The Sunday Leader

Digitisation In The Doldrums

  • People’s Bank CBS Procurement Saga

Peoples Bank Headoffice

With People’s Bank being the latest target of a fully-fledged mudslinging campaign, many segments of the society are questioning as to this pre-meditated effort of weakening banks along with leasing and finance companies is part of a series of transaction.

The Sunday Leader has exposed during the last few weeks several moves by parties with vested interests to weaken companies especially in the banking, finance and insurance sector. (See last issue and Page 1 & 8 in today’s issue)

“There’s an organised move to destabilise the banking and finance sector and throw the whole economy into chaos. We have information of not only public officials but key management persons but even directors of some government organisations working hand in glove with bankrupt politicians and mudslingers. This is not an isolated incident but one incident out of a series of initiatives and incidents to destabilise the banking and finance sector,” a good governance activist and a renowned personality within the banking industry told The Sunday Leader.

In fact a certain Deputy Minister of the Government told this writer on grounds of anonymity on May 10, that they (certain MPs) wished to see several finance companies fall into trouble so that certain ministers would be placed in uneasy position.  We leave it to  the reader to decide who is right or wrong.

 

First response

In the initial days of the unfurling of People’s Bank debacle, People’s Bank Chief Executive Officer and General Manager – N. Vasantha Kumar sent the following response:

“As per the set vision of the People’s Bank to make it Sri Lanka’s ‘first Digitized Bank’ the required process started in June 2015 with the decision of having a total solutions using the current core banking platform and the final conclusion to have a total solution with the current core banking vendor Silverlake Axis to minimise conversion issues of reduced costs. They were assigned with the responsibility for providing total Digital fulfilment via People’s Bank new Digital channels by way of seamless integration. The Solution provider is fully responsible for the solution development to satisfy the Bank’s customer needs and its running, platform specification, configurations and implementation with its integration to the IBM based core banking system.”

The first phase delivery of digital products was planned to be deployed to the market in September 2016. Our IT Department started the process of sourcing hardware needs in April 2016 and Silverlake Axis simulated the solution in IBM labs in US to devise the exact configurations and received from them the Bill of Material in June 2016 and submitted same to our Supplies department to initiate the procurement process.

In line with People’s Bank procurement policies, our Supplies Department has called sealed quotations from vendors for the BOM and invited IBM vendors recommended by IBM Sri Lanka, and invitations were also extended to other vendors via sourcing relevant IBM vendors listed in websites. Although 7 vendors were invited only three were recommended by IBM. Since some vendors requested additional time, the Supplies Department further extended time by two weeks. Received bids were evaluated by a Bank Technical Committee to ascertain whether the bids comply with the evaluated BOM. The process was concluded in August 2016; the Bidder submission was compiled by the TEC committee and intimated to our Supplies Department. As the bank strictly followed the set procurement procedures and norms of the Bank, project time line was extended from March 2016 to September 2016, while the Hardware readiness was initially planned to be finalised by June 2016. Accordingly the total time plan was adjusted and the bank is yet to award the hardware to the bidder.

The bank has neither awarded the order nor taken any short cuts with the procedure as implied by the press reports. The bank has rigorously and transparently followed all laid down procedures and regulations pertaining to the project, of which progress has regularly been updated to the Board of Directors. At the last meeting of the Board of Directors, People’s Bank Digitisation project received the consent of the members except one member who had concerns and it was decided to refer this to an IT expert to obtain an independent opinion for discussion at the next meeting of the Board of Directors, in order to make the appropriate decision. It appears that a false propaganda campaign has been launched by certain interested parties with ulterior motives of disrupting the ambitious digitisation project of People’s Bank.”

 

Defeating the conspiracy

Last Thursday the People’s Bank issued an appeal to the public in a bid to inform the public of the need to expedite the digitalization drive. Titled ‘Let’s Defeat the conspiracy against People’s Bank’ it had the following message.

