initiatives.
- The financial position of
the bank was very sound. There would not be any constraint
of funds to facilitate IT initiatives.
- The bank wasn't bound to
too much legacy systems and equipment.
- Different Unix OS flavors
in different branches.
- Different standalone financial
applications on PCs at different branches.
- Lack of interoperability
due to disparity in systems.
- Limited expertise on the
software packages currently deployed. This increased
dependence on vendors.
- Systems audits were pending.
- Most branches did not have
a proper LAN in place.
- There was almost no WAN
The bank realized
that there was a lot of opportunity to create a stable
IT infrastructure which would fuel future growth. But
there was also the need to honor the CVC deadline to
computerize at least 70 percent of its business within
December 2000. The bank now has around 4,000 branches.
PNB hired a consultant
and devised a two-pronged plan of action. The plan comprised:
- A short term goal - To meet
the CVC deadline of 70 percent computerization.
- A long term goal - To create
a dependable core banking infrastructure and build
a nationwide network to connect different branches
to the core infrastructure.
In order to meet
the CVC deadline the bank decided to deploy simple IT
infrastructure so that it could computerize 70 percent
of its business within the deadline. The IT team decided
to implement an application, which could run on standalone
PCs across its nationwide branches. The application
vendor would have to provide nationwide support since
the in-house IT team could not provide support at all
PNB chose a product
from a company called Nelito. It was a DOS-based, 'Partial
Branch Automation' application. Standalone versions
were chosen since there weren't LANs in place, and deployment
of LANs at branches would take so long that the CVC
deadline couldn't be met. The interface was simple in
design, and thus easy for the bank personnel to use.
The bank selected
two hardware vendors and the application software was
embedded into the hardware to make them 'plug-and-play'
capable. Nelito's package was deployed at one branch
at a time. And after each successful implementation
at a branch, it was replicated at a newer branch.
sessions for the bank personnel were conducted with
the help of 14 training institutes. The source code
of the product was tweaked to facilitate deployment.
The IT team was specially trained to re-architect the
source code, and make any modifications, improvements,
value additions, and enhancements. Deployment at the
selected branches was over by December 2000.
The bank requested
CVC for an extension of the deadline and was granted
time till March 2001. By March 2001, 70.60 percent of
the bank's business was computerized.
In the long-term,
PNB wanted a technology that would consolidate all its
business resources and sustain the bank's future growth.
It also wanted to create its own network, which would
play a vital role in its success. Three consultants
were appointed to review technology options for long-term
adoption. The verdict of the consultants was to deploy
a centralized core banking architecture.
On 30 March 2001,
the bank used the services of Infosys for the deployment
of Finnacle. A core team was selected, which would be
the heart of the project. Infosys trained 200-odd personnel
from a core team over six months. The core team modified
and customized the package according to its specific
It was then time
to procure hardware. K.S. Bajwa, Deputy General Manager,
Information Technology Division, PNB, said, "It's a
standard international practice to procure hardware
based on the type of software applications that an enterprise
has selected. This helps to match the specific computing
needs required by the software."
PNB purchased servers,
security infrastructure, and storage equipment and decided
to house it in its own central data center in New Delhi.
A lot of infrastructure from Cisco has been used to
build the data center.
In April 2002 the
bank rolled-out Finnacle in seven branches as a pilot
venture. This was done because the bank had seven different
application packages, and it wanted to ensure smooth
migration of the data into Finnacle. By mid May 2002,
all data from other software was successfully migrated
Issues were mostly
cultural. Most staffers were used to working in a manual
environment, and some had worked in standalone environments.
In the new networked environment, personnel at the node/counter
didn't actually 'see' the transactions updating in the
various account books.
This gave rise
to a number of queries and suggestions from personnel.
The bank consulted IDRBT and RBI to verify the implementation
success and it was reported that the deployment was
absolutely correct. Around six months later, the personnel
felt that the environment 'change' had done them good,
and was used to working on the systems.
"There were a few
integration issues when migrating to Finnacle, but the
in-house IT team was able to resolve them all. The pilot
for the initial seven branches was a test-bed for us.
The knowledge we gained from the pilot deployments helped
us overcome the future issues," explained Bajwa.
the core banking architecture, PNB used servers which
were NT-based, from IBM, and from other vendors. The
bank conducted benchmarking tests for Finnacle on various
server platforms. And it was satisfied with the performance
of Sun's hardware on Solaris. Sun's Fire servers, Solaris
OS, and Oracle's RDBMS are now in use.
