HPB Croatia, Profiting from Treasury Transformation
Hrvatska Postanska Banka (HPB) is the largest state-owned bank in Croatia. Among the fastest growing players in the Croatian Banking market, its large asset base and total equity places it in the seventh position with a 4.2% market share. Owing to a strategic partnership with the Croatian Post, the bank is a market leader in payment transactions using the Croatian Postal Network.
HPB is a universal bank, serving corporate as well as individual clients, offering a wide range of products and services. It is especially noted for its contribution to the Small and Medium Enterprises (SME) sector as well as to the investment banking space.
Key Business Drivers
Prior to Finacle treasury, HPB was operating on a disparate platform where tasks such as transfer of deals from third party platforms to the treasury system, posting of accounting entries to the back office, generation of SWIFT messages and reports were performed manually. This was time consuming for bank staff and also entailed high costs for the bank to maintain multiple legacy applications.
With trading volumes increasing globally and ever increasing emphasis on risk management, HPB needed a solution that would enable them to grow through automation of processes on an integrated platform and minimal manual intervention. Finacle treasury powered by its limits module equipped the bank with efficient risk monitoring on an integrated platform.
As trading volumes increase, banks look to replace multiple legacy systems with a single integrated platform. With newer products being introduced in the treasury space, there is greater need for a robust, scalable treasury product. Moreover, with ever-increasing emphasis on risk management in the current global scenario, banks look at an integrated trade capture & risk management solution. Finacle treasury solution powered by its Limits module equips HPB with more efficient risk monitoring.
The need to manage a new and relatively unknown language and culture posed unique challenges for the implementation team. To add to this, during the project, the regulatory environment was very dynamic leading to multiple iterations while defining product parameters.
The biggest challenge faced was to enable the product to handle the Croatian regulatory environment. Through an extensive study of Croatia-specific requirements and leveraging the product’s flexibility to accommodate enhancements and customizations, a solution for the Croatian market was effectively designed.
Yet another challenge was integration of the treasury solution with the bank’s existing retail banking solution, until the time the bank went live on Finacle core banking solution. An interface was created with the local payment system in Croatia- HSVP or CLVPS (Croatian Large Value Payment System) to develop a comprehensive payments solution.
Data migration was complex as two different systems were used by the bank for treasury operations and data had to be collated before migration.
Two product versions were released before go-live. Comprehensive testing of these releases was a herculean task.
Snapshot of the manual processes automated with the implementation of Finacle treasury solution.
||Finacle Process (Automated)
||Deals entered in Reuters system had to be manually specified again in the Astra System. The dealer had to manually prepare deal tickets
||The treasury interfaces with the Reuters Dealing 3000 and supports real-time upload of all Money Market, Foreign Exchange and Swap deals
||Position updated by the dealer in the blotter maintained in Microsoft Excel
||Real-time position update in Finacle treasury solution
||Limits monitored outside the system
||Online Limit monitoring and breach analysis
||Manual preparation of deal tickets and confirmations
||Deal tickets are not printed as they are available in the system. Confirmations are system generated and printed on demand
||Croatian Central Bank regulatory reports manually created because data was housed in two separate legacy systems
||Automatically required data extracts are transferred to Regulatory Reports database
||SWIFT messages manually created for security buy-sell deals, repo deals, futures, FX forwards and swaps
||Automated SWIFT message creation and sending from Finacle treasury solution
||Commercial loan deals processing manually executed in back office - booking of due and undue interest, maturity of deals
||Deal is processed and booked according to parameterization on the deal level
||FX swap deals have been separated in two systems - spot leg was created and booked in one system, forward leg in another. Payments on forward leg were created manually
||FX swap deals are processed in one system, payment SWIFT messages created automatically
Reaping The Benefits
HPB was impressed with the flexibility provided by Finacle treasury solution through its robust customization infrastructure. Finacle treasury solution replaced the bank's legacy system and helped strengthen its competitive position by enabling innovation, greater process efficiencies as well as by meeting the new regulatory requirements, including Basel II. Implementation of the treasury solution reduced paper-work at the department level through automation and integration of the front office, middle office and back office. HPB Croatia can now monitor a deal through its entire life-cycle, through various stages at each department. STP enabled by Finacle treasury solution has helped the bank reduce operational risk. Report generation, in accordance with the regulatory requirements of CNB has been enabled, leading to easier and streamlined reporting.
To realign and leverage technology to meet business requirements, the bank sought:
- Realignment of business processes with industry best practices which was achieved by adopting the treasury solution; this also resulted in reduced manual workload and maintenance costs
- Highly parameterized product definition functionality permitting the bank to structure the system to support its internal and regulatory requirements
- Extensibility, flexibility and scalability of Finacle to empower growth and expansion
- Risk management functions to facilitate efficient risk monitoring
- Optimal reports to meet the regulatory requirements of Croatian National Bank.
- STP at every level, delivered through Finacle treasury solution, considerably reducing operational costs, while improving resource management and productivity
HPB has found that the workload of its employees has been greatly reduced since implementation of the treasury solution, as it has automated a large number of processes, manually addressed otherwise. This enabled the bank to harness resources more effectively to expand and grow in a competitive market.
View From the Top
““Finacle treasury solution has enabled us to streamline operations, improve efficiencies and augment our service offerings to our customers. The adaptability of the solution combined with the comprehensive functionalities delivers an increased cost-benefit ratio and higher operational efficiencies which will enable us to achieve client value.””
Mr. Saša Stankovic,
Senior Executive Director of Project Management Office, HPB