Suncorp picks Oracle to replace core


news Tier two banking and insurance giant Suncorp has picked Oracle’s next-generation banking platform to replace its ageing Hogan core banking system, as the momentum around core banking replacement projects accelerates in Australia.

In March 2010 Suncorp chief information officer Jeff Smith (pictured, right) acknowledged the bank was investigating the case for replacing its core, although at the time the CIO noted he believed there was still life in the legacy infrastructure. He said Hogan operated “quite well”, but the software’s owner CSC hadn’t upgraded it in a long time: “We are taking a look at that now, saying: ‘Do we want to go and do something bigger?’”

Yesterday The Age published an interview with Smith confirming Oracle had been selected and the project would go ahead. “The big priority is around simplification … this year it’s going to be simplifying our banking system,” Smith reportedly said.

Further details have also been published on the LinkedIn profile of Mark Smith, an infrastructure architect at Suncorp, who appears to be seconded from Oracle to work at the bank and assist with the project.

According to Smith’s profile, Suncorp has badged its core banking replacement project as the ‘Banking Platform Program’ (BPP). “BPP is the complete replacement of the banks core banking software with the new Flexcube product called Next Generation Platform (NGP),” Smith’s profile states. “Additional to the Flexcube product, they will be deploying the following Oracle prodicts: Golden Gate, Active Data Guard, ODI, OBIEE, WebCenter, SOA Suite, OSB, OEM, E-Business Suite, IDM Suite, BPA Suite.”

The decision represents a loss for CSC, whose Hogan software appears to be gradually losing ground in Australia to the likes of Oracle, and also SAP, who was in the running for the Suncorp deployment but lost out, despite having been used in a successful core banking deployment at the Commonwealth Bank of Australia.

Core banking platforms sit at the heart of any bank and constitute the base on which the bank’s technology platform is built – for example, modern applications such internet banking systems commonly sit on top. However, many of Australia’s banks have core banking platforms that have been in place for decades – often built on mainframe technology – and are becoming increasingly unwieldy and difficult to maintain.

Other banks such as the Commonwealth Bank of Australia have already instituted major programs to replace their core, but they can be pricey – CBA’s SAP- and Accenture-led overhaul has a budget of $1.1 billion. CBA chief information officer Michael Harte has hailed the new technology’s ability to provide ‘real-time banking’ – without the need to run batch processing jobs.

National Australia Bank has also put its foot in the water on its own core revamp based on Oracle, but others such as Australia and New Zealand Banking Group and Westpac appear to be holding off for now to focus on other projects.

In 2010, Smith said that Suncorp had been able to cut the cycle time down eighty percent to build a new service on its existing Hogan platform. The CIO noted opening accounts and conducting transactions between systems in the bank’s branch and automatic teller machine networks took place in real time even with Suncorp’s current platform. One of the main motivators to migrate to a new platform, he said, was the availability of talent to maintain it.

“We all have to be cognizant that the average age of Hogan developers is in the fifties now,” Smith said. “That is a bigger issue for me, because we want to keep people enthused and keep them engaged, but you are running into retirement years, and I think that is a bigger issue than the technology side. I think the big advantage of the new platforms is the ability to be able to do more with them because you have a bigger supply base of individuals and technology that you can use.”

In mid-2011, Suncorp also revealed plans to invest some $9 million in a new customer relationship management system from Oracle. The value of the new core banking platform has not yet been revealed.

I’m not surprised by the fact that Suncorp has chosen to take the plunge with a new core banking platform. Smith is a very forward-thinking CIO and has long appeared to have the complete support of Suncorp’s upper management and board when it comes to major new technology deployments. He’s one of the only CIOs in Australia’s current banking sector who enjoys that level of support — with the other one being CommBank’s Michael Harte.

Suncorp had already knocked so many systems upgrades off its ‘To Do’ list over the past half-decade. It makes complete sense for the bank to go after its core at this time.

A successful Suncorp deployment of Oracle’s platform will ratchet up the pressure on the other major banks yet to initiate a core replacement strategy — Westpac and ANZ — to get into the game. NAB is also deploying Oracle’s system, but very little is publicly known about how it’s going. From the little that the bank has said on the matter after it conducted some early test rollouts a while back, I have no doubt that it’s going slowly.

CommBank’s core deployment has given it a real advantage in the marketplace. If you sign up for accounts with the major banks (most of which I have) to test their customer-facing systems out, it quickly becomes apparent that there is just so much *more* you can do with CommBank’s systems — and so much faster.

New accounts are created virtually instantly, money is transferred around faster, and there’s a stack of little features which its online systems let you do — such as changing your PIN number online. If you haven’t played around with CommBank’s new online platforms, I recommend you do so. And that’s just the most obvious indicator of the deep underlying structural change the bank’s successful core revamp has wreaked on its systems. Now Suncorp’s going in the same direction.

Image credits: Delimiter, Suncorp