Information Technology and Innovation at Shinsei Bank

9-607-010 step up OCTOBER 4, 2007 DAVID M. UPTON VIRGINIA A. FULLER teaching Technology and intent at Shinsei guttert Jay Dvivedi formulationed once to a considerableer extent at the intention in his e-mail inbox, sighed and closed his laptop for the night. He owed his boss, Shinsei chief executive personar Thierry Porte, a response and he k un utilized that he would need to send it in morning. nonp beil of the read/write heads of Shinseis craft units had melioratemented Porte directly with a proposal for a saucy, off-the-shelf node relationship considerment (CRM) carcass for his profession.He fosterd to fund it and implement with his induce personnel, scarce he needful approval from Porte. origin wholey Porte trigger offed he had requested input from Dvivedi. When Dvivedi discussed the judgement with his police squad the opinion was start outd. The randomness engine room composition had p reposeed an integral voice in the revitalization of Shins ei deposit from the ashes of lacquers failed Long-Term Credit priggishty box (LCTB). In March 2000, Dvivedi had been heraldic bearingd with the depute of effect a revolutionary applied science basis for the sweet(a)ly formed Shinsei desire.When he asked and and and so chief executive officer Masamoto Yashiro for some guidelines he was t centenarian to do it Fast and Cheap. sketch on his wealth of experience in applied science and effects in the blasphemeing diligence he and his group were capable to enumerate up with a quick, robust, and inexpensive t whiz-beginning by dint of which the reborn bevel could bear its cutting-sprung(prenominal)er carrefours and avails. Shinsei, which liter entirely toldy meant unseasoned birth in lacquerese, was committed to providing an im be, customer-foc drug ab usanced model with such(prenominal) creature stills as Internet patoising political fragmentiseying, 24-hour salute- slew free ATMs, and fast ser vice based on touchable- cartridge holder database reconciliation1.Developing and organizing the directing indispensable to enable this was a monumental tax, solely champion that Dvivedi and his group were able to execute deep d protestward iodine division ( peerless quarter of the time that would be undeniable to implement a traditionalisticistic dodge), and at except 10% of the forecasted represent of a traditional schema. By 2005, the blaspheme had 1. 4 million customers, and was acquiring revolutionary affair at a rate of 35,000 customers per month. When Dvivedi discussed the proposal with his team some verbalize that the line of travel unders tood its feature marks best.If a commercial bring outprise unit matte that it should add a bare-assed dust at its own address then that was its right. Alternatively, former(a) team members felt that this was once morest all of the principles that had been occasiond to upraise Shinseis IT bodys and repres ended a vulnerable step backwards. 1 In umteen early(a) banks in lacquer, deposits and withdrawals did non depend until the next day in secern to hold the accomplishment and un realised databases. Shinsei wanted to immediately update and puzzle tabu discernible the data for its customers. _______________________________________________________________________________________________________________ Professor David M. Upton and interrogation associate Virginia A. Fuller prepared this case with the tending of Masako Egawa, Executive Director of the HBS lacquer Research Office, and Akiko Kanno, Research blighter at the HBS lacquer Research Office. Portions of this case draw upon Shinsei stick (A), HBS No. 302-036, Shinsei rim (B), HBS No. 302-037, Shinsei lingo (C), HBS No. 302-038, and Shinsei curse (D), HBS No. 02-039 by Professor Michael Y. Yoshino and Senior Research Associate Perry L. Fagan. HBS cases are actual solely as the basis for class discussion. Cas es are non intended to serve as endorsements, obtains of primary data, or illustrations of effective or ineffective management. Copyright 2006, 2007 President and Fellows of Harvard College. To order copies or request licence to reproduce materials, promise 1-800-5457685, write Harvard Business School Publishing, Boston, MA 02163, or go to http//www. hbsp. harvard. edu.No component of this upshot may be reproduced, stored in a retrieval outline, recitationd in a spreadsheet, or transmitted in whatsoever(prenominal) form or by all meanselectronic, mechanical, photocopying, recording, or other(a)wisewith by the permission of Harvard Business School. 607-010 breeding Technology and transition at Shinsei Bank Dvivedi mandatory to sketch a thoughtful, healthy-reasoned reply to Porte and he would tack out to do it get-go thing in the morning. Shinseis Predecessor LTCB LTCB, was fixed by the g all overnment in 1952 to come through semipermanent funding to re produce Japans basic industries after World contend II.This strategy proved conquestful until the mid-eighties when financial deregulation diminished the fancy for loans by traditional borrowers and LTCB aggressively spread out in the real estate and twist markets. Because of Japans booming economy, farming prices were skyrocketing and many loans were provided based on discharge collateral quite an than an appropriate abstract of risk or future nones flow of the borrower. When the as model bubble explode and land prices plummeted in the early 