Managing Costs Related to Increasing Banking Regulation By leveraging a single source of information, financial institutions can gain a consolidated view of their core banking systems and their capabilities, across multiple instances and geographies. Executive Summary Banks face several issues with their core banking systems (CBS) pertaining to documentation. These include undocumented customizations as well as knowledge dependency on subject matter experts (SMEs) and vendors. By using a platform document solution, financial institutions can create a single point repository of information for their core banking capa- bilities implemented in multiple branches and regions, thereby replacing the conventional approach covering how release-based documen- tation is managed. A platform document solution provides a real-time, holistic view of all function- ality changes that have occurred within the core banking system over time. Conventional release- based documentation has limitations with respect to coverage since typically incremental function- ality changes are documented. This white paper makes the case for platform doc- umentation as an initiative banks should embrace when they deploy core banking systems renewals or upgrades. Platform documentation enables banks to maintain end-to-end traceability among business processes, functional requirements and test scenarios to make core banking renewals, or upgrade-related engagements, less daunting and risky than the more isolated and less synchro- nized release documentation approach. Situation Overview It can be said that core banking systems form the backbone of bank operations and, as a result, contribute substantially to growth and profitabil- ity. This in and of itself justifies renewed interest among banks to modernize their CBS to improve competitiveness amid ever-changing regulatory compliance requirements and business needs. Furthermore, banks have realized the importance of having a process in place to organically manage information relevant to the most recent versions of their CBS. As a result, they are placing emphasis on ways to maintain a centralized repository wherein all features of the CBS are recorded and updated, including all releases and enhancements. Many realize that rapid access to timely and accurate information is essential to protect and expand existing revenue streams. Platform documentation as a solution can be instrumental in consolidating all information associated with a bank’s core banking platform and provide a holistic view of the overall system’s cognizant 20-20 insights | june 2015 • Cognizant 20-20 Insights
Transcript
Managing Costs Related to Increasing Banking RegulationBy leveraging a single source of information, financial institutions can gain a consolidated view of their core banking systems and their capabilities, across multiple instances and geographies.
Executive Summary Banks face several issues with their core banking systems (CBS) pertaining to documentation. These include undocumented customizations as well as knowledge dependency on subject matter experts (SMEs) and vendors.
By using a platform document solution, financial institutions can create a single point repository of information for their core banking capa-bilities implemented in multiple branches and regions, thereby replacing the conventional approach covering how release-based documen-tation is managed. A platform document solution provides a real-time, holistic view of all function-ality changes that have occurred within the core banking system over time. Conventional release-based documentation has limitations with respect to coverage since typically incremental function-ality changes are documented.
This white paper makes the case for platform doc-umentation as an initiative banks should embrace when they deploy core banking systems renewals or upgrades. Platform documentation enables banks to maintain end-to-end traceability among business processes, functional requirements and test scenarios to make core banking renewals, or
upgrade-related engagements, less daunting and risky than the more isolated and less synchro-nized release documentation approach.
Situation Overview It can be said that core banking systems form the backbone of bank operations and, as a result, contribute substantially to growth and profitabil-ity. This in and of itself justifies renewed interest among banks to modernize their CBS to improve competitiveness amid ever-changing regulatory compliance requirements and business needs.
Furthermore, banks have realized the importance of having a process in place to organically manage information relevant to the most recent versions of their CBS. As a result, they are placing emphasis on ways to maintain a centralized repository wherein all features of the CBS are recorded and updated, including all releases and enhancements. Many realize that rapid access to timely and accurate information is essential to protect and expand existing revenue streams.
Platform documentation as a solution can be instrumental in consolidating all information associated with a bank’s core banking platform and provide a holistic view of the overall system’s
cognizant 20-20 insights | june 2015
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architecture from a functional (i.e., business) as well as from a system design and configura-tion perspective. This helps banks to address the knowledge requirements of all stakeholders who are interested in referring back to various modules (i.e., business products) that the CBS is configured to accommodate. Readers of this document can clearly identify the functionalities in the build version of the CBS (model bank) and also the version which has evolved after custom-izations suited to the specific bank or financial institution (enterprise suite).
