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ColdFusion Can Save You Big Bucks

What happens when you discover that automation can cost so much

How does a bank justify using over $200 million in shareholder funds to its shareholders? That's the million-dollar question that CEOs of banks in Nigeria were trying to answer in the aftermath of the forced capitalization imposed on them by the Central Bank of Nigeria (CBN).

In July 2004, the new CBN governor, Professor Charles Soludo, handed down a directive that every bank in Nigeria should increase its capital from about $16 million to $200 million in 18 months or risk losing its license. The options weren't any too pretty: merger and recapitalization. At the end of the intense bloodbath that followed, only 25 banks survived out of 89. But the reality that confronted the CEOs was that it was easier surviving the first recapitalization hurdle than justifying to shareholders the $200 million booty with bottom-line profits.

From a simple perspective, it should have been relatively easy. Since every bank is awash with cash, it's just a matter of creating a retail strategy, opening more branches, loaning money to multinationals, etc. But there was no simple perspective; it was way more difficult especially when every one of the 25 banks was targeting almost the same set of customers.

Just like its counterparts in every country of the world, each Nigerian bank runs a main banking application such as FlexCube, Finacle, Bankmaster, and Phoenix. The survival of these banks was (whether they liked it or not) directly linked to the capabilities of these applications, in addition to other things. The new mega-bank status of these banks exposed the relative weaknesses of some of these applications. Weaknesses that were relatively harmless when these banks were like mom-and-pop organizations were now threats to their very existence.

First City Monument Bank Plc (FCMB) was in this situation when it merged with three other banks. The application it used then, Equation, was slowing down its move to implement one of the best retail banking strategies the country had ever seen. Without skipping a beat, however, the management went for a new core banking application, Finacle, which has been judged to be one of the best in the world. Unfortunately, Finacle is pretty expensive to implement. For a newly minted mega-bank like FCMB, the implementation cost would carve massive hole in its the bottom-line profits.

Apart from the retail strategy and new banking application, FCMB was also trying for the Holy Grail of banking efficiency in Nigeria; the automation of all its processes. It didn't take a seer to see what they were trying to achieve. Lashing together a good strategy with a world-class application supported by a fully automated processes then justifying to shareholders at the next annual meeting the use of their $200 million equity should be a piece of cake.

Or so it seems until you discover that automation can cost so much. While considering the technologies that could be used to automate its processes, the bank discovered Infopool. Infopool is a Web-based ColdFusion integration-and-automation platform that had been successfully deployed in another Nigerian bank. Based on the efficacy of the application, FCMB realized that the cost of implementing Finacle could be significantly reduced by deploying Infopool.

Aside from the cost of the heavy-duty IBM minicomputers needed to run the massive database and Finacle applications, the bulk of the cost of implementing the Finacle application is the license. Every user license runs into four digits. Multiply that by over a thousand user licenses and the total cost of acquiring the end-user licenses stops looking attractive. Meanwhile, most users would be using the application only for enquiries while the rest, the operations staff, would use it to post financial transactions.

Consequently it was decided that the automation process should also integrate the Finacle database so that all non-operation staff could make enquiries on Infopool. The integration team swung into action and was able to complete the enquiry modules on Infopool the day before Finacle was officially launched. The total cost of implementing the automation, which included the enquiry modules and other workflow portions, was less than the cost of the 10-user Finacle licenses. Using ColdFusion, Infopool was able to achieve a single sign-on with the Microsoft Active Directory running the bank's network. As a result, the user only needs to log in once to access different applications based on the profile configured by the systems control department.

Of all the recent technology implementations in the industry, Infopool has the best return on investment (ROI) and the lowest total cost of ownership (TCO). It also lets management, using the management information dashboard, make intelligent decisions, quickly and accurately.

None of the things done with ColdFusion is a novelty or a ground-breaking technique. But as far as the management of FCMB is concerned, ColdFusion saved the day. For the bank, over a million dollars was saved in direct cost. It's not the technology that's important, but the fact that ColdFusion has been immensely instrumental in rapidly deploying a user-friendly platform with rapid access to customer information and automated processes. The bank has been able to live up to its promise to customers of superior customer care. It's been able to provide cutting-edge services to its old and new customers, which is actually the crux of its retail strategy. Happy customers mean more revenue. More revenue, all things being equal, translates to bottom-line profit.

This is exactly what First City Monument Bank Plc needed to show its shareholders. All made possible by the power of ColdFusion.

More Stories By Adédèjì Olówè

Adedeji Olowe, a business intelligence expert, has been using ColdFusion for several years. He has experience developing and extending enterprise applications for companies in the financial industry as well as systems integration.

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