Oracle Customer Study

Harris Bank

Business Challenge
The Customer To support its rapid growth, Chicago-based Harris Bank wanted
• Industry: Financial Services to completely revamp its legacy systems with a new management
• Geographics: Regional with reporting system able to automate manual processes and
headquarters in Chicago, improve business decision making, financial analysis, and
Illinois profitability and risk management across the organization.
• Revenue: $1.3 billion
• Employees: 6,000

PeopleSoft Enterprise
Solutions
PeopleSoft Solution
• Performance Management Using PeopleSoft Enterprise Performance Management from
Activity-Based Management Oracle, Harris Bank now has a multidimensional management
Enterprise Warehouse reporting system able to electronically calculate profitability and
Funds Transfer Pricing results. A single, consistent set of quality data also improves
Risk-Weighted Capital
financial analysis and decision making, enabling managers to
identify and act on key earnings drivers across all bank products
Implementation Team and services.
• PeopleSoft Consulting
• BearingPoint (formerly KPMG
Consulting, Inc.)
• IBM Consulting Business Benefits
With PeopleSoft Enterprise Performance Management, Harris
“Our PeopleSoft EPM solutions Bank benefits from:
are helping us prepare for Basel
II compliance and ensuring that • A multidimensional management reporting system that spans
the information we disclose to
2,800 departments, 625 products, and 8,000 accounts.
regulators is accurate and timely.
Plus, the insights we are gaining • The ability to capture three million customer instruments
into profitability at the instrument,
monthly for profitability and risk analysis.
product, and business unit levels
are helping Harris drive new • A single view of profitability information across all
value-based strategies to instruments, products, and lines of business, which improves
improve our competitiveness
under the New Basel Capital financial accuracy and business decision making.
Accord.” • Best practice methodologies for funds transfer pricing, risk-
Bill Kragh weighted capital analysis, and cost allocations to support
Vice President, Finance detailed profitability measurements at the instrument level.
• Automatic reconciliation of financial information from 40
different sources into the general ledger, enabling a single
set of quality data for increased integrity and financial
accuracy.
• A comprehensive financial services data model for
compliance with emerging Basel II standards and new value-
based management strategies.

Copyright © 2004, 2005 Oracle. All rights reserved. Printed in the U.S.A.
 Oracle Customer Study
Harris Bank Uses PeopleSoft Enterprise
Performance Management to Stay Ahead of
the Pack
With a lion as its logo, Chicago-based Harris
Bank is no stranger to fierce competition. This
120-year-old banking institution has expanded
across Illinois in recent years to become a
regional powerhouse and the nation’s 37th
largest bank. A wholly owned subsidiary of the
BMO Financial Group, Harris Bank is
preparing another attack on the competition,
becoming one of the first banks worldwide to
deploy the newest cutting-edge profitability
and risk management tools and best practice
methodologies from PeopleSoft.
Harris Bank recently replaced its 30-year-old
legacy system with the full suite of PeopleSoft
Enterprise Performance Management (EPM)
solutions, including PeopleSoft Funds Transfer
Pricing, Activity-Based Management, and Risk-
Weighted Capital. PeopleSoft Enterprise
Warehouse, a comprehensive pack-aged
business intelligence and analytics platform,
serves as the underlying architecture running
these solutions.
“Two of the top business challenges we face at
Harris Bank are defending and expanding our
market share in the Chicago region and
ensuring profitable growth going forward,”
explains Bill Kragh, vice president, Finance,
Harris Bank. “To address those challenges, we
needed a comprehensive, consistent view of
profitability across all our products and
services. PeopleSoft was able to deliver that
comprehensive view, with best practice
methodologies, and a real commitment to the
financial services industry.”
Going Where No Bank Has Gone Before
Going into the 21st century, multiple
acquisitions and other priorities had left Harris
Bank with a 1968 mainframe system and a
hodgepodge of manual processes executed
with key punch cards, tape-based files, and
Microsoft Excel spreadsheets. Manually
reconciling data from over 150 branches for
management reporting left little time for
profitability analysis, let alone strategic
planning.
Committed to totally reinventing the
management reporting system, Harris Bank
Copyright © 2004, 2005 Oracle. All rights reserved. Printed in the U.S.A.
became one of the earliest adopters of
PeopleSoft EPM within the financial services
industry. Bank executives had already rejected
the idea of assembling best-of-breed
components from other vendors, opting
instead to create an entirely new management
reporting system with PeopleSoft EPM to
achieve a single, comprehensive view of
profitability at the instrument, product, and line
of business levels.“
Although other banks were using the
PeopleSoft EPM solutions individually to
collect data or handle specific processes like
funds transfer pricing, we were really the first
to create an entire management reporting
system using PeopleSoft EPM,” says Kragh.
“Although it’s a large investment, it is one that
we were willing to make to be able to totally
understand our business and what drives
customer profitability and capital allocations.”
Bringing It All Together with PeopleSoft
Enterprise Warehouse
Thanks to the open architecture of PeopleSoft
Enterprise Warehouse, Harris Bank easily
pulls together financial data from 40 disparate
sources to achieve a consistent,
comprehensive view of information. Using that
single source of data, the bank can now
conduct multidimensional reporting and
analysis across its 2,800 departments