Organizations that proactively embrace platform documentation as a solution to help reorganize its internal processes while redefining its overall approach to core banking implementations or upgrades can reap the following advantages:
• Platform documentation offers a structured process to execute core banking transforma-tions, enabling banks to upgrade with complete end-to-end traceability between standard func-tionality and requirements. This minimizes the need for customization to the standard core banking platform.
• An engagement around platform documen-tation can reduce the overall effort invested in requirement management — from require-ment gathering and elicitation, through gap analysis and functional documentation.
• A platform capability matrix (PCM) and a platform catalog document (PCD) are two crucial deliverables that form the pivot of a platform documentation-based solution. Together, they provide a holistic picture of the end-to-end architecture of the CBS, particularly where various configurations and parameter-izations are mapped to the bank’s entire gamut of products and features. Platform documen-tation, therefore, best qualifies as the only approach in which traceability can be estab-lished and maintained between the functional and operational aspects of the bank’s business, as well as system-related nuances of the CBS.
• The output (final deliverables) of an engage-ment around platform documentation not only facilitates the requirement manage-ment phase of the implementation lifecycle of any CBS, but it also forms the foundation of all understanding that is required from a domain or a technical perspective in all down-stream activities such as application develop-ment, maintenance and support.
Listed below are the most common trouble areas that tend to decelerate CBS transforma-tions across multiple geographies and regulatory frameworks. A CBS’s presence in a particular geography (commonly referred to as an instance) should adhere to all localized statutory and regulatory requirements. Instance differences are intentionally deployed to accommodate the various product features necessary to meet specific customer needs. The more divergent the modules, the more challenging it can be to track these differences and measure their impact.
Major Hurdles to OvercomeManaging all CBS platform information and capa-bilities across multiple instances and countries is a major challenge faced by banks. Key hurdles include:
• Lack of one-stop-shop for information. Business users cannot view the core banking platform holistically and hence are unable to fathom the capabilities of all product features. Due to this lack of understanding, they are unable to leverage product function-ality to address current operational needs and sometimes end up making unwarranted cus-tomizations.
• Knowledge dependency on multiple sources. In the absence of a common knowledge repository for the entire CBS, there is a larger dependency on the system vendor, as well as SMEs, for obtaining the system’s functionality information in their respective areas.
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• Redundant release document. A bank’s core banking platform undergoes multiple upgrades and enhancements that are launched as sepa-rate releases. This documentation is usually specific to the features that are revamped at that time and does not deliver a complete view of the platform’s evolution. Furthermore, the features listed in these release documents may not necessarily be valid even on the date on which it is issued due to subsequent iterations.
• Undocumented customizations. System-related customizations to a CBS may have been added through multiple releases of a core banking product. There remains a potential risk that all changes made through these upgrades were not formally documented or aptly cap-tured. Any undocumented customizations are seen as a major setback for banks’ audit logs.
• Absence of back-to-core analysis makes it difficult to identify the core capabilities of the CBS. Often, previous customizations made into a core banking product are integrated and incorporated into its latest release. These additional features, which were configured over and beyond the “model bank” (build version) are often offered as core functionality in subsequent CBS releases. These are typically known as product upgrades. This sometimes makes it difficult for banks to identify which features pertain to the original functional-ities of the CBS. Banks must then conduct a thorough back-to-core analysis to distinctly identify core features from customizations. This can help ensure that the bank’s products equate directly with the up-to-date capabilities of the core banking platform.
Platform Documentation as a Solution Rapid access to timely and accurate informa-tion is essential to protect and expand existing revenue streams.
This has been realized by many banks that now feel the need for a centralized repository for maintaining and updating all CBS features and functionalities, encompassing all releases and enhancements.
We recommend that banks consider platform documentation as a solution to complement their needs around a core banking implementation or upgrade. Our rationale is that a platform docu-mentation solution:
• Requires the creation of a tool-based knowledge repository that covers all the core
banking platform features used by the bank.
• Constitutes a definite strategy for tackling the shortcomings and challenges faced by a typical legacy core banking system.
• Helps banks to facilitate appropriate dissemi-nation of knowledge regarding various CBS modules (products and functionalities) as well as the overall system architecture.
