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TechvisionMay 1 2013

Vakifbank steps up to compete in Turkey's high-tech market

Vakibank's five-year plan to upgrade its IT infrastructure and completely remake its core banking application is ambitious but, according to CIO Ali Engin Eroglu, it is vital if the bank is to keep pace with Turkey's technology-focused banking sector.
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Vakifbank steps up to compete in Turkey's high-tech market

Turkey’s Vakifbank, the second largest state-owned lender in the country, is ramping up its innovation resources. Leading the transformation is CIO Ali Engin Eroglu. When Mr Eroglu joined the bank two years ago, the bank was in the process of developing a five-year strategic transformation and growth plan.

According to Mr Eroglu, Vakifbank's growth plan is “very aggressive” and one of the most important parts is the transformation of the bank's IT infrastructure and applications. “We created a vision for IT that drives a customer-centric organisation and we have defined a five-year IT strategy to support this vision,” he says.

It is hoped that the Vakifbank Innovative Transformation (VIT) programme will not only drive the bank’s innovation but also boost its profitability.

Driving business

VIT was outlined as 41 individual projects aimed at establishing a new core banking application. The new infrastructure is a leaner set-up for applications, according to Mr Eroglu, and is based on a combination of service-oriented architecture (SOA) – a software designing method that connects different modules – and event-driven architectures (EDA).

“EDA [enables] the software modules to act independently from each other. They provide a fault-tolerant environment in a loosely coupled way. That means overall performance and availability remains high,” he says.

This changes the way the bank does business quite significantly. “In the old-fashioned approach, all of the software components were dependent on each other. In order to complete a transaction, all components had to be up and working. If any of the component were to fail, the whole system would be affected,” says Mr Eroglu. Thanks to the new EDA and SOA approach, this is no longer the case.

The new banking architecture is also leading changes in the organisational structure and processes of the bank, a clear example of how technology can drive business, says Mr Eroglu. “The new architecture is providing a flexibility for the business units to focus on their business. While developing a new product, the effort required to implement profitability, accounting, risk and pricing is dramatically decreased,” he says.

“We have created a framework for the whole core banking application. We are also planning to integrate some of the third-party products but almost 90% of the work is being done with in-house resources. The new framework will let us plug in and out whenever we need a new application. It is also providing us with a leaner set-up for applications and infrastructure.”

Quick fix?

Since the five-year plan was launched at the end of 2011, the number of individual projects has increased from 41 to 45, including new projects related to loans, treasury, deposits and customer relationship management (CRM).

“At the moment, we are focusing on tools on customer analysis, deposit, accounting, CRM, collections and payment tools," says Mr Eroglu. "We aim to finish the transformation project by mid-2014. This solution will enable the bank to compete in a very technology-centric sector in Turkey.

“In future, the bank can develop products in a more flexible and agile way based on the new banking system. This will enable us to decrease the time to market for new products. Thus, it will be a catalyst for Vakıfbank to grow in retail banking. This approach will enable us to respond to market trends faster and so roll out more products faster too. This will also increase the quality of our products."

The VIT programme has been noted by some in the industry as a very aggressive transformation, compared to similar projects that have taken place in the Turkish banking sector, but Mr Eroglu maintains that this is necessary if the bank is to stay competitive.

“We acknowledge [the feedback], but the current plans of the bank push us to do it in a very short time period so that the bank will be able to compete in the market," he says.

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