Oracle Flexcube Transformation Programm

1. INTERNATIONAL SUBSIDIARY BANKS DIVISION
Constellations project Ukraine
Implementation of universal banking solution
FLEXCUBE system international edition V.11
19th International conference
Banking systems and security of informational technology
Project Management Team
Yalta, June 18th 2012
Reporter, Andrii Mykhalniuk, PMO PRAVEX-BANK PJSCCB

2. 2
AREA RESULTS
Migration
— Lessons learned from previous migration (03/2012) put in place
— Data migration nearly perfect
Applications
activation
(Flexcube, PM+,…)
— All applications working from day 1
— From day 2, number of transactions are at the same level
comparing to the old system
EOD & NBU reporting
— EOD branch closure stabilized and optimization in progress (no
impact on opening of the day)
— NBU reporting sent daily and (nearly) on-time
Training
& Support
— All staff (branches, HO) trained and operating
— Support properly staffed and effective (Core Team, Help Desk,
Reconciliation, Training team)
Infrastructure
— Some initial tuning needed on 1st and 2nd days (May 21-22)
— Infrastructure always stable and performing since Day 2nd
Highlight: May rollout successful !!!
The day after May rollout (May 21st, 2012) – An entire Information
Systems has been changed

3. 3
How we did it? All the milestones have been fully accomplished
following an innovative approach, sharing risks in three main steps
Milestone Plan Actual Objectives
Green Field 14-Nov-2011 14-Nov-2011
Functional test
Test Coexistence
Pilot Region
(20% bank)
12-Mar-2012 12-Mar-2012
Test Migration
Large functional test
Headquarter support
Test Support/training
Rollout completion
(80% bank)
21-May-2012 21-May-2012
System & organization
Performance
Full functional scope
deployed

4. 4
Rollout starts 4
months BEFORE
Rollout finishes 5
months BEFORE
When we did it? 5 months ahead of original schedule !!! Only
two months of coexistence – Business not blocked in 2012

5. 5
What we did ? Pravex completed successfully a complex IT
systems renewal and business processes update… (1/2)
Timing
Budget
Scope
People
Organiz
ation
 Project completed 5 months ahead of original schedule agreed at start date (21 vs 26 months)
 “In-line” with plan approved by Supervisory Board
 Pravex Bank succeeded in the “plain vanilla” approach limiting system customizations (<40 gaps)
 A new Data Center in Ukraine has been created from scratch for Pravex Bank
 Full renovation of TLC infrastructure from (frame relay to MPLS)
 Full renovation/refurbishment of all end users’ PCs
 Increased scope during the project, such as full integration to increase user efficiency (e.g.
Pravex Money+, Pravex Telegraph)
 Integration of Group systems (e.g. Norkom for AML) and potential ones (e.g. Deloitte Fineware).
Also analysis done for possible new functionalities (Internet Banking, loan origination CRIF)
 Pravex employees “on-board” from day 1 (core team, IT,…) handling partially production
 Pravex managed a project involving more than 100 people from 11 different countries
 Bank processes tailored to new system logics leveraging ISBD best practices
 Training execution and end users’ manual for more than 2.500 people
PRAVEX BANK MAJOR ACHIEVEMENTS

6. 6
… renewing entirely the core banking and accounting systems (2/2)
AS IT WAS
 Hetererogeneous platforms
 Outdated functionalities
 Redundants interfaces
 “Silos” oriented architecture
 High rate of manual activities
AS IT IS
 Centralized and rationalized platform
 Reduced Time to market
 Up to date functionalities
 Effective maintenance
 Reduction of interfaces
 Client oriented open architecture
 Process Automation oriented
 Scalable
 Reusable for other Foreign Banks
Centpay+
(utilities, money
transfer)
Transmaster
Pravex
Money+

