Summary

• Oracle Financial Services Software Limited, majority owned subsidiary of Oracle
• revenues comprise three streams - license fees, annual maintenance contract (post contract support – PCS) fees for its products and consulting fees in respective business segments.

Overview

Oracle Financial Services Software Limited (NSE:OFSS), majority owned by Oracle, is a world leader in providing IT solutions to the financial services industry. With its experience of delivering value-based IT solutions to global financial institutions, Oracle Financial Services Software understands the specific challenges that financial institutions face: the need for building customer intimacy and competitive advantage through cost-effective solutions, while simultaneously adhering to the stringent demands of a dynamic regulatory environment. ¹

The company offer financial institutions the world’s most comprehensive and contemporary banking applications and a technology footprint that addresses their complex IT and business requirements. The company offer a comprehensive suite of offerings encompassing retail, corporate, and investment banking, funds, cash management, trade, treasury, payments, lending, asset management, compliance, enterprise risk and business analytics, anti-financial crime among others. The products business (comprising product licensing, consulting and support) is its principal business segment. The company also have two smaller business segments comprising of PrimeSourcing, its consulting services business (comprising IT application and technology services) and the business process outsourcing (BPO) services business.

Products

The company provide suite of solutions delivering a compelling digital experience and digital engagement and enable comprehensive range of banking products and services for financial institutions across the globe of varying business focus, geographic spread and scale. The company's customers rely on its solutions to modernize their technology platforms, accelerate digitization and deliver superior customer services. These solutions are built on latest technology and offer various deployment choices of a cloud / SaaS or an on-premise deployment.

Oracle FLEXCUBE is a complete banking solution for retail, corporate and investment banking, consumer lending, asset management, and investor servicing including payments. Oracle FLEXCUBE can help banks jumpstart digital transformation and leapfrog their capabilities to stay relevant, competitive and compliant in a fast-evolving industry. With its modern, digital, shrink wrapped, pre-configured, interoperable, scalable and connected capabilities, Oracle FLEXCUBE can help catapult banks to the fore front of digital innovation and leadership

Oracle FLEXCUBE equips banks for the era of physical and digital by helping them drive higher revenues, lower costs and improving service levels and convenience. It offers the right mix of digital self-service and assisted engagement capabilities, coupled with robust product processing functionalities that enable banks enhance customer experiences. Enabled by the latest User Experience and technologies like Machine Learning, Natural Language Processing and Intelligent Assistants, Oracle FLEXCUBE empowers bankers with new insights, predictions and capabilities to personalize customer engagement while automating and streamlining routine processes. It’s 1600 + APIs and Business Services enables banks to open up data and services to third party developers to drive new ways to collaborate and build revenue streams in the age of Open Banking.

Oracle FLEXCUBE offers comprehensive functional capabilities across multiple lines of business and supports new business capabilities and functionalities, regulatory compliances and country specific localizations. It enables banks to standardize operations across multiple countries, transform their processes, address niche business requirements, respond faster to market, and manage compliances. Oracle FLEXCUBE offers out of the box support for multiple standards and regulatory directives such as SWIFT GPI, SEPA Instant, PSD2, PAD, and FATCA phase III etc. and includes data privacy features.

Oracle FLEXCUBE Universal Banking is a comprehensive core banking solution that helps banks take advantage of rapidly emerging opportunities in the industry. The solution enables banks to offer retail banking and corporate banking services that meet evolving customer needs and effectively comply with regulatory guidelines and industry standards. Banks can offer tailor made accounts, deposits, loans, mortgages, fixed assets, microfinance and financial inclusion products and services and efficiently manage product lifecycles. The solution enables the streamlining and automation of core processing and operations. Embedded machine learning capabilities help unlock the value of data with new insights. Additionally, Oracle FLEXCUBE for Islamic Banking facilitates Shariacompliant banking operations, including pure-play Islamic, Islamic window, and coexisting Islamic and conventional banking.

