Core Banking Transformation at a top North American bank

leveraging BIAN

© 2021 Cognizant
 A team from Cognizant’s Banking and Financial Services Consulting practice led the Core
Transformation strategy and design at a top 5 North American bank

Has 21 years of global experience in the banking and Has more than 12 years of experience in leading
financial services industry working for brands such as technology and strategy projects for financial
Deloitte, Protiviti, Capgemini. He works at the intersection services clients. She has worked on multiple digital
of business, operations, and technology helping retail and transformation programs for top banks across North
commercial banking clients create sustainable value by America, EMEA and Asia Pacific and has significant
developing and executing business agility and performance expertise on Core Banking Modernization, Wholesale
Sanghosh Bhalla improvement strategies with focus on products, platforms Neha​ Lending Transformation. She is also a BIAN (Banking
Assistant Vice President and services, and digital/core banking transformation Manager Consulting Industry Architecture Network) certified consultant

Has 19 years of progressive experience in providing Has more than 15 years of experience in leading
advisory services to the both top-tier and challenger technology and strategy projects for financial
banks. ​He specializes in the intersection of banking & services clients. His experience includes strategic
financial services, with a focus on digital banking, platform assessments, product management, business
modernization, business architecture. He is an expert on process optimization, target operating model design,
Fintech assessments , specifically Core Banking and and project management. He specializes in
Customer Servicing Platforms and is a BIAN certified Akshaya Bhargava​ Treasury and Core Banking Transformations and
Niloy Sengupta
Director Consulting architect (Ex) Senior Manager Consulting holds a BIAN certification
Cognizant

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The bank was using a three decades old mainframe platform, heavily customized, as its
Enterprise Customer system of record and the Deposits transactional system
The Bank’s core banking platform was built on legacy system (Hogan) which was highly customized over the years, leading to increased
costs, complexity, and inflexibility, creating an urgency to modernize to achieve agility, differentiated capabilities , and technology parity.

Bank partnered with Cognizant Consulting for advisory support in helping formulate the overall path to modernization including the approach
to decompose current legacy application into Microservices and plan to rewrite existing applications using modern technology stack and
infrastructure.

Key considerations for Core Modernization

Business Considerations Strategic Considerations

• What are the implications for current Products and Process Landscape in the • How to manage the high risk and complexity of Core Modernization?
new core ecosystem?
• How will the new Core handle existing gaps in products and processes and • What Organizational Change Management would we need?
customizations?
• What applications/components should be harvested, build or bought during • What are the new risks that will be introduced by the Transformed Core and
modernization? how to manage that?
IT Considerations Financial Considerations

• How will the dependencies on other projects in the pipeline be handled? • What will the TCO and ROI of the modern Core?

• How to find the right Consulting and SI Partners who can deliver? • What will be the Engagement Cost of Core Banking Transformation?

• What IT resources and capabilities would be needed to support Core • What would be the exit and opportunity costs ?
Modernization ?

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Customer, Deposits, and Relationship Pricing based Account Analysis were the three
functional areas, across multiple business lines, that the legacy platform supported

Customer Deposits Relationship

Supports theend-to-end
Supports the end-to-end product
product set-up,
set-up, Pricing and
account opening, ,account
account opening accountservicing
servicing
andand Billing
DepositSystem
Deposit System reporting forChecking,
reporting for Checking,Savings,
Savings,CDs
CDsand
and
IRAs
IRAs 140M Party 1.3M CD Accounts 200K
Records Commercial
Customer Primary System of Record for Customer Customers
Customer profile. Contact, Address, Customer to
Information
Information System Account Information and Customer to 650M Customer to 45M DDA Checking 630K accounts
System Customer relationships Account accounts analyzed
Relationships
System of Transaction and Record for
Relationship Relationship Pricing and Combined
Pricing and Billing Statements for Analyzed Checking 130M Phone 75M DDA Savings 220K accounts
accounts for Commercial customers numbers accounts invoiced monthly

Foundational Foundational Hogan app linking all other

Hogan Apps apps in the Hogan ecosystem
75M Customer IRA : 190K accounts
Addresses -0.9M IRA Money auto-debited
Minor apps in the Hogan platform
Market accounts monthly
Downstream Apps complementing and supporting the major
-2.0M IRA Savings
apps.
accounts
Current State Core Banking Apps
*Numbers are approximated

