PKO modernizes, localizes with banking software
With 404 full branches and 455 sub-branches, bringing the bank up to speed from a technological point of view is an enormous task. PKO BP plans to invest zl. 350 million ($142.8 million) by the end of the century to computerize its network, said Krzysztof Misinski, deputy director of PKO's information technology center.
PKO had planned to develop its own, fully-integrated, on-line banking system, starting from the center and moving out to the branches. But designing such a system would have taken five years, and in the meantime, branches would be condemned to carrying out most tasks manually, a costly and inefficient way to run a bank. Eventually, the pressure from the branches to automate became too much.
"The decision was taken to build the system from the ground up - first automate the branches, and then move back toward the back office," Misinski said. "If we're talking about individual deposits, then we're by far the largest bank. But you need to have automation for it to make any sense. It's a big task to manage all those accounts."
As an example, Misinski pointed to the PKO branch on ul. Marszalkowska, just under his own office. "There are one million accounts down there. Sometimes they complete 800,000 transactions in one day," Misinski explains. "But under the system we were using, you would type in information today, and only two days later you would get a status report. But by that time the data was useful only for research and statistics."
Softbank SA, which won the tender for software late last month with its Zorba branch software package, realized that PKO would eventually feel the pressure to automate branch operations.
To prove its system would work, Softbank installed, at its own cost and at its own risk, a pilot Zorba software system in a PKO branch in Katowice.
"There's always an element of risk in business, but I knew they wouldn't be able to hold off for five years with the branches until the entire system was designed," said Aleksander Lesz, president of Softbank. "And we knew that if this system (in Katowice) worked, we would have an edge over the competition in the tender."
For PKO, improving efficiency is a must if the bank is to remain competitive and maintain profitability. Last year, interest income from loans fell by almost 40% compared to 1993. Had it not been for interbank lending, which increased 125% during the same period, the bank would have shown a negative net interest income.
"This is about managing money," Misinski said. "We have some branches that we call pumps. They take a lot of deposits, but they don't do anything with the money. We need to unite them with the ones that are dynamic, lending money," which would allow PKO to increase interest income.
On the software tender's short list were Computer Systems for Business International (CSBI), Softbank's main domestic competitor, and two foreign companies, Sanchez and FIserv. Sanchez won the contract to computerize Bank Przemyslowo-Handlowy and FIserv took a similar contract with Bank Slaski.
But in the case of PKO BP, because of its special character and unique products, the packaged solutions that international software companies were offering were only 15% compatible with PKO's needs, Misinski said.
"It would have taken a long time to Polonize the software for us. The difference between Bank Slaski and Western banks may only be 25%, but for us they would have to change 85%," Misinski explained. "We have a lot of products, like Homeowners Savings Book (Ksiazeczki mieszka-niowe), which you can't find anywhere else in the world. They (foreign software companies) weren't ready for such a large undertaking."
Bogdan Barewski, head of IT consulting company IDOM, said that a decisive factor for PKO BP in choosing Zorba was the leverage it will have over Softbank as its largest customer. "PKO will have over 70% of the market for Zorba, so it will almost be a tailored made system for them," Barewski said.
Lesz said that the ability to modify systems to Polish accounting and service standards will be the key to competitiveness in the market. "Western systems can fit into Polish banks, but only when they have Polish partners who can customize it. There is such a thing as international banking, but every country has its own quirks," Lesz said. In 1993, London-based ICL purchased 51% of Softbank, and Softbank has in turn formed a joint venture in Belarus to computerize Sbierbank's branches.
Having bagged a contract that's probably worth $5 million-$10 million, Softbank will have the resources not only to customize the software, but also upgrade it, said Peter Watson, managing director of computer hardware supplier Westek Polska.
"Softbank must be rubbing their hands," Watson said. "I think they could bring Zorba into the modern world with this."
PKO had planned to develop its own, fully-integrated, on-line banking system, starting from the center and moving out to the branches. But designing such a system would have taken five years, and in the meantime, branches would be condemned to carrying out most tasks manually, a costly and inefficient way to run a bank. Eventually, the pressure from the branches to automate became too much.
"The decision was taken to build the system from the ground up - first automate the branches, and then move back toward the back office," Misinski said. "If we're talking about individual deposits, then we're by far the largest bank. But you need to have automation for it to make any sense. It's a big task to manage all those accounts."
As an example, Misinski pointed to the PKO branch on ul. Marszalkowska, just under his own office. "There are one million accounts down there. Sometimes they complete 800,000 transactions in one day," Misinski explains. "But under the system we were using, you would type in information today, and only two days later you would get a status report. But by that time the data was useful only for research and statistics."
Softbank SA, which won the tender for software late last month with its Zorba branch software package, realized that PKO would eventually feel the pressure to automate branch operations.
To prove its system would work, Softbank installed, at its own cost and at its own risk, a pilot Zorba software system in a PKO branch in Katowice.
"There's always an element of risk in business, but I knew they wouldn't be able to hold off for five years with the branches until the entire system was designed," said Aleksander Lesz, president of Softbank. "And we knew that if this system (in Katowice) worked, we would have an edge over the competition in the tender."
For PKO, improving efficiency is a must if the bank is to remain competitive and maintain profitability. Last year, interest income from loans fell by almost 40% compared to 1993. Had it not been for interbank lending, which increased 125% during the same period, the bank would have shown a negative net interest income.
"This is about managing money," Misinski said. "We have some branches that we call pumps. They take a lot of deposits, but they don't do anything with the money. We need to unite them with the ones that are dynamic, lending money," which would allow PKO to increase interest income.
On the software tender's short list were Computer Systems for Business International (CSBI), Softbank's main domestic competitor, and two foreign companies, Sanchez and FIserv. Sanchez won the contract to computerize Bank Przemyslowo-Handlowy and FIserv took a similar contract with Bank Slaski.
But in the case of PKO BP, because of its special character and unique products, the packaged solutions that international software companies were offering were only 15% compatible with PKO's needs, Misinski said.
"It would have taken a long time to Polonize the software for us. The difference between Bank Slaski and Western banks may only be 25%, but for us they would have to change 85%," Misinski explained. "We have a lot of products, like Homeowners Savings Book (Ksiazeczki mieszka-niowe), which you can't find anywhere else in the world. They (foreign software companies) weren't ready for such a large undertaking."
Bogdan Barewski, head of IT consulting company IDOM, said that a decisive factor for PKO BP in choosing Zorba was the leverage it will have over Softbank as its largest customer. "PKO will have over 70% of the market for Zorba, so it will almost be a tailored made system for them," Barewski said.
Lesz said that the ability to modify systems to Polish accounting and service standards will be the key to competitiveness in the market. "Western systems can fit into Polish banks, but only when they have Polish partners who can customize it. There is such a thing as international banking, but every country has its own quirks," Lesz said. In 1993, London-based ICL purchased 51% of Softbank, and Softbank has in turn formed a joint venture in Belarus to computerize Sbierbank's branches.
Having bagged a contract that's probably worth $5 million-$10 million, Softbank will have the resources not only to customize the software, but also upgrade it, said Peter Watson, managing director of computer hardware supplier Westek Polska.
"Softbank must be rubbing their hands," Watson said. "I think they could bring Zorba into the modern world with this."
