In our special series featuring the W.Media Awards, we dive deep into one of the top 50 banks in the world – State Bank India (SBI). Find out what SBI has been up to in its Automation journey as we celebrate the most innovative organisations involved in Data Centre implementations and undergoing Digital Transformation. If your organisation has a similar DX project worth sharing with the community, do submit your nomination here.
For State Bank of India (SBI), the numbers are mind numbing. SBI is the 43rd largest bank in the world and ranked 221st in the Fortune Global 500 list of the world’s biggest corporations of 2020. It operates in a country whose population almost equals China but at the same time has a huge percentage of people who are unbanked.
SBI has 421 million customers and 761 million accounts, which is more than the entire population of the US.
Such a large size can be a boon. But it can also be a bane if not properly managed as the ramifications could be felt across India’s $3 trillion economy.
This is where SBI has embraced technology, more so automation and a hyperscale approach. Hyperscalers have to be looked at it from two aspects – one is network and the second is software. Most banks and large organisations have a north to south connectivity, but there is no East to West kind of connectivity. East to West means connectivity between multiple applications. North to South is connecting your application to the outside system through DC, router and others.
“Banks do not have the East to West connectivity due to security reasons you cannot have multiple systems talking to each other, they have to come to a routed setting,” points out Amit Saxena, Deputy Chief Technology Officer – Digital Banking, SBI.
While in normal times, these are issues that could be resolved at a slower pace, in the New Normal, financial institutions do not have the luxury of working at a pre-COVID pace.
“So, the biggest question for us just after the outbreak of the pandemic was what should be done on priority. All this got all of us into a situation that we have never thought of. But despite the adversities, we performed well,” says Saxena.
Nuts and Bolts of Automation
The challenge before Saxena was daunting to put it mildy. As digital adoption surged, the bank had to ensure that systems are geared up and meet the stringent requirements that Reserve Bank of India (RBI) – the banking regulatory body demands of banks. While SBI officials did not go into specifics, industry watchers are of the view that the bank had to make internal changes in business processes and align it with tech, with an eye on the future.
“Most in the BFSI sector have hyperscalers and private cloud implemented. We also have our private cloud and a lot of our applications are installed over there and that helps in the hyperscaling of our environment,” explains Saxena.
SBI looks at it from an aspect that gives them insights and this applies across their IT systems. “We tell them to tell me the four things that you are asking every day and you are extracting it. That is the first level of automation we said you would do it and this we have already implemented,” he says.
For example, all the data that has been sent across multiple bases which has been requested by multiple agencies and multiple regulators and also for internal usage that has to be automated which comes in frequently.
“The second thing that we have done is how well you know your IT systems and tell me when it is going to go down. That we have also automated. So a surge coming in would be reported within a millisecond itself because that’s an automated kind of a thing that is integrated with a lot of our systems and everybody would be able to see the live transaction processing of the system,” points out Saxena.
It shows the downstream systems and the upstream systems, which means from the incoming traffic to the outgoing processing traffic.
So, till what extent has automation been achieved?
“I won’t say 100 percent but in some of the places for example we have got a full digital bank. There are other systems which have achieved more or less of it but there is an opportunity for an organisation to keep on continuing with what they are doing,” Saxena avers.
Here one needs to understand that automation in the Western sense will not be applicable in India and definitely not in the scale that champions of automation prescribe.
This raises the question of whether India’s largest bank has specific guidelines when it comes to hyperscale automation? Saxena is of the view that there are certain principles of what you have to do. “It’s like asking a question about what you do every day, if someone is asking you to do it every day and then you are doing it then it is a process of automation,” he says.
The second thing we say is if you are automating your system then don’t look at it from a narrow region perspective. “I believe that we do this (automation) exercise wherein we tell how different systems tell how they are automating and what their monitoring method is. Some of the points are common across, but at the same time we have to look at a good takeaway and something that can be implemented across the organisation. If my foreign offices have done something because the regulator has asked them to do, it is a different country, then we should look at how that can be replicated in India,” says Saxena.
