International business requires international banking capabilities, and more potential customers are looking for full-service offshore banking. How could this bank enable global financial services?
The bank created premium offshore banking services, built on Oracle applications running on the IBM Cloud, tempting new customers and providing a robust, highly scalable foundation for future growth.
Four-foldgrowth in revenues projected
66% time savingtarget for transaction processing
Excellent serviceattracts new customers and grows market share
Business challenge story
Meeting of giants
Growing numbers of businesses operate globally, and both they and their executives need a similarly international approach to banking services. While the term “offshore banking” can carry negative connotations, in many cases such a service makes commercial sense, and tends to draw customers away from local banks.
This bank already offered an offshore service, but noticed that if a customer’s business operated internationally, it often moved its main banking requirements. To capture and retain high-net-worth customers and businesses, the bank wanted to create a globalized service, improve its service offerings, and increase its international capabilities.
The bank looked for ways to develop its new offerings while minimizing business risk. With no certainty of future success, how could it bring new services to market cost-effectively, yet be ready to grow fast?
Opting for the best
The bank decided to pioneer a radically different approach to banking infrastructure. Rather than build data centers and implement on-premise equipment and software, it chose an all-cloud route. The cloud-based approach removes the need for upfront capital investment, and enables the bank to focus on customer service and market strategy, while backed by agile, flexible and scalable IT services.
The bank selected IBM Cloud for Oracle Solutions running the Oracle FLEXCUBE Core Banking solution. IBM provides a Platform-as-a-Service, coupled with management services for the Oracle solutions. The Oracle solutions are being implemented by Oracle Consulting.
A cloud approach means that the bank has avoided the substantial upfront cost of setting up a data center and purchasing infrastructure, freeing up cash for investment in other areas of the business. With a predictable monthly fee, the bank can plan its expenses and cashflow, as well as release technical staff to focus on business process improvements rather than infrastructure administration.
The bank’s CEO comments, “A robust IT infrastructure is vital for all banks – but it’s especially important in the offshore environment, as without physical branches, you depend entirely on IT solutions to deliver your products and services to customers.
“To deliver high-end service to our clients efficiently, we needed a reliable core banking solution which could act as the backbone of our operations and the front-end for transactions, including internet banking for customers. Our local office already had a strong relationship with IBM, and we know that IBM provides unrivalled expertise and global reach in the banking sphere, so we felt confident entrusting them to help us set up the systems for our new subsidiary.”
He adds: “Critically, IBM offered us infrastructure on IBM Cloud, maintenance of the environment, the Oracle licenses, application monitoring, backups and disaster recovery all for a single monthly fee, with no upfront cost. That was a game-changer, because our venture into the offshore banking industry was highly experimental, and we were under pressure to minimize risk and cost.
“With IBM Cloud for Oracle Solutions, the bank gains access to enterprise-class software and services, which could otherwise be far beyond our means. We are very happy with the service from IBM.”
One of IBM's global leaders for Cloud, observes: “IBM is sometimes perceived as too large an organization to serve smaller banks, though in reality we are moving more and more into this space.”
“What’s more, IBM provides the funding and environment to help developers innovate, and design solutions that better fit the needs of younger, growing businesses.”
Ramping up growth
Oracle Consulting is working to integrate the Oracle solutions closely with the bank’s systems, reducing the need for human intervention in processing transactions. In the meantime, the bank is building up its product and service portfolio to serve its customers invest. The bank’s efforts are paying off, as its market share and customer base continue to grow.
The bank’s CEO remarks: “When we first started out, we were processing 15 transactions per day manually. Since the introduction of the Oracle solutions, we have scaled up to 50 per day. Once we have integrated our banking systems more closely and launched our online banking solution, we expect to process up to 200 transactions each day without increasing headcount, which would equate to a four-fold increase in revenue.
“At the moment, processing each transaction requires around half an hour of work. Once the system integration is complete, we aim to reduce that figure to around 10 minutes – a 66-percent saving. By harnessing automation and maintaining efficient operations, we can ensure that increased growth feeds our bottom line without being consumed by rising overheads.
“Most importantly, our customers will enjoy premium banking services, with real-time balances available online, fast turnaround times for their transactions, and personalized service. Service quality is a top priority for us, because we serve a small, exclusive market of prestigious customers, and securing their loyalty is vital to our long-term success and viability.”
The CEO concludes: “The offshore banking market is niche, and winning market share is tough. In fact, of the 300 banks awarded offshore banking licenses in the last 15 years, only a small fraction are still in existence. We are establishing ourselves as a small but important player in the offshore banking market, and we believe that the solutions from IBM and Oracle offer us a key competitive advantage.”
This is a large commercial bank with a wholly owned offshore subsidiary.