Oracle FLEXCUBE Onboarding helps banks drive streamlined and frictionless onboarding and originations for retail customers, accounts, deposits and loans. Designed for cloud and on–premise, the solution enables banks to deliver consistent and seamless cross-channel consistent origination experiences.

Oracle Banking Branch blurs the digital and physical divide, empowering bankers to progressively take an advisory role that drives revenue growth and deepens customer relationships. The solution enables efficient servicing and branch operations spanning teller operations, branch administration, till and vault operations, service management and instrument handling.

Oracle Banking Digital Experience is an enterprise class solution that empowers financial institutions to rapidly deliver end-to-end digital experiences. Oracle Banking Digital Experience is enabling banks to execute their digital strategies including launch new digital brands, digitize processes, modernize digital experiences and launch new innovative digital capability such as mobile payments digital wallets and transactions on wearable devices. It also offers self service capabilities for corporate customers in several areas including supply chain finance, corporate lending and many more.

Oracle Banking APIs helps banks embark on an Open API journey. With ready to consume APIs, banks can tap new opportunities presented by PSD2 and Open Banking. Oracle Banking APIs enable banks to build seamless partnerships with third-party technology organizations, easily integrate with corporate client applications and reduce the time between API ideation and delivery.

Oracle Banking Liquidity Management enables banks to run a centralized liquidity management solution optionally available as a scalable, secure and highly available SaaS based cloud service. The solution enables banks to provide in-depth visibility into cash positions of customers, thereby helping them manage their daily liquidity in a consolidated and effective manner. The solution also provides advanced techniques such as additional avenues for higher yield investments with flexibility to cater to country regulatory restrictions, which in turn helps businesses to remain competitive and grow steadily despite all odds.

Oracle Banking Virtual Account Management provides comprehensive support for banks to enable their corporate customers to manage their banking accounts efficiently. This is optionally available as a scalable, secure and highly available SaaS based cloud service. Pre-integrated with Oracle Banking Liquidity Management, Oracle Banking Payments and Oracle FLEXCUBE DDA, the solution helps banks offer comprehensive support for virtual accounts. With Oracle Banking Virtual Account Management, corporates can ensure rationalization of number of real accounts and at the same time manage corporate liquidity efficiently.

Oracle Banking Corporate Lending is an end-to-end digitally enabled lending solution. The solution enables easy integration with banks’ internal and external systems of customers, partner banks and agencies which supports open interface (Open API) standards and eliminates processing overheads to deliver a faster loan processing. It allows banks to embrace digital capabilities across the enterprise from credit management, origination to servicing. Its flexible reporting capability and its ability to integrate with vendors and credit bureaus enables banks to comply effectively with new regulations. The solution provides banks the capability to finance large and complex loan requirements of corporate customers.

Oracle Banking Corporate Lending Process Management is built to accelerate the process of origination and servicing of corporate loans, enhance digital experience and empowers banks to address customers’ financing needs. This is optionally available as a scalable, secure and highly available SaaS based cloud service. Banks can now easily close loans with an efficient workflow that ensures settlements and legal proceeding are undertaken smoothly. An Open API enabled solution, Oracle Banking Corporate Lending Process Management allows banks to create new and connected experiences for their customers.

Oracle Banking Credit Facilities Process Management is a comprehensive credit management solution that enables banks to accelerate credit origination, pre-qualify wide variety of credit lines and enhance customer experience and track exposures to customers in real-time and mitigate business risks. This is optionally available as a scalable, secure and highly available SaaS based cloud service. The solution allows for periodic re-evaluation of collateral and customers’ credit worthiness throughout the credit lifecycle. Banks can also proactively track utilizations, collateral leverages, credit and risk scores, and covenants to ensure customers are meeting compliance requirements.

Oracle Banking Enterprise Limits and Collateral Management offers a single source for managing exposure across a business portfolio. It enables centralized collateral management, limits definition, tracking and exposure measurement for effective exposure management and resource utilization.

