Oracle Customer Case Study

IDBI Bank Improves Profitability with Integrated

Management Accounting System

“The implementation of Oracle’s Financial Services

applications has provided improved visibility of the contribution
of each business unit to the overall profitability of the bank.
This has created a staff culture that is focused on generating
IDBI Bank
Mumbai, India higher value products and exceeding customers’ expectations.”
www.idbibank.com R.K. Bansal, Executive Director and CFO, IDBI Bank
Industry:
Financial Services Industrial Development Bank of India (IDBI) was established in
Annual Revenue: 1964 by the Government of India to provide credit and other
US$2.6 billion facilities for the development of industries. In line with the
reforms in the Indian financial sector and to meet emerging post-
Employees:
reform challenges, IDBI transformed from a development finance
9,867
institution into a full-fledged commercial bank in 2004.
Oracle Products & Services: In 2005, IDBI merged its commercial banking subsidiary IDBI
Oracle Transfer Pricing Bank. In 2006, the bank acquired United Western Bank to further
Oracle Transfer Pricing Online
strengthen its position in the banking sector. Following these
Oracle Profitability Manager
mergers, the bank was renamed as IDBI Bank Ltd. The bank has a
Oracle Financial Services
Oracle Profitability Analytics network of 564 branches and 955 ATMs across India. It offers a
range of products and services covering: retail, corporate,
Implementor: international banking, treasury management, merchant, and
Oracle Consulting investment banking.
In 2008, IDBI Bank was restructured into several customer-
focused business units to streamline processes and improve
customer service. Following the restructure, the bank needed to
develop a system to better assess the performance of each
business unit and take corrective action if they were not delivering
adequate profit.
IDBI Bank engaged Oracle Consulting to deploy a range of
Oracle’s Financial Services applications that enabled the bank to
measure each business unit’s contribution to profitability.
Using these applications, the bank can determine the performance
of products, customers, and branches, allowing it to devise
strategies that boost revenue and overall profitability.

Copyright © 2009, Oracle. All rights reserved.

Oracle is a registered trademark of Oracle Corporation and/or its affiliates. Other names may be trademarks of their respective owners. Published July 2009
 Oracle Customer Case Study

Analysis Across all Business Units and Products

Key Benefits:
ƒ Gained insights into the
Prior to implementing the Oracle solution, IDBI Bank did not
performance of products at have an adequate system to assess the profitability of each line of
many levels, allowing the bank business at branch, product, and customer levels. This type of
to devise strategies to improve
analysis would help the bank allocate resources in the right areas,
profitability
and evaluate the performance of various products to ensure these
ƒ Enabled managers to analyze
the true contribution of businesses stayed profitable.
customers, products, and
“Being able to evaluate the performance of our business units and
branches to the bank’s bottom
line products at a granular level was crucial to the bank’s future
ƒ Provided objective growth,” said P. Sitaram, chief general manager, finance and
assessments of performance at accounts at IDBI Bank.
account level to facilitate better
decision making In March 2008, IDBI Bank selected Oracle Transfer Pricing,
ƒ Allowed regular monitoring of Oracle Transfer Pricing Online, Oracle Profitability Manager, and
actual financial performance Oracle Financial Services and Oracle Profitability Analytics to
against budgets
build an enterprise performance management system. Data is
ƒ Provided the potential to
stored in an Oracle Database whilst the applications act as
conduct detailed performance
assessments on employees knowledge engines and eventually enrich the data collected from
working at bank branches transaction processing systems. The bank is also a user of Oracle
Financials and Oracle Human Resources.
“The Oracle solution enables us to objectively assess performance
at the desired granular level, so we can monitor the actual
performance of each business unit, versus their target, each
month,” said Sitaram.

“Regular performance monitoring is crucial to devise strategies,

initiate appropriate actions, and drive business in line with the
overall performance objectives of the bank.”

IDBI Bank uses Oracle Transfer Pricing to measure the net

interest income (NII) contribution from assets and liabilities based
on a benchmark reference curve. The solution allows staff to
dissect NII contributions, assets, and liabilities separately, and
analyze these results by lines of businesses, products, customers,
and branches.

In addition, Oracle Transfer Pricing Online allows staff to view

the transfer price for all products as they are completing
transactions.

Oracle Profitability Manager is used to allocate costs related to

the bank’s products, lines of business, and branches. This enables
the bank to measure the operating profit across these dimensions
on a monthly basis.
Copyright © 2009, Oracle. All rights reserved.
Oracle is a registered trademark of Oracle Corporation and/or its affiliates. Other names may be trademarks of their respective owners. Published July 2009
 Oracle Customer Case Study

“Being able to assess operating profit this way has far reaching
benefits for performance analysis and management at the product
and business unit level.”
Oracle Financial Services Profitability Analytics delivers
profitability information to users over the internet. Staff can
analyze variances, trends, and rankings across products,
geographies, and lines of business.
“Relationship managers and decision makers now have better
access to critical information that allows them to objectively
evaluate the performance of their respective portfolios and areas
of responsibility on a regular basis,” said Ishwar Padhan, head of
the balance sheet management group at IDBI Bank.
“Armed with this information, they can make better business
decisions and ultimately make a larger contribution to the
profitability of the bank.”

Ability to Assess Employee Performance

The Oracle solution will soon provide building blocks to conduct
performance assessments on individual staff members.
“We will be able to assess employee performance at the group
level, which will allow us to develop an appropriate performance-
based incentive and reward system,” said R.K. Bansal, executive
director and CFO at IDBI Bank.
“With this system in place, we have better visibility on the
contributions being made at different levels which is generating a
culture focused on customer service and creating more value.”

Why Oracle?
IDBI Bank chose Oracle due to the functionality offered by
solution and Oracle’s success in implementing similar
infrastructure at other top-tier banks in India.

“The flexibility of the Oracle system has to incorporate tailor-

made configurations on various performance measurements, and
cost allocation principles of the bank, as well as the expertise of
the Oracle implementation team, convinced us to choose Oracle,”
said Padhan.

Copyright © 2009, Oracle. All rights reserved.

Oracle is a registered trademark of Oracle Corporation and/or its affiliates. Other names may be trademarks of their respective owners. Published July 2009
 Oracle Customer Case Study

Implementation Process
In March 2008, Oracle Consulting began rolling out the solution
at IDBI Bank. The policy and design principles were handled by a
core team with domain expertise, while the system integrated and
technical tasks were managed by IDBI Intech, the technology
subsidiary of IDBI Bank.
In April 2008, a pilot project was conducted at 12 IDBI branches.
Integration and user testing was completed across the bank’s
entire operations and branch network by September 2008.
“The project’s aggressive deadlines were met thanks to the
dedicated resources and close co-ordination between the Oracle
implemention, user, and IT teams,” said Devendra Hedaoo,
associate consultant, IDBI Intech.
“The integration and testing went well because Oracle Consulting
worked with the bank in the past so they understood our
infrastructure,” said Sanjay Sharma, IT advisor at IDBI Bank.
“All teams made a concerted effort to complete the project in a
timely manner.”

Industrial Development Bank of India (IDBI) was established in 1964 by the

Government of India to provide credit facilities for the development of industries.
In line with reforms in the Indian financial sector, IDBI transformed from a
development finance institution to a fully-fledged bank in 2004 and was renamed
as IDBI Bank Ltd.

Copyright © 2009, Oracle. All rights reserved.

Oracle is a registered trademark of Oracle Corporation and/or its affiliates. Other names may be trademarks of their respective owners. Published July 2009