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All banks which go for a core banking driven transformation face similar challenges

Situation 15+ years old systems

Mainly self developed

Well understood

System functions thinking

Rich in functionality

Product thinking

Problems Solution Complications

Functional gaps

Inconsistent data

Low agility

Limited compliance

Limited scalability

High maintenance

Select Core Banking

System as strategic

platform of the future

Limited knowledge of CBS

Build-in business processes

Different implementation

approach

Parameterization within limits

New strategic partner

Adopt, not adapt

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There is still a high failure rate of core banking driven transformations

Transformation programaborted

Transformation programdelivered

Transformation programdeliveredwhile costs and timelinedoubled or tripled

25 %25 %

50 %

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Failure

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Case study Oracle FLEXCUBE, failed implementation at Allied Irish Bank

Budget:84 million Euro

Time:3 years

Technical implementation: IBM’s z/DB2 platform, which is not supported by Oracle/FLEXCUBE

Program management shortcomings

Program stopped in 2010

AIB sued Oracle for 84 million Euro in 2011

Retail banking Accounts Replacement of

legacy retail banking platform

Started in 2007 Migrate

5,000,000 accounts to Oracle FLEXCUBE

Learning

One wrong choice, like the technical infrastructure, can lead to a failed program.

PlanScope Challenges Results

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Case Study Temenos Globus/T24 at ING, stopped CBS transformation after three years

Budget:-

Time:3 years

The requirements were significant higher than anticipated

Underestimated need to meet regional, head office and country requirements

Singapore was the largest branch in Asia Pacific and had a ‘wealth of know-how’ which was not easy to transfer that know-how to head office

Change of database technology during the implementation of the CBS program from Oracle to jBase

In 2005 the program was stopped citing ‘internal reasons’

Wholesale banking TreasuryLendingCorporate financePaymentsCash managementRisk managementGeneral ledger

35 Countries

Single view of a corporate customer across all countries

Start in 2002

Significant change of scope, underestimation of complexity and wrong technical choice can lead to a failed program

LearningPlanScope Challenges Results

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Case Study SAP at Commonwealth Bank of Australia, Integration Partner Accenture, Costs double against initial estimation

Budget:580 million $

Time:4 years

Increase of scale and scope of the CBS program

Acquisition of Bank West and St Andrew’s

Need for significant change of lately renewed access channels, again.

Current knowledge (Mar 2013) on Budget:

1,300 million $ Time:

5+years

Accounts Deposits Loans Payments Started in 2008 Replacement of

45 years old legacy IT system landscape

Change of scale and scope may lead to significant cost overruns

A large SI partner will not prevent you from having costs overruns.

LearningPlanScope Challenges Results

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Success

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Scope Accounts, payments, trade finance, loans, deposits

Oracle FSS Flexcube Universal Version 10

Challenges Managing the banks expectations Changing the habit of the people in the

bank Ensure quality of software customization Coordinate brand and business strategy

over borders

Description

Objectives Core bank automation across foreign branches with Headquarter to follow

Migrate all countries to the same common system

Standardize services, improve cost base and brand loyalty

Replicate good practice across group

Best Practice Patterns

Background Retail and Corporate Bank 210 branches, >70 abroad $50 billion assets

Oracle Flexcube at Chinatrust Commercial Bank Taiwan

Phased Implementation

Model Bank Implementation

Socio-Cultural based Selection of Consultancy

New Operating Model

Prepared Business Processes

Minimum Customization

Communicate the replacement as an

business issue

CASE

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Scope Private Banking Roll out in 3 countries 18 months implementation time Accounts, Deposits, Payments, Securities

Challenges Data migration concerning existing silos of redundant and inconsistent data

Ensure employees continued cooperation within the program

Ensure a smooth and complete knowledge transfer

Different tax issues and client reporting requirements of migrated countries

Description

Objectives Increase operational efficiency and maximize synergies within the group

Migrate all countries to the same common system Improvement of CRM, risk management, and

compliance Reduction of complex interfaces and decrease the

number of technical and platform skills required

Best Practice Patterns

Background Private & Corporate Banking 34 branches in 26 countries CHF 110 billion assets

Temenos T24 at Schroders, Switzerland

Big Bang Approach

Established Change Management

Prepared Business Processes

Shared Strategy

Open Communication concerning Job Cuts

Real Partnership

Be the Reference Bank

CASE

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Scope Accounts, deposits, payments, loans, credit cards

29 months; in 5 countries Alnova Financial Solutions

Challenges Adjust business and IT processes Migrate all P.S.K. client account data to the

new system Achieve a solid post-merger IT platform for

its constituent organizations

Description

Objectives Reducing the need for large back offices Provide online access to all customer- and

product-related information Streamline work processes Create synergies between IT capabilities

and business goals Adapt quickly to new market conditions

Best Practice Patterns

Background BAWAG acquired P.S.K. Retail and corporate banking 150 branches, > 1,300 post offices €45.4 billion assets

Accenture Alnova Financial Solutions at BAWAG P.S.K. ,Austria

Phased Implementation

Established Change Management

Quality People

CASE

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Scope SAP – accounting (R/3), client and account management (Deposits Management)

Investment banking back office operations 26 months implementation time

Challenges Integration requirements, more than 100interfaces

Lack of expertise within SAP for its banking software

Description

Objectives To move from being a small local player to a much larger institution, focused not only on Argentina but also other central and south American countries

Adoption of Basel II

Best Practice Patterns

Background MBA Lazard Argentina is a pure investment bank

No branches

SAP Deposits Management & R/3 at MBA Lazard, ArgentinaCASE

Be the First Reference Bank

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Templates

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Case study

A B C

A B C

A B C

A B C

Learning

ABCDEF

PlanScope Challenges Results

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Scope A B C

Challenges A B

Description

Objectives A B C

Best Practice Patterns

Background A B

CASECASE

Best practicepattern

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Contact

Frank Schwab’s customers are banks, IT consultancies and IT Service Providers in Europe and Middle East.

Frank has more than 14 years experience of IT transformations. He has planned CBS-driven IT transformations based on SAP, Flexcube, Temenos, OSPlus, and others in Scandinavia, Middle East, Eastern Europe, Germany and others.

Until 2009 he was chief architect at Deutsche Bank. Amongst others he was responsible for the planning of the IT transformation based on SAP Banking, the set up and (10 years later) the renewal of the Online Banking, the introduction of Mobile Banking and the set up of the first German lab for Banking IT. Frank also designed an ASP Core Banking model based on SAP Banking Services.

Frank is a pioneer of Online Banking, Mobile Banking and Touch Point Banking and a winner of three European Awards in 2009 and 2010 for the New Online Banking, Mobile Banking and Touch Banking at Q110 - The Deutsche Bank of the Future.

Frank.Schwab@imacor.de

+49 173 670 623 3

Skype: fjschwab