Oracle Banking Trade Finance Process Management provides comprehensive support for banks to enable their corporate customers manage trade finance operations efficiently. Banks can help corporates improve their trade service quality levels, expand trade operations to a global scale and ensure compliance with regulatory requirements without incurring additional costs.

Oracle Banking Supply Chain Finance is a comprehensive digitized end-to-end solution that supports the full lifecycle of supply chain finance across receivables and payables offering supplier centric financing and buyer centric financing. This is optionally available as a scalable, secure and highly available SaaS based cloud service.

Oracle Banking Payments helps financial institutions improve straight through processing, support real-time and immediate payment settlement, and reduce time-to-market while driving innovation. The solution is designed to enable banks to rapidly respond to evolving standards while maintaining complete operational control and providing high fidelity insight. Oracle Banking Payments supports global as well as local payment standards.

Oracle Financial Services Lending and Leasing combines the power of Oracle’s comprehensive, industry-leading lending, and leasing solution with the simplicity, elasticity and security of Oracle Cloud and empowering lending institutions to grow and improve profitability of their core lending business. The solution supports complete consumer lending operations and lifecycle processing from origination to servicing, collections, delivering accurate, actionable information from a single data source to help lending institutions make faster and more informed decisions about loans, reduce risk, effectively manage the loan life cycle and manage delinquencies and losses. Its intuitive interface, navigation and context-based account and customer sessions help boost user productivity.

Oracle FLEXCUBE Investor Servicing is a process enabled-transfer agency and investor servicing solution. It helps financial institutions manage the complete fund lifecycle and reduce operational costs through process automation across fund structures, intermediary hierarchies, and investors. Oracle FLEXCUBE Investor Servicing, an ISO 20022 compliant solution, enables enhanced STP processing through support for a wide variety of SWIFT NET Fund messages. With a comprehensive business rules engine for products such as hedge funds, mutual funds and investment linked products and fee structures, Oracle FLEXCUBE Investor Servicing allows fund management companies to configure and launch new products rapidly

Oracle Banking Platform is a comprehensive suite of business applications for large global banks. Oracle Banking Platform is designed to help banks respond strategically to today’s business challenges and progressively transform their business models and processes, driving productivity improvements across both front and back offices and reducing operating costs. The solution supports banks as they grow their businesses through new distribution strategies, including multi-brand or white labeling, to tap new markets and enterprise product origination supporting multi-product and packages to drive an increased customer-to-product ratio. The solution provides a holistic view of the customer relationship across all products and services.

Oracle Financial Services Analytical Applications (OFSAA) is a suite of industry leading applications catering to the critical areas of Risk, Finance, Treasury, Front office, Regulatory Reporting and Compliance, including the areas of Financial Crime. These products are built on a unified data architecture leveraging new age technologies like Artificial Intelligence (AI)/ Machine Learning (ML) and Graph, to deliver high performance.

Oracle Financial Services Analytical Applications Infrastructure (AAI) provides state of the art tools/frameworks/libraries that support building OFSAA analytical applications and power their runtime across Risk, Finance, Treasury and Financial-Crime- &-Compliance domains. AAI’s compute engines process data at scale exploiting hybrid compute engines that include Big-Data cluster. AAI supports business logic that is both deterministic and model based with powerful predictive analytics framework that delivers the foundation for Artificial Intelligence (AI)/Machine Learning (ML) and augmented learning. AAI’s customer footprint is a testament to its enterprise nature and ability to address regulatory needs, real-time responsiveness and complex decision support systems for financial institutions across the globe. AAI’s portfolio has approved global patents, with both US-Patents & Trademarks Office (US-PTO) and European Union Patents Office (EPO) gives it unique advantage.

