Aite Group Helps RCBC to Analyze ROI for Its New Core Banking System

New ROI analysis methods by Aite Group indicate that core banking systems can be strategic assets

Boston, May 8, 2013 – Aite Group is launching a return-on-investment methodology to help financial institutions evaluate their technology deployments.

In a new case study, Infosys Finacle ROI Case Study—RCBC Bank, Aite Group uses this methodology to examine the adoption of Infosys’ Finacle Core Banking Solution by Rizal Commercial Banking Corporation (RCBC). The study determines that the bank earned an ROI of 54.4% on this deployment, which had a payback of 2.07 years.

Philippines-based RCBC wanted to deploy Finacle to replace its aging existing core banking system, increase the number of customers it could serve, and improve its ability to offer clients a variety of new products that would enable the bank to grow its revenue.

Aite Group analyzed RCBC’s Finacle deployment on the basis of interviews with personnel at RCBC and on Aite Group's own extensive knowledge of core banking solutions, including the benefits available from these capabilities and the costs necessary to deploy them. Aite Group’s financial analysis of the deployment is based on operational improvements and cost reductions observed by RCBC staff during the first six months after the deployment. This data was used to calculate the ROI, payback, and average net annual benefit from the deployment over a three-year period.

Aite Group’s analysis shows key benefits to RCBC, including productivity increases that enabled the bank to eliminate PHP1.1 billion in annual operating costs over the three-year period. Reductions to annual operating expenses are expected to reach PHP2.1 billion in the fifth year after the deployment's October 2012 go-live date.

“Core banking systems can be underappreciated as enablers of a bank's strategic objectives. Aite Group's ROI analysis shows that there are clear financial benefits and that the deployment also improved customer service, enabled faster new-product introductions, and dramatically increased transaction processing capacity,” says David O’Connell, senior analyst in wholesale banking at Aite Group.