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Delta Bank has pioneered an enterprise-wide, one-day 'big bang' switchover from a legacy core system to a new one in Kazakhstan. The bank shares its experience of deploying the CBS core system from Colvir.

Delta Bank has pioneered an enterprise-wide, one-day 'big bang' switchover from a legacy core system to a new one in Kazakhstan. The bank shares its experience of deploying the CBS core system from Colvir.

Nurbol Samzayev, Delta Bank


    

Kazakhstan-based Delta Bank is a small but dynamic player with an ambitious plan to grow. 'In 2012 we adopted a new strategy to become one of the leading banks in Kazakhstan, to diversify our business, to modernise our IT infrastructure and to improve our business processes,' says Nurbol Samzayev, chairman of the management board at Delta Bank. 'Our financial performance has improved since, with profit rising 4.5 fold, and we have reached 16th place by assets in Kazakhstan's banking market.' The bank has eleven branches, assets exceeding $1 billion and a loan portfolio of $793 million.

A new core banking system has been a vital part of the process, states Akylbek Aitimov, deputy chairman of the management board at Delta Bank. The bank felt its existing system, Progress Openedge-based Bisquit from a small Russian developer, Banking Information Systems (BIS), was outdated. It was installed in Delta Bank in 2007 (IBS, April 2008, Kazakhstan: the heart of the matter). Aitimov explains that Bisquit is a book-keeping focused system and could not adequately support the bank's plans for development and growth. 'We didn't consider upgrading it because BIS has no new releases,' Aitimov observes. An in-house build was discarded as well, as 'from our point of view, it is much more cost-effective and reasonable to buy such a solution from the market'.

'In 2012 we adopted a new strategy to become one of the leading banks in Kazakhstan, to diversify our business, to modernise our IT infrastructure and to improve our business processes.'
Nurbol Samzayev, Delta Bank

Delta Bank spent one year on system selection. Key requirements included experience in the local market, parameterisation and broad functionality to address the current and future needs of the bank. Also, the implementation time was set not to exceed twelve months. The selection involved all divisions of the bank including top management, so there was buy-in from across the organisation, he emphasises. There was no third party involvement.

The shortlist came down to Colvir Software Solutions, a UK-registered vendor with roots in Kazakhstan, and Russia-based CFT. The two main criteria at this stage were a fast and successful implementation track-record of the systems – Colvir Banking System (CBS) and CFT-Bank respectively – and total cost of ownership (TCO), says Aitimov.

So what advantages did the bank see in Colvir and its CBS offering? 'CBS requires much less of the bank's own resources for day-to-day system support and development compared to CFT-Bank. Thus, TCO of Colvir's system evaluated over a five-year period looks at least three times lower than that of CFT-Bank,' says Aitimov. Also, proof-of-concept demonstrated that CBS has 'much deeper functionality', plus the vendor has a larger market share in Kazakhstan and the bank felt it provided better references. The contract with Colvir was signed on 22nd February 2013, with the implementation work commencing in early April that year.

The project was split into two stages. The main activities were automated in the first stage, comprising 31 functional modules including GL, corporate and retail business, compliance, card management system and ERP. This was followed by another eight modules in the second stage, including treasury and management information system (MIS).

The system went live on 7th October, 2013, less than eight months after the contract signing. It is based on the IBM System P750 hardware (two servers) and has Oracle 11g as its database management

       

Akylbek Aitimov, Delta Bank

It was a 'big bang' switchover, with the aforementioned 31 modules rolled out at the head office and branches simultaneously. The second stage was originally scheduled for 2014, says Aitimov, 'but as the stabilisation period was very short we decided to start it immediately'. It is now ongoing. CBS interfaces to the internet banking and card management solutions, plus to the applications required by the regulatory authorities, such as the RTGS, the tax committee, the credit bureau, the credit registry and so on.

Aitimov admits that Delta Bank was very wary of the 'big bang' model. 'It was Colvir who insisted on it, and our final decision to follow this model was made only after successful testing days,' he recalls. 'Now we are 100 per cent confident that it was the right decision as it spared us a lot of time and money.'

However, the implementation was not without challenges. Customisation, end-user training and data migration were the most difficult tasks, according to Aitimov. Customisation of CBS was kept to a minimum 'to prevent the implementation of legacy system features in the new system' and also to keep the costs down. This required a huge effort from the bank's key people during gap analysis, he notes. There was a process optimisation project in parallel to the CBS deployment, with the bank restructuring its business processes and products for ready-made solutions set in Colvir's core system.

Testing was done with standard UAT procedures and two test days, carrying out a full set of the bank's actual daily operations, including business day opening and closing.

For training, Delta Bank followed Colvir's methodology, which consists of three courses:

  • introduction training course preceding the gap analysis;
  • functional training course preceding the system set-up and UAT;
  • end-user express training course preceding testing days.

'This is revolutionary, as until now none of the banks in Kazakhstan have had experience of transitioning from one system to another in just one day.'
Akylbek Aitimov, Delta Bank

'Express training is a very important part of the Colvir training methodology,' observes Aitimov. 'It is provided online for all end-users and includes only practical exercises focused on typical transactions. We have found express training to be a very effective tool that enabled the successful “big bang” implementation.'

The data migration methodology was also adopted from Colvir, as the bank saw it as 'advanced'. There is a wide set of reports that enables the bank to validate data migration results in the course of the implementation, 'long before the system goes live,' says Aitimov. Delta Bank decided not to ask for support from the legacy vendor, BIS, as the bank's IT staff had sufficient expertise. However, a local partner of Colvir, ProfIT Global, was recruited to assist in the development of data migration formats. 'As a result, data migration was completed successfully. We migrated all the necessary historic data and avoided a lot of manual work,' Aitimov states.

'We are satisfied with the results of the implementation,' concludes Samzayev. The project was delivered on time and within budget. There were tight controls to ensure this, he adds. All projects at Delta Bank run through its committees, headed by the bank's management and held several times a week. 'Top management applies a responsible attitude to the projects, not leaving any questions unanswered,' emphasises Samzayev. 'Disputes are resolved in a constructive manner.'

Colvir's system is the backbone for the future information system at Delta Bank, he says. There are now plans to launch new sales channels, internet banking and mobile banking. A new workflow automation system will be introduced too, to shift from paper-based processes to electronic ones.

Overall, it has been an immense undertaking for the bank. Changes took place across the board, including in operations, the approach to business and interaction between the bank's units. All this, in Aitimov's view, made it possible to move to the new core banking software platform in record time. 'This is revolutionary, as until now none of the banks in Kazakhstan have had experience of transitioning from one system to another in just one day.'