Oracle Financial Services Financial Crime and Compliance Management (FCCM) suite comprises of a modern, comprehensive, and extensible suite of applications that enable financial institutions with advanced capabilities to effectively combat financial crime and comply with regulations while enhancing operational efficiency. Oracle FCCM’s key offerings span across the entire financial crime and compliance management value chain including streamlined Know Your Customer checks and Sanctions screening, Anti Money Laundering (AML) Transaction Monitoring and Detection, efficient Enterprise Case Management, timely Compliance Regulatory Reporting and Management dashboards. The offerings are augmented by a comprehensive Data Management and Advanced Analytics capabilities to manage complex new generation threats. The key advanced analytics capabilities include an integrated analytics workbench for machine learning based scenario modelling, and embedded graph analytics-based data visualizations enabling discovery of hidden networks, entity resolution, advanced case investigations, and network pattern analysis.

Oracle Financial Services Enterprise Risk Management applications are industry-leading products that enable financial institutions to address a wide range of requirements in manage enterprise risk. It supports continuous compliance for complex Basel III post-crisis reforms covering Revised Standardized Approach for Credit Risk, Market Risk, FRTB, Counterparty Credit Risk, Large Exposures and Leverage Ratio guidelines due to be adopted by various jurisdictions from 2023 onwards. The Treasury risks are managed with integrated solutions covering interest rate risk, liquidity risk and funds transfer pricing. The solution helps in improving forecasting and predictive modeling capabilities thru pre-built models that leverage Artificial Intelligence and Machine Learning methods.

Oracle Financial Services Analytical Applications for Customer Insight suite of products comprise of Banking & Insurance Performance Analytics and Retail Customer Analytics products which are front office applications aimed at promoting topline growth through data driven insights into customer behavior. The solution helps improve top-line growth with improved profitability by managing the profitable customer journeys and their lifecycle with the bank. The banks have an added flexibility of deploying the Performance Analytics solution on cloud.

Oracle Banking Enterprise Product Manufacturing is a comprehensive suite of product master data management capability for the banking domain. It provides functionality to define financial products under current accounts and savings account, loans, term deposits, credit cards, investment and retirement accounts and insurance (consumer credit, lenders mortgage and home and content insurance types). Oracle Banking Enterprise Product Manufacturing helps banks create innovative products faster, add features to existing products, and set prices based on customer relationships. By designing differentiated product bundles, banks can optimize their product portfolio.

Oracle Banking Enterprise Collections is an enterprise-class collections platform designed to assist financial institutions with managing repayments of their consumer loan portfolios. The solution enables financial institutions in identification of delinquent accounts, and accurate tracking and monitoring of delinquent accounts with high standards of efficiency. The solution covers the delinquent life-cycle of a consumer loan starting from the identification of the symptoms of delinquency to tracking delinquency and impairment.

Services

Oracle Financial Services PrimeSourcing offers a comprehensive suite of consulting and application services addressing retail, corporate, and investment banking, funds, cash management, trade, treasury, payments, lending, private wealth management, asset management, compliance, enterprise risk and business analytics. PrimeSourcing offerings encompass end-to-end consulting partnership, providing comprehensive business and technology solutions that enable financial services enterprises to improve process efficiencies, optimize costs, meet risk and compliance requirements, define IT architecture, and manage the transformation process. PrimeSourcing services are rendered through centers located in India, by onsite teams operating at the customers’ premises and on-site centers located in other parts of the world. With customer demands changing rapidly to outcome transformational engagements, there is a clear opportunity for PrimeSourcing to integrate its deep domain knowledge with the product offerings of Oracle, thereby providing a compelling value.

Oracle Business Process Outsourcing Services (BPO) offerings excels in providing cost effective and high quality BPO services ranging from complex back-office work to contact center services for the banking, capital markets, insurance and asset management domains. This comprehensive ecosystem of BPO services is backed by a mature process and consulting framework. The BPO offerings are ISO 9001 certified for quality management and ISO 27001 certified for information security management.

