Unique story: Japanese bank running on Indian IT

Unique story: Japanese bank running on Indian IT
Dibeyendu Ganguly, TNN

There was a time when Shinsei Bank had so many Indian software engineers working at its headquarters in Tokyo that the company canteen introduced a range of curries on its menu. The software engineers were from TCS, Wipro, Infosys, iFlex, Polaris, Nucleus and their numbers were in thousands. Led by Jay Dvivedi , Shinsei’s legendary Indian-born CIO, they transformed Shensei from the stodgy old institution it was five years ago to the sleek new retail bank it now is.

The story eventually became a Harvard Business School case study, titled Information Technology and Innovation at Shensei Bank, and CEO Thierry Porté attests to the debt the Japanese bank owes the Indian engineers. “The IT initiative totally changed Shinsei,” he says. “Even today, we are a Japanese bank that runs on Indian IT.”

Formerly the head of Morgan Stanley Japan, Porté joined Shinsei in 2003, two years after its IT rejig began, but as a long time resident of Tokyo, he was well acquainted with the problems of the country’s banking system. When Indian engineers first began their work at Shinsei, Japanese banks charged ATM users a fee for every transaction — and the service was available only during banking hours, till three o’clock in the afternoon. “Japan’s banks started sooner with IT, but they didn’t change as technology developed,” says Porté . “Shinsei was one of the earliest to completely shut down legacy systems and start afresh.”

Shinsei’s IT project was completed in one year rather the three years originally estimated and it cost only $60 million — 10% of what other Japanese banks spent on similar projects. The Harvard case study gives the credit to Dvivedi’s relationship with India’s IT companies: “With each company , Shinsei worked to establish a relationship characterised as a partnership rather than one of a supplier.

The bank worked with its partners without requiring competitive bids, avoiding traditional requirement documents such as Request For Proposal or Request For Information. Dvivedi believed these were superfluous process steps that added unnecessary time and overhead. Further, Shinsei did not enter into fixed-price contracts; on the contrary, engagements were quantified on a time-and-material basis.”

An interesting aspect of Shensei’s new IT system is that it uses no mainframe computers. In fact, Shinsei is Bill Gates’ favourite company — featuring in every other speech he makes — for its systems are based entirely on PCs using the Microsoft Windows platform. Further, it uses the public internet rather than leased lines, which allows it to move work to any location, the most important of which is India. Shinsei still has a close relationship with its Indian IT partners, who are called in whenever its system needs to be expanded and upgraded , such as when it acquired APLUS, a consumer finance company , whose systems needed to be integrated with the bank. “We have virtual work rooms in India,” says Porté . “We video-conference with our IT partners for new projects all the time.”
The thousands of Indian software engineers who created the bank’s IT system, and continue to work with it, have never needed to learn Japanese — Shinsei has provided them with translators all through. As an American private-equity owned Japanese bank, Shinsei is exceptionally global in its outlook. A graduate of Harvard Business School, Porté is American (his parents immigrated to New York from France after World War II), while his wife is Japanese. And there are several other Indians at the top in Shinsei besides Dvivedi, such as its CFO and head of retail banking.

Last year, Shinsei expanded its India connection with a small office in Mumbai, offering corporate advisory services. This was followed by a deal with UTI Mutual Fund, through which Shinsei distributed UTI’s products to investors in Japan (the asset management venture manages $500 million). The tie-up is now being expanded to other South East Asian countries, starting with Singapore.