OSPD Assignment
Q1- What should be the future business vision of XYZ bank
management?
Ans:
XYZ Bank is a strong and big public sector bank which is facing fierce
competition from private and foreign banks and losing its sheen. The
major reason for its dismal performance during the last few years is
its failure to adapt to modern technology. Though at one point of time,
it was one of the frontrunner in technology front, it has failed to
change with time and needs a complete overhaul with respect to
Information Technology. As it has a huge presence all over India, with
the implementation of modern banking technology, it can regain its
lost glory. Thus, the future business vision of XYZ bank management
should be:
To emerge as a strong and technology savvy bank and
contribute to the needs of the economy and customers.
To invest in IT, treat it as an important area for the bank and
adapt to technological changes with time.
To provide better customer services along through more
delivery channels like ATM’s, Internet Banking, Mobile Banking, in
order to increase efficiency and profitability of Bank.
Q2- What should be the future scope and scale of IT and IS for
the bank in the next three to five years?
Ans:
As per our analysis of the case study, the Information Technology (IT)
System of the bank is completely redundant and needs a complete
overhaul. With respect to Information System (IS), it can be said that
the Management Information System (MIS) is virtually missing for all
important areas of top management responsibilities. Since the
management takes all decisions on the basis of ineffective
information available to them, that’s the reason why they have a huge
level of NPA’s of 12%. So, there is a huge scope for improvement in
the IT and IS of the bank in the next three to five years. We suggest
the following steps in this regard:
1) Full computerisation and connectivity of all branches
with regional and head offices:
The first thing that XYZ bank needs to do is full computerisation
and connectivity of all of its branches with regional and head offices
and if possible, implementing a Core banking solutions software like
Finacle. All branches, offices and ATM’s of the bank should be
connected so that customers can access their accounts from any
location and provide them with anytime and anywhere banking.
At present, the branches and ATM’s operate on a standalone
basis. So full computerisation and connectivity will serve the dual
purpose of providing efficient customer service as well as
eliminating the problems associated with transferring the data from
branches to regional and head offices like data corruption, viruses,
etc.
Electronic Fund Transfers/ remittances could also be achieved
once the networking of the branches is done.
So, a detailed plan should be prepared for the implementation of IT in
the bank. Since the back lacks good IT personnel, it would be best if it
would take the help of specialised IT companies and consulting firms
which have past experiences in the implementation and maintenance
of huge branch network of banks.
2) Recruitment and training of Specialised IT personnel in
the bank:
Since the bank lacks technically qualified IT personnel at top level, it
should hire specialised IT personnel having good amount of experience
and capable of leading and handling IT operations at a large scale.
Since the bank has 11 computer learning centres across the country, it
should provide training to its employees in IT and motivate them to
adapt to new technology. A detailed training program needs to be
planned in this regard. It can also sponsor some technical courses that
its employees undertake.
3) Implementation of IT based Management Information
System (MIS):
A proper management information system (MIS) needs to be set up so
that the top management can access important and relevant
information to take quick decisions. So, a separate Asset Liability
Management (ALM) Department needs to be set up on IT platform with
full connectivity to all branches. This would help in reducing the level
of NPA’s as defaulters will not be given new loans.
4) The bank should implement proper risk management systems,
treasury and foreign exchange management systems with the help
of IT.
5) Opening of city back offices:
City back offices should be opened so that functions like cheque
processing could be separated from branches as this gives the branch
staff time to interact with customers and solve their queries, thus
increasing customer satisfaction. It would also help branch staff and
managers to focus more on business development.
6) A detailed internet banking website should be developed by the
bank which could offer services to customers.
Q3- What are the major draws back of system?
Ans:
The following are the major draw backs of the MIS and IT system of
XYZ Bank:
Lack of centralised customer database:
Since there was no centralised customer database, defaulters at one
branch were given loans at the other branch and this lead to
increasing the level of NPA’s of the bank.
Lack of computerisation:
Only a limited number of branches were computerised and there too,
some terminals were not working properly. This lead to huge
paperwork and reports to be made and thus, customer dissatisfaction.
Lack of connectivity among branches:
The branches and ATM’s operated on a standalone basis and thus,
there were problems related to transfer of data from branches to
regional and head offices like data corruption, etc. Also, the ATM usage
was also low as ATM’s were only situated along with the branch.
Lack of technically qualified IT personnel at top level:
The General Manager (IT) and Assistant General Managers (IT) were
not technically qualified to run the IT department. So, there was huge
reliance on junior level IT officers. So the bank lacked specialised IT
personnel.
Lack of a proper MIS:
The MIS was missing for top level management which resulted in the
bad performance of the bank as the bank could not take good
decisions based on efficient information.
The system of the bank does not follow the Bank for
International Settlement (BIS) based on ISO. Similarly , the in house
Technical support of keeping the technology safe and access
secured does not follow the RBI and IBA guidelines ,In case of
Password Management , Accesses control , Offsite backups , Fall
back system , data Base Administer .
Inter Bank transactions were huge and their reconciliation is
tough. Interbank transactions were a potential area where frauds
were possible.
The bank had very high NPAs of around 12%.
The customer service of the bank was poor because of which
it was losing its market share.
Q 4- What steps you would take to design a better MIS
consisting of TPS/EIS/DISS? Give detailed steps.
Ans:-
The Management Information System (MIS) of the bank should
be designed in such a way that all the information should be
accessible to the management so that they can take decisions on
the basis of information. It should consist of Transaction Process
System (TPS for the junior level employees) for routine banking
transactions and Decision Support System (DSS) & Executive
Support System (ESS) for middle and top level management.
Design of the Management Information System (MIS)
The MIS should be designed in such a way that it provides various
kinds of information useful for all the departments of the bank like
treasury, risk, credit, forex, etc. It includes principally the basic design
as to what information should be provided by the system .
Finding and Determining the Information base available in
the organization: A proper database should be prepared by the
bank which should include the data about all companies of the
country along with their financial need analysis. Information for this
can be gathered from various agencies like CRISIL and CIME etc.
Classification of the information on the basis of various
decision areas like, Internal control return, cost price information,
Personnel and administrative information.
Data Processing Implementation: -
This is concerned with those things that are important to the
processing of the data. The purpose in this stage is to design a data
processing system that will most efficiently implement the system
specified in the stage – 1 and its sub steps. This stage is consisting of
following sub steps in designing the system;
Matching Information to decision use helps in eliminating
the redundant information and information gaps i.e. information
which are useful but not available at present will be identified.
Avoiding the Duplication, discontinuing collecting of some
data not used at present may be considered.
Arranging the information in a structured way so that the
useful information can be identified any time. We can use either
relational database management system (RDBMS) or normal
database management system (DBMS) to organize the information
in a proper manner.
Determine how the information is processed, centrally or
reconciliation of inter branch transaction should be proper along
with proper network and with no time lag.
Determine the flow pattern of information, multidirectional
flow of data should be channelized.
Determine the cost of information considered the various
cost parameters required in the design process mentioned above.