Revenues

The company's revenues comprise three streams - license fees, annual maintenance contract (post contract support – PCS) fees for its products and consulting fees in respective business segments.

License fee

The company's standard licensing arrangements for products provide the bank a right to use the product up to a limit on number of users or sites or such other usage metric upon the payment of a license fee. The license fee is a function of a variety of quantitative and qualitative factors, including the number of copies, users, modules and geographical locations supported. The licenses are perpetual, non-exclusive, personal, non-transferable and royalty free.

Annual maintenance contract (PCS) fees

Customers typically sign an Annual Maintenance Contract with it under which, the company provide technical support, maintenance, problem resolution and upgrades for the licensed products. These support agreements typically cover a period of twelve months and are renewed for further period of twelve months.

Consulting fee

The company provide consulting services to its customers. The customer is typically charged a service fee on either a fixed price basis or a time and material basis based on the professional efforts incurred and associated out of pocket expenses. Both PrimeSourcing and BPO businesses comprise only of consulting services. In products business, its customers can optionally avail its consulting services related to the implementation of products at their sites, integration with other systems or enhancements to address their specific requirements.

Financial Highlights

Company’s revenue stood at ₹ 49,839.37 million this year, up 3% compared to ₹ 48,612.76 million of the previous financial year. The net income for the current financial year was ₹ 17,618.55 million, an increase of 20% compared to ₹ 14,622.17 million of the previous year. On an unconsolidated basis, the company’s revenue stood at ₹ 36,452.12 million during the current financial year, increase of 3% compared to ₹ 35,255.08 million of the previous year. The net income for the current financial year was ₹ 16,392.85 million, an increase of 4% compared to ₹ 15,826.56 million of the previous year. Previous years’ figures have been re-arranged / re-classified, wherever necessary, as per the applicable regulations.

Q1 Fiscal Year 2022 Results

Oracle Financial Services Software Reports Q1 Fiscal Year 2022 ²

July 28, 2021;  Oracle Financial Services Software Limited (Reuters: ORCL.BO and ORCL.NS), a majority owned subsidiary of Oracle, today announced results for the quarter ended June 30, 2021. Net income for the quarter was Rs. 524 Crore, up 9% yearover-year. Revenue for the quarter was Rs. 1,397 Crore, up 4% year-over-year. Operating income for the quarter was Rs. 708 Crore, up 7% year-over-year.

For the three months ended June 30, 2021, the products business posted revenue of Rs. 1,260 Crore, up 6% year-over-year, and operating income of Rs. 727 Crore, up 9% year-over-year. For the same period, the services business posted revenue of Rs. 100 Crore, down 13% yearover-year, and the Operating income of Rs. 22 Crore, down 9% year-over-year.

Chet Kamat, Managing Director and Chief Executive Officer, Oracle Financial Services Software said, “The company's entire range of applications for the financial services industry demonstrated strong wins globally. The company signed licenses of US$ 37.6 million in the quarter, registering 28% year-over-year growth. Year-over-year, revenue for the quarter grew 4% and operating income grew 7%. The company's margins continue to be strong - an operating margin of 51% for the quarter and net margins of 38%. Oracle Financial Services has an exciting solutions portfolio and Oracle Financial Services is ready to help financial institutions accelerate their digital transformation initiatives as they respond to the changing economic environment.”

Makarand Padalkar, Executive Director and Chief Financial Officer, Oracle Financial Services Software said, “Oracle Financial Services has delivered yet another solid performance on all operating parameters. Year-over-year, products business margins increased from 56% to 58%, Services business margins increased from 21% to 22%, and BPO business margins increased from 35% to 46%. The company's balance sheet remains strong with a healthy cash and liquidity position.”

References

1. ^ https://www.oracle.com/a/ocom/docs/annual-report-2020-21.pdf
2. ^ https://www.oracle.com/a/ocom/docs/industries/financial-services/ofss-q1fy22-pr.pdf