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Journey of Fintech Vendors in Bangladesh

The journey of ICT in the banking industry in Bangladesh has crossed almost two decades. Starting with a very small space of using a PC just for checking the balance of a deposit account only, it has occupied the vast space almost in every sphere of banking activities. We cannot even think of any banking activity without using a computer. During this journey, the technological platform has grown from a single PC server in a small server room to a bundle of servers of both RISC, x84 and Itanium servers in a larger Data Center and Disaster Recovery Site. We can say that the platform that we use for providing various kinds of information service either to the customers or to the internal people have taken the shape of maturity. The Core Banking Solution(CBS), Card Management Software(CMS), Switching Software, Internet Banking Software etc. are the few names of the software technology that are already running in many banks with many modern features for a long time. These software Applications are running in IBM (P series), HP (Itanium), Sun Solaris (RISC) platforms and many other x86 platforms from DELL & HP and other vendors. The projects that implement those Applications software take one year to two years. The role of the vendors of these software and hardware solutions is a critical factor in implementing and managing these solutions along with the role of the project team of the banks. Our discussion will be confined with incidents previously happened in our banking industry and some suggestions to improve the management of these vendors in an efficient way so that both the bank and these vendors can be benefited.

In many cases, a vendor tries to win the bid of a large such project (say for implementing a CBS) in the bidding process with such a rock bottom price that during its implementation, the vendor starts to find some new issues to demand some extra money from the bank. Usually the bank does not want to hear about any additional cost. As a result, the project gets delayed and both the bank, the local vendor and its foreign principal become financially losers. Whenever a local vendor, obtains a bid in this way, he should sit with the principal to avoid such scenarios. The foreign vendor engages another foreign vendor to implement the project along with the local vendor. This implementation vendor engages those manpower who are cheaper in its payroll as he is given the low price for the project. It engages it costly experts where it gets more money like that in the projects in Europe, America or Canada. Under such circumstance, the local vendor should be prudent enough to manage the project siting with the principal vendor first. In many cases, the principal wants to win a bid for the new customer by giving heavy price cut just to meet yearly target. The local vendor should request the principal to engage few critical experts from its own payroll or the principal should select the critical experts from the payroll of the implementation vendor. Usually the principal knows the critical experts of the implementation partner as they have a long relationship. The implementation vendor should be convinced that in Bangladesh some new issues may arrive during project implementation and it has to consume it.

Again a bank should not select a local vendor whose overall business performance for the last five years is not satisfactory. If the business tract record of a local vendor is gradually declining, it will try to catch a big project giving a huge price discount and ultimately, it either cannot complete the whole project or leave the project and the bank choose another local vendor to complete the project. We have seen such scenario in one of a large bank in Bangladesh where the bank was bound to change the vendor at the middle of the project. The lesson that we have learned here is that qualitative judgment (business record) while selecting a vendor should not be ignored in large and critical projects.

If we look at the banking industry, around 10 to 15 nos of most reputed vendors (Mission critical Applications, Server, storage, Network & security products) are working in our country. Almost all the large projects are done by these vendors. These vendors should come under some guidelines of some authority so that they are monitored constantly and should be ranked so that the bank can select a vendor who is a member of a vendor community supervised by some authority. Bangladesh Bank may take this responsibility or a committee headed by Bangladesh Bank and taking members from some commercial banks may be formed to look after this matter.

Another factor should be mentioned here that in our country, a company running well for few years suddenly splits into two or more companies. The bank suddenly falls in turmoil to settle the support issue. Therefore, the support from the foreign principal should be purchased by the banks through the local vendors so the local office of the principal can be informed in such cases so that the local office of the principal can settle this issue. In case of local support, the bank should plan an alternative in such cases.

The communication link vendors should be focused separately. More than 20 of such vendors are providing the network communication service to the banks. If a link fails, the disruption occurs and the banks cannot provide service. Usually we keep a redundant link for each site but the fact is that when one link goes down, the redundant link also goes down. Definitely the link vendors take only one backbone link. We understand that either Fibre @Home or Summit provides the backbone network service. But the vendors who are providing us the link service should take both the backbones so that if one gets down the other can provide the service.

The manpower issues of the vendors should be discussed here. Majority of the vendors do not provide any service benefit to the employees working in their companies except very few. As a result, job switching is very common to these companies. A relationship is developed with the support expert of the vendor during the course of support for a long time. When he or she leaves the company of the vendor, the bank falls in discomfort when need comes. We may propose that the vendor company should take all measures to retain the support experts by providing their employees with all service benefit facilities of a professionally run organization.

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