Thailand may have a small financial services sector with only 3 percent of the region's capital, but in terms of mergers and acquisitions and activity, a lot is happening here, according to Andy Woodhouse, Oracle's financial services industry solution specialist director.
Speaking in an exclusive interview in Bangkok, Woodhouse explained how banks typically spend three to four times more on IT compared to the manufacturing sector, even calling banking the first true knowledge-based industry.
"In the 70s, the value of the U.S. dollar was linked to gold. By the 80s the value of money became more vague and that challenged banks. Today, money is more about the perception of value," he said.
Local banks are also more than eager to upgrade their IT systems to fend off the competition from foreign banks and demand agility and flexibility to meet customer and regulatory demands.
Through its relentless acquisition of companies, Oracle today offers 75 percent of the software that financial institutions need, from the heart of running a bank to the back and front ends. He pointed out that Oracle always buys a leading player in every industry, and in the case of Siebel's customer relationship management software, it was by far the leader in the financial services industry.
One example of this synergy is how Oracle has combined embedded analytics, CRM and banking. Today, business intelligence is no longer about doing batch runs and generating reports for management, but it has evolved to giving real time analysis to the point of contact with the customer, while it also learns from those interactions.
Integration of software around the Oracle Fusion middleware means that banks can deploy more complex systems with ease. Today when someone deposits a check at a teller, the screen will guide them in real-time--CRM call center style--as to what new services the bank should offer and whether this is an important customer.
Each response from the customer is fed back into the system so that it learns more and more about the customer.
If this is combined with access management for online banking, the same algorithms that can detect fraudulent access by changes in online banking behavior can be used to better understand how a customer interacts with their bank. Since the system knows what is normal for this customer and what is not, it can anticipate the needs of the customer better and provide only the services that are of interest.
For that last piece of the jigsaw, Oracle recently bought Citigroup's Mantas, a specialist in anti-money laundering and compliance that Woodhouse describes as having amazing algorithms that have been proven to detect and prevent fraud.
So what does Woodhouse think of IBM's much publicized outsourcing agreement with Kasikorn bank in which IBM not only delivered the IT system, but became a strategic partner and took on the bank's IT staff? He said that banks that have outsourced without restructuring and getting their applications and business processes right are simply passing costs from one area to another. "Doing stuff in-house makes more sense if it is going to lead towards automation and standardization," he said, without referring to any specific case.
That said, the also noted that Oracle is starting to do outsourcing itself in the form of Siebel on-demand.
One trend he has not seen catch on in the region is the way many supermarkets have now replaced banks for day to day transactions. Paying bills while buying food has become quite common in Australia and the United States but not yet Thailand.
Woodhouse said he was once asked in an interview if SOA (service-oriented architecture) was like Y2K, in that it was a huge non-event. SOA is as much a way of thinking, of re-using business components based on open, standardized platforms, as it is a technology. Today, SOA in that respect has taken hold as nobody today commissions new projects based on closed, proprietary platforms any more.
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