Case Study | State Bank of India
Banking for India
SBI is truly an institution the ‘Nation banks on’ holding over 250 million customers in a country where only half of the population is estimated to have access to banking
What Indian Railways is to transport sector, State Bank of India (SBI) is to banking in the country.
With over 13,300 branches (around 8,900 at rural and semi-urban centres), 17,000 ATMs (23,000 if you add ATMs of its associate banks; the number constitutes one third of the total ATMs in India) and average 47 million transactions in a day, SBI is truly an institution the ‘Nation banks on’ holding over 250 million customers in a country where only half of the population is estimated to have access to banking.
The oldest bank of the Indian subcontinent, which was known as Imperial Bank of India in its earlier avatar, has traveled a long way becoming a mass banker from a class banker. Enabled with ‘all the right technologies’, the leader is marching on to bring about financial inclusion in the country. It has already covered 119,000 unbanked villages through Business Correspondents (BCs), Business Facilitators (BFs) and opening branches there. Out of 73,000 villages (each village having a population of over 2,000), the government plans to introduce banking in by March 2012 the SBI will cover about one-sixth (12,421).
Besides this, the bank is in the process of providing basic banking facilities to about 125,000 unbanked villages through internet kiosks, POS mobile machines and cell phones. Till February this year, the bank has opened around 9.4 million ‘no frill’ accounts in the country. Its 43,000 business correspondents have fetched it business of Rs 1.58 billion up to February 2011 (deposits – Rs 460 million and advances – Rs 1120 million). Sixty thousand BFs on the other hand, have generated business of Rs 42.04 billion for it. The bank towers over others in SHG credit linkages as well cornering 29 per cent of the market shares. It has disbursed more than Rs 140 billion through Micro-Finance Institutions (MFIs) and Not-for-Profit companies.
To provide back-office support to BCs and 31,500 customer service points (CSPs), the behemoth plans to set up 300 Financial Inclusion Centres (FICs). Besides facilitating uploading of accounts, the FICs would provide regular supply of stationery and monitor compliance with KYC norms by CSPs. The bank has insured 1.4 million rural poor under SBI Insurance’s Grameen Shakti scheme.
Apparently SBI’s technology partners like TCS and HP expect a huge expansion in the bank’s operation in near future and are already preparing for scalability of the solutions. “We have, from the beginning understood that SBI is going to grow and it is growing rapidly. We need to be able to create a solution that is scalable and we have been moving ahead. For example, today the system that we have can handle double the amount of volume. We are operating 250 million customers and already thinking of 500 million customers,” says N Chandrasekaran, Chief Executive Officer and Managing Director of TCS, the company responsible for solution integration.
Chandrasekaran expects a six-fold increase in daily transactions (47 million), the SBI handles, in near future. Calling the SBI system ‘unique, state-of-art and scalable’, he lauds the ‘excellent environment’ created by bank’s generous investments in training, business and reliable technology.
HP, which provides underlying infrastructure for core banking and ATMs to the SBI, has already demonstrated to it future generations of technology and products through simulation in their US lab. “We have been associated with SBI for almost a decade now. It has been a journey which has been very demanding no doubt, but it proves that HP’s technology provides the ability to handle varying workloads 24x7 and help SBI deliver customer satisfaction. Over the years while the transactions volume and services have increased, we have been able to provide SBI with non-disruptive investment protection and scalability,” Ramanujam Komanduri, Country Manager for Business Critical Servers, HP India.
Prakash Krishnamoorthy, Country Manager-Storage Works Division, HP India, feels that the SBI, besides touching maximum number of people and making transactions possible across the length and breadth of the country, will be able to ‘link not only the navratnas but also the SMEs and offer the same quality of services, facilities and make industrialisation, growth, modernisation and commerce truly possible.’ He is sure SBI has a ‘highly reliable, proven and scalable’ storage platform to meet all of its future demands.
From the beginning of 1990, the bank got into what was called a distributed database. In 2002, the bank selected BaNCS 24, an Australian software, which TCS took over subsequently for running its core-banking platform. The platform, according to A Krishna Kumar, Deputy Managing Director (IT), SBI, covers all its branches within India. While TCS-BaNCS 24 takes care of SBI’s domestic operations, Infosys-Finacle looks after its foreign operations.
The ‘banker to every Indian’ has done lot of work in mobile banking and have nearly 100,000 transactions a day. It recently entered into a joint venture with Bharti Airtel, India’s largest telecommunications company, to make banking services available to the unbanked millions. The JV as Business Correspondent will make use of Airtel’s 150 million-strong customer base and ecosystem of over 1.5 million retailers and distributors across India.
It is looking at increasing the capacity of its servers and is also considering new generation servers for future. “The servers which we have are storing data up to 50 terra bites. When we look at December 2012 we are looking, may be, at about 80 to 100 terra bites worth of storage capacity,” says Kumar.
Considering the very large wide area network it uses, SBI is planning to have a fallback (in case its network goes down) and structure its payments activity through an application called ‘A Payment Initiative’ to maintain its dominant share in the banking sector.