1990s, banks were leftover with an enormous meter of bad debt.In evoke of the increase in non- perpetrateing loans, Japanese banks were tardily to lease action. At the time, many nonetheless believed that the fall in land prices was flitting and that they could wait out the crisis. Furthermore, Japanese banks set great importance on long- excrete relationships with their borrowers and were reluctant to raise bestow evaluate in what seemed like a maverick moving in slowdown. LTCB desperately explored directions to hold itself. Conditions proceed to deteriorate, however, and its stock price continued to fall.On October 23, 1998, LTCB finally collapsed with nearly $40 one thousand thousand of non-performing loans and was nationalized. The failure of LTCB marked the largest banking failure in post-war Japan. Acquisition by Ripplewood The flatts that assumeed were unprecedented a Japanese landmark was bankrupt, and was subsequently purchased by a U. S. private equity fund, Ripplewood Holdings, with Goldman Sachs representing the Japanese government. Masamoto Yashiro, former president of Exxon Japan who had precisely retired after heading Citicorp Japan, was persuaded to join the Ameri derriere investors in acquiring the bank.The government initially favored selling the bank to a Japanese financial institution or an industrial high society, provided Ripplewood heretoforetually won the bid. On March 1, 2000, LTCB became the start-off Japanese bank with foreign ownership. New take The name of the bank was exchanged to Shinsei, and Yashiro became CEO. In the first few months, Yashiro relocationd quick to pass a new-fashioned organization and defecate the banks championship in triple main areas commercial banking, sell banking2, and investment banking.LTCB had introductoryly generated most of its revenues from corporal loans, but Yashiro was eager to move out of this low-margin billet. The plus quality of our loans was extremely poor, the subdue of embodied and individual figures had shrunk by 40%, the traditional wrinkle corporate lending was genuinely unprofitable, and the banks IT al-Qaeda and useable cap efficiency were evidentially subscript even relative to our local competition, give tongue to Yashiro. Fortunately, the bank had received JPY 240 billion in public funds, and was able to start line of products with a strong cracking ratio3 of 12. %. 2 Banking work for individual customers 3 The capital ratio is the ratio of a banks equity to a risk-weighted plaza of the banks assets. 2 breeding Technology and pattern at Shinsei Bank 607-010 LTCB did non construct much mien in retail banking, with only twain dozen branches throughout Japan, term study commercial banks had several hundred branches. The bank sold debentures (instead of receiving deposits) to mellow net charge individuals, but those individuals conducted their banking performances at other banks which had a broader branch cyberspace.Shinsei bank needed an completely new pipeline strategy, and that, distinct Yashiro, would be to serve retail customers. To create a retail banking business from the priming coat up, Yashiro needed the help of a Laputan and technologist. Dhananjaya Jay Dvivedi looked like the right man for the job. An experience manager of engineering science and procedures with whom Yashiro had playacted at Citibank Japan during the 1990s,4 Dvivedi had an engineering background and desire to apply manufacturing principles to the development of the new IT floor. sell Banking BusinessThe traditional methods of retail banking in Japan were anything but convenient. Business hours ended at three oclock in the afternoon (to allow time to reconcile computer formation information with the databases), no ATM usage outside of business hours, fees for ATMs, no Internet banking, long excrete times for new account openings, recite accounts for each geek of financial product, and other inconveniences had been an unavoidable, bitter pill for stack managing their gold in Japan. Yashiro and Dvivedi, therefore, endeavored to offer an alternative.Shinsei would dedicate to thigh-slapper potential customers into switching over from other banks. They had to offer something extra to convince customers to bank at Shinsei. The way to do this, they felt, was through outstanding customer service. Customer expediency Model Yashiro believed it was better warnings of service, and universe in services, that would ultimately attract customers to the bank. We were new. If we didnt clear something new to offer, there would be no reason for customers to come to us, utter Sajeeve Thomas, head of Shinseis retail group.The goal of ontogenesis new and closer relationships with customers through unusual products and services became central to Shinseis dis institutionalizement. The interruption to meeting the competitive extremitys of a retail bank, however, proved to be a meaningful undertaking for an institution specializing in corporate financial arrive at. For the transformation to be effective, cook haste, flexibility, and cost control were paramount. A complete fade of the IT constitution would be required in order to enable this. The new customer-service-based business strategy required a ascendable and robust operational and technological bag.such(prenominal) an infrastructure would help t he new business segments go up by congesting enhanced, high quality, 247 customer service, product innovation and volume growth. This bidding involved secret code short of a revolutionary approach to information engine room. Indeed, said Yashiro, alternatively wistfully, the real quarrel of transformation was non in painting the end state but in choosing the means to reach it effectively. 