7. 7
How we did it ? Strong governance with regular ISBD Headquarter
and Pravex Top Management involvement
KEY SUCCESS FACTORS & LESSONS LEARNED
1. GOVERNANCE: experienced project management team with deep involvement of ISBD
Headquarter top management, leveraging “hourly” activities tracking and issue “killing at
the birth” approach
2. PRAVEX BANK FULL INVOLVEMENT: Pravex personnel inside all strategic streams
(Operations, Core Team, interfaces, migration, business processes redesign,…)
3. SCOPE CONTROL: “Plain vanilla” approach applied since the beginning
4. RISK MANAGEMENT: rollout approach applied in Pravex is a good compromise between
speed and risk (Green Field, 20% bank, 80% bank)
5. LOCAL CULTURE AND LANGUAGE KNOWLEDGE COUNTS: such a complex system
implementation requires a deep knowledge of local behavior and rules
6. “QUICK-WINS” FROM FIRST ROLLOUT: concept applied Pravex Bank with Pravex
Telegraph. Used from the start, it can increase dramatically the end users’ buy-in
7. METHODOLOGY: use Pravex’s experience to tune methodology (e.g. analysis)

8. 8
What can be reused for other Foreign Banks of IntesaSanpaolo?
Pravex’s experience can be reused to adopt Constellations
architecture in other bank, decreasing implementation costs,
timeline and managing properly risks
LOCAL
PROVIDERS
-Accounting
-Payment
routing
-Regulatory
reporting
CORPORATE modules
(Loan Origination, AML, CRM)
ARCHITECTURE ASSETS
1. Migration engine: leverage and reuse the
standard components of migration machine
2. Interface gateway: reuse Pravex “Web
Sphere Message Broker” approach to make a
standard for FC integration inside ISBD
3. Accounting Engine: enable quick and secure
transformation between Flexcube and local
accounting system
4. Reporting architecture designed in Pravex
5. Group Asset integration capability (e.g.
Norkom, Finware)
MessageBrokerGateway
CIF (,GL)
CASA
TD
RL
RP
RT
PC FT
SI
EMS
Direct Banking
AccountingEngine
EXISTINGAPPLICATIONS
(ex.Moneytrasnfer,cards,…)
: Local bank application
: Corporate ISBD modules
: Constellations Architecture

9. 9
Pravex Bank is starting the transition phase from implementation phase to
application maintenance phase, with the following organization
How to run the new Constellations platform in Pravex ?
from «Project» to «Application Maintenance Support»
Temporary Organization of
Production Support (till end
of July)
1. Core Team
2. Help Desk
3. Reconciliation team
4. Suppliers’ contribution and
support
Target Organization of Production
Support (from August)
1. Core Team (business oriented)
2. Help Desk as a unique front end for
all Pravex employees
3. Reconciliation team as “business
as usual” activities, in Operations
4. Remote support and evolutive
application management in action

10. 10
What can be next for Pravex ?
from «Delivery» to «Value Extraction»
AREA VALUE ADDED BY
CONSTELLATIONS
POSSIBLE INITIATIVES TIMELIN
E
(months)
REVENUE
Reduced time to issue a new product
New product offering enabled by new
system (e.g. floating rate loan, bundle
of products)
Ability to integrate other applications
(money transfer)
Scability of architecture
Define a list of 5-10 new products to
be created by end of 2012
Launch ASAP a first new product
(ex. Overdraft for Corporate)
External money transfer integrated
Direct banking, loan origination, CRM
0-12
CLIENT
SATISFACTION
Centralized & reliable customer
database, which can help to
significantly improve data quality and
support sales
Contact customers to enrich client
data and propose new products
Define campaign and next products
for best clients
6-12
EFFICIENCY
Some processes automated both for
Branches and Headquarters (e.g.
accrual of interest for Deposits,
reporting,…)
Support from 9 to 1 Core banking
Analysis undergoing to map and
identify gaps between old and new
operating processes (Back Office,
Branches,…)
3-12

11. 11
Thank you!

