Profile

Export-Import Bank of India (ExIm) is the premier exports finance institution of the

country. The Government of India launched the Bank under the Export-Import Bank of

India Act 1981 with a mandate to not only enhance India’s exports but also integrate

the country’s foreign trade and investment with overall economic growth. At the end of

the Financial Year 2013-14, the Bank’s overall business stood at INR 1567.82 billion, up

14 percent over the previous year. The size of the loan portfolio was INR 758.73 billion.

The Bank has a staff of 275.

Export-Import Bank of India moves from complexity to simplicity with Finacle

CASE STUDY

2 | Infosys

Overview

Though ExIm Bank is primarily a corporate

lender, the lending business workflows are

very different from traditional commercial

banks due to the support of lending

schemes by the government of India.

Terms are governed largely by diplomatic

and strategic decisions by the Ministry of

External Affairs and Finance, and the tasks

and objectives of the Export-Import Bank

have repercussions not only in the banking

industry, but for the entire economy of

India. With operations supporting such

high-stakes transactions, the complexity

required a modern solution. Yet the

operations of the bank were still very much

stuck in the time period during which it

was created. Lacking the automation and

integration innovation that has defined

core banking evolution over the last

two decades, ExIm Bank remained in an

environment directed by humans. As a

large government entity, clients of ExIm

Bank are large multinational corporations

and countries. It was becoming

increasingly difficult to serve the customer,

and without a modernization effort to

optimize the IT environment, it was likely

the challenges would have cost the Bank

significant business.

The need for core banking transformation

Like most IT environments at large number

of banks today, many of the applications

at ExIm Bank had been assembled over the

years as a loose patchwork of systems and

workflows. The bank had some significant

legacy challenges to overcome, most of

which revolved around manual and very

low-tech processes. Where applications

were involved, different core functions

had their own solution, and the systems

were extremely siloed, with almost no

integration. Where applications were

absent, excel sheets and manual data

gathering sufficed. Human intervention

into the legacy workflows were one of the

most crippling areas for the old system.

An absent employee might mean an

inability to access specific data, or might

stall whatever aspects of the operation the

employee controlled. With roles so widely

dispersed and fragmented, inefficiency

and human dependency stymied growth.

Another issue of the legacy system was the

quality of data. Manual intervention means

mistakes, affecting the output of that data

into downstream processes. A snowball

effect was common as data became

larger, and the bank opened itself up to an

inordinate amount of risk, in turn hurting

the core business. Table 1 lists some of the

common challenges faced by ExIm Bank

with its old system.

CORE FUNCTION THREAT/ CHALLENGE

Loan processing was developed in-house Co-ordination with different vendors for

different applications resulted in huge

AMC and support costs

Guarantees were on propriety applications Since applications were isolated,

duplication of work was un-avoidable

Letters of Credit were supported by Bank staff was forced to do majority of

excel sheets their routine work manually

Treasury was mostly on excel sheets due Due to the process being manually driven,

to unavailability of any specific application the bank was not able to gather data

Limits were monitored manually Manual operations were human error

prone and the bank was exposed to

operational risk and credit risk

MIS reporting was done on excel sheets Data problems, weak integration into

with the help of manual data feed other applications

Table1: Challenges Were Numerous.

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Finacle rises to the challenge

The Finacle team devised a number of

creative solutions to overcome various

challenges en route to successfully

implementing two complex modules.

ExIm Bank required a unique functionality

for it’s product called Line of Credit Module

(LOC) which is specific to the Bank. Under

this functionality, ExIm Bank extends credit

line to a specific country to promote export

of goods and services to the borrowing

country at a subsidized rate of interest

and claims differential rate of interest

from Government of India under interest

equalization scheme. This is a unique

lending feature and is not offered by other

commercial banks. The customization team

designed workflows and mapped LOC

work flow to form a cohesive solution by

using the existing Finacle functionalities

available in Commercial Lending, Letter Of

Credit, Bills and Limit Tree.

Similarly, the project team had to find a

way to support drawdown level interest

functionality, coupled with interest table

code and interest reset functionality based

on pegging frequency. They hit upon an

innovative approach of customizing the

interest calculation using scripts and then

passing the interest calculated through the

demand generation batch job.

On the Finacle treasury solution side, the

following six major enhancements were

done to cater to the requirements of the

users:

• Syndicated loans

• Multiple fees

• Step-up, step-down commercial loans

• Functional line items like combined

Nostro, combined counterparty credit

limit, FX dealers pad and instrument-

wise limits

• Market specific interfaces, namely

CROMS (Clearcorp Repo Order

Matching System) CBLO (Collateralized

Borrowing and Lending Obligation)

and NDSOM (Negotiated Dealing

System Order Matching)

• Three regulatory reports, which have

added value to ExIm Bank and sparked

the interest of a similar institution in

another country.

Building confidence among the users

was arguably the biggest challenge

of the User Acceptance Testing (UAT)

phase. The staff was habituated to the

old legacy system, which over a period of

eleven years had been fully customized

– complete with Excel worksheets and

manual processes – to the Bank’s needs.

Also, the implementation team also had

to gain the support and confidence of the

Bank’s top management. They achieved

this primarily by conducting a series of

user acquaintance workshops and video-

conferenced demonstrations to familiarize

the staff with the Finacle solution. The

Bank and the implementation team

together refined several process flows and

streamlined a number of desk operations.

Next, a team of subject matter experts from

both sides collaboratively produced user-

friendly manuals explaining, among other

things, specially customized functions like

interest calculation and disbursement.

ExIm Bank found that these issues were

threatening its ability to scale operations.

