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New Answers to Globalization—An Interview with Rajesh Hukku

It's no secret that globalization, internet banking, and stringent regulatory requirements are challenging financial institutions as never before to stay competitive and profitable. Against this backdrop, technology is playing an increasingly significant role in meeting these challenges. But as IT costs continue to rise—some estimates say institutions will spend $550 billion annually for technology by 2010—how can the organizations know they're getting the most for their IT investments?

In the following interview, Rajesh Hukku, senior vice president and general manager of Oracle's Financial Services Global Business Unit (FSGBU) and chairman of i-flex solutions, discusses the FSGBU's strategy to help financial institutions effectively address the new opportunities and challenges.

Q: Oracle recently unveiled the Financial Services Global Business Unit. What is the FSGBU and why should financial services companies be interested in it?

Rajesh Hukku: The FSGBU's mission is to enable financial institutions to excel through the effective use of information technology. In essence, Oracle's FSGBU will help banks, capital market firms, and insurance companies excel at customer service, risk mitigation, cost optimization, and regulatory compliance.

Q: What challenges do banks face today in those areas of their operations?

Hukku: Whether they're doing syndicated lending, consumer lending, mortgages, or internet banking, companies want a best-of-breed solution for each area. But they also want it all to be integrated. So, banks have two choices. The first choice is to go to 10 different vendors and buy the best-of-breed solution from each of them. And then expend huge amounts of capital and energy to link up all the applications so there's a single view of the customer, enterprisewide view of risk and compliance, and the other necessary intelligence and management tools. The second choice is to purchase an integrated platform and build all the functionality themselves.

With Oracle's FSGBU we offer financial institutions the best-of-breed application solutions, including Oracle Applications and those from acquisitions like i-flex, Siebel, and PeopleSoft. Further, we have preintegrated these applications to enable end-to-end business processes and the integrations are built, maintained, and upgraded by Oracle. The processes themselves are defined in a repository of best-of-breed process definitions developed by i-flex solutions called iPFB--the i-flex Process Framework for Banking and are prebuilt, extended, and deployed using Oracle's recently launched Application Integration Architecture. So financial services companies not only get best-of-breed capabilities, but they also get solutions that work well with each other.

Q: What does Oracle's FSGBU offer financial services companies in terms of "feet on the ground" to help them address their unique problems?

Rajesh Hukku: With i-flex we service customers in 125 countries. In addition, Oracle's FSGBU has created a comprehensive ecosystem of financial services experts; sales and support staff; and partner network of local and global systems integrators, ISVs, and hardware infrastructure providers across 145 countries. Within the FSGBU we now have access to financial services experts who can then work together to install solutions in all these countries, while speaking the local languages and understanding the local laws.

Q: You've said that IT plays an important role in helping to solve today's top challenges. But IT has always been part of the mix in the financial services industry--is there something new about the status of IT now that's different than in the past?

Hukku: Information technology has been important for the last 30 to 40 years. But as Y2K arrived, CEOs of financial institutions realized that the technology running their day-to-day business was archaic, causing them to spend billions of dollars. That was the first wake-up call and forced CEOs to start getting involved in IT along with the CIOs.

Since then, the internet has completely changed the game. Today, even a retail investor can go online and see the performance of a company, read the research reports, see a graph of the stock's price against peers over the last 10 years before investing in the company. And all this can be done without paying any fees.

Similarly, take, for example, ING Direct's launch in the United States. It created a branch-less, brick-less, mortar-less bank with just technology and people. But it gave customers more interest than the conventional banks offered and successfully collected billions of dollars of deposits.

Along with all this, banks are also facing the rising phenomenon of unconventional players becoming (or trying to become) banks through technology—e.g., e-Trade, Pay Pal, and a number of retail chains.

The internet era has created a second awakening for decision-makers at financial institutions. They realize they need technology that's more agile, more flexible, and more integrated. And they need to introduce new products quickly to remain competitive.

The existing legacy systems are unable to handle the new ways of doing business and hence the need for next-generation IT solutions. In our opinion, these next-generation solutions need to process-driven; prebuilt to enable best-practice business processes, yet extensible and flexible such that they can be rapidly adapted to changing business needs; and very importantly, based on open standards so they can interoperate with and take advantage of existing enterprise assets. The FSGBU ensures all of Oracle's investments in financial services solutions comply with these standard principles.

Q: The FSGBU offers ways for banks to use standard business processes. Why is this important?

Hukku: If you look at the typical global financial institution, which is spread across multiple countries throughout the globe, or large domestic banks that have grown through acquisitions, standardization has been missing. We're saying that in a transformational model, why can't the bank look at its account-opening process, for example, as one standard process across the board?

So first of all, Oracle launched the Application Integration Architecture (AIA), which offers a standard and easy framework to define and execute processes. Then, specifically for financial services, within the AIA framework, we have built a repository of best-of-breed process definitions developed by i-flex solutions called iPFB, the i-flex Process Framework for Banking. We continuously refine existing processes and create new ones. When a financial institution embarks on a business transformation initiative, it starts with these best-of-breed process definitions instead of a blank piece of paper. Once the institution's standard processes are defined, it deploys these processes within its enterprise with our market-leading applications such as Siebel and FLEXCUBE, which are preintegrated using Oracle's AIA framework and also interoperate with the financial institution's existing custom-built and third-party assets.

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