Case study: National Bank of Kuwait - All the data under the sun

Case study: National Bank of Kuwait – All the data
under the sun

NBK was formed almost 60 years ago to meet the needs of the Kuwaiti business community. To
ensure that it continues to be relevant, in recent years it has undergone a comprehensive IT
facelift, a central part of which has been a total revamp of its BI system.

Turning your back on customers can prove fatal. It’s hardly groundbreaking news, but sadly the world of
commerce is littered with examples of those that ignored the blindingly obvious and paid the price.

Legend has it that when the British Bank of the Middle East (BBME) in Kuwait rejected a prominent local
merchant’s request to open a Letter of Guarantee for 10,000 Indian Rupees (which is equivalent today to
about 750 KWD or $2600) it could hardly have expected what was to follow.

The merchant was so infuriated by this apparently unreasonable refusal that he made sure the news
spread far and wide. The response, following much discussion within the business community, was to
form a national bank that would prioritise Kuwaiti needs and help the economic growth of the country. To
this end, an Amiri decree was issued on 19th May 1952 to open the National Bank of Kuwait (NBK). It
commenced operations six months later and is now the largest private sector institution in Kuwait, having
built up market share of almost 40 per cent. BBME, on the other hand, was bought out by HSBC in 1959;
the name was consigned to the history books, its new owner having steered it to a better place under the
auspices of its Saudi British Bank affiliate group.

                                         In 2009, Global Finance magazine named NBK as one of the
                                         world’s 50 safest banks. In pure financial terms, by year-end
                                         2008, it was posting $10.27 billion of assets under management
                                         and claimed a market capitalisation of $11.2 billion.

                                         Its banking activities have grown to cover all areas, including
                                         retail banking, corporate banking and international trade, as well
                                         as investment banking and private banking. Products and
                                         services are managed through NBK’s homeland HQ and
                                         branches and its network of subsidiaries in 14 countries across
                                         the Middle East, Africa, Europe, North America and South East
                                         Asia.

                                         NBK intends to keep hold of its credibility, mindful of what can
National Bank of Kuwait
                                         happen, directly or indirectly, at the hands of poor customer
                                         service, and has gone out of its way to deliver an enterprise-wide
data system to keep it on track.

An important milestone – and the turning point for NBK’s IT strategy – revealed itself in 2003, recalls Hani
Khalil, enterprise architect for NBK’s IT division. It started, he says, with the realisation that NBK needed
to replace its core business and technology systems, the awareness of a systems shortfall at that time

fuelled by the possibilities being afforded to go-ahead banks by the economic boom and expansion of
financial markets globally. ‘Our priorities, or shall I say our dependencies, were evolved from our core
strategy and vision to revamp our core capabilities,’ explains Khalil.

‘Our priorities, or shall I say our dependencies, were evolved from our core
strategy and vision to revamp our core capabilities.’ - Hani Khalil, National Bank
of Kuwait
                                Indeed, given NBK group’s mission to establish a leadership position
                                across the region, it initiated an enterprise transformation project –
                                codenamed Shorouq (Arabic for sunrise) – to revamp its business
                                processes and IT infrastructure. The IT transformation project would
                                include a full revamp of its core systems and, pertinent to its customer
                                focus, all associated decision support tools – with more than a passing
                                nod to Business Intelligence (BI). ‘The Shorouq programme was
                                envisaged as a long-term enterprise technology architecture and IT
                                strategy,’ notes Khalil. NBK has a full project roadmap that started in 2004
                                and will run until 2012 for application and data related projects. ‘As part of
                                the programme, we formed an enterprise programme division to deliver
                                this project in four major phases.’ The decision was taken to use a partner
                                model to support this delivery, bringing in specialist application and
                                technology vendors where required. Each element of Shorouq was
Hani Khalil, National Bank of   aligned with the overall NBK business strategy.
Kuwait
                               Following intense discussion, the resultant enterprise architecture plan
comprised three main streams as enablers for achieving the IT strategy: core system changes; the
building of an SOA-driven integration platform; and the delivery of a BI system as part of a fluid
information architecture. A new Operational Data Store (ODS) – effectively a data warehouse – would
consolidate data from across the enterprise and provide NBK with the ability to drive all of its enterprise BI
and information requirements, and support all decisions out of one place.