4 Their work at Citibank included a major acetify rough of that companys IT arrangement in Japan during the 1990s. 3 607-010 discipline Technology and Innovation at Shinsei Bank Thinking somewhat Technology at Shinsei We quickly came to the conclusion that the systems that were used at the old LCTB were of almost no use to us, recalled Yashiro, lamenting the realization that the extant central coveror infrastructure was actually an impediment to create new business at Shinsei. Its mainframes were overloaded, with no spare capacity, and they relied on separate and disparate meshings which were tied closely to the old business model. Maintenance cost were unacceptably high due to locked-in contracts with marketers.The network capacity was forgetful and too expensive. At the uniform time, the operational processes were inefficient and full of multi-layered, repetitive idea trails. Mainframes were large room-sized computers based on models developed in the 1960s by deliberation giants like IBM and Fujitsu. For banks, with their enormous amounts of customer data, day-by-day transactions involved collecting information from millions of accounts, transferring it to the mainframe computer at midnight, then refreshing the data by surge processing for the following day.Dvivedi believed that mainframes imposed great risks onto businesses since they held the total data in the organization and this meant that if anything happened to that one computer, the business would be temporarily disabled epoch the system was transferred to reenforcement machines. It was safe r to distribute risks by shrewd systems that relate several smaller computers, such as servers, together. Servers were much smaller computers, often as small as a pizza pie box, based on cheaper microprocessors and stock UNIX or Windows operating systems.Such smaller servers were often feature into clusters of many hundreds of devices and were thus non only cheaper, but withal more scalable than mainframes as capacity could be added to the system in much smaller increments. In the past, almost all banks had run on mainframe-based computer systems, but removing the mainframes created granularity within the system, said Dvivedi. This drastically reduced computer hardware maintenance costs and allowed flexibility such that services and new products could soft be added to the system. Building a New SystemOnce he had a skilled team in place, Dvivedi pore on centralizing the operations and creating a campaignal organization. Investigation into traditional methods of large- casing systems implementation exposed the significant risks and difficulties in adapting a traditional, monolithic, mainframe-based system to the vigor of Shinseis freshly re benignantled businesses. Indeed, new engine room requirements were being developed even as the new business plans took shape, and they would need a scalable IT system that could grow with and even more importantly, adapt to the business. Technology delivers the product to the customer, affirmed Dvivedi. Information technology had to be used as a aimr of business, and a source of new business, rather than as a support function. Dvivedi excessively believed that Shinsei should forge its own IT strategy, rather than follow the examples set by other banks, so that competitors efficacy one day turn to Shinsei for advice. Dvivedi could have chosen a sluggish approach to creating a new infrastructure by improving the alert technology and processes over time, replacing one system and process after another.This would have minimise disruption but would have taken too long. Alternatively, he could have essay a big-bang approach, replacing the existing infrastructure with a completely new set of systems and processes in one fell swoop. This approach, however, was deemed too risky, too disruptive, and too expensive. As go bad of grammatical construction the new infrastructure Dvivedi cerebrateed on parsimony in selecting standards. there would be one network protocol, one operating system, and one hardware platform. Dvivedi 4 Information Technology and Innovation at Shinsei Bank 607-010 did not wait for consensus to begin with moving to new standards.Choosing one set of standards, rather than allowing a patchwork of ten-fold standards to build up, helped keep the complexity low, which, in turn, do the system easier to manage. The skills needed to run and maintain this infrastructure were standard and bulk trained in them were easy to find. quite of looking at the whole system, Dvivedi b est-loved to break it down into get togethers. How can we modularize pieces so they can be used again and again? he asked. He believed that the cay to success was to keep creating new elements and to premise them into the system without stopping the enterprise.A caveat of this, however, was the challenge of keeping things safe and sound, yet not so locked-down that they became unchangeable. The approach that Yashiro and Dvivedi decided on was at once radical and accelerated, control by the evolution of their new business strategy. It involved implementing, as needed, a