Information Technology and Innovation at Shinsei Bank

Topics: Bank, Retail banking, Shinsei Bank Pages: 18 (5929 words) Published: March 27, 2013
REV: OCTOBER 4, 2007


Information Technology and Innovation at Shinsei Bank
Jay Dvivedi looked once more at the proposal in his email inbox, sighed and closed his laptop for the night. He owed his boss, Shinsei CEO Thierry Porte, a response and he knew that he would need to send it in morning. One of the heads of Shinsei’s business units had approached Porte directly with a proposal for a new, off-the-shelf customer relationship management (CRM) system for his business. He wanted to fund it and implement with his own personnel, but he needed approval from Porte. Before Porte responded he had requested input from Dvivedi. When Dvivedi discussed the idea with his team the opinion was divided. The information technology organization had played an integral role in the revitalization of Shinsei Bank from the ashes of Japan’s failed Long-Term Credit Bank (LCTB). In March 2000, Dvivedi had been charged with the task of developing a revolutionary technology infrastructure for the newly formed Shinsei Bank. When he asked then CEO Masamoto Yashiro for some guidelines he was told to do it “Fast” and “Cheap”. Drawing on his wealth of experience in technology and operations in the banking industry he and his team were able to come up with a quick, robust, and inexpensive approach through which the reborn bank could deliver its newer products and services. Shinsei, which literally meant “new birth” in Japanese, was committed to providing an improved, customer-focused model with such conveniences as Internet banking, 24-hour cost-free ATMs, and fast service based on real-time database reconciliation1. Developing and organizing the technology required to enable this was a monumental task, but one that Dvivedi and his team were able to execute within one year (one quarter of the time that would be needed to implement a traditional system), and at only 10% of the forecasted cost of a traditional system. By 2005, the bank had 1.4 million customers, and was acquiring new business at a rate of 35,000 customers per month. When Dvivedi discussed the proposal with his team some said that the business understood its own objectives best. If a business unit felt that it should add a new system at its own cost then that was its right. Alternatively, other team members felt that this was against all of the principles that had been used to resurrect Shinsei’s IT systems and represented a dangerous step backwards.

1 In many other banks in Japan, deposits and withdrawals did not appear until the next day in order to reconcile the

transaction and primary databases. Shinsei wanted to immediately update and make visible the data for its customers. ________________________________________________________________________________________________________________ Professor David M. Upton and Research Associate Virginia A. Fuller prepared this case with the assistance of Masako Egawa, Executive Director of the HBS Japan Research Office, and Akiko Kanno, Research Associate at the HBS Japan Research Office. Portions of this case draw upon “Shinsei Bank (A),” HBS No. 302-036, “Shinsei Bank (B),” HBS No. 302-037, “Shinsei Bank (C),” HBS No. 302-038, and “Shinsei Bank (D),” HBS No. 302-039 by Professor Michael Y. Yoshino and Senior Research Associate Perry L. Fagan. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright © 2006, 2007 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-5457685, write Harvard Business School Publishing, Boston, MA 02163, or go to No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the...
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