12. 12
APPENDIXes

13. 13
Functional Gaps through ”Qualification Gates”
1st
Area owner
level
End of workshop
WHO
WHEN
Real need
assessment
Possibile w/a
HOW
2nd
Project Management
Team level
After workshop
Qualify Regulatory
gaps
Qualify Business
critical gaps
3rd
Operational
Committee level
End of analysis
Qualify Regulatory gaps
Qualify only Business
critical gaps w/o
process impact
ORIGINAL
SCOPE
4th
Project Management Team
Level (+ Steering Committee)
Closure of analysis phase
(functional / technical arch.)
Match updated vs
expected gaps (cost)
Balance additional vs
removed gaps
STATUS
GATE
355 requests
182 requests 100 requests 26 gaps
$$$
45 requests

14. 14
“Plain Vanilla approach” – Target Architecture uses proven standardized
components Flexcube>Accounting Engine>ProFIX
Core Banking (FLEXCUBE)
Current and
Saving
Accounts
Term
Deposits
Loans
Metals and
coins
Payments
and Fund
Transfer
FRONT END (Branch & Headquarter)
Other Systems
Cards
(As
Is)
Direct
channels
Product
originati
on
engine
Bad
Debt
Manage
ment
(As Is)
CRM
(As Is)
AML
Norkom
Product engine and lifecycle management from account opening to closure
Integration
Accounting (PROFIX)
NBU GL and reporting IFRS transformation
GL and reporting
Payment routing (UAH
payment management,
SEP NBU interface for
UAH payment
management)
Integration (ACCOUNTING ENGINE)
Trade finance automation
Treasury back-office
Automated nostro reconciliation
Internet
Banking
Loan
Origination
CURRENT systems/procedures
NEW architectureNEW
OLD
Corporate SolutionsNEW

15. 15
“Plain Vanilla approach” – Business Processes definition using standard
functionalities of new systems and leveraging on BIB (Banca Intesa Beograd,
one of the 11 foreign banks of IntesaSanpaolo) experiences
Pravex
BIB
Best Pratices
Flexcube
OBJECTIVE
“Find the best combination between
Flexcube standard features, Pravex’s
Legal regulatory requirements and
BIB best pratices”
APPROACH
 “Plain Vanilla” approach “in action”: after half review of processes such as C/A, Deposits, Debit cards, there are
NO new (additional) recorded GAPs between processes and Flexcube functionalities; some changes might be
needed for payments area which is traditionally more complex in Ukraine/Russia area
 Leverage of BIB experience and practice, change of some processes are initiated and agreed toward higher
efficiency and client oriented business (ex. reducing checks, paper less,…)
 Structured review using Corporate Business Processes Tool (ARIS), which will enable a structured business
process redesign and an easier process management and maintenance

16. 16
Front-end Evolution for Branches
ODB
BARS
Transmaster
Centpay
CRDT
PravexMoney
Pension Fund
Money transfer
Flexcube
PravexMoney+
Old branch
applications
KIEV
LEFT
May
rollout
TODAY
Pravex Telegraph
Transmaster*
After May
rollout
Transmaster
Centpay
Money transfer
Flexcube
PravexMoney+
Flexcube
PravexMoney+
* Primary access to Card operations front end through PM+;
Transmaster remains in 2nd level / back end
Unified Centpay
& Money transfer
Centpay
Money transfer
Transmaster*
UNDER PLANNING

17. 17
Migration strategy 1/3 – Customer Information File (CIF)
CIF
OPER
ACC&REP
AS IT IS
 2 CIFs after decommission of
Legacy Systems:
 Core Banking (Flexcube, PravexMoney+)
 Cards (Transmaster)
 “CIF master”, possible first step
of a future CRM system
2 CIF Master Files
CIF Master
“Data Warehouse”
Flexcube
CIF
Transmaster
CIF
AS IT WAS
 9 CIFs (1 for each legacy system)
 “CIF Master” custom developed,
which can operate also as a client
data warehouse
9 CIF Master Files
CIF Master
“Data Warehouse”
Legacy Systems (9 CIFs)
COEXISTENCE
 10 CIFs = 9 Legacy Systems
CIFs + 1 Flexcube CIF
 “CIF master” data warehouse
will be used as the client data
source for migration
Flexcube
CIF
10 CIF Master Files
CIF Master
“Data Warehouse”
Legacy Systems (9CIFs)
New System
(1CIF)
deduplication,
cleansing,…

