TRADE FINANCE | Sandra Sendingan, Singapore

Inside Asian Development Bank's $118m modernisation programme

The bank is digitising its systems; streamlining financial and administrative services and setting up a digital sandbox.

Multilateral lender Asian Development Bank (ADB) is embarking on an ambitious $118.3m digitalisation project to enhance its ageing infrastructure and ensure its sustainability in a region that it helped build.

The first phase of the bank’s Digital Agenda 2030 will build on the progress made from reforms that began in 2016 and work on realising the vision of building and optimising ADB’s core IT systems. In this stage, ADB will implement a total of 16 projects under six programmes between 2019-2023. If the projects were to achieve at least 6% efficiency gain, ADB would have realised its return on its investments. 

Reforms are needed to replace ageing technologies, automate extensive manual processing, and overcome a legacy of unconnected and siloed systems. Additional investment is needed to support resiliency, growth in operations, decentralisation, and innovation. 

In a report, ADB noted that staff members cumulatively spend more than 1.5 million hours per year in meetings across its main and field offices. “Furniture is designed for using paper rather than technology, lighting is inadequate, cabling infrastructure is nonexistent, and the audio and video technologies are outdated. This causes poor user experience and inefficient meetings that are often delayed due to technical difficulties and contributes substantially to lost productivity,” the bank said in its report.

Beyond the replacement of its ageing mainframe with a modern platform, ADB is also upgrading its Comprehensive Loan Accounting and Servicing Systems. The new disbursement system will be optimised, cash management processes will be managed more efficiently under a new consolidated system, and a more robust Credit Risk Management System will be put in place. Routine tasks will be automated. In later stages, emerging technologies will be used to support new digital financial products and services for clients and partners.

“The team is running on all cylinders to be certain that we’re delivering on the programme objectives and the desired impact on development,” Shirin Hamid, chief information officer at the Office of Information Systems and Technology (OIST) at ADB told Asian Banking & Finance

With the expectations that private sector activities will account for a third of operations in number by 2024, ADB is investing to develop a new platform for nonsovereign operations. In view of the growing diversification in its operations, ADB needs enhanced forecasting tools and improved cash position visibility for treasury functions.

Moreover, the bank is also aiming to cut the time it takes to prepare for a project and disburse a loan for trade finance purposes. For this, the multilateral lender mulls the possibility of using blockchain technology to speed up the drawn-out process due to the transaction time between the exporter, importer and their respective banks.

“Right now, it takes more time than what is desired to get financial transactions processed. Under the Digital Agenda, we will focus on dramatically improving our business processes to improve turnaround times,” said Ozzeir Khan, director, business relations and IT strategy division at OIST.

ADB will also establish a digital innovation sandbox, automate approval processes, and strengthen cybersecurity schemes. 

‘“We are fully hands-on with AI in 2019, seeking to build or incorporate it in our systems. For example, we hope to infuse the knowledge that we have about infrastructure projects and leverage on AI to bring insights and expertise,” added Hamid.

Currently, the bank grapples with a fragmented and manual system where information is scattered across more than 600 management information systems that individual departments have built.

Knowledge bank
With over fifty years of experience in development work in the region by providing loans, technical assistance, grants and equity investments, ADB has accumulated a formidable arsenal of knowledge in complex project financing which it hopes could just be the key to ensuring its sustainability.

This entails exploring the possibility of looking at the stack of economic reports produced by the bank’s economists over time along with other archived data to advance the regional development agenda.

Tasked with accelerating the development of developing countries, the ADB CIO believes that the bank's digitalisation agenda can only enhance its capability to create more value for its stakeholders across the region. “Our efforts to modernise the Bank’s entire technology platform sets the tone for how agile ADB is or can be. For us, our agility and ability to transform digitally reflects on ADB's ability to affect positive changes to the lives and economies of the people and countries that we serve. At the end of the day, it is about impact on development.” 

EDITOR'S NOTE: This article has been revised to more accurately reflect the contents of ADB's Digital Agenda 2030. An earlier version of this story was published on March 11. 

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