Oracle’s three modes of Progressive Transformation

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9 October 2014
Daniel W. Latimore
I was able to attend Oracle’s Open World at the end of September, and although it conflicted with Sibos, it was an extravaganza. While there I sat down with some of the folks involved with core systems; they outlined the interesting way they’re thinking about progressive transformation (briefly, how to migrate core systems gradually; the opposite of a “big bang” approach). Oracle agrees with the consensus that a big bang for any sizable bank is going to be problematic. What interested me was that they outlined three different approaches for progressive transformation:
  1. Replace a vertical slice
  2. Replace a horizontal slice
  3. Create a new target state architecture off to the side
Without going into great detail, I'll describe how Oracle has at least started the journey in three different banks around the world.
  1. Vertical Slice. Suncorp in Australia has started the process of moving off its Hogan core by focusing on unsecured lending; its next stop will be secured lending.
  2. Horizontal slice. KeyBank, based in Cleveland, announced at Open World that it intends to use non-core systems components of Oracle Banking Platform (“OBP”) to enhance and modernize its mobile and online channels. To be clear, KeyBank has not committed to a core transformation. The project is in its very early stages; it’s one we’ll watch with interest
  3. Target architecture. National Australia Bank’s new entity, UBank, is a digital-only bank that NAB created as part of its bank transformation using OBP. Its goal is to change the customer experience, and uptake has surpassed initial expectations.
Celent’s perspective is that progressive transformation (or whatever various name different vendors use for the same basic concept) is a way to purchase a real option as banks think about how to modernize their systems and accommodate the increased demands that digital access place on their technology. It lets banks begin a journey without committing them to course of action that might not be appropriate down the road as the world changes. Time will, of course, tell how successful each of these projects will be, but thinking about the different ways to approach a phased core transformation is useful for any bank with core on its strategic agenda (which should be…almost any bank).

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