International Conference on Islamic Banking & Finance in Mauritius

1. International Conference on
Islamic Microfinance in Mauritius
Organized
By :
CENTER OF ISLAMIC BANKING & ECNOMICS

3. The following is intended to outline our general
product direction. It is intended for information
purposes only, and may not be incorporated into any
contract. It is not a commitment to deliver any
material, code, or functionality, and should not be
relied upon in making purchasing decisions.
The development, release, and timing of any
features or functionality described for Oracle’s
products remains at the sole discretion of Oracle.

4. <Insert Picture Here>
Technology for Islamic Finance – Is it time to invest?
Sugato Banerjee, Senior Manager, Southern Africa Sales
International Conference on Islamic Banking
Mauritius, 6 April, 2011

5. Discussion Topics
 Oracle and Islamic Finance
 Background
 Re-architecting of Islamic Banking Technology
 Benefits of Re-architected Technology Platform
 Conclusion

6. Oracle Corporation
Track Record of 30+ Years of Innovation
• Scale
• $27.0B in revenue for FY10
• #1 in 50 product or industry categories
• 370,000 customers in 145 countries
• 30,000 partners
• 106,000 employees
• 10 million developers in Oracle online communities
• Innovation and Investment
• Annual R&D investment of over $3.0B. About 150-200K person days
per year in Oracle FLEXCUBE enhancements.
• 29,000 developers and engineers. 4000+ FLEXCUBE resources.
• 15,500 customer support specialists, speaking 27 languages
• 20,000 implementation consultants
• 1 million students supported annually
• 870 independent Oracle user groups with 355,000 members
6
© 2011 Oracle Corporation – Proprietary and Confidential

7. Oracle’s Strategy in Financial Services including Islamic
Finance
COMPLETE OPEN INTEGRATED BEST OF BREED
#1
Comprehensive Standards-Based Designed to
Offering Architecture Work Together Industry Leader
Broad & Deep More Choice Less Effort Robust, Proven
Offering Maximizes Existing Industry leading
Investments More Value
Lower Cost, Lower Software
Risk
© 2011 Oracle Corporation – Proprietary and Confidential 7

8. Oracle FLEXCUBE Delivers Significant Business Benefits via
Comprehensive Range of Functionalities and Features
ARCHITECTURE / FRAMEWORK
Business Straight
Universal Extensive Faster Product Accelerator
Process Through Extensibility
Banking Parameterization Launch Pack
Orchestration Processing
Sophisticated Enterprise
Customer Pricing Comprehensive
Limits Wide Limits Integrated GL
Centricity Flexibility MIS
Management Management
REPORTING / STATEMENTS
Multi Currency/
Statements/ Comprehensive Flexible SOA-enabled
Branch & Entity
SECURITY / USABILITY
Advices Security Deployment Architecture
Support
MULTI FUNCTION
TECHNOLOGY
DEPLOYMENT
Multi-Currency
Flexible Audit Trail and Flexible
Multi Lingual Foreign Branch
Reporting Controls Interface
Operations
Regulatory Task Based UI Departmental
Multi Channel Scalability
Reporting and Usability Servicing
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© 2011 Oracle Corporation – Proprietary and Confidential

9. Oracle FLEXCUBE Islamic Banking Product Coverage
Origination
Workflows
Murabaha
Tawarruq
Istisnaa
Mudarabah
Musharaka
Ijarah
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© 2011 Oracle Corporation – Proprietary and Confidential

