Newly formed in late 2008, Indonesia's Bank BRISyariah (BRIS) needed the agility to meet surging demand for products and services compliant with Islam's Sharia law. However, with the legacy core systems developed by its parent, Jakarta-based Bank Rakyat Indonesia (BRI; US$46 billion in total assets), it took weeks to open new locations, according to Fahmi Ridho, CIO for BRIS. "In addition, branch banking with the legacy systems was decentralized, leading to duplicate customer information files," he says. "We wanted an efficient, centralized system."
The core modernization effort actually began in late 2007, prior to BRIS' launch, when a unit of BRI, Unit Usaha Syariah (UUS), and representatives from the parent company started evaluating about two dozen local and international vendors, Ridho recalls. After narrowing the list to five, three were asked to provide a proof of concept. Key selection criteria included open source code and either established Sharia functionality or the flexibility to easily modify systems appropriately, Ridho reports.
Ultimately, Geneva-based Temenos' T24 system was selected in mid-2008, just before BRIS was officially established. "Temenos' open solution was easy to customize," Ridho explains. "Also, Temenos offered T24 as a pre-configured, parameter-driven model bank solution, with standard products and processes" -- including Sharia banking functionality.
Teams from BRIS and local integrator Anabatic Technologies began development in late November 2008, Ridho relates. To support T24, BRIS invested in an IBM System power6 p550 server and an Oracle Database 10g database. To enable all branches to access the centralized system, Cisco Systems (San Jose, Calif.) infrastructure was deployed, including Cisco Wide Area Application Services (WAAS) for WAN optimization.
Not Without challenges
Despite the planning, there were development challenges, Ridho says, including adapting the system to local Sharia practices and ensuring proper data migration. Since every Islamic country translates the Sharia methodology differently, he says, the template Temenos provided for Sharia banking wasn't completely suitable for Indonesia. "Having a local integration vendor partner helped us fulfill our market's requirements," Ridho emphasizes.
And when migration began in the summer of 2009, the distribution of data across multiple legacy systems caused several migration attempts to fail, pushing the data migration process across six months, Ridho notes. But, by late 2009, all development, migration and testing processes were complete, he reports.
And after cutting over to the new system on Jan. 1, 2010, using the big-bang method, BRIS immediately began reaping rewards, Ridho adds. "With T24, we can open a branch, outlet or even a temporary tabletop location in one to two days," he says.
"Also, using Cisco's WAAS with 50 percent compression enables T24 to work twice as fast," Ridho continues. "Consequently, we can use a range of network communication options because distant locations only need a minimum of 64 kilobits in bandwidth. In other words, we can operate locations using anything from a modem on a notebook computer to standard telecommunications infrastructure supporting multiple workstations."
In addition, the flexible core system permits IT to design workflows to fit end users' needs, rather than the other way around, Ridho says. "Temenos is changing our paradigm," he insists. "Before, business users were forced to follow workflows defined by the legacy system. Now we can adapt T24 to fit the process needs of our users."
Most important, BRIS is gaining competitive advantage while improving efficiencies. "Because we can now automate almost every banking process, we can maintain lean IT and operational organizations," Ridho says of his 50-person IT staff.
"We've reduced development time by 40 percent, allowing us to strategically reallocate programming resources," he adds. "As a result, we're not only able to achieve rapid business transformation, our bank is also growing at double the target rate, giving us the edge compared to similar banks."