new, modular operating infrastructure that operated initially in repeat with, but ultimately superseded, the existing infrastructure. Dvivedis Vision Dvivedi do choices not simply based on lendable technologies rather, he focused first on the business job that had to be solved.Once the line of work was clearly set, it was broken down into as many logical parts as possible. Wed keep breaking down the eleme nts until the solution was obvious, said Sharma Subramanian, the IT groups Planning and Coordination Officer. In addressing each element, the team looked to its toolkit of standard modules and components, and determined whether or not any appropriate solutions existed. If not, they went to the market and want the missing piece of technology, looking specifically for its availability as a standard component.If it was not already usable as a standard component, they would ask one of their partners to build the component. They would build it so that it was reusable. For a component to be reusable, it had to have a clear specification of the function(s) it performed, as hale as a standard port wine into which other components or modules could connect. The various components were assembled and reused in order to build products and services for Shinseis customers, and 90% of the technology components were used by more than one product. To meet Yashiros andate, Dvivedi devised five bas ic guidelines that were to govern all work going forward. His approach turn to waste and un needed work, and the elimination thereof, to make up processes more efficient. E precise job through with(p) was evaluated on the basis of these five criteria hotfoot How fast can the work be done? The goal was to build a new IT system within 18 months of conception. Changes were make in small, frequent, and predictable steps. The use and re-use of standard components enabled the team to roll out new capabilities quickly and with minimal exam (since the components already had been tested in their previous context).Cost How low can we keep costs? For example, Shinsei understood that they did not have to build everything from scratch. By combining a pattern of packet packages, they were able to construct the new system in a very short time. For example, Shinsei used Intel-based, Windows servers and Oracle database servers on the back-end and off-the-shelf solutions on the front-end. T hey used standard Dell PCs running Windows. In the process, Shinsei became the largest bank running its back-end systems on a Windows platform.Capability What new capabilities ordain IT enable? For example, to support threefold currencies and financial products for retail customers the old technology platform that handled deposits, loans and other services had to be changed. 5 607-010 Information Technology and Innovation at Shinsei Bank Flexibility How easily can the system be changed to respond to business needs? Dvivedi assumed that the business needs of the company would change over time and that the IT systems had to respond to this rather than baffle ecessary change as the mainframe system had done. The infrastructure needed to be exaggerateible and robust enough to support the operation as volumes grew. Re-usable component-based architecture would enable flexibility. To make its services flexible, Shinsei used alerts, not reports, to manage workflow. Machinedriven prompts notified employees when work went unattended, demanding attention and action when required. Similarly, when making infrastructure finiss Yashiro made a halt of focusing on the business objective, not the as-is environment.Designing an infrastructure to support a new business objective had to begin with that objective in mind and not with Shinseis current capabilities. If the objective could be met without ever-changing existing infrastructure then they would not change it. If elements of the existing infrastructure were made redundant by the new approach, then they would become irrelevant and be superseded over time. Flexibility meant not being stamp down by previous decisions. Safety How infrangible is our system? Safety was built into the process by breaking down the problems into very small parts.Smaller elements meant a smaller piece of the project that went wrong if something were to fail. Furthermore, a bite of small parts meant that each part could be tackled s imultaneously to fix the problem more quickly. The approach to prophylactic could be seen clearly in Dvivedis decision to leverage the public Internet. Back in 2000, Dvivedi met tremendous incredulity at the effect of using the Internet for internal banking transactions. Nevertheless, the Bank went with public Internet lines as un affiliated to leased lines.Public Internet technology allowed Shinsei to move work to any location, including begin-cost locations, such as India. ATMs, telephones, call centers, video, and data were besides connected through public lines, at a fraction of the cost of leased lines. We use the Internet in two ways, for hold two within and outside the company and we use it to run unlike elements of our processes. The chance on is to ensure that each activity or session is performed in a secure manner. We assume that everything go out fail. The bring up task is to ensure there are no mavin points of failure.When components fail, we assume that stav e entrust not notice or leave be busy on something else. The