Oracle’s FLEXCUBE in Demand – Analyst Blog

Oracle Financial Services Software Limited, a major subsidiary of Oracle Corp. (ORCL) announced that a large number of Vietnamese banks are switching to its FLEXCUBE core banking solutions from local solutions to achieve their operational needs.

 

Major Vietnamese banks such as Dong A Bank, Habu Bank, Ocean Bank, Nam A Bank, Vietnam Russia Bank and Tien Phong Bank have attained huge success in catering to the customers’ diverse requirements on a timely basis by using the FLEXCUBE solution. Currently, FLEXCUBE has more than 15 customers in Vietnam.

 

Originally launched in 1997 by iflex Solutions, FLEXCUBE provides solutions to core banking, retail banking, private banking, corporate banking, investor servicing, and microfinance. Oracle acquired iflex solutions in 2005.

 

FLEXCUBE has been the most successful banking solution offered by Oracle over time. With more than 390 customers in 125 countries, this solution has proved to be extremely beneficial to banks in fulfilling their strategic objectives in the shortest time span, improving their competitiveness and customer base.

 

FLEXCUBE reduces operating costs and plays a pivotal role in maintaining a strong customer base. Moreover, it facilitates new product launches in the shortest possible timeframe. FLEXCUBE also helps in maintaining regulatory compliances.

 

FLEXCUBE can be easily integrated with the existing systems using flexible Java platform, an Enterprise edition technology. This solution uses a XML Web based user interface and can process large transaction volumes, with a high availability on a 24x 7 basis.

 

FLEXCUBE solution can support multiple delivery channels, including branches, ATMs, point-of-sale terminals, call centers, mobile devices and internet banking. This solution also provides assistance in security management and operational risk management.

 

Being one of the fastest growing emerging economies, Vietnam is successfully expanding its banking services with the aid of FLEXCUBE. Ho Chi Minh City based Vietnam Asia Commercial (VietA) Bank, which has grown at a three year CAGR of 100.0%, is shifting its operations to FLEXCUBE to maintain its growth trend.

 

FLEXCUBE is helping VietA Bank in implementing its expansion strategy and continued growth based on a broadening customer base through diversified products and timely services. Since its shift to FLEXCUBE in 2008, the Bank has opened 15 new branches and introduced 20 new products.

 

Similarly, by switching to FLEXCUBE, Tien Phong bank started its operations in Vietnam, with a strong customer centric approach, enabling it to successfully face cut-throat competition in the market.

 

A number of other banks such as HDFC Bank in India and Shinsei Bank in Japan have also opted for FLEXCUBE to upgrade their banking operations.

 

We believe an increasing demand for flexible and timely banking services, especially in the emerging economies of India, China and countries of South East Asia makes the implementation of a core banking solution such as FLEXCUBE an absolute necessity to ensure smooth functioning of daily operations. We expect Oracle to gain significant market share in these emerging markets through this core solution going forward.

 

 

We maintain a Neutral rating on a long-term basis based on Oracle’s longer-term growth prospects. We are of the opinion that a promising product pipeline, incremental cost savings, robust cash flow, improved margin and cumulative benefits from Sun’s acquisition will drive Oracle’s growth going forward.

 

Currently, Oracle’s shares reflect the integration risks associated with Sun’s acquisition.

 

Oracle also faces stiff competition from Hewlett-Packard (HPQ), Cisco Systems (CSCO), EMC Corporation (EMC), SAP AG (SAP), in addition to its largest rival International Business Machines Corp. (IBM)

 

Oracle has a Zacks # 3 Rank, which implies a Neutral rating on a short-term basis.