Al Rajhi drives profitability with financial applications

Oracle apps allow Saudi banking and investment company to create more accurate customer profiles.

  • E-Mail
By  Vijaya Cherian Published  July 28, 2003

I|~||~||~|Al Rajhi Banking & Investment Corporation has deployed Oracle’s Financial Services Applications (OFSA) to improve its understanding of customer behaviour. As a result, the financial institution hopes to increase the accuracy of its profitability forecasting process. Further, by gaining insight into its customer segments, channel, and product profitability, the Saudi-based bank will also be able to optimise its portfolio of services, refine its delivery channels and offer improved customer services.

“Al Rajhi Bank is now capable of understanding and analysing its banking transactions and customer information that we have at our disposal — it’s not enough to just collect data, we must analyse it to better serve our customers’ needs,” says Saeed Al Ghamdi, deputy general manager, Al Rajhi Bank. “OFSA will enable us to optimise the products and services we have to better meet customer needs while also increasing customer and shareholder value,” he explains.

The implementation of OFSA is part of Al Rajhi’s plans to better integrate its planning processes and day-to-day performance so as to create services that can match changing customer needs and expectations. With the financial services application in place, the bank will be able to collect and manage data from its 378 branches and 845-machine ATM network, for a comprehensive customer analysis framework.

“We extract all the data from our back end system, load it on to Oracle, and run cost allocation and transfer of pricing on it to generate the profitability. We then try to analyse which customers are profitable and which are not, so that we can find ways to make the latter also profitable,” explains Al Ghamdi.

Al Rajhi is running the OFSA solution on its newly-acquired IBM p69e server. “We already use IBM’s RS/6000 machine for some of our other banking applications and we have found it meets our requirements. Also, from a support and maintenance point of view, this is a better option for us because the skills to operate both are the same,” explains Al Ghamdi.

||**||II|~||~||~|Likewise, Al Rajhi’s choice of OFSA is also founded on its future plans and requirements. Currently, it has only purchased OFSA and uses its financial data, performance analyser, transfer pricing, and budgeting and planning modules. However, the bank has plans to deploy other solutions, such as asset liability and risk management in future [as OFSA will make the implementation and integration of future Oracle applications easier]. “We chose Oracle because it will be the base for us to do this. Also, our evaluation of other vendor solutions showed us that they could not offer us the same flexibility as OFSA,” explains Al Ghamdi.

The deployment of OFSA has taken the bank eight months and has included a full evaluation of each of its products. “This is not a long period for it. We needed to take into account direct and indirect costs, distribute it to the level of accounts and then down to the level of the customer. This is what took most of the time,” explains Al Ghamdi.

The project also entailed writing programmes for extracting select fields of data accurately from the bank’s backend system, which runs on IBM’s DB2. The reliability and availability of this data also had to be tested. “We had to apply all of the rules for the cost allocation and transfer of pricing to generate profitability reports. This in turn, needed to be validated to ensure that they were accurate and genuinely giving us profitability,” he adds.

Moreover, Al Rajhi’s staff needed to be trained. This was accomplished through two courses, supported by Oracle, for the bank’s end users and four, for its IT team. Since it went live in December 2002 with the solution, the bank has taken seven monthly snapshots of its profitability. The whole project, including the hardware and software, has cost Al Rajhi about US$1.2 million. However, it is not ready to comment on possible timeframes for achieving ROI. Instead, it is all geared to gather customer data so that it can use it effectively to profit from its customer relationship management solution, which is next on the bank’s agenda. ||**||

Add a Comment

Your display name This field is mandatory

Your e-mail address This field is mandatory (Your e-mail address won't be published)

Security code