SVC Bank Makes 'Swift' Transit to Forex Trading

by Manu Sharma    Apr 16, 2009

About the bank

The Shamrao Vithal Co-operative Bank Limited was founded when co-operation was just beginning to gain ground in the country. It was set up with the primary objective of assisting the less fortunate members of the community in its economic enterprises, to encourage savings and to create funds for providing financial aid to deserving members.

Need for a solution

The bank was already doing forex business routing it through another bank. The volume had reached a critical mass and having an own connection was both part of the bank’s growth strategy and the need of the hour. The bank fulfilled all the criteria set by RBI for banks intending to do direct forex business and have an own connection. With all the parameters falling in place with the RBI issuing the Authorized Dealer (AD) License it was the inevitable next step.

The Solution

The implementation process was a 16 week long process which started on February 9, 2008 and finally ended on June 8, 2008. The entire implementation was done in a phased manner. SWIFT Membership Letter along with membership E-Ordering Form (hard copy) was sent to SWIFT Head quarters, Belgium. All the network connectivity equipments were ordered from SWIFT using the SWIFT E-Ordering Tool.

The Bank had already evaluated various options of connection and after a long deliberation selected the most effective option of having a direct own connection using TurboSWIFT product of BankServ Inc. which was offered by their Indian Business Partner Synlog with a detailed plan with definite timelines. Once the network connectivity equipments were made ready for use, the software interface was installed by Synlog and the SWIFT connectivity was tested on the Test & Training mode.

Once the entire testing phase was over, the Bank finally connected over the SWIFT network on June 8, 2008.
The entire process starting from the time the bank received all the go-aheads from both RBI and SWIFT is as follows.

1. Evaluation of the various options like having an own-connection, routing the transactions through a shared connection, routing the transactions through a Service Bureau. This is  an elaborate process as there can be costs that are hidden and not easily visible. Besides cost, there are other parameters to be considered in the evaluation, like security, contingency management, disaster recovery management, pre-sales, post-sales, implementation and post implementation support etc.

2. Once the network partner, connectivity software and software solution partner is identified, it gets into the implementation phase as described above.

Benefits of the project

The connection has given the bank it’s own direct connection to the SWIFT network with a user-friendly user interface and the latest multi-tier technology. It has prepared the bank to implement STP (Straight Thru Processing) to it’s indigenously developed CBS (Core Banking System). This is the next-in-line project to be taken up by the Bank.

The investment in the initiative has been in excess of Rs. 25 lakhs only for the software and the network components. The other indirect costs and shared costs are hard to classify and label.

Challenges faced during the implementation and after the project started

The biggest challenge faced was that there was absolutely no lag available in the 4 month schedule and any delay of even a day would have resulted in a delay of at least one month.