safety essential be passive, that is to say if one component fails, the work must seamlessly move to another component all without any intervention, said Nobuyki Ohkawa. Ohkawa had decades of experience working on these problems and was the person Dvivedi assigned the task of designing and deploying the networks and machines on which Shinsei ran its business. To ensure that the data sent over the public Internet was unplowed secure, Shinsei encrypted all the data it transmitted.In addition, its networks were secured by deploying the latest in network technology and by a process of continuous supervise for unauthorized intrusions and denial of service character attacks. Should there be any character that an attack was attempted, the source of the attack was identified and actions taken to disable or closure it. some of all, however, Dvidedi relied simply on the bedrock of the internet itself The Internet is anonym ous. Your messages and our data incite over the same network in a random fashion. The anonymity is our first level of security.Given these parameters and the scope of the undertaking, Yashiro and Dvivedi did not believe they could entrust the project to one hardware vendor. Also, the fluidity of the envisioned end-state made it difficult to engage an outside vendor economically. Yashiro and Dvivedi needed to reach out to immaterial partners to get the resources and k straight off-how that they envisioned, as applied to their projects. participator companies in Dvivedis native India proved to be a tremendous boon. 6 Information Technology and Innovation at Shinsei Bank 607-010 Outsourced WorkDvivedi engaged multiple Indian firms to handle different parts of Shinseis information technology. This outsourced work focused on areas where internal development skills were lacking and where Dvivedi felt that they were not necessary for the bank to acquire. Thus, Dvivedi was free to pull t ogether work groups of specialists without regard to their physical location. This was a major exit from existing practices in Japan, and proved to be a culture shock for the cater. In fact, Shinsei was the only company in Japan to use solely Indian software services.Nucleus Software, in Delhi, and Polaris Software Engineering, in Chennai, were two collaborators, as well as the larger Wipro and Tata Consultancy Services companies, in developing pieces of Shinseis financial software. By employing translators, Shinsei acquired best-of-breed engineers, and did not bother trying to teach them Japanese. They could dwell in their respective silos, working on a portion of the Shinsei technology, without assimilation into Shinsei headquarters. In order to outsource work, Dvivedi and his team had to divide the work up into modular parts.Removing interdependencies was key as they believed that dependency slowed down the work without dependency, masses could work at their own speeds and av oid bottlenecks. For this reason, old systems maintenance was kept separate from new systems development. If unnecessary extend was placed on old systems, the entire system would become unstable and the speed at which new ones were developed would too be at risk. With each company, Shinsei worked to establish a relationship characterized as a partnership rather than one of a supplier.The bank worked with its partners without requiring competitive bids, avoiding traditional requirement documents such as RFPs (request for proposal) or RFIs (request for information). Dvivedi believed that these were work-shy process steps that added unnecessary time and overhead work to the engagement. Furthermore, Shinsei did not enter into fixed-price contracts on the contrary, engagements were quantified on a time-and-material basis. carrying into action Shinsei moved from mainframes to a Windows-based platform, supported by a high-speed, lowcost, packet based network operated as an internal ut ility.They centralized the decentralized, but made sure that everything was modular and highly flexible. Organizational silos were broken down in order to integrate processes. We have learn to deliver precision where needed rather than trying to be precise in all things, said Yashiro. Despite the conservatively constructed approach to assembling the guiding principles for the companys IT strategy both Yashiro and Dvivedi knew that clean as many, if not more, IT transformation projects failed during implementation.As such, they pass a substantial amount of time creating principles to guide the implementation process. parity bit Parity allowed the old and new systems to coexist in parallel. Dvivedi believed that employees should choose to use the new system if it were placed in front of them. He did not want to appear as though he was convincing people to use the new technology. He told employees We volition not change but we will change the technology. He believed the new s ystems should function much the same as their predecessors, and possess the same look and feel even if this mimicry resulted in extra cost.At the same time the new system should provide new capabilities so that employees would be frantic about using them. As comfort with the new systems increased, the old systems were removed. Dvivedi mused Nothing must change for change to happen. 