SBI’s approach to the Cloud
SBI has a presence in 39 countries globally. Traditionally, Indian banks do not have legacy systems which can be compared to say mainframes in US banks. SBI built its own private cloud called “Meghdoot” (Indian word for rain clouds) of about 7500VMs (Virtual Machines) hosting various financial services applications based on diverse technologies such as Oracle, Java etc. Meghdoot leverages virtualisation of compute, network and storage too (see box).
There are multiple critical business services which are leveraging Cloud Computing services:
- SBI Kiosk Banking Application – A front office application for Financial Inclusion is accessed by 60,000+ strong BC network of SBI to service the banking needs of customers where branches are not closest or accessible to the customers for their day to day financial needs. At any point of time about 20,000 BCs pump the transactions on this cloud hosted application.
- SBI Exclusif – SBI Wealth Management Services are hosted on Meghdoot
SBI Digital Channels hosted on Cloud:
- SBI Buddy – SBI’s flagship initiative for digital payments is hosted on OnDemand cloud architecture to be scalable payments platform for Digital India.
- SBI Quick – Missed Call Banking: Another scalable digital channel which processes 8+ million transactions per month
- Various Leads Management Applications
- Various intranet applications deployed for business support services
Above services are hosted under different models of cloud compute – Platform as Service, Software as a Service etc. It has brought agility in the deliveries, as well as automation of provisioning for cloud compute has been setup in DevOps model.
SBI will be leveraging Cloud Infrastructure for Collaboration Solutions, Capturing Customer interactions and Complaints, Analytics, Applications Development and Testing.
Refactoring old systems
However, there are older systems, which are being refactored and integrated with new-age systems. SBI has refactored some of the old systems but in banking there are certain heterogeneous systems that are not interconnected – such as a KYC (Know Your Customer) system or LOS (Loan Origination System).
“These were independent systems but now they are getting connected. Now they have to come to a middle layer, so those kind of design principles are being done at most of the places and some of those systems are still monolith so they are building an encapsulation layer at their end so that they should be able to export an API because they have never been consumed through a digital chat,” points out Saxena. Now YONO, SBI’s application, has the capability to dish out a loan in a few minutes, akin to what fintechs have to offer. “We rolled out new services (post COVID-19), new features and made it a 100 per cent end-to-end digital platform wherein you can open an account without visiting the branch and complete your KYC,” points out Saxena.
Are state-owned banks agile in the face of competition? This is the raging question across many Asian countries where government-backed banks are prevalent. “From the outside we might look conservative but as a bank we are very agile and have embraced every innovation across the banking sector,” Saxena maintains. For SBI, there are examples of YONO and partnerships with many Indian startup companies to help them navigate the next. We keep ourselves openly aware of the technological shifts that take place, states Saxena.
Going forward SBI is planning to do away with a separate mobile app and a portal, in an effort to reduce maintenance needs. “We don’t see the need to maintain two versions of a code and that is a technology shift we are considering,” reasons Saxena.
So, how does a bank of this size build a tech roadmap in a seemingly fast changing landscape? SBI has zeroed in providing ease-of-use experiences leveraging artificial intelligence, Virtual Reality, Scan-and-Pay and others. “My kind asks me why are you not providing a Netflix-like experience for banking services. This generation does not care whether you are a bank or a service provider. Personalised experience are the way forward and that is where we are headed,” said Saxena.
While that maybe the case, SBI has a huge responsibility. India has second-largest unbanked population in the world. As per government data, as of 13th February 2019, 340 million bank accounts have been opened under the government’s scheme. India’s population is around 1.2 billion. In absolute terms, India still has a large unbanked population, which is likely to be targeted in the coming years.
Studies have indicated that opening bank branches in rural unbanked locations was associated with significant reductions in rural poverty. Perhaps technology could aid in bridging the unbanked divide.