Befitting a bank that knew what it wanted, the project had a definite modus operandi from the word go.
‘As a part of Shorouq, we strategically decided to run all three streams in parallel, as opposed to the
conventional waterfall approach of first implementing the integration platform, then implementing the core
system, and finally investing in BI strategies and tools,’ says Khalil.

NBK chose a number of vendors to cover the three project areas ‘as enablers for this journey’. India-
based BI solutions specialist, iCreate was drafted in to help form and execute the BI strategy.
iCreate was chosen because it had ‘knowledge and experience in the core banking system space –
especially in the emerging market context – as well as the BI aspects of a bank’, explains Khalil. ‘This
helped us keep the BI streams in line with all other critical tracks.’ iCreate, he adds, was ‘essential in
delivering this successful vision’.

Praise indeed, but success in this field comes with hard work from all parties. Unsurprisingly, the team
had a clear target in sight. The existing system, prior to the Shorouq initiative, was completely ‘locked in’

to a mainframe platform which, over time, had become ‘a home for many custom applications’, serving
the changing business needs of the bank. ‘The applications and systems were in a state where
maintenance and further enhancements were becoming costly and slow,’ admits Khalil. The desire for
NBK to grow required the implementation of what he describes as solutions based on ‘industry-standard
best practices’.

‘The applications and systems were in a state where maintenance and further
enhancements were becoming costly and slow.’ - Hani Khalil, National Bank of
Kuwait
The key systems that were identified as being in need of full replacement were the core retail banking
solution, trade finance, payment cards and the general ledger. ‘The decision to implement specialist
systems for each of these functions brought with it a challenge of data consolidation,’ notes Khalil. In fact,
the need to run a complementary BI programme to consolidate data across the systems was, in part, born
out of the realisation that these specialist systems would not necessarily integrate at a data level, nor
therefore align with NBK’s vision of enterprise-wide BI. However, implementing individual specialist
components ‘allowed us to carry out the BI initiative in a piecemeal approach, yet still based on a solid
foundation for achieving the final vision for NBK’s BI,’ explains Khalil. That vision, he adds, was to ensure
that data quality and high availability could be maintained, to enable effective business operations,
decision-making and reporting. ‘I can say that our key drivers within the BI initiative were good risk
management, customer-centric marketing, increased demand of regulatory reporting and the integration
of the regional branches of NBK. In NBK terminology, what was being sought was the single version of
the truth.’

In order to make real this vision, Khalil’s team evaluated a number of BI technology options and, in
consultation with iCreate, finally decided to deploy the Microsoft-based BI toolset because of its ‘low total
cost of ownership’, as well as the fact that it would align with NBK’s strategy for channel and data
management. SAP Business Objects software was also chosen to cover operational reporting as the
vendor’s distribution and access were felt to be in line with the needs of the bank.

With the various strands of the project getting underway simultaneously, iCreate’s knowledge of core
banking systems was tested straight away, needing to source the data from the multiple systems to feed
the BI initiative and, of course, the ODS. ‘We worked with iCreate to build the BI infrastructure and
foundation,’ explains Khalil. ‘Some of these frameworks in the BI space are now found in the ODS, the
retail banking data marts, and the enterprise reporting and distribution – and we had additional help from
them in building data-related architectural components.’

Khalil comments that NBK’s partnership with iCreate has enabled the ‘seamless integration’ of the bank’s
various systems for core banking, trade finance, card management, and legacy mainframe banking –
along with a variety of other departmental systems – into the single enterprise ODS.
The ODS was deployed on an MS SQL server. ‘We have used the ETL [extract, transform, load] tools
within the SQL server umbrella to enable this project and, of course, we use the SAP Business Objects
tools for reporting and distribution of information,’ he notes, clearly quite satisfied with the progress.

