FINCA Pakistan Microfinance Bank, founded in 2008 as Kashf Microfinance Bank, was formed to provide access to financial services to low-income borrowers with no collateral requirements, providing entrepreneurs with capital to expand their businesses. FINCA acquired the organisation in 2013, using its wealth of experience and robust business operations to spur growth.

Now part of the FINCA Impact Finance global network, FINCA Pakistan provides financial services such as small loans and savings accounts to more than 900,000 clients through more than 135 branches across 120 cities in Pakistan. It is a pioneer of microfinance banking in Pakistan, having introduced the first completely digital mobile wallet, called SIMSIM.

FINCA Microfinance Bank was previously using BiLOGiC’s hPLUS Core Banking system on a ten-year licence. With the expiry of the licence due in 2018, the bank decided to transform its solution capabilities and align its IT strategy with the overall business strategy. The bank initiated the selection process for its strategic solution partner, with the roll-out of an RFP in Q2 2016.

Selecting the best-fit solution partner is an immense responsibility and the first step towards a successful transformation. The selection process was comprehensive and lasted six to eight months, which included technical and financial proposal evaluations, detailed system demonstrations, due diligence and risk assessment. Six systems comprising three local and three global systems, including Temenos T24, Oracle Flexcube and AutoSoft AutoBANKER were shortlisted for further evaluation based on four main criteria – market presence, functional attributes, technical architecture and vendor experience. The evaluation committee for the selection process included all relevant department heads and representatives from FINCA’s global Core Banking team.

As an industry practice, the evaluation process holistically looks for factors beyond the functional and technical strength. For example, one of the differentiating factors is the solution provider’s potential to be a long-term strategic partner.

The bank had a positive experience and an established level of comfort with AutoSoft Dynamics during the quick and successful  implementation of AutoSoft’s AutoMWALLET and AutoHRM solutions for the bank’s branchless banking and human resource department respectively.

Relevant banking experience from AutoSoft’s management team allowed them to provide business know-how and a strategic approach, which was appreciated by the bank. Moreover, AutoSoft Dynamics welcomed the idea of carrying out a gap analysis before contract signing, which allowed the bank to quantify the customisation cost, which went in favour of AutoSoft. Finally, AutoSoft’s solution complied with the requirements from the regulatory and localisation perspectives.

During the latter part of 2017, the bank awarded the mandate to local solution provider AutoSoft Dynamics for its flagship Core Banking system AutoBANKER III Premium along with a host of relevant modules.

Implementation

The planning and analysis phase began in Q1 2018, with the implementation starting in March 2018. There was an aggressive timeline set with the first pilot branch scheduled to go live in four months. The pilot branch selected has a diverse product base, sizable portfolio and transaction volume, and proximity to the bank’s headquarters. The solution for the pilot branch was delivered in three deployment batches, with the branch solution ready for user acceptance testing (UAT) by June 2018. There were about six weeks of rigorous testing with the pilot branch going live on 4 August 2018.

After two months of stabilisation, subsequent branches were rolled out on the new system from October 2018 onwards. Initially, there were five to seven branch migrations per week, which was later ramped up to 15 branches per week in March and April 2019, with the last branch migration completed by the end of April 2019.

One reason for the phased roll-out was to limit the risk and exposure that is inherent in a ‘big bang’ approach, and another was to ensure sufficient hand-holding of the branch staff through the onsite presence of trainers after every migration. This approach allowed the bank to start migrating branches quicker with necessary functionality, instead of the longer duration required for full-fledged customisations and comprehensive readiness required for the big bang approach. This approach also enabled the bank to prioritise the customisations, with critical customisations given priority, while the other customisations were rolled out eventually.

AutoSoft Dynamics had previously worked with microfinance banks; therefore the number of customisations required was limited. Functionalities such as account opening, KYC, teller operations and so on are standardised. As AutoSoft’s solution complied with regulatory and localisation requirements, the need for customisation was further reduced. The majority of the customisation involved microlending functionality. FINCA Microfinance Bank has tailored its cashflow-based individual lending processes to the needs of its client segment; hence the required feature set was not readily available in the solution and parts of it had to be developed by AutoSoft Dynamics.

Another challenging activity for the solution provider was the multiple integrations that had to be carried out during the implementation, which involved around 60 uploading routines developed with about 25 query-based routines. While integration with AutoSoft Dynamics’ AutoHRM and AutoMWALLET was more straightforward as they were internal to AutoSoft, other third-party systems involved multiple vendors such as Avanza for ATM and mobile banking, Analytics for IBM-Cognos business analytics, FINJA for mobile wallet app, loan mobilisation and digitisation, Nadra for biometrics and BiLogics for hPLUS.

A tricky issue in a technology transformation is data migration. AutoSoft needed to ensure clean data and correct formats for migration and this process proved to be cumbersome due to the complexities of data structures in the previous system. Also, the vast amount of transaction and historical data that had to be migrated was another challenge.

A rigorous testing process was followed to ensure a smooth transition to the new system. The testing started as soon as AutoSoft Dynamics delivered the vanilla product and then as each subsequent deliverable came in. System integration testing (SIT) and UAT were performed for six weeks, before the go-live of the pilot branch. There were three mock migrations to ensure a successful release. After the initial  phase, further testing was carried out for subsequent releases for customisation, regulatory changes and internal controls.

Governance structure

 For a complex implementation to succeed, it is imperative to have the buy-in from the entire organisation. While the core team consisted of four technology team members from both FINCA Pakistan Microfinance Bank and AutoSoft Dynamics, there was participation from the bank’s top leadership. In the initial phase of the project, there were weekly steering committee meetings, which then became biweekly as the project and processes matured. The steering committee included heads from all departments, chaired by the COO. Often, during a large transformation, while the team is focused on delivering a strong and stable solution, the people-readiness takes a backseat. However, during this implementation, there was equal emphasis given to training the users. This included hands-on training and video tutorials provided by AutoSoft Dynamics. Trained team members visited each branch for a week during the branch go-live phase to provide additional training to branch staff. In all, almost 40% of the entire organisation was trained on the application.

From the selection of a strategic solution partner to the implementation and phased approach for go-live, the bank and AutoSoft worked tirelessly to ensure success. The transformation has left behind key lessons for both parties and positive end-user feedback and a visible improvement in processing speed and accessibility of the system. This is a classic example of synergy between client and provider, resulting in the successful implementation of a Core Banking platform.

KEY FACTS

Bank: FINCA Pakistan Microfinance Bank
Headquarters: Lahore, Pakistan
Solution partner: AutoSoft Dynamics
Solution: AutoBANKER III Premium
Timeline: 4 months for pilot branch

Avatar
by IBS Intelligence
imp-loader
preloader