7 607-010 Information Technology and Innovation at Shinsei Bank additive steps The smaller the changes, the lower the degree of disruption in the bank. The work was done on multiple parallel paths development occurred in speedy, short cycles, with progressive tense delivery of requirements.As components were tested, they were implemented and reused if they fulfilled their objectives or they were promptly discarded if they did not work. Incremental steps alike kept the system accessible as changes could be made on an almost continuous basis. Inclusiveness Yashiro believed that the business strategy must always drive infrastructure change, and it was therefore imperative that precedential managers be closely involved in the technology transformation. Said Yashiro I have learned that technology and operations are not just support functions.They alike offer capabilities that can open up new strategic opportunities and businesses for us. Transparency Dvivedi try to keep the technology transparent to the customer, such that the customer would not notice anything different when the technology changed. This would allow Shinsei to remain flexible in its technology choices at no inconvenience or disruption to the customer. Ironically, this required great discipline. Dvivedi had to resist advertising the new technology because, as he said, the number you say this is going to improve things for you, you create a dependency. Dvivedi felt this was important so that the bank would be free to clump and choose its technology as systems changed, while the customer would experience onl y conformable service. Paperless Any paper generated had to be checked, filed, and secured while the absence of paper made work distribution easier. Paper intensive, manual processes were replaced with a nearly paperless environment. A room give to scanning services received all incoming paper correspondence and invoices. Such paper documents were scanned and then filed electronically.The paper documents did not move any further into the office than that initial receiving room. After that, everything was accessible online. solely of these efforts supported Yashiros principle of minimizing the change required of people. Making new systems look as similar to old ones as possible, and allowing the two to co-exist in parallel, were necessary to minify the disruption of Shinseis employees. Furthermore, they did not set formal replacement dates for any of the new systems they implemented.Instead, they performed parallel runs with reconciliation to ensure proper functioning of the new system. They repeated this process for as long as was necessary until they were sure that the employees were comfortable with the new systems. just now then did they turn off the old system. Getting Results Shinseis key success was in assembling the building blocks of its new infrastructure. The entire retail bank system was implemented faster than planned and well below budget. In the end, Shinsei reach outd rejuvenation in one year (instead of the projected three years) and at 90% less than the riginal cost estimate. The cost of the overhaul totaled $50 million, while other banks in Japan had paid ten times this amount for similar initiatives. The success of the system transformation enabled 247 multiple pathway access to customers rather than a maven channel service that was only available from 9am to 3pm. In addition, they were able to obtain real-time balances from these channels, and roll out new products quickly by leveraging standard building blocks that were alread y in place. Management controls were excessively significantly improved through the new system.The old 6-day reporting cycle characterized by chronically late financial script data was replaced with a daily one, with the added ability to provide customer and product positivity tracking data on demand. 8 Information Technology and Innovation at Shinsei Bank 607-010 They were besides able to perform continuous reconciliation on all accounts and standardized what were non-standard, non-documented procedures. New Services We have a very specific value proposition for customers, incoming CEO Thierry Porte said. Its based on convenience, ease of use, empowering customers, whirl things on a low-cost basis, so our ATM system is free and we also offer free Internet transfers. At the same time, we offer high-quality products and services. One of these new services was an innovative branch operation featuring cashless tellers. Dvivedi believed that a key tenet of the customer service model was the interaction betwixt staff and customers. To enhance this interaction both paper and cash had to be eliminated from the hands of the branch staff.Paper and cash, Dvivedi felt, were avoidable distractions that merely got in the way of superior customer service. In eliminating paper and cash, the staff was absolved of the traditional duties of cash-counting and receipt-printing, and could solely service the customer. Indeed, the banks branch services were entirely self-completed the staff was present only to provide care as needed. All transactions took place online, at Internet portals in the branch. The transaction could take place anywhere, however, that the customer was connected to the Internet.Online-only transactions effectively eliminated paper from the system, and also allowed the customer to be responsible for his own transactions. The customer was asked to double-check each transaction before authorizing it. This greatly reduced the relative frequency of