IBS Journal Supplement 2015


‘Despite the best intentions of executive management


to build the bank around the new system, the opposite often occurs.’


Mark Paterson, Sofgen


for a few years some of its best people to work full-time on the project, alongside the new recruits, he observes.


Selection and contract considerations


De Meyer also believes that for most banks, vendor attributes are more important than functional ones. ‘Except for tier one banks and the upper layer of tier two, the reality of most banks is that the products of the top five vendors can serve your needs. So, yes, study the products but look at the vendor company, its vision, roadmap, strategy, people and track-record.’ Similarly, consider the system integrator along these sorts of lines, he advises. Andrew Ruffell, CEO at the Core


Banking Group, which focuses on testing and quality assurance, suggests, ‘in terms of the selection of systems and partners, beware the cheapest and spend time on the contract. There is no time to negotiate lengthy change control in such a fast moving environment so have a contracting basis which allows for this and choose your partners carefully based on relationship, alignment of objectives and trust – not price, as the lowest price is often a sprat to catch a mackerel.’ De Meyer warms to the topic. He


recalls a previous project where the final


vendor quotes were $3 million, $6 million and $6.5 million. The bank selected the $3 million option and the project ended with a lawsuit. ‘Nobody in this bank seemed to realise that perhaps there was a reason why it was only $3 million. The product offered was an “end of lifecycle” product while the two others were “top five” products. Also, do not get into the trap of focusing on licence cost. Licence will be eight to ten per cent of your programme cost.’


There is also some hard-nosed


commercial advice from Fiona Brownsell, who has worked on a number of projects, including at Metro Bank in the UK, and is now heading UK-based consulting firm, Tusmor. ‘Agreeing to a fixed price and timeframe for implementation [is optimal] as this means it isn’t in the supplier’s best interest to run late and boost “consultan- cy” revenue.’


Senior backing and strong governance


The project team needs to have clear direction from the top of the bank, with senior management buy-in and a vision that is communicated to all staff, not only at the start of the project but throughout, particularly in the inevitable rocky times. This is emphasised by Mark Paterson, EVP, integration at Sofgen (recently acquired


© IBS Intelligence 2015


by Tech Mahindra), and another to have worked on many core banking system projects, including at MKB in Hungary and Hypo Alpe Adria. ‘From the outset, the bank needs to drive the project, taking ownership of planning, migration strategy and so on. A strong, dedicated project sponsor is needed, capable of translating the strategic vision of executive manage- ment into the decision-making process within the project.’ The project manage- ment needs to be agile and flexible so that it can respond to problems and delays, he adds, and both bank and vendor resources should be dedicated to the project. De Meyer believes the business case is


essential to the success of the project. It is expensive and high-risk, so have all other options been considered? ‘I sometimes call core banking option 26,’ he says. You only go for option 26 if the 25 other options to solve your problem don’t work. ‘Make absolutely sure that the business case of not doing anything is worse than doing the core banking programme.’ And De Meyer is clear about senior


buy-in. ‘Get real support for the core banking project across the bank including business (first), operations and IT. Real support means real support, not the kind of “yeah, yeah, we should do this programme” but outspoken strategic support that says, this is not about IT, this is of paramount importance to the


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analysis: running a core banking project


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