Banco Credito del Peru and Alltel are hoping that the next seven years of their relationship will provide fewer headaches than the first seven years.
Not that either is dissatisfied. But after Banco Credito del Peru switched from its homegrown systems to the Alltel suite in 1995, it had to make extensive modifications in order to make it work in the South American banking environment.
As a result, the bank later found itself hampered in its ability to upgrade to new versions. "We had customized and made modifications to a large degree, which turns out to make our systems more custom-adapted instead of package-oriented," said Ricardo Bustamante, CIO of Banco Credito, a subsidiary of Credicorp Ltd. "We have to do our own maintenance, and it was almost impossible without paramount effort to install new releases."
Under a seven-year renewal agreement, Alltel will provide the bank with upgrades, new software and maintenance. It will also provide consulting on strategy, project management and application development methodology.
But ultimately Banco Credito del Peru wants to scale back its application development efforts.
"Part of our strategy, in order to run for the next five to 10 years, is to reorient our IT strategy in terms of packages," said Bustamante. "The bank should adapt its procedures to the capabilities of the best software in the industry."
However, not all of the bank's procedures easily fit into the U.S. mold. Banco Credito has subsidiaries in Peru, Colombia, Bolivia, El Salvador and the U.S. Accordingly, certain business practices are specific to the banking culture and regulatory environment. For example, the assessment of insufficient funds charges is more complicated in Peru due to stringent check kiting regulations. "A bounced check is disastrous for the customer because the regulations say that if a check is bounced twice, the customer is not entitled to have accounts in the entire financial system," said Bustamante. "We put the check through a process in our central organization, and have our credit officers essentially weigh the transaction and decide whether to reject the transaction."
An added complexity is the method by which Banco Credito charges transaction fees based on certain customer and account characteristics.
"It's a complex matrix that we have implemented within Alltel's systems," said Bustamante. "The kind of fees that we charge are also a source for modifications of the system."
In another initiative, the bank is installing middleware to help applications talk to each another.
"We are implementing IBM MQSeries in order to get rid of all of those one-to-one interfaces that we had built in the past," said Bustamante. "We have to have a good, sound CRM strategy to be sophisticated in the process of selling products and services, based upon very robust back-end applications."
Although Banco Credito plans to make several modifications using internal resources and bolstered by Alltel support, Bustamante expects the software industry to eventually step up with banking suites tailored specifically to South American financial institutions.