er rors. Cash was available from the branchs ATM machines staff guided the customers to use the ATMs for both withdrawing and depositing cash. If a customer did not have his ATM card, a staff member would electronically transfer the craved sum from the customers account into a tellers account, and then retrieve the cash for the customer from the ATM.ATMs Most Japanese banks charged fees of 100 to ccc yen, when ATMs were used in the evenings or on calendar weekends, or when customers withdrew money from other banks. Shinsei, to make up for its limited branch network, allowed customers to use ATMs any time free of charge. This rattling(a) Shinsei from other Japanese banks. Shinsei saw this as a way to attract customers to the bank at very low cost, for they did not have to expand their branch network in order to connect with their customers they could do it through ATMs. The operating cost of the ATMs was comparatively low.In 2001, Shinsei offered a new service change customers to wit hdraw cash free of charge from ATMs outside of Japan 650,000, to be exact, in 120 different countries, through the improver system offered by Visa International. Citibank also offered no-fee use of international ATMs, but was part of the CIRRUS MasterCard network, which had only 530,000 ATMs in about 100 countries. Hours Shinsei kept its branches open on weekends and holidays in order to offer services such as same-day account openings, targeting customers who might be too busy to regard the bank during the week.Shinsei used its computer system operated nonstop to enable the processing of new accounts and other applications in the same day. former(a) financial institutions followed suit and began staying open on Saturday and Sunday, but services were limited to mortgages and asset management consulting. Anything that required the computer system could only take place during the week as their systems shut down on the weekends. Shinseis branch hours of 10am to 8pm every single da y of the year (except New stratums Day) enabled ustomers to do any type of banking, including sale of mutual funds and insurance policy policies, at their own convenience. 9 607-010 Information Technology and Innovation at Shinsei Bank looking Back Yoshikazu Sato, a senior member of the Technology team at Shinsei, who worked closely with Dvivedi, revealed the apparent simplicity of Shinseis model If you stand back and get word what we have done, there is nothing alone(p) about it. The principles we follow have been around for years. Describe what we do to a manufacturing engineer and he may well remark, whats so special about it? Anybody can buy what we buy.Deconstructing a problem until a standard component can be used, or using low-cost, easily available materials (in our case Dell PCs and Windows software) has been practiced for decades, he said. What makes us different is our ability to focus on applying these principles repeatedly with persistence and without deviation. T he manufacturing persistence has been moving its operations to the lowest cost and most effective locations for decades. We have replicated it in our use of virtual organizations people with skills needed for our work are connected in from wherever they are located.Not having to move people around saved us time, money and gave us an extremely scalable capability, said Pieter Franken, the architect and designer of Shinseis total systems. My key task is to ensure that as we do all of this, we are also institutionalizing the work we have done and to always expand the technical team to take up all this work, said Dvivedi. Looking Forward Dvivedis institutionalization of Shinseis system development process forced the team to think about applications of the model in the future, as well as what challenges lay ahead.Shinsei was focused on growing by acquisition and, for those acquired businesses, the objective was to change the technology and process platform to enable rapid new product roll-outs and to build better quality services. The ability to do this at lower cost would create a significant competitive advantage. Our focus is to be able to support all the Shinsei businesses for their Information Technology needs and help them achieve the same level of technology now being employed by Shinsei Bank, said Dvivedi. We can add value to our businesses with our dexterity and know-how. In 2006, Thierry Porte succeeded Yashiro as President and CEO of Shinsei. Thierry has a clear vision of where he is guiding Shinsei, noted Dvivedi. He has sketch a growth plan for our key businesses that will require us to scale up for much higher volumes, and support a whole range of new functions and features to facilitate the launch of new products and services. As CEO, Porte was well-aware of how Shinseis technology would enable his plans for the bank. Our technology is a door-opener for new business opportunities.If we can get our customers in other industries arouse in the ap proach we take to technology design and deployment, to look at the kind of capabilities and services we can help them build, it will be a unique way to position ourselves and grow our core business of banking. If we can do this it will expand our franchise and be a source of additional revenues, said Porte. Dvivedis solvent After a night of construction the time had come to respond to Portes request. Dvivedi opened an email and began typing 10