One of the first tasks from phase one, starting in Q2 2005 and completing in Q4 2005, was to migrate
core data from NBK’s legacy applications to the new ODS using the ETL tool. This, says Khalil, was to
ensure that all data was streamlined into the bank’s daily operations.
Phase one of the migration continued with the ETL of existing management, operational and regulatory
reporting data from those legacy systems to the new ODS. This duly started in Q1 2006 and was
completed in Q4 that same year.

The second project phase continued the migration into the ODS of all management, operational and
regulatory reporting data from legacy systems but also covered ETL of data into the ODS from the other
systems newly implemented under Shorouq. As well as TCS’s Bancs, the list included ACI’s Base24
EFTPOS and card system, and the CSI Banktrade trade finance system. This started in Q4 2006 and
completed in Q2 2007.

An enterprise-wide deployment of the SAP Business Objects solution for users was completed for the
majority of the user community in Q1 2007, having kicked off in Q1 2005. From Q2 2007 to Q4 2007, the
streamlining of the daily extract operations was carried out.
From Q1 2008 to the end of the year, a data mart project was formally established to lay down the
Management Information Systems (MIS) framework and platform. This included a complete enterprise
data model for the delivery of consumer retail products and the customer mart, with data extraction from
the legacy ODS side and from the new ODS. ‘This helps us ensure data consistency and integrity
between the current operational data and final migrated data in the last phase of the programme,’
explains Khalil.
The first two major project phases have now been delivered, with iCreate having played a major guiding
role in each of these. An additional project milestone is expected to be delivered by the middle of this
year, with the last of the four scheduled phases due for completion before the end of the year.

The data integration project has had its share of challenges, but Khalil states that the team has been able
to overcome each one ‘without any significant impacts on timelines or cost’. As an example of an area
where matters could have come unstuck, he recalls that the legacy systems and their lack of proper
documentation ‘formed a hurdle to the speed of analysis and transformation into the new models of
technologies’. However, he notes, ‘using various techniques such as reverse engineering and ground-up
analysis helped us overcomes these issues’.

In terms of delivery of usable BI, NBK has successfully put in place processes to roll out functional
solutions for its various user groups within the organisation. It has carried out a controlled roll out in the
consumer banking group – ‘with good results’, claims Khalil. ‘We have more plans with the consumer
banking group and other groups such as credit and corporate banking as well as risk management,’ he
adds.

The strategy of roll-out started with the main locations and then expanded to include all regional offices.
Currently, the majority of systems are live in all country locations with ‘limited functionality’.
The project team continues to keep a close eye on performance as data volumes increase. In response, it
makes ‘minor modifications to continuously improve the performance of the system’. So far, states Khalil,
‘we have not discovered any major deficiencies or limitations’. This good fortune he primarily attributes to

‘the rigorous technical design and planning that the team went through’. He adds that NBK and its
technology team are sure that there is more to come from the system in terms of the final vision of making
the bank’s systems and infrastructure agile and responsive to all market changes.
In terms of overall project progress to date, Khalil says that ‘we have successfully managed to stay on
course with our vision’. TCS Bancs, for example, is live on some of the modules (including loans and term
deposits and a partial realisation of the CIF). By the end of June it is anticipated that NBK should be live
with everything else in this strand, bar the corporate lending module.

In the BI zone, whilst some elements are still to be rolled out, Khalil notes that what has been done to
date ‘is already starting to exceed the expectations’ of the user community. ‘As we are still in the
penultimate phase of implementation, the focus is more on delivering functionality and easing roll-out
pains, rather than on performance or other such system health indicators,’ he explains. ‘However, we will
review the completeness of our solution and implementation with each passing phase.’ The bank will
validate the outcome and continue to compare and contrast usable functions to expected results. It will
also be looking for the all-important ROI.

To continue the journey, Khalil believes that working with trusted and experienced partners ‘such as
iCreate’ in the area of BI is the right strategy. In this way, NBK’s banking personnel can continue to focus
on their core business while NBK’s technology and implementation partners are able to get on with the
implementation of the vision and strategy for enterprise technology.