The years leading up to the new millennium were very successful for Zuger Kantonalbank (ZGKB). Benefiting from a positive business environment, the financial institution posted increased earnings each year, while its costs remained stable. However, in regard to IT, the increased earnings were produced using comparatively outdated host applications developed primarily in-house; these were no longer expandable and nearing the end of their life cycle. It also became apparent that the future banking market holds significant challenges for ZGKB.
Modern banking customers are more demanding, more informed, more technically adept, and generally more educated. To meet these customers’ needs, a bank must rely on highly efficient IT solutions, modern management instruments, and individual customer solutions. Systems must be available around the clock, seven days a week. Moreover, new sales channels must be integrated and increased corporate governance requirements must be met. To stay ahead of the competition, a bank needs to meet all these challenges at ever-decreasing costs while reducing the time-to-market for new solutions. That’s why ZGKB chose to replace its existing IT systems with new, future-oriented applications.
In-House Development Not an Option
While evaluating possible approaches, project managers quickly realized that a small bank like ZGKB would be unable to develop such a platform on its own. Most solutions offered by cooperative groups or larger banking institutions were also out of the running, as they are based upon concepts developed in the seventies or eighties.
In 2000, ZGKB developed the following new core statement for its new IT strategy: “Within five years, ZGKB seeks to shift to a new IT platform that is modular, open, and based upon standard software.” Since ZGKB already had positive experiences with SAP R/3 in accounting and controlling, project managers chose an SAP banking solution. Moreover, SAP committed to adapt to Swiss circumstances core banking systems already in use in Germany, and to continue developing them. As a pilot customer, ZGKB saw an opportunity to influence this ongoing development significantly.
To implement the project, ZGKB first sought a suitable and experienced partner company, finally settling on CSC Ploenzke (known today as CSC). One deciding factor was that ZGKB had been outsourcing its IT development to CSC since 1999, so that close ties exist between the bank and the consulting firm. CSC had also gained experience with similar implementation projects in Germany. During the course of the project, the third partner (after SAP and CSC) became IBM, which hosts the UNIX systems of ZGKB at its Winterthur branch. With these partners at its side, ZGKB launched its fit.com project in March 2000. In the summer of 2001, the financial institution began putting several SAP modules and the IBM infrastructure into operation in Winterthur.
Complete Platform Successfully Introduced
In April 2002, the bank went live with the complete platform; ZGKB now possesses one of the one of the most modern banking platforms on the market. The core of the solution is comprised of SAP components: central business partner (CBP) with customer data, account management with BCA (bank customer accounts), accounting with FI/CO, and controlling with SAP SEM. This core is complemented by SAP components for cash and foreign exchange processing (FX/MM) and SAP Business Information Warehouse (SAP BW).
The UNIX-based, ADD central transaction data bus of CSC maps the booking logic, handles format mapping, and routes payments. Since all platform movements are routed through this ADD, ZGKB didn’t need to establish countless point-to-point connections. This results in a platform that is modular, open, and flexible. For an archiving solution, ZGKB introduced an SAP-certified IXOS application. Implementation of the new platform, however, didn’t end with the introduction of SAP components. One challenge of the project consisted of integrating the new applications into numerous existing banking applications. The project team was able to accomplish the transition to this complex system in a relatively brief period of two years. Subsequent production start-up was a success.
After one-half year of operations, the solution has proven very stable and is highly valued by users. However, upon completion of the fit.com project, only the bank’s basic applications had been modernized. In the coming two to three years, ZGKB will transition the currently remaining host systems for securities, credit, and card administration.