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Success Story - BRAC Bank Limited, Bangladesh

Solution: Implementation of a comprehensive online banking solution that corroborates banking and financial experience and technological innovation.

Overview

BRAC Bank Limited was formed by BRAC, one of the largest microfinance institutions in the world, primarily with the purpose of offering regular banking services to the SME Sector that was considered under-served by the banking industry at large. SME’s are considered as “expensive” to serve because of the special needs of those who belong to this large group and because of their diversity and geographical dispersion. The Bank also had the objective of offering innovative banking services to urban corporate institutions and retail clients. IFC of the World Bank and Shore Bank, California are stakeholders in BRAC Bank Limited.

Having experienced the benefits of real technology through an earlier automation project of BRAC’s microfinance business using Southtech as the turnkey solution provider, the management of BRAC Bank Limited selected Southtech in late 1999 as its partner for planning, designing, developing and implementing a total electronic banking solution while waiting for the formal banking license from Bangladesh Bank (Central Bank). BRAC Bank obtained its go-ahead from Bangladesh Bank in June 2001.

The business goals and objectives were to spread and ensure efficient, high quality and reliable banking services by increasing access to economic opportunities for all individuals and businesses in Bangladesh with a special focus on under served enterprises and households across the rural–urban spectrum. BRAC Bank believes that the pursuit of profit and development goals are mutually reinforcing and thus it will increase the ability of under-served individuals and enterprises to build their asset base and will enable them to access market opportunities. Thus this endeavor will increase the economic well being for all Bangladeshis and at the same time will contribute towards the profitability of the bank.

Challenge

The main challenge was to work closely with the management of BRAC Bank in its formative stages when it had not even obtained its banking license and therefore only had a skeletal staff. Being the technology partner in the establishment of an institution from scratch was both challenging and rewarding. Southtech had to work closely on many aspects such as defining and understanding business objectives and market segmentations, understanding results of market research, development of different types of financial products, suggesting service delivery mechanisms, dealing with communication challenges throughout the country, understanding the Central Bank’s rules and reporting requirements, designing and suggesting an appropriate solution architecture that met existing and potential future requirements, etc. Rarely does one get an opportunity to look at the establishment of a full-fledged scheduled bank in such detail.

Solution

The integrated online banking solution provided comprehensive and robust customer services to its clients. It was the first Bangladeshi scheduled bank to be fully online with all the branches with a centralized database for online consolidation. Customers were surprised with many innovative features that clearly identified BRAC Bank to be the banker of choice. Moreover, the solution allows hundreds of customer relationship officers located in various parts of the country to market and administer customer relationships with minimal costs. Its unique solution architecture allows centralized as well as decentralized banking and the Bank takes advantage of both options; where the communication lines are unreliable, it chooses to have a server in the branch, otherwise a branch is served from its head office.

Why Southtech?

BRAC Bank was looking for a well-established software solution provider having strong analytical insight with sound domain knowledge of the banking industry. The bank needed a software development firm as the turnkey solution provider with a successful track record and commitment. Additionally, it required data conversion experience, proven phase-wise implementation methodology, a positive attitude towards embracing new ideas, a pool of skilled personnel to address challenges associated with hardware, software and humanware. Above all, the bank needed a provider having a comprehensive training program for their staff along with long-term service and support delivery capabilities in a very cost-effective manner.

Southtech Limited met all of the prerequisites and enabled BRAC Bank to fully exploit technology for its business transformation.

Results of the solution

BRAC Bank is expanding its activities rapidly. The numbers of branches have increased from one to nine within a short span of time. It plans to open six more branches in 2004. It enabled the bank to focus on their core business, which is providing financial products and services, not technology. However, technology has been leveraged to build and sustain mutually beneficial customer relationships based on quality, diverse product portfolio, sustainable growth strategy and effective management capability.

The banking solution satisfied the needs of key stakeholders by:

Empowering the top management with information at the fingertips for quick decisions
Providing a bird’s eye view of the bank from the financial and other perspectives
Risk management from the very beginning
Reducing operational costs significantly
Ensuring customer satisfaction by offering better service, a wider range of options and greater convenience
Enabling highly secured internal controls
Facilitating shortened time to market new financial products and services

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