Ti Eng Hui, CEO of Brunei-based Baiduri Bank Group described how its new core banking system will position it for the future by simplifying IT operations, removing complexity and reducing costs. It will consolidate many obsolescent legacy systems into one open platform to support various businesses. The project, led by Tech Mahindra will be implemented in two phases over the next 18 and 24 months.
Baiduri Bank was established in 1994 and is a member of the Baiduri Bank Group, which also comprises two wholly owned subsidiaries, Baiduri Finance and Baiduri Capital.
With total assets of about $3.48 billion (BND4.7 billion) in 2021, the Baiduri Bank Group is among the top financial groups and is the largest non-Islamic domestic bank in Brunei. Baiduri Bank claims to be one of the most innovative in the industry, and to be the first to offer in-store and in-mall banking seven days a week, the only to introduce multi-currency ATM dispensing euros, US dollars, Singapore dollars and Brunei dollars, and the first to offer online securities trading through its subsidiary, Baiduri Capital.
In early November 2022, Baiduri Bank announced an agreement with Geneva-based open banking system provider, Temenos, to implement a new core banking services on the latter’s software as a service (SaaS) platform in the cloud. Reportedly, the first bank in Brunei to do so.
Bank Baiduri seeks to maintain its leading position as a provider of digital-first experiences, and offers a comprehensive suite of digital solutions such as Baiduri b.Digital Personal and dedicated business digital internet banking service, Baiduri b.Digital Business. The introduction of the b.Digital platform in 2020 was an important milestone in the bank's digital journey, in line with the country’s Smart Nation initiative, Digital Payment Roadmap 2019-2025 and Financial Sector Blueprint 2016-2025, as part of Brunei's Vision 2035 for a more dynamic and sustainable economy.
The bank has also been adopting modern technologies including artificial intelligence (AI), robotic process automation (RPA) and new microservices to help automate existing workflows.
Ti Eng Hui, CEO of Baiduri Bank Group described how the new Temenos Banking Cloud-enabled core banking system will enable it to simplify IT operations, remove complexity and reduce costs by consolidating many obsolescent legacy systems into one open platform to support its various businesses. The project which is led by Tech Mahindra will be implemented in two phases over the next 18 and 24 months.
Ti joined Baiduri Bank at its inception about 26 years ago and played an important part in its growth from a small corporate lender to a full-fledged commercial bank. He was a key management member who negotiated the bank’s purchase of UOB Brunei’s retail portfolio in 2015 and HSBC Brunei’s retail and corporate portfolios in 2017. He was appointed CEO in 2019 and guided the bank through the tremendous digital and COVID disruptions in the last three years.
He has over 35 years of banking career that included stints at Citibank and Standard Chartered prior to Baiduri Bank, in wide and diverse functions from information technology, branch banking, retail business, banking operations, service quality, change management, risk and asset and liability management to sales, marketing and general management.
He is also active in the banking and payment industries at board level and chaired the Brunei Association of Banks from 2019 to 2021.
Here is the full transcript of the interview:
Key drivers of the core banking implementation and modernisation of the bank
Thank you for giving us the opportunity to share our experience in this core banking project. Baiduri Bank has a core banking system that's about 17 years old.
Over the years it's working well, it's reliable, and it's reached a stage where we feel that we need to go beyond what the system can do. It's also increasingly difficult to maintain because it's reached end of life in terms of hardware, and software. So we thought it's time that we look for something new. It became very obvious during COVID that as we transfer a lot of our process into digitisation flows, there are certain limitations. There's only so much we can do and tweak the old systems.
Two years ago, we started the request for information (RFI) process. We invited seven companies to take part in the RFI together with the help of IDC to select the companies. And now that's seven. We narrowed it down to three. And of the three, we select the two to do the deep dive. Temenos, and there's another company. Both are actually very close, I must say, in terms of functionalities, both also offer cloud hosting.
We were very pleased with the two in fact. What really stands out for Temenos is really the user experience from both the internal user and the customer user, which is really a big step beyond what we've seen. In terms of the user experience, this is a tremendous change, it is a tremendous transformation. That's something we look for. Another factor in favour of Temenos is that they have been doing a migration from on-premise to cloud for many banks.
I'm a person who looks at cloud quite carefully because it is a new technology. It has been around for some time. And I think it's reached a stage where it has that level of maturity where banks can rely on in terms of security, in terms of reliability.
Hosting on the cloud is a big important factor for banks to move forward. But it's beyond that because they offer more than that. They offer also what is called a SaaS service, which allows us to change the way we manage IT operations. That is a big plus to us. As Brunei is small, there's a limited skill set.
So, by having the bank focus more on business rather than management of IT, it really gives us time and focus to grow the business. Those are the change drivers that lead us to the selection of Temenos, and from us, willing to change, wanting to change, to move into the new digital space.
What other services of Temenos will give additional value?
Definitely that's something we liked about Temenos, is that they have the open banking modules that allow us to communicate, system-wise with other vendors, fintech companies that we can work with. Definitely, that's a big plus. That's something we look forward to working with their team to see and fintech companies that we can bring forward and work with our team and Temenos to be able to do more open banking. That will benefit the clients, that will benefit the market. So to me, that's a game changer, something that we will not be able to do under the old system.
What's the significance of the project in Brunei?
Baiduri Bank has always been known as a very innovative bank in Brunei. We were the first in a number of products and services in the country, including the first in the country to launch internet banking, many years ago. We want to continue that tradition of innovation, It's very important for us. Through Temenos, they are able to help us to reach the next level of innovation that we were not able to do using our existing core banking.