10. Oracle FLEXCUBE’s Life Cycle Support for Financing
Flexible Pre- Process
Operational
Product Pricing Packaged Flow
Framework Configuration
Controls
Products Enabled
Payments
Acquisition Initiation Servicing and Tracking Closure
Settlements
Lifecycle Support
Lead Booking Repayments Agents/Groups
Management Penalty Computation
Configurable
Credit Policies & Simulation Schedules
Pre-payments Queue Management
Checklist Auto/Manual Status Tracking
(Individual/Group)
Disbursements
Collection
Credit Rating Life Cycle SWIFT
Dashboards
Provisioning
Application Entry Profit Processing Multi-Mode Customer Interactions
Settlements & Follow ups
Charges and
Fees Renegotiation
PTP/
Underwriting Commitment Rollover
Broken Promise
Rate Revisions
Document Value Dated Consolidated Rollover Partial Write off Agent Commissions
Verification Amendments
Holiday Limits SWIFT
Processing Accounting
Treatment /Collaterals
Advices Promotions Intermediary
Processing
Reporting
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© 2011 Oracle Corporation – Proprietary and Confidential

11. Sharia Compliance Verified & Confirmed As Part of
Product Deployment at Leading Institutions
Oracle FLEXCUBE for Islamic Banking
Customers
Sharia Board Members of User Institutions
Sh Dr Hassan Sh Nizam Sheikh Dr Shaikh Ajeel Shaikh Dr. Sh Abdulla Sh Dr M Abdul
Sh Dr Daud
Hussain Hamid Naquby Abd Sattar Jasim Al- Mohamed Ali Bin Sulaiman Rahim Sultan
Bakar
Abu Nashmi Al Qari Al Manea Al Olamaa
Ghuddan
© 2011 Oracle Corporation – Proprietary and Confidential
11

12. Oracle FLEXCUBE’s Islamic Banking Capabilities: Key Takeaway
Functionality for Islamic Banking built upon the proven, best
Proven Core selling Oracle FLEXCUBE platform leveraging all its architecture
Platform and technology features.
Support all commonly used products, including extensive &
Comprehensive configurable profit distribution model for deposits. Features
Product Coverage modelled as per requirement of leading Islamic institutions.
Integrated Ability to Support both Conventional Banking and Islamic Banking
Platform operations from the same installation.
Embedded Oracle BPEL based process flows for origination of
Embedded financing contracts under multiple products. Facility to easily
Process Flows adapt or build upon the available process flows.
Fast Deployment Accelerator Pack with factory shipped product configurations.
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© 2011 Oracle Corporation – Proprietary and Confidential

13. Discussion Topics
 Oracle and Islamic Finance
 Background
 Re-architecting of Islamic Banking Technology
 Benefits of Re-architected Technology Platform
 Conclusion
© 2011 Oracle Corporation – Proprietary and Confidential
13

14. Characteristics of Islamic Finance Institutions (IFIs)
Customers
Dedicated Customers (15%)
Independents (70%)
Non Believers (15%)
Compliance
Islamic Financial Institutions 1. Audit
Products  Established within the last 5 years 2. Central Bank
Rapid Evolution  Less than 1m customer accounts 3. Risk Mgmt
Multiple Contracts  Less than 50 branches
4. Shariah Audit
 Asset Size of USD5b or less
Debt & Equity & Fee 5. Shariah Council
 Limited budget on Technology
 Inadequate IT Expertise 6. AAOIFI
7. IFSB
Competitors
Banks (Islamic & Conventional)
Non- Bank Financial Institutions
© 2011 Oracle Corporation – Proprietary and Confidential
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15. The Reality on Technology Implementation for
Islamic Banking as observed by IBS in 2007
 Decision making has been too quick without proper vendor assessment. Many
banks are paying today for making the wrong choices through extended timelines for
implementations
 Banks have been under-budgeting for Islamic banking systems. Although
they spend in the millions for conventional systems, they tend to budget less than $500,000
for Islamic banking systems. This leads to:
 Tweaking of existing systems to cater to the requirement
 Shoddy implementation and ill-conceived products
 Lack of knowledge amongst vendors often leads to ‘tweaked’ products
being delivered. Often, banks end up doing the work themselves as the system is unable to
meet the short time-to-market requirement for Islamic banks
 Vendor misleading the customer into believing that their Islamic banking offering is a
simple solution
 Varied interpretations of the Shari' a across geographies and banks operating in
similar markets
Source: IBS Guide on Islamic Banking - 2007
© 2011 Oracle Corporation – Proprietary and Confidential
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16. Islamic Banking Technology Implementation
2007 vs Now
In 2007 Now (2011)
1 Decision Making Has Been Too Quick Less prevalent now. However cases of new banks
making decision over short (1-2 days) presentation
are still observed
2 Banks have been under-budgeting for Still prevalent in start up banks; however
Islamic banking systems significant reduction seen on banks that are
migrating to new Islamic banking systems
3 Lack of knowledge amongst vendors Marked improvements. vendors have been
often leads to ‘tweaked’ products exposed to more implementations and have
recruited experienced resources over the last few
years
4 Vendor misleading the customer into Vendors taking a different stance; Islamic banking
believing that their Islamic banking systems are now showcased as comprehensive and
offering is a simple solution complex solutions to meet the demanding
requirements of Islamic banking
5 Varied interpretations of the Shari' a Reduced significantly due to the need to comply to
across geographies and banks AAOIFI and IFSB standards
operating in similar markets
© 2011 Oracle Corporation – Proprietary and Confidential
16