18. 18
Migration strategy 2/3 – Operational Systems
CIF
OPER
ACC&REP
AS IT WAS
 Operations and processes
are managed by different
systems
9 Operational systems
COEXISTENCE
 Operations and processes
managed in both systems
(legacy and new)
 Incoming and Intrabank
payments through enhanced
routing component
10 Operational systems
Flexcube
Transmaster
migrated branchesNOT migrated
branches
Other
Legacy
systems
Link between
Cards and
Current Accounts
AS IT IS
 Operations and processes are
managed by Flexcube, except:
 Cards (Transmaster)
 Utilities payment, pension funds,
money transfer, under the front
end named Pravex Money+
3 Operational systems
Flexcube
Transmaster
Other
Legacy
systems
Link between
Cards and
Current Accounts

19. 19
Migration strategy 3/3 – Accounting & Reporting Systems
AS IT WAS
 Current GL system
(Core ABS)
 Current GL system
(Core ABS)
Old System
CIF
OPER
ACC&REP
AS IT IS
 New accounting system
(Profix GL) becomes the
master of Accounting for
overall Bank
 New accounting system
(ProFIX GL)
Flexcube
GL
Accounting
Engine
Profix
GL
New System
ACCOUNTING
REPORTING
COEXISTENCE
 Migrated branch: Flexcube/AE/ProFIX
 Non migrated branch: Core ABS
 Overall Bank (master): Core ABS
 Current GL system (Core ABS)
Core ABS
GL
Flexcube
GL
Accounting
Engine
Profix
GL
Old System New System
Core ABS
GL

20. 20
International Portability of “Constellations Ukraine” framework
FlexCube base (CIF, GL)
CASA
TD
RL
LO
RP
RT
PC FT
SI
EMS
Direct Banking
(retail and corporate)
Existing
Applications
•Cards
•Utility
•Money tran.
Legacy
Gateway
Accounting
Engine
General
Ledger
Reporting to
National
Bank Ukraine
SEP
payments
•AML Norkom
Corporate modules

21. 21
Existing
Applications
Local GL and
Reporting
Bank 3
Existing
Applications
Local GL and
Reporting
Bank 2
International Portability of “Constellations Ukraine” framework
Corporate
modules
FlexCube
Existing
Applications
Local GL and
Reporting
Bank 1

22. 22
Infrastucture – the concept of dynamic services
Constellations Ukraine
Steering Committee #002
 Our ICT resources: overcapacity or scalability?
Conventional solution
Resources
Months
Always designed to handle peak load
Idle
resources
Actual demand
1
2
Too slow
3
Expected demand
Dynamic Services: use what you need, pay for what you use

23. 23
Dynamic services: who can provide for them?
Prerequisites of Dynamic Services
 They require competence and proven experience
 They work better with many environments and more than 1 customer (resources sharing)
Can we satisfy this?
 We, Pravex, cannot do it directly, but we have two options:
 internally, with ISP Group Services
 externally, with a facility management provider like IBM, HP, Oracle/SUN
 We have several environments (11), and potentially we are the first of several customers.
If we do not develop these logics from the beginning, it will be hard to change in the future
Production Performance
2012
Traini ng Gold Develop.
2010
Parma
???
Ukraine
Integr. Migration Test 1 Test 2 UAT Migration
2011

24. 24
The Services’ stack
Middleware (dbms Oracle, web services, reporting) Infrastructure
Outsourcing
CA/SA TD PC FT Profix LegacyAE
Pravex
Oracle
Accenture
Application
Management
Datacenter Implemented in Ukraine for Pravex needs with
facilities Management and SPOC (single point of contacts)
Empty shell (typical drivers sqm, power, cooling)
Rack and Cabling (typical drivers lan ports) HostingDataGroup
DeNovo
Hardware (CPU/Core, Storage/TB, DC Lan - firewall, Switches)
OS (Unix, Linus, Win) and System Management
Facility
Management
IBM,
Oracle/SUN