For us, it's an important step to go forward. In terms of innovation too, what also appeals for us in terms of what Temenos can offer is that there is a standard banking model in terms of process flows that we can adopt.
Brunei is small, the market is not complicated, it is rather simple. So we don't need some complicated processes and one of the things we want to aim is to minimise the customisation to fit our local requirements. And what we are saying is with this model bank approach, we don't need to customise too much. We will just follow the model bank process and from there we can reduce the time required to go live, we can reduce the time required to launch new products. And it's a lot easier to maintain from the system's point of view, too. So simplicity is a big appeal to us. The standardised process is a big appeal to us.
What are the project details and businesses included in the shift?
At the moment we have a number of systems supporting various businesses. What we hope to do is that with this new platform, we are able to consolidate them into one single Temenos platform to support all the businesses. So to create, again, simplicity in terms of managing IT operations, in simplicity, in terms of managing the costs. A large part of it is reducing the carbon footprint as we have less servers, less systems in our data centre, I think it all works towards, the ESG component of what banks are now required to do. So again, supporting the ESG
initiative that we have in the bank. This all-in-one approach is a very important approach for us.
Again, for a small market, we don't need too many systems, too complicated systems. That's what we're looking for in Temenos. From the initial project timeline, we're hoping to complete phase one in 18 months and then to be followed by phase two in another six months. So all in all, you're looking at 24 months of completing phase one and phase two.
What key opportunities and challenges are expected and how will you address them?
I see the major challenges being the people because when you bring in the new system, new process, we need to make sure our people are able to adjust to the new process. I think that mindset of able and willing to change are very important.
Of course, is also a big, important factor. To learn the new system is to adapt the process under the model bank branch concept is the way to go forward and also manage the time that the staff have to spend on top of their day-to-day work, also time spent on the project. Of course, there will be additional resources given to them to handle the project. But nevertheless,
the staff still need to be involved in terms of training themselves to learn the system, getting involved in the UAT (user acceptance testing) and all that and also adapting to the new process, at the same time, preparing our customers to make sure that when we go live they're able to understand what we are trying to do and follow us along this journey.
The biggest obstacle is the people's expectations. Getting our staff along the journey to come with us and also make sure nobody is left behind. Also bringing along the customer. That journey is inclusive of everybody who's involved in the project.That's the biggest challenge, managing all this time factor.
What can customers expect from this project?
We hope to offer a much better customer experience, definitely. With simplified workflows, customers will be able to understand better how things are done by the bank and how each step of the process are involved. And definitely, we're taking the opportunity using that model on the bank branches to reduce this as many steps as possible to minimise.
At the end of the day, we're looking for an enhanced customer experience, that's what we look for.
What can we expect in the advance phases?
With later phases, we hope to offer customisation of customer experience.
There's a lot of discussion about how do we make the customer experience more personalised rather than treat everybody the same. That would be the next step beyond phase one. And phase two, it's how do we personalise it for the customer. How do you want to see the screen? In what sequence and what colour? how do you want the flow of the screen to be between screen one, and screen two? A lot of that we would like to be able to customise it based on customers' preferences.
How does this new platform create a digital ecosystem?
How do we homogenise it? to make sure that it is easy to understand, and easy to use as there are many payment instruments, and payment products available, we hope to make it simple for clients.
We want to make it all in one, easier for customers to have a 360 view of themselves. In terms of what they do with the bank, they transact with the bank. What they invest with the bank, they are borrowing with the bank a 360 degree in total, On top of that, in phase three and beyond, we are also looking at adding some lifestyle elements into the whole process so that, banking is just a part of our engagement with customers.
I think a lot of the banks if you see around the world are making towards that initiative of engaging customers beyond just banking. I think that's an important part of how banks are, increasing engagement. We want to know the customer better. We want to engage customers more and more and we want to know your lifestyle and hopefully, we can be your life-long partner.
How are you working with the regulators in risk management and compliance?
It's important to engage the regulators very early in the process and this is what exactly we have done. The moment we are clear after evaluation of all these lenders, when when we are clear that we are going to cloud when we are clear that we are going to outsource IT process management. That's the time we start engaging with the regulators and explaining to them what the regional banks are doing, how the banking industry is moving forward in terms of the technology part of it, and telling them, explaining to them what we are trying to achieve. That engagement is very crucial to make sure that they are comfortable with us from day one until today.
Even though there is no specific requirement under the Brunei Banking order for the regulators to approve the vendors we use. But because of our engagement, they have given us a very supportive command to allow us to go into the cloud, to allow us to go into outsourcing more in terms of IT management. We are very encouraged by this response that has been shared by the regulators and it is something that we will continue to do while we are still in the project phase. And then beyond that, because a lot of the reasons nowadays in running a bank is also technology risk, how do we handle technology risk. And the more that we engage with the regulators, the more they're comfortable with what we are trying to do, and they will be more and more supportive.
How will this make Baiduri bank a more resillient, innovative and sustainable bank in the future?
At the end of the day, it's all about engagement. For large projects like this, definitely we want to make sure that the project is run on a budget and on time. We are making a significant investment into this new core banking system. I would say that the model is quite significant, but it's important for us to go forward and that it is something we're investing in, not just for the present, but also for the future.
It's something that we can leverage in the future to even accommodate what we want to do in if there are opportunities outside Brunei. That's also an important part: preparing the bank for the future, not just meeting our current requirements.