It realized that the solution to this was to

replace the snarl of legacy applications

with a modern core banking solution.

A welcome but challenging mandate for Infosys

In 2012, ExIm bank approached Infosys

to implement Financle core banking

solution with Finacle CRM and Finacle

Treasury, on the basis of its experience

in commercial banking space and the

strong treasury product. The uniqueness

of the implementation was about the

customization required to make it work.

While the mandate was welcome, it posed

several challenges to the Infosys and the

Bank’s team. For one, ExIm Bank was not

a regular commercial bank, which meant

that it’s requirements differed from the

functionality available in Finacle core

banking solution. Since it was difficult for

Bank to deviate from existing practices,

it was up to Infosys to find a way out of

the impasse. Another issue was that the

Bank’s products and services were having

customer-specific variants. Also, it was

going to be a complex activity to integrate

the treasury and trade finance systems,

which used several trading platforms,

with Finacle treasury solution. But the

biggest challenge of all was winning

the confidence of employees, who had

previously gone through a treasury

solution implementation that had failed

because of a lack of fitment with the Bank’s

functionality.

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Understandably, ExIm Bank’s top

management was closely involved. During

the final phase of the project, the Finacle

team met with the Bank’s Chairman &

Managing Director and Executive Director

twice a week to give them a status update.

Separately, the team met other important

stakeholders once a week to discuss any

issues or roadblocks.

Last but not least, a war room housing

key stakeholders from both sides was the

scene of hectic action. Over a period of two

weeks, the concerned people discussed,

debated and closed all outstanding UAT-

related issues.

Following a strict set of best-practices

to reach an ambitious end goal was

compelling, but what made this project

worthy of recognition was the lack of cost

or schedule overruns.

In recognition of all this, ExIm Bank

also won the Celent Model Bank Award

2014 for the Legacy and Infrastructure

Transformation category.

The technology in short

The following technologies were used:

• Finacle Core Banking, CRM and

Treasury Solutions

• IBM AIX -UNIX System

• Oracle 11g

• WAS 7 (IBM WebSphere Application

Server)

• JDK 1.6.0_24

• Jasper reports 3.0

• Visual Basic 6.0

• XML,XSL

Business Benefits

ExIm Bank has realized a number of

quantifiable business benefits from the

successful implementation of Finacle

core banking solution, CRM and treasury

solutions. The rate of customer growth has

accelerated from 15 percent to 24 percent,

to raise the percentage share of revenue

from new customers from 10 percent

previously to 22 percent. The number of

products per customer on average has

increased to 40 from 32. What’s more, the

Bank has achieved 100 percent success is

converting prospects to customers.

Today, the Bank can implement a new

product or variant in a week, which used

to take four previously. As a result, it has

managed to launch three new products

within the time it used to take to launch

one new product earlier.

Finacle has made an equally big impact on

the Bank’s agility and accuracy. The average

turnaround time for reporting is now 2 days,

down from 5. The number of transactions

carried out per person has been reduced due

to high automation resulting in reduction of

human error.

The technology cost per user has come

down dramatically from INR 79,000 to INR

30,000; automation efficiency stands at 30

percent today, compared to zero earlier.

The number of change requests per project,

which indicates the platform’s ability to

meet evolving business needs without

requiring significant development effort,

has crashed 90 percent to go from 10 to 1.

Operational Benefits

Automation has brought much efficiency

to erstwhile laborious processes. This

has resulted in several benefits, ranging

from manpower savings and better

planning to better NPA management and

timely reporting. It has also improved

risk management and compliance. For

instance, the Bank’s Risk Management

Group is able to operate in a more scientific

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Parameter: Business Growth Pre – Finacle Post implementation of Finacle

Customer growth rate (%) 15% 24%

Percentage revenue from new customers 10% 22%

Number of products per customer 32 40

Customer conversion rate

Technology costs

Technology Cost per User (INR) 79,000 30,000

Average change request per program (Reduction in the average highlights ability of platform to meet evolving business needs without any development efforts) 10 1

Product launches

Average time to implement a product or sub-product in the system (weeks) 4 1

Operational costs

Reduction in turnaround time for reports (%) 60%

ExIm Bank is very different from regular commercial banks and hence the transformation program was also uniquely challenging. We are delighted that despite the complexity involved, the Bank and Infosys worked together to ensure a smooth implementation. The business benefits, efficiency gains and lean infrastructure that ExIm Bank has achieved through its partnership with Infosys Finacle is testimony to the success of this program

Deepak Bhatia, Chief Manager at ExIm Bank, India, said,

manner; and the solution’s strong security

features have minimized the risk of

fraudulent practices.

Treasury operations have benefited

from better liquidity management and

close monitoring of exposure limits; any

breach is signaled immediately to prevent

overexposure or regulatory violation.

Encouraged by this improvement in

capability, the Bank has ventured into

exotic products like derivatives more

aggressively.

Last but not least, the technology

landscape wears a new look. By ridding

the Bank of multiple applications, Finacle

has also enabled the consolidation of

servers. This has reduced the number of

servers both at the Production and Disaster

Recovery sites, saving a large portion

of data center expenditure. The Bank

has optimized its talent pool and is less

dependent on external vendors. Thanks to

its leaner infrastructure, the Bank is able to

comply with Business Continuity Planning

and Disaster Recovery mandates.

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About Infosys FinacleInfosys Finacle partners with banks to ‘simplify’ banking and arms them with accelerated innovation to build tomorrow’s bank, today.

For more information, contact finacleweb@infosys.com www.infosys.com/finacle

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