1.  In the year 2000, People’s Bank reported its worst financial status in its 40-years of existence.

2.  During the process of reconstruction in the year 2001, one of the main changes was to introduce a new software system (core banking system).

3.  This Computer system (core banking system) upgrading of the bank with the reputed Malaysian company, “Silver Lake” in 2003 has made People’s Bank the second largest bank in the country today.

4.  In order to ensure the bank’s standing among its competition, the Board of Directors and the management felt the need to implement an efficient, digitalised banking solution to enhance the bank’s services to the general public.

5.  Therefore, in  April 2015 the Board of Directors made an important decision to digitalise the bank.

6.  In order to minimise the costs of implementing a new digital banking solution, with data security as the main priority, the Board of Directors decided to upgrade the existing computer software system (core Banking system) of  Silver Lake.

7.  It was the opinion of digitalisation specialists as well, that the current software system, which handled the accounts of over 13 million customers, should be upgraded under digitalisation.

8.  Accordingly, the Board of Directors granted approval to sign an agreement with Silver Lake to undertake this digitalisation initiative in August 2015.

9.  Silver Lake clearly recommended that the new digitalisation process should take place upon the IBM Platform.

10. Hence, the bank called tenders (sealed quotations) from vendors endorsed by IBM agent in Sri Lanka for the necessary hardware to carry out this project.

11. Following the general tender (sealed quotation) procedure the vendors were given 5 days to submit their quotations and upon request by the vendors (bidders) the period was extended to 14 days.

12. By the end of the 14 days , the bank received one sealed quotation ( tender).

13. During the board meeting held on 25th August 2016, when this proposal to purchase the digital banking solution was taken up for discussion, one member of the board questioned the procedure followed.

14. As a result, the Board of Directors decided to seek an independent opinion from an organisation specialising in digitalisation and discuss the subject further, during the next board meeting before taking the final decision.

15. The bank rejects all the press allegations regarding a large-scale fraud and irregular dealings as false and baseless.

16. The Board of Directors has not yet taken a final decision on this matter.

17. It is clear that an individual or a group of individuals with malicious intent are conspiring to tarnish the image of the bank in order to break the trust & confidence the bank has built among its customers throughout the years.

18. It is no secret that most of the competitor banks are digitalising their services or have already decided to digitalise their services to their customers as well.

19. Evidence indicates that an unscrupulous group intends to ruin the reputation of the bank and sabotage the digitalisation process.

20. These conspirators are well aware of the bank’s ability to become Sri Lanka’s most successful bank through digitalisation and hence aims to stop the bank going digital somehow.

21. We urge the public not to be misled by this false information.

22. The bank will not allow anyone to stall the success or to destabilise the position of People’s Bank which the bank has built over the last 55 years.

23. We request the public to remain cautious of such motives until the next meeting of the board, where a decision will be taken in this regard.

24. Thus far, only one newspaper group repeatedly defames the bank with malicious intent. However, the bank would like to assure the public these allegations are totally false and baseless.

25. The main objective of People’s Bank is to digitalise its operations as soon as possible and provide its customers the world renowned cutting edge services with further efficiency & convenience.

 

Regulator’s dilemma

When inquired about the issues faced by the banking and finance industry, a Central Bank official on grounds of anonymity said that this was known as the ‘Regulator’s dilemma’ in central bankers’ parlance.

“We are continuously monitoring all banks and finance companies. However this is a situation like ‘Maga hitiyoth tho nasi- Gedera giyoth ambuwa nasi’ (Should you remain in the roadside, you will die- should you go home, your wife will die’.)”

In a different context with regards to a financial institution, Central Bank Non Banking Supervision Director Udeni Alawattage earlier told The Sunday Leader that even in the best company in the industry, if parties with vested interest within those companies work towards scuttling the business, nothing beneficial will ever materialise.

“Ultimately it is the depositors who will suffer and as the regulator we too will suffer,” warned Alawattage.

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