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Our strategy pivoted on unbundling the core ecosystem to simplify the business
capabilities, streamline operations and modernize the core
DESIGN CONSIDERATIONS BUILD CONSIDERATIONS DELIVERY CONSIDERATIONS
Hollow Out the Core Core platforms – best of breed approach, as Agile and Devops from the onset
Separate legacy add-on products from core and
compared to traditional legacy with entangled Drive MVP concept through automation of the
simplified core to essentials before beginning to capabilities development to deployment process, and incremental
modernize Complex integration but decoupled through API improvements. Minimizing overheads of heavy waterfall
Gateways and ESBs – can invoke both fine-grained style release planning, integration, and delivery
Simplify products and focus on driving and coarse-grained microservices. Supports the
customer engagement target state digitization providing high speed Straight- Workforce Transformation
Thru Processing
Drive product simplification to reduce product clutter Workforce transformation through training, upskilling,
and aligned product capabilities with a set of product Progressive Modernization fostering a culture of innovation, instituting agile ways of
and services to engage particular target segments. Modernization is a journey that can include a mix of working, strengthening the technology workforce, and
both Build and Buy approaches. Instead of a big- modernizing workplace environment.
. band replacement or re-write, use architectural
Technology led transformation Data is the core
patterns such as Strangler towards incremental
Enable Technology to be at the front and center of core evolution Analytical engines built on the data lakeaggregating data
transformation initiative working cohesively with business from all interactions, touch points across core / non-core
and operations through MVP based approach Lean implementation and experience components
Adopt to best market practices in the packaged software,
Platform approach supporting international as compared to extensive build / expensive and difficult to API first strategy
expansion maintain customization
Develop the API’s in forward looking manner, to
End to end integrity, and a replicable model for potentially monetize and help create API market place for
international expansion (geographies) and capabilities Complete segregation of experience layer from expanding the eco system and third-party service-
build-out (products and services) the systems of records providers to be integrated
Experience and process API’s on top of domain API’s
. (from the core) – and managing experience completelytop
Product management mind-set down, as compared to point-to-point that imposes legacy
Drive platform build (integrations) and capability build by characteristics on the process and experience
MVP construct – what can be taken to the market rapidly

4 © 2020 Cognizant
Using our proven DDD led progressive modernization approach, we drove both Re-write
to Microservices and Replace with COTS initiatives
Customer/ User Value Stream Functional Modernization Target State Microservices COTS product
Journeys Analysis Decomposition Disposition Blueprint Development Assessment

Customer Using top-down Decomposed the Assessed Developed Performed due

Developed a target state
journeys/process approach, value stream Functional Groups Microservices and diligence of COTS
blueprint using a combination
maps and mapped analyzed the components and for Modernization associated integration product as an
of top down & bottom ups
to business business value capability/ functional choices – Retain, architecture as a build alternative to Build
approach
capabilities. streams, through groups Retire, Improve and approach approach
event storm New
workshops
Scope of DDD (using BIAN)

BIAN helped narrow down Functional groups were framed Aggregates, Entities, Value Objects, Domain Events were
BIAN offered Open APIs out of the
the Business Scenarios, to align with the BIAN L3 derived easily from BIAN Service Domain, Business
box, influencing Modernization
Business capabilities and Components (Service Scenarios the business object model (BOM) and underlying
disposition assessment outcome
their interactions Domains) ISO20022 data model
DDD = Domain Driven Design

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We used BIAN extensively to outline the target state blueprint by hollowing out the Core

Extracted out of the legacy Core Resides in Core, on a modern platform

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The Transformation strategy resulted in significant business and technology benefits for
the bank
Acts as the GPS for the Core ▪ A modernization playbook with proven accelerator and frameworks based on Domain Driven
Design principles and technique to collaborate between Business and tech to drive large
Transformation
scale transformation
implementation and similar ▪ Comprehensive understanding of the emerging digital banking and leading vendor platform
platform modernization capabilities
journeys

Meets Strategic Business Bank is anticipating significant gain in below business objectives:
Objectives for Consumer and ▪ ~25 - 30% in Time to Market for New Products and Features
▪ ~10 -15% in NPS by improving Digital Efficiency and CX
Commercial Banking ▪ ~15 - 20% in Customer Retention through Relationship based pricing
▪ New Customer target of ~15%

Supports significant Cost ▪ ~$50M estimated annual cost avoidance through reducing Technology and Operating
Avoidance and Risk Expenses and through Process Simplification
▪ Ability to exceed targets of Risk Reduction and meet MRA requirements
Reduction

▪ Ability to harness the value and benefits of Cloud Computing and Digital technologies using
Stays Relevant in Terms of modern technology stack
Technology ▪ Stay Competitive with Digitally Native Banks and Fintech Non-Bank disruptors

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Thank You
Contact:
[email protected]
[email protected]