17. Discussion Topics
 Oracle and Islamic Finance
 Background
 Re-architecting of Islamic Banking Technology
 Benefits of Re-architected Technology Platform
 Conclusion
© 2011 Oracle Corporation – Proprietary and Confidential
17

18. The Need to Re-Architect Islamic Finance Technology
Vendor Bank Technology Competition Regulatory
Costly to maintain Java Technology
Older Islamic banks New Islamic banks Standardization to
Islamic & adopted by all
started to replace taking away market AAOIF and IFSB
Conventional vendors – others
legacy systems from older banks Standards
versions considered legacy
Unable to offer Flexibility of system
Islamic banks use Shariah Audit
Inappropriate initial sophisticated Islamic via use of object
technology to lure becoming stringent
architecture adopted products required by oriented technology
customers and more frequent
the market and components
Changes to support
Long lead time to Islamic banks not
Islamic windows Move from Customers demand
develop support for given preferential
impacted stability of proprietary to open excellent service
new products treatment by the
operation of system from Islamic banks
required by market Central banks
conventional banks
© 2011 Oracle Corporation – Proprietary and Confidential
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19. The Outcome - Comprehensive Functionality – Covers
all Prescribed Products
Demand Deposit
Accounts
& Saving Deposit
Deposits
Time Deposit
Mudarabah Financing
Musharakah Financing
Murabaha Financing
Financing Salam Financing
Istisnaa Financing
Ijarah Financing
Qard Financing
Trade Finance Letters of Credit, Guarantee
Treasury FX Cash, FX Spot
© 2011 Oracle Corporation – Proprietary and Confidential 19

20. The Outcome - Advanced Functional Features with
Readiness for Localization
 Document Management
Efficient
 Scoring Workflows
for
 Business Activity Automation
Monitoring
 Customer Profiling
Advanced New Core  Risk Management
Strong Core
Functional Banking Services
Features  Accounting
System
 Relationship / Channel
based Pricing
 Straight through
Processing Localization
Readiness
 Customer Service Alerts  Regulatory reporting
 Payments & Clearing
 Processing Prescriptions
© 2011 Oracle Corporation – Proprietary and Confidential 20

21. The Outcome - Product Launch – Quick Go to Market
Configurable Transaction Processing Rules Across Modules
Modules: Base Accounts, Deposits
Product Variants
Transaction Types Transactions
Eligibility Criteria
Validations
Transaction
Availability
Characteristics,
Processing
Requirements
Pricing
Default
Pricing, Charge
Special Terms s & Terms
Module Accounting Rules Journal Postings
Parameters
Lifecycle Events Processing
Event Handling
Exception Handling
© 2011 Oracle Corporation – Proprietary and Confidential
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22. The Outcome - Customer Centricity
Customer based Pricing, Processing and Tracking
Limits &
Exposures
Pricing
Customer Product
Eligibility
Profitability
Relationship
Views
© 2011 Oracle Corporation – Proprietary and Confidential 22

