With Oracle, Akbank improves profitability and customer relationships

Akbank is one of Turkey’s largest and most financially successful private banks. It has 771 branches and consolidated assets of more than US$65 billion. The bank consistently receives accolades for its performance, most recently being awarded Euromoney’s 2019 Best Digital Bank Award.

The bank is focused on ensuring profitability and advancing customer retention. To achieve these goals, it requires real-time insight to guide daily pricing decisions as well as longer-term operational strategies.

Akbank deployed Oracle Financial Services Profitability Management, running on Oracle Exadata, to drive new precision across critical pricing and operational decisions.

Akbank migrated from an earlier version of Oracle Financial Services Analytical Applications to Oracle Financial Services Profitability Management in July 2019. The new solution, running on Oracle Exadata, delivers extreme performance that enables the bank to run daily profitability reports in four hours instead of seven to eight hours with the legacy solution. Executives consistently use Funds Transfer Pricing (FTP) rates in setting daily pricing for deposits and loans and can adjust, as needed, based on market conditions and volatility.

The solution is also having an important impact on Akbank’s ability to identify its most and least profitable customers and develop retention strategies. The bank can also target upsell and cross-sell strategies to elevate customer profitability based on projected lifetime value.

For example, Akbank can now run what-if analyses that drive smarter decisions. Mortgages may not be a profit leader, but looking at the lifetime of the customer, the bank may see significant opportunity for revenue from cross-sold products. It might be willing to subsidize the revenue from the mortgage product based on projected lifetime income from other services. Akbank is able to manage customer profitability at the individual level as well as at the branch, region, business unit, and channel levels. It can also assess profitability by product, customer segment, relationship manager, business unit, and more.

The bank also leverages the solution to guide operational decisions. For example, it can assess the revenue impact of a specific IT project, such as a credit card initiative. It can then determine net profit and cost-to-income ratio, which enables project prioritization and more informed decisions. And, because of the quality of data the solution provides, leaders feel comfortable making investment decisions.

The solution enables Akbank to allocate costs more precisely. It can now apply activity-based costing in much more granular detail to retail, commercial, corporate, and corporate segments. This capability plays an important role in enabling the bank to operate as one of the most cost-conscious and most profitable banks in Turkey, with a cost-to-income ratio of 33%.

In addition, due to elimination of manual interventions, error-prone Excel inputs, and multiple reconciliation efforts, Akbank is saving more than 20% on its data management costs in calculating profitability with Oracle Financial Services Analytical Applications.

The solution reinforces a culture of accountability at Akbank because managers can track expenditures and measure outcomes against them. As a result, unnecessary expenses are eliminated, and managers are reassured that they are allocating resources toward initiatives that will grow the business.