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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 higher value products and exceeding customers’ expectations.” R.K. Bansal, Executive Director and CFO, IDBI Bank Industrial Development Bank of India (IDBI) was established in 1964 by the Government of India to provide credit and other facilities for the development of industries. In line with the reforms in the Indian financial sector and to meet emerging postreform challenges, IDBI transformed from a development finance institution into a full-fledged commercial bank in 2004. In 2005, IDBI merged its commercial banking subsidiary IDBI Bank. In 2006, the bank acquired United Western Bank to further strengthen its position in the banking sector. Following these mergers, the bank was renamed as IDBI Bank Ltd. The bank has a network of 564 branches and 955 ATMs across India. It offers a range of products and services covering: retail, corporate, international banking, treasury management, merchant, and investment banking. In 2008, IDBI Bank was restructured into several customerfocused 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.
IDBI Bank Mumbai, India www.idbibank.com
Oracle Products & Services:
Oracle Transfer Pricing Oracle Transfer Pricing Online Oracle Profitability Manager Oracle Financial Services Oracle Profitability Analytics
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. Other names may be trademarks of their respective owners. “Regular performance monitoring is crucial to devise strategies. IDBI Bank selected Oracle Transfer Pricing. versus their target. allowing the bank to devise strategies to improve profitability Enabled managers to analyze the true contribution of customers. Oracle Profitability Manager. so we can monitor the actual performance of each business unit. Oracle is a registered trademark of Oracle Corporation and/or its affiliates. All rights reserved. In addition. Oracle Transfer Pricing Online. each month. and branches.” said Sitaram. Published July 2009 . “The Oracle solution enables us to objectively assess performance at the desired granular level. Oracle Profitability Manager is used to allocate costs related to the bank’s products. The bank is also a user of Oracle Financials and Oracle Human Resources. product. Oracle Transfer Pricing Online allows staff to view the transfer price for all products as they are completing transactions. products.” IDBI Bank uses Oracle Transfer Pricing to measure the net interest income (NII) contribution from assets and liabilities based on a benchmark reference curve. and evaluate the performance of various products to ensure these businesses stayed profitable. IDBI Bank did not have an adequate system to assess the profitability of each line of business at branch. initiate appropriate actions. and branches. and analyze these results by lines of businesses. Copyright © 2009. The solution allows staff to dissect NII contributions. Data is stored in an Oracle Database whilst the applications act as knowledge engines and eventually enrich the data collected from transaction processing systems. This enables the bank to measure the operating profit across these dimensions on a monthly basis. finance and accounts at IDBI Bank. products. and Oracle Financial Services and Oracle Profitability Analytics to build an enterprise performance management system. and drive business in line with the overall performance objectives of the bank. Sitaram. In March 2008. assets. customers.Oracle Customer Case Study Analysis Across all Business Units and Products Key Benefits: Gained insights into the performance of products at many levels. This type of analysis would help the bank allocate resources in the right areas. chief general manager. “Being able to evaluate the performance of our business units and products at a granular level was crucial to the bank’s future growth. and branches to the bank’s bottom line Provided objective assessments of performance at account level to facilitate better decision making Allowed regular monitoring of actual financial performance against budgets Provided the potential to conduct detailed performance assessments on employees working at bank branches Prior to implementing the Oracle solution.” said P. and liabilities separately. and customer levels. lines of business.
Published July 2009 .” Ability to Assess Employee Performance The Oracle solution will soon provide building blocks to conduct performance assessments on individual staff members. they can make better business decisions and ultimately make a larger contribution to the profitability of the bank. as well as the expertise of the Oracle implementation team. “With this system in place. “The flexibility of the Oracle system has to incorporate tailormade configurations on various performance measurements. head of the balance sheet management group at IDBI Bank.” said Ishwar Padhan. Bansal.” Oracle Financial Services Profitability Analytics delivers profitability information to users over the internet. Other names may be trademarks of their respective owners.” 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. executive director and CFO at IDBI Bank. and lines of business. Oracle is a registered trademark of Oracle Corporation and/or its affiliates. convinced us to choose Oracle. and cost allocation principles of the bank. Copyright © 2009. 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. “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 R. “We will be able to assess employee performance at the group level. and rankings across products. Staff can analyze variances. All rights reserved. geographies. “Armed with this information.K. which will allow us to develop an appropriate performancebased incentive and reward system. trends.” said Padhan. Oracle.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.
IDBI Intech. user. In April 2008. All rights reserved. the technology subsidiary of IDBI Bank. Oracle Consulting began rolling out the solution at IDBI Bank. “The project’s aggressive deadlines were met thanks to the dedicated resources and close co-ordination between the Oracle implemention. and IT teams. “All teams made a concerted effort to complete the project in a timely manner. Published July 2009 . associate consultant. while the system integrated and technical tasks were managed by IDBI Intech. IDBI transformed from a development finance institution to a fully-fledged bank in 2004 and was renamed as IDBI Bank Ltd. “The integration and testing went well because Oracle Consulting worked with the bank in the past so they understood our infrastructure.” said Sanjay Sharma.Oracle Customer Case Study Implementation Process In March 2008.” said Devendra Hedaoo. Oracle. Other names may be trademarks of their respective owners. Oracle is a registered trademark of Oracle Corporation and/or its affiliates. Integration and user testing was completed across the bank’s entire operations and branch network by September 2008.” 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. The policy and design principles were handled by a core team with domain expertise. Copyright © 2009. IT advisor at IDBI Bank. a pilot project was conducted at 12 IDBI branches.
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