23. The Outcome – Integrated Workflow and
Origination Features
Process Efficiency, Automation, End-to-End Processing
Integrations with
Channels / Agents for
Sourcing
Credit Bureau
Work Monitoring, SLA
Interface / Internal
tracking, Exception
Rating Model based
Handling, Escalations
Credit Scoring
Configurable Rule
Documentation based Work
Generation and Progression &
Archival Decisioning
© 2011 Oracle Corporation – Proprietary and Confidential 23

24. The Outcome – Scalable Architecture (N-Tier)
Client Tier Javascript
& XML
Process Tier
Oracle BPEL
Application Tier
J2EE 1.4
Data Tier Oracle 11g R2
© 2011 Oracle Corporation – Proprietary and Confidential
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25. SHARIAH COMPLIANCE
Built-in tools to
support Shariah
Audit activities
Extensible process
AAOIFI and IFSB as
flow framework to
basis for compliance;
support additional
flexibility to support
future Shariah
other authorities
requirements
Shariah
Compliance
© 2011 Oracle Corporation – Proprietary and Confidential 25

26. Discussion Topics
 Oracle and Islamic Finance
 Background
 Re-architecting of Islamic Banking Technology
 Benefits of Re-architected Technology Platform
 Conclusion
© 2011 Oracle Corporation – Proprietary and Confidential
26

27. Benefits of Re-Architected Islamic Finance Technology
Designed for State-of- Regulatory
End to End Competitive
Universal the-Art and Shariah
Banking Integration Advantage
Technology Compliance
System ready to Complete banking Adoption of latest
Extreme agility in
respond to any operation supported on technology and open Designed to comply to
responding to
business initiatives in one platform – standards ensure AAOIF and IFSB
competitive pressures
retail, commercial, or eliminates redundancy longest life span and Standards
from other players
corporate and improves control lowest TCO
Uniform processes
Best practices from
across product and More customers can be Ability to match
conventional banking Designed to facilitate
operational areas – reached without brick services offered by
made accessible to Shariah Auditing
improves staff and mortar set-up international players
Islamic banks
productivity and morale
Periodic updates
Speedier customer
ensure banks are Technology becomes Excellent customer Incorporate Best
service as most
equipped with market enabler for business service can readily be practices of Operation
processes are
leading features and growth offered to customers Auditing
automated
capabilities

28. Discussion Topics
 Oracle and Islamic Finance
 Background
 Re-architecting of Islamic Banking Technology
 Benefits of Re-architected Technology Platform
 Conclusion
© 2011 Oracle Corporation – Proprietary and Confidential
28

29. The Right Time To Invest in Islamic Finance Technology
Re-architected Islamic Finance Technology (IFT) is designed for Islamic
Universal Banking entities to compete effectively against conventional
and other Islamic banks
Islamic banks with re-architected IFT is ready to be Shariah-compliant
and equipped for Shariah Auditing – providing added confidence to
their stakeholders.
With access to best practices adopted by highly successful
banks, Islamic banks can operate with precision and ensure customers
are served promptly and accurately, enhancing customer loyalty
Use of the latest technology enables Islamic banks to offer new
products rapidly so as to fend off competitors and reach new
customers without having to build brick and mortar infrastructure
Islamic banks with re-architected IFT is ready to gain market share and
beat the competitors away.

30. Thank You!
Jamil Hassan
Principal Consultant, Islamic Banking
Jamil.Hassan@ORACLE.com
Sugato Banerjee
Senior Manager, Southern Africa Sales
Sugato.Banerjee@ORACLE.com
ALHUDA CENTER OF ISLAMIC BANKING & ECNOMICS
Head Office:
192- Ahmad Block, New Garden Town , Lahore, Pakistan
Ph: +92-42-35913096-8, 35858990, 38407850
Fax: +92 -42-35913056
E-mail : info@alhudacibe.com
Web: www.alhudacibe.com