By Jon Tonti
Massive systems integrations – brought about by mergers and acquisitions – have been occurring at unprecedented rates in global financial markets over the last several years. Senior executives at Bancolombia, one of Latin America’s fastest growing banks, know all about the triumphs and challenges of such integrations, and are among the first to point out that third-party outsourcers play a complex, multi-layered role in such transformations. We sat down with Bancolombia’s Jorge Otálvaro, Administrative Vice President, and Alejandro Pulgarin, Manager of Corporate Strategy and IT Architecture, to gain insight into how the largest bank in Colombia has updated its systems architecture since 2006 and the specific contributions made by several leading global services providers.
Pulgarin is responsible for defining and developing Bancolombia’s business architecture (much of that consistent with systems architecture) since the intense transformation process began. Otálvaro plays an integral role in Bancolombia’s outsourcing strategy while also touching areas of the business such as corporate security, compliance, logistics, and information management.
We learned from Pulgarin and Otálvaro (the two will also be referred to as ‘Bancolombia’) that strategic areas outsourced by Bancolombia are IT Operations, Software Development, Q&A Testing, Security Monitoring, Collections, and Asset and Property Maintenance. That range of outsourced services is supplied by a number of providers. Bancolombia shared with us the strategic providers that play major roles are TCS, Infosys, IBM, Personal Soft, HP, Intergrupo, and Accenture, among others.
These major providers mesh their Global Delivery Models with the Bancolombia’s value chains using a mix of insourcing, nearshoring, and offshoring recognized as the progressive strategy in international banking. “Currently outsourcing offers huge benefits. Internally we are constantly analyzing trends and best practices to define what processes can be delegated to third party providers,” said Pulgarin.
Global Delivery Network
TCS for example has a local presence in Medellín (where Bancolombia is also headquartered) from which it helps Bancolombia service customers, its global delivery hub in Montevideo where Uruguayan software developers support Bancolombia, and its main operations in India where Indian teams manage back office banking processes.
Bancolombia was born in 1998 out of the merger between Banco de Colombia and BIC. Several years later in 2005 Bancolombia absorbed Corfinsura and Conavi, two other massive Colombian financial institutions, to become the biggest bank in Colombia. Like all CIOs know, the integration of systems that must take place as a result of mergers is not easy to deal with.
“The integration process confronted us with legacy systems, which had to be modernized to guarantee the ability to meet our strategic objectives,” added Otálvaro. Bancolombia’s relationships with its providers are clearly based around the various systems these providers install, adapt, and maintain. Thus, Bancolombia’s systems architecture and strategic relationships walk in lockstep. Since the transformative process began in 2006, Bancolombia has dedicated itself to incorporate world class systems to support its core processes and to renew and replace legacy systems according to our interviewees.
Bancolombia’s Systems Matrix
SAP – Customer Relations Management (CRM), Administration, Finance and Accounting, and Human Resources (HR) (some 38 modules in total)
Sap’s CRM solution helps Bancolombia with marketing, sales, and service functions related to clients while modules regarding administration are used to manage supply chain, fixed assets, and providers. Finance, Accounting, and HR related modules handle their namesakes.
SAS – Anti-Money Laundering (AML), Marketing Automation (MA), and Operating Risk (OpRisk)
Together with other specialized solutions the above SAS modules are focused on analyzing information. AML is a necessary tool to comply with legal requirements while MA helps Bancolombia analyze and deepen its knowledge about client contact. OpRisk is another SAS module that enables Bancolombia to build risk models related to operational loss.
Murex – Treasury Solution
The comprehensive Murex Treasury Solution provides “real time analysis, access to derivatives, global risk and limits management, full processing and accounting conforming to the most recent regulations,” according to Murex.
Finacle – Core Banking Solution from Infosys
Finacle (which is supported by in-house Infosys staff) is used to carryout core banking functions.
Tecnocom SAT – System to administer bank cards
This system supports Bancolombia’s card related products and payment gateways.
Oracle – Enterprise Content Management (ECM)
Oracle ECM manages documents and content organization wide.
Websphere acts as the glue for all other systems; it is the integrative infrastructure.
“The value chain is evermore integrated among clients, business alliances, providers, and financial entities. For that reason it is imperative to shorten cycle times regarding their interactions (especially with the client), strengthen the business through distribution channels, and emphasize information management.”
It Didn’t Come Easy
Obviously when an international bank (Bancolombia has presence in Perú, El Salvador, USA (Miami), Panamá, and Puerto Rico) decides to embark on a massive multi-year systems upgrade there are challenges.
Pulgarin and Otálvaro told us that adopting best practices and aligning them with processes and specific needs of the business was a key challenge to take advantage of each solution to its fullest potential. The systems are tasked with conforming to a regulatory environment in constant flux that needs to be fed the right information; Bancolombia says that parts of that same information flow used by employees for operational purposes of course must have the same quality and confidence as data that flows to regulatory agencies.
Another challenge was bringing the Bancolombia workforce up to speed. New communications channels had to be established to help the workforce develop additional capacities so that the new functionality of the systems could be applied to the day-to-day activities of Bancolombia. While all this was going on, an emphasis also had to be placed on standardization to guarantee infrastructure sustainability and the ability to build on the current infrastructure.
Bancolombia told us that the updated systems architecture invites new practices and advances in technology that facilitate client focus. It’s clear the bank has used the “how will this impact the client” test as it has updated its systems. Pulgarin and Otálvaro talked about 360-degree customer care and financial services while also mentioning providing the auto-service platforms for clients, internal and external. They want to have as much secure and dependable information available as possible so Bancolombia’s clients and employees can resolve problems without information gaps.
Another huge focus relates to how Bancolombia works in a vastly integrated world.
“The value chain is evermore integrated among clients, business alliances, providers, and financial entities. For that reason it is imperative to shorten cycle times regarding their interactions (especially with the client), strengthen the business through distribution channels, and emphasize information management. The synergies and benefits of this dynamic result in earnings growth, profitability and efficiency,” said Pulgarin.