Mrutyunjay Mahapatra, MD & CEO, Syndicate Bank
Despite using Oracle's core banking solutions (CBS), the versions used by Canara Bank and Syndicate Bank
are different. As technology integration emerges as a critical factor in ensuring a successful merger, Syndicate Bank's MD & CEO Mrutyunjay Mahapatra
tells Debasis Mohapatra
that despite differences, there is a lot of synergy between the two banks. Edited excerpts:
What kind of challenges that the merger of Canara Bank and Syndicate Bank is likely to face in terms of technology integration?
There are two ways of looking at this. First is integrating the database, product and processes, apart from the integration of people-related affairs. The second way is to look at customer-facing, employee-facing and also back-office technologies.
If we decide that customer integration will happen first, then customer-facing technologies like lead management system, customer relations management system, internet and mobile banking, and RTGS, among others, have to be integrated ahead of everything else.
Whereas, in the case of employee-facing technologies, employees will like to continue with whatever they are currently using. For example, both Canara and Syndicate Bank
use Oracle's i-Flex (which is now known as OFSS) but there are version differences. Syndicate Bank is currently using the latest version (11.6); Version 10.2 is being used by Canara Bank. Due to the difference in the versions, the screens are different, so the employee training. That's one of the challenges as far the version difference is concerned.
For mobile banking, Syndicate Bank is using to the latest version provided by a Tata Group company. For internet banking, we have been using Oracle's latest version.
How much time will the technology integration process take?
When associate banks had merged with State Bank of India (SBI), the process was completed in 6-9 months because there were technological similarities. But, in the case of a recent banking sector merger, the technology integration process is yet to start. It is likely to take around 12 months in our case.
As far as costs are concerned, there will be two types of cost. First is the integration cost and the second is the expanded licensing cost. Suppose, Canara Bank has done something for its 6,000 branches, now it has to be replicated in all the 10,000 branches of the combined entity, for which new investment has to be done. Also, there will be an early termination cost. For example, if a functional software is found to be no good for the combined entity, then the contract with the software vendor has to be terminated and a pre-termination penalty will be there. In 30-45 days, we will identify all those things.
Will employee integration be the trickiest part? Will you rope in an external consultant for this process?
As I have said, HR processes have to be aligned (for seamless integration). Because, there could be different policies for perquisite, transfer and promotions. But, our aim is that these HR matters should be postponed to the next fiscal year. So, Day Zero activity will include corporate office alignment because there can't be two corporate offices. Also, we may require some alignment at the second level of officials.
Has the consultation process between officials of both banks started?
We have started consultation and identified people to lead various teams. I already had two-three rounds of informal talks with Canara Bank MD & CEO RA Sankara Narayanan. In the case of past mergers, we have seen eight-10 teams for IT, processes, and credit, among others. Though we have not zeroed in on the number of teams but, there is a likelihood of eight-10 teams being set up for this process.
Both Canara Bank and Syndicate Bank have a significant presence in Karnataka. In that way, there is a likelihood of an overlap. When will the identification of branches begin for rationalisation?
Initially, our aim is not branch rationalisation. We aim to do the integration seamlessly. No staff rationalisation and no branch rationalisation is our approach. We have also decided not to come up with VRS (voluntary retirement scheme). Right now, we are looking at pricing power and going forward, we will look at cost reduction. There will be no rationalisation of branches for the next 18-24 months.
Will this merger act as a distraction for senior management of the bank? What are your views on the business integration process?
For us, this is business as usual. We will aim to function as if nothing has changed. But, the fact is that a merger has been announced for which business alignment is necessary. As Canara Bank and Syndicate Bank are going to be one entity, it will not be proper to fight bitterly in the market. That marketing alignment has to be done before anything else.