OTP Bank Cuts Reporting Time 50%, Improves Risk Analysis, Currency Exposure Monitoring, and Forecasting Accuracy for 1,000 Loan and Savings Products
 
 

OTP Bank Cuts Reporting Time 50%, Improves Risk Analysis, Currency Exposure Monitoring, and Forecasting Accuracy for 1,000 Loan and Savings Products

  • Oracle Customer:  OTP Bank Plc
    Location:  Budapest, Hungary
    Industry:  Financial Services
    Employees:  8,000
    Annual Revenue:  $500 Million to $1 Billion

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OTP Bank Plc is the largest commercial bank in Hungary with assets totaling US$28 billion. A leader in all financial services sectors, OTP Bank offers more than 1,000 loan, mortgage, saving, credit and debit card, and investment products. It serves 12 million corporate, private, and retail customers in Hungary and eight other countries in central and eastern Europe and has a network of almost 1,500 branches.

OTP Bank wanted to strengthen and simplify asset and liability management and improve modeling capabilities for its portfolio of 1,000 products. It worked with Oracle Partner Loxon Solutions to deploy Oracle Financial Services Asset Liability Management. With Oracle, the bank improved balance sheet forecasting capabilities and incorporated risk management into decision-making at all levels.

 
 

 
 

Challenges

A word from OTP Bank Plc

  • “Oracle Financial Services Asset Liability Management provides a consistent framework for measuring risks, monitoring exposures, analyzing cash flows, and capitalizing on dynamic market conditions, which helps us maximize profitability and deliver the right products to our customers.” – Gyula Barabás, Managing Director, Asset-Liability

  • Gain advanced financial services analytics to simplify interest rate and liquidity risk monitoring, measure sensitivity to currency fluctuations, track balance sheet variations, and improve the accuracy of net income and net interest income forecasts
  • Analyze cash flows at individual account and portfolio levels, considering discounts and unique payment and pricing criteria to determine impact on the bank’s risk profile
  • Create a transparent liquidity and interest-rate risk management culture, incorporating pervasive intelligence into decision-making at all levels and functions
  • Streamline management and board-level reporting and facilitate compliance with regional regulatory requirements for bank capital, liquidity, and leverage ratios

Solutions

Oracle Product and Services

  • Replaced a customized, in-house developed risk management solution with Oracle Financial Services Asset Liability Management and Oracle Financial Services Asset Liability Management Analytics to gain an out-of-the-box, industry best-practice suite of solutions for measuring the impact of net interest income, interest rate, liquidity, and exchange rate risk at the instrument, product, and portfolio levels
  • Rolled out to analysts, risk managers, balance sheet managers, and liability management experts to build a pervasive risk-management culture and instill timely intelligence into short-term decision-making and longer-term strategy planning
  • Used prepackaged reports for calculating the net income, market valuation, liquidity, and repricing gaps over different time periods for each product
  • Processed approximately 400,000 records using deterministic, Monte Carlo-based stochastic computational algorithms, modeling capabilities, and “what if?” scenarios, which increased accuracy of the bank’s forecasting assumptions
  • Responded in three working days to management and board members’ inquiries on portfolio risk and performance status with detailed multidimensional reports, a process that previously took one week using the bank’s legacy tool
  • Benefited from timely, accurate data to cut time required to complete statutory compliance reporting
  • Continued to extend the solution with future plans to use it to conduct analyses of earnings at risk and value at risk
  • Supported future plans to deploy Oracle Financial Services Asset Liability Management and Oracle Financial Services Asset Liability Management Analytics in subsidiaries in Ukraine, Russia, and Bulgaria

Why Oracle

OTP Bank chose Oracle Financial Services Asset Liability Management over a competing solution because it offered more comprehensive functionality and ready-to-use features that enabled out-of-the-box operation and ensured faster time to value.

“Oracle’s prepackaged solution offer more functionality for the same price and will enable us to build new capabilities and reports whenever we need them,” said Attila Kovács, department head, Asset and Liability Management Directorate, OTP Bank.

Implementation Process

OTP Bank worked with Oracle Partner Loxon Solutions to implement Oracle Financial Services Asset Liability Management in just 12 months. As an early adopter taking part in Oracle’s Strategic Implementation Program, OTP Bank benefited from direct access to Oracle’s development teams and product experts for guidance and advice during the four-month testing period.

“Oracle’s developers and product teams were very responsive to our needs. This helped ensure a smooth go-live and enabled our risk managers to become productive users from day one. We continue to give feedback to Oracle’s development team and suggest enhancements for future releases that could benefit us and other financial institutions,” Kovács said.

Partner

OTP Bank chose Oracle Partner Loxon Solutions based on its reputation for implementing risk management solutions in the financial services sector. Awarded “Leader in Technology Innovation 2008” by Oracle Hungary, Loxon has been listed as one of Oracle's top 20 partners for the financial services industry in the Europe, Middle East, and Africa region. Loxon managed the implementation end-to-end and trained OTP Bank’s key users and IT staff.

“Loxon’s business and technology know-how were essential to our successful deployment of Oracle Financial Services Asset Liability Management. We will continue to rely on Loxon’s expertise as we roll out the full functionality in Hungary and replicate our success in other countries,” Kovács said.