Supporting Bank Growth and Extending Access in Eastern Europe With Core Transformation

In its recent report "A Snapshot of the Global Core Banking Market," Boston-based analyst firm notes that over the past few years, Eastern Europe has joined the core banking modernization trend that has mainly taken place in the North American and Western European markets over the past decade. Banca Transilvania, located in the city of Cluj-Napoca in Romania, is one notable Eastern European-based bank that has entered this space; it's currently in the midst of migrating to an Oracle Flexcube Universal Banking System (UBS).

The bank decided to replace its legacy core banking solution in order to better support current and future growth, according to Leontin Toderici, the bank's chief operations officer. "We have a growing number of customers, accounts and transactions," he says. "This has generated the need for an integrated and efficient core-banking platform based on cutting-edge technologies."

In a concerted expansion effort, Banca Transilvania opened almost 20 new branches within the past year for a total of 533 locations across Romania and Cyprus at the end of 2011. In just one year, the bank grew its assets by 19 percent, from US$6.5 billion at the end of 2010 to US$7.8 billion in the last quarter of 2011. In addition, the bank has experienced double-digit operational growth over the past several years, with increases of 28 percent during 2008-2009, 13 percent in 2009-2010 and 11 percent during 2010-2011.

[For more on growth in the Eastern European market, read "3 Hot Banking Markets Beyond the Obvious." ]

"Our IT platform was instrumental in supporting both growth and our customer-centric platform," notes Toderici, adding that the core system replacement is just the next logical step in a number of technology overhauls that Banca Transilvania has implemented over the past few years. They include the replacement of the bank's card management application in 2010 with a more modern system that has a graphic user interface, loyalty module, SMS alert capability, and the ability to conduct Western Union transactions using an ATM. In 2011, the bank replaced its Internet banking platform, which enabled it to support mobile banking, a personal finance manager, multiple authentication methods and online Western Union transactions.

"The decision to work with Oracle for one of Banca Transilvania’s most important projects -- a core-banking system replacement -- was based on the partnership that our bank had with the company," says Toderici. The partnership began many years ago with infrastructure and software applications and was extended to hardware in 2010. He says the new core banking system will work with existing Oracle Exalogic cloud middleware and Oracle Exadata storage server to process large data volumes and ensure resilience.

The bank began the Oracle Flexcube UBS implementation in January 2011 with an ambitious live migration date of August 2012. Toderici says the new system will enable around-the-clock functionality of its online and mobile banking platforms and allow the operation of branches in shopping malls with extended hours.

The bank remains on schedule with the various stages of the project, according to Toderici, from staff training to preparing the specifications for products and services available in Banca Transilvania’s portfolio. "We still have to complete the development of the interfaces for third-party systems and prepare for user adoption and acceptance," he notes. "After these stages we will re-evaluate our go-live migration date of August."

Toderici says that the bank aims to sustain profitability as it continues to grow, something that the new core system will help support. He points to the institution's 2011 net profit, which was 35 percent higher than that of 2010. "Third-quarter 2011 earnings represented the strongest showing for the bank within the last three years," he says. "In 2012, Banca Transilvania will continue on a path of prudent and sound growth. We will also continue to support the Romanian economy, as well as local entrepreneurs."