IBS Journal April 2015
Danmarks Nationalbank in major RTGS system modernisation project
The Danish central bank, Danmarks Nationalbank, is progressing with a multi-year initiative to overhaul the real-time gross settlement (RTGS) sys- tem for domestic high-value interbank payments. The new technology part- ner is Perago, the South Africa-based subsidiary of the SIA group, which will supply its Java-based RTGS solution in a phased migration. The project has a target go-live date of 2018. This follows shortly after the mod-
ernisation of the Danish retail pay- ments network, with a new real-time clearing infrastructure supplied by out- sourcing provider, Nets, going live at the end of last year. ‘The main driver for this was that the
current central bank systems were obso- lete and needed to be replaced. All IT systems have to be updated continuous- ly, but at some point, it is not feasible to update the systems anymore, they sim- ply need to be replaced in order to meet the short and long run demands from the banking sector and the markets,’ says Ken- neth Schøler Pedersen, head of the pro- gramme for implementing portfolio and central bank systems at Danmarks Nation- albank. The incumbent platform is known as Kronos, a proprietary development
Danmarks Nationalbank, Copenhagen ©Jacob Christensen, Flickr
operated by regional outsourcing pro- vider, BEC, with the technical operation outsourced to another company, JN Data. Danmarks Nationalbank is responsible for the oversight of the system. ‘The current business applications, including the RTGS, operate on a mainframe-based IT plat- form, shared with a number of smaller and mid-sized commercial banks,’ says Ped- ersen. ‘This operating platform has been designed and maintained to meet the requirements of these commercial banks, but it now needs to be replaced.’ Perago was selected after an interna-
tional tender process, says Pedersen. ‘This included a prequalification in which pro- spective vendors were prequalified based on certain conditions for participation.’
This was followed by a formal invita- tion to bid, after which Perago/SIA was awarded the contract based on the main award criteria, ‘which was the most economically advantageous offer’. Perago also satisfied Danmarks Nationalbank that it was able to pro- vide operational reliability and main- tenance of the system. It is also worth noting that the vendor has local refer- ences for its RTGS solution. Both Sver- iges Riksbank in Sweden and Norges Bank in Norway have used the Perago platform since 2009. The first drop of the Perago software
is expected to launch in autumn 2016. The second stage, which will include integra- tion with the Target2-Securities (T2S) infra- structure for securities settlement in Dan- ish kroner, will go live in 2018. ‘The project applies an agile development method. This means that the development, which takes place to accommodate the needed changes to make the new RTGS system meet the bank’s business needs, is done in development iterations,’ says Pedersen. Each iteration will be delivered to Dan- marks Nationalbank, with testing carried out internally. The commercial banks con- nected to the RTGS system will then carry out user acceptance testing (UAT) before a migration phase prior to the launch.
More core banking system decisions looming in Nepal
The banking software market in Nepal con- tinues to be buoyant, with a number of core system selections expected to come to fruition this year as well as new ones to be launched.
Nepal Bank Limited has assessed the
responses to its extensive expression of interest (EOI) document released last year, and has now moved to the RFP stage. The EOI from the government-owned bank has attracted a lot of interest across the board, from vendors big and small, including the usual heavyweights like Temenos, Infosys and Oracle FSS and less known vendors in the region such as SAB and Colvir Software
Solutions. On the way out will be a locally developed system, Pumori Plus, supplied by Mercantile Communications (which is also known to have responded to the EOI). It is understood that three core sys-
tems made it to the next stage of the selec- tion: Temenos’ T24, Infosys’ Finacle and ERI’s Olympic. All three already have users in the country. The RFP is expected to be released in the next few months. In parallel, the bank is looking for a new CEO and head of IT/MIS. Another Nepal-based entity, Prabhu
Bank, is likely to go to market for a new system. The bank is the result of a 2014
© IBS Intelligence 2015
merger of four financial institutions: Kist Bank, Prabhu Bikas Bank, Gaurishankar Development Bank and Zenith Finance Company Limited. Prabhu Bank is listed on Nepal Stock Exchange, has 90 branch- es countrywide and 650,000 customers. It has inherited a hotchpotch of local legacy systems, which it intends to replace with a centralised, modern core platform, accord- ing to a source on the ground. Meanwhile, Lumbini Bank and Citizens
Bank International are yet to reach a deci- sion on their respective core software ren- ovation projects. The two banks initiated their system selections last year.
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