Cisco has tied
up with PNB to evolve the network design and implement
a nationwide network backbone to connect all its offices.
Cisco will assist the bank in understanding and implementing
the various technologies associated with the project.
The converged network infrastructure will allow PNB
to standardize the applications and software needed
to provide the banking services.
The network infrastructure
will have a three-tier architecture. The network hub
will be in its data center. The various branches would
be connected to the data center using new-world routing
and switching technologies.
Moving to Internet
PNB got a license
from RBI to offer Internet banking services. Some of
the RBI preconditions were that the systems should be
audited by an independent auditor, and an independent
and authentic agency must carry out penetration testing.
The bank has already had its systems audited by an external
agency, and the penetration testing process is still
In the process,
PNB has developed the skills of its own personnel to
take charge of security on their own at a later stage.
The bank will also recruit technically trained staff
to provide the necessary knowledge pool. With the Internet
banking launch, the bank will also strengthen its security
The bank has followed
RBI's storage requirement guidelines. Provisions have
been made to store transaction data for around 10 years.
In some cases, data is stored permanently. Around 164
Sun enterprise class servers are used in a DAS architecture.
The total capacity is of multiple TBs.
The Sun hardware
uses an in-built storage management tool. Bajwa feels
that the bank doesn't need a third-party storage management
tool right now since the database is not too large.
However the bank is considering a storage management
application from Veritas.
WAN and connectivity
101 branches of
the bank are on a WAN. The bank plans to put 500-odd
branches on the WAN this year, and in three years the
WAN will have 2000-odd branches.
The bank tried
a number of connectivity options. 802.11b wireless connectivity
was installed in five branches to begin with.
"It was a comfortable
experience, but suffered the inability to interchange
between the wired medium. Changing between mediums had
to be performed manually," said Bajwa.
The bank then explored
the option of leased lines and used connectivity from
MTNL and BSNL. It also used Bharti's leased line between
Mumbai and Delhi. The bank now uses Reliance Infocomm's
fiber optic backbone along with the leased lines in
locations where the optic fiber does not reach. However,
the use of Reliance Infocomm's infrastructure may be
temporary. Bajwa says that his experience with BSNL's
service is very commendable.
PNB has appointed
HCL Com-net to carry out 24x7 monitoring of the countrywide
network. There's a live link between HCL Comnet's NOC
and PNB's IT head office. The network is monitored remotely
and can also be viewed at the bank's IT facility, where
a separate monitoring system is used for the Base24
Switch. Reliance has set up a NOC at PNB's premise to
monitor its optic fiber network.
These are some
initiatives the bank wants to take in future:
- Set up a data warehouse
and a data mart soon. It will take six months to achieve.
IDRBT has been involved as a consultant.
- It may need to set up a
NAS and SAN to consolidate its storage.
- Disaster Recovery site may
be built at Mumbai to create a replica of its data
center. It will take around six months to be functional.
- A call center will be set
up as a CRM initiative, which uses information from
the data warehouse with the help of the Base24 switch.
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Security was especially important because the bank
could afford no compromise. The security architecture
had to be robust, reliable, and scalable to meet
current and future needs. Cisco was chosen as the
service provider who could meet these stringent
requirements. The bank uses a range of security
products like Firewalls and IDSs from Cisco for
its security needs in its LANs and WAN. All data
transactions between its routers and switches are
encrypted. It has appointed Ramco Systems as the
security integrator. The security integrator is
responsible for the complete security infrastructure
and is answerable for any security breach or lapse.
The bank will also appoint a security administrator.
Verisign will provide the necessary Public Key Infrastructure
(PKI) to the bank for secure transactions.
PNB feels that ATMs offer many advantages over conventional
branch-based banking like low cost per transaction
and customer convenience. To encourage this, the
bank has installed over 250 ATMs, out of which 175
are networked. A Base24 switch controls the ATMs.
The ATMs are connected essentially through VSAT
links from Comsat Max. VSAT links were chosen over
leased lines because the bank felt that leased lines
did not provide 100 percent uptime, and VSATs were
closer to that mark. "If a customer uses an
ATM and the line is not up, he/she will not be able
to complete the transaction. The bank can't take
a chance with connectivity," said Bajwa. Comsat
Max has signed an SLA of maximum guaranteed uptime
and dedicated bandwidth, to be increased whenever
required. PNB has formed a consortium of seven banks
and has principally agreed to share the ATM facilities
amongst themselves. It will be available for public