emerging corporates (due to go-live in H1 2014), to be followed by a roll-out across all business lines domestically as well as in all international branches.
The focus in the Middle East is typically on risk management
and corporate lending, including collateral management due to the strong trade finance businesses of banks in the region. Erni pointed out that the sales cycles here can be relatively short. Often the demand is driven by specific regulatory changes, most recently in Saudi Arabia with new liquidity rules introduced by the monetary authority and in Jordan by the central bank for Basel III.
User experiences
Banca Comerciala Romana (BCR) in Romania is a universal bank and has been part of the Erste Bank group since 2007. It is the largest in the country, claiming a 25 per cent market share. The bank has an in-house built core system that was developed with Oracle, IBM and Ernst & Young, and went live in 2006. For corporate loans it uses Loxon’s Loan Approval System, going live in 2005. According to Radu Nelepcu, executive director of IT at the bank, the front-end system covers the approval part of corporate loans. It provides the workflow for origination and approval, then creates the contract, and the back office administration is done in the core. Following the Erste Bank take over, BCR went through an intensive transformation process to move towards a centralised approach. ‘All the processes within the bank have been heavily re-engineered,’ said Nelepcu. As part of this, the corporate lending process has been enhanced. ‘We have re-designed the solution, and together with Loxon, we have implemented flows which support the new process for corporate lending.’
BCR also started an integration project with the core
system. ‘We want to automate the lending process as much as possible, and the approval part should continue naturally with the administration part. We would like to do automatic import and booking of the loan.’ However, within this project Nelepcu experienced complications. ‘The problem is that most of the corporate loans are not very standard.’ This creates the challenge of finding which processes are advantageous to integrate.
The stated aim of Loxon is to deepen its existing products,
rather than broaden the suite. For risk, there are always new requirements, as reflected in the arrival of Basel III. The focus has been on Central Europe, including CIS, Middle East and Africa. Asia has recently come into the focus, with the deal to implement Loxon’s collection system across all international subsidiaries of a Czech financial services group, Home Credit. The domestic operations and those in Vietnam already in production. Home Credit has ten international subsidiaries in Eastern Europe and Asia, and the project is anticipated to help Loxon to gain a foothold in the new markets in Asia.
Moving the lending functionality into the core system is not something BCR considered during the re-build. Nelepcu explained: ‘In terms of architecture I wouldn’t do that. We are moving towards a service-oriented architecture and I would like to have the systems specialised on what they are doing. The core banking system I would keep only for the core part, and what is only workflow or document management should be separate systems integrated with the core.’ At the Takarekbank (also known as Hungarian Savers Co-
operative), an installation of the full front-end suite of Loxon for risk management and lending, carried out jointly with the bank, took six months and culminated in a cut-over in early 2008. According to Erni, two months were for integration with the multiple core systems at the co-operative. The front-end system was implemented as ‘one application supporting multiple legal entities’, said Erni. It is integrated with a full installation of Oracle’s BPEL and ESP systems. This is something that Erni believed was ‘very important’ to ‘match up information from the multiple cores’. Jordan-based Housing Bank for Trade and Finance (HBTF) went live in early April 2014 with its rating/scoring solution for retail and small business customers, to be used throughout the bank’s 119 branches (HBTF is the largest bank in the country in terms of branch network). This is one of two projects that Loxon has been working on with HBTF. The other one is the migration of the Oracle Financial Services Applications (OFSA) product of Oracle to the new version, Oracle Financial Services Analytical Applications (OFSAA) and a new data warehouse for the bank. The start of the collaboration with HBTF dates back to 2013. The aforementioned BBK uses Loxon’s Basel II regulatory
reporting and risk management suite for Basel II, economic capital
and RAROC (risk-adjusted Risk Management Systems & Suppliers Report |
www.ibsintelligence.com return on capital) 79
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