A platform document solution primarily addresses the need to provide knowledge transfer electroni-cally to all who wish to familiarize themselves with all CBS modules (related to all of the bank’s products). It acts as a one-stop reference that addresses the information requirements of all of the bank’s stakeholders, ranging from senior executives who require a holistic view of the CBS’s capabilities as well as business users, who are interested in understanding the CBS’s enhanced features and supported products as well as its core functionalities.
A platform documentation solution meets the above objectives in the following ways:
• Provides a single repository for accessing information on platform capabilities imple-mented across multiple instances:
> Captures capabilities of the existing core banking platform of the bank.
> Delivers a consolidated “platform view” rather than the limited release documents that showcase platform enhancements made over time.
> Identifies and documents the system gaps that have been offered as customizations across multiple instances.
• Meets the knowledge needs of multiple stakeholders:
> Multiple views can be created including those that are specific to the needs of busi-ness users, bank operations and IT teams.
> Role-based access rights can be granted to users.
• Assists in system upgrades by creating a single platform document covering all previous enhancements and requirements:
> Offers a real-time knowledge platform that is updated on an ongoing basis.
> Maintains end-to-end traceability between functionality, requirements and test cases.
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PFD
PCD
PCM
Dee
p D
ive
An
aly
sis
A high-level understanding about functionalities of various modules/clusters.
Detailed business context as well as system adjustments and customizations necessary to support the overall functioning of various modules/clusters.
Detailed understanding of functional requirements, business rules, business process flows, specific use cases and screen references, etc.
Platform Functional Document
Platform Catalog
Document
Platform Capability
Matrix
Platform Documentation
Platform documentation ensures organized docu-mentation of all core features and functionalities of the CBS along with the customizations added to the core product to meet the bank’s localized requirements, both functional and regulatory. These customizations are included in the list of core functionalities of the CBS throughout the cycle of multiple upgrades.
Organized documentation facilitates a more intuitive understanding of the sequence of changes and customizations that have been made through successive upgrades. This way, the organization can establish traceability between core functionalities, enhancements and require-ments addressed in each upgrade from inception throughout the lifecycle of the engagement – be it when initiated in core banking application devel-opment or added during the maintenance phase.
Platform Documentation FrameworkFigure 1 depicts a typical three-layered approach undertaken to capture all system-level configu-rations and parameters for the various products and features offered within the CBS.
The three-tier platform documentation approach will succeed in expediting the pace of an engagement around a core banking implementa-tion or upgrade.
In this approach, the complete CBS information is documented in a layered manner, providing the following:
• Modular functionality overview.
• Business context and region-specific system customizations.
• Detailed functional requirement understanding.
Core Banking Transformation Approaches Using Platform DocumentationListed below are two approaches we have undertaken to enable platform documentation in the CBS implementation lifecycle.
We suggest a different approach depending on the bank’s intention to execute the CBS imple-mentation or upgrade in a single go or through successive releases.
Figure 1
The Three Tier Platform Documentation Model
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Approach A: All at Once
For banks considering a replacement or upgrade of their CBS in a single go, platform documen-tation engagement can be executed as the first step toward marrying banking processes and operations with IT enablement. The documenta-tion should precede workshops with business
users, as well as documentation of business requirements, to best determine the finite set of customizations followed by the remaining SDLC (see Figure 2). Such an approach will guarantee minimal customizations, since all products and functionalities are typically frozen in the platform documentation phase.
Figure 2
Figure 3
Big Bang Approach to Platform Documentation
Incremental Approach to Platform Documentation
Approach ARequirements using complete platform documentation at the start of the implementation roadmap:
SDLC Complete Platform
Documentation (L1 + L2 + L3)
Workshops with Business Users
Business Requirement
Documentation
Perform Fit/Gap Analysis in
Core Banking
Approach B
SDLC Workshops with Business Users
Business Requirement
Documentation
Perform Fit/Gap Analysis in
Core Banking
Requirements using phased execution of platform documentation parallel to the implementation roadmap:
Functional Requirement Document (L3)
Product Journal (L2)
Product Schema (L1)
This approach would take more time to execute from start to finish, and also runs the risk of limiting the ability to add customizations.
Approach B: Phased Implementation
For banks that are planning to upgrade their core banking platform through successive releases, it is recommended that they run a parallel engagement for platform documentation to effec-tively manage the documentation supporting the software.
Banks with mature core banking solutions should follow a phased approach to platform documenta-tion since their platform will be more complex as a result of the CBS’s necessary interactions with ancillary applications (see Figure 3).
At the onset, they can focus on creating a high-level snapshot of the products and function-alities that are present in various installations/versions of the software across diverse geogra-phies. On completion, stakeholders will gain a
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comprehensive view of the universe of features supported by their CBS, including customiza-tions. Some of these identified features, such as globally adhered functionalities, are then incor-porated in the final version, called the universal banking platform.
As the bank proceeds to the next phase in its CBS implementation, it should focus on creating a detailed document such as a product journal that contains a consolidated view of the bank’s businesses along with the overall system configu-ration with references to geography-specific cus-tomizations.
This product journal facilitates the implementa-tion lifecycle by establishing traceability between different business requirements and the core banking modules supporting them, including the customizations added to suit the bank’s unique needs. This model can be more time-efficient, although some additional effort will be required to analyze customizations at the end of the imple-mentation lifecycle.
Looking ForwardWe typically follow a specific roadmap when working with customers to execute core banking platform documentation projects. Our methodol-ogy is similar to the SDLC waterfall model wherein tasks undertaken at each stage are informed and cascade from the output of the previous stage. These stages include:
• Prioritization: Prioritize customizations and identify functional specification documents (FSDs), use case documents and other related approach documents.
• Analysis: Analyze the identified FSDs and create base documents.
• Discussion: Modify and streamline base documents by conducting interviews and workshops with SMEs.
• System analysis: Assess the system to confirm that the system’s behavior jibes with its docu-mentation.
• Platform document creation: Brainstorm and finalize the sections of the final platform document system.
About CognizantCognizant (NASDAQ: CTSH) is a leading provider of information technology, consulting, and business process outsourcing services, dedicated to helping the world’s leading companies build stronger busi-nesses. Headquartered in Teaneck, New Jersey (U.S.), Cognizant combines a passion for client satisfac-tion, technology innovation, deep industry and business process expertise, and a global, collaborative workforce that embodies the future of work. With over 100 development and delivery centers worldwide and approximately 217,700 employees as of March 31, 2015, Cognizant is a member of the NASDAQ-100, the S&P 500, the Forbes Global 2000, and the Fortune 500 and is ranked among the top performing and fastest growing companies in the world. Visit us online at www.cognizant.com or follow us on Twitter: Cognizant.
World Headquarters500 Frank W. Burr Blvd.Teaneck, NJ 07666 USAPhone: +1 201 801 0233Fax: +1 201 801 0243Toll Free: +1 888 937 3277Email: [email protected]
About the AuthorsAgniva Mookherjee is a Senior Consultant within Cognizant Business Consulting’s Core Banking Practice. He has worked in projects related to retail and corporate banking on multiple core banking platforms such as Temenos T24 and Flex Cube. His core competency includes business analysis, require-ment gathering, gap analysis and platform documentation for customers across various geographies. Agniva received a degree in management in 2009 when he completed PGDM, focusing on marketing and finance. He can be reached at [email protected].
Megha Bhasin is a Senior Consultant with Cognizant Business Consulting. She has more than nine years of experience in the banking domain across the retail and corporate banking sectors. Megha has worked on several core banking platforms including Temenos T24, Flex Cube, Finacle and The Complete Banking Solution (TCBS). She is a commerce graduate from Panjab University and holds a management degree in finance from ICFAI, Hyderabad. She can be reached at [email protected].
Rohan Kudav is an Associate Director within Cognizant Business Consulting’s Banking and Financial Services’ Core Banking Practice. In this role, he is responsible to lead and run a practice with defined revenue and profitability targets, develop solution offerings and provide consulting to retail/corporate banking customers. Previously, Rohan worked as a business analyst supporting customers in various geographies within the retail and corporate banking domains. Rohan received his commerce degree at University Of Mumbai. He is also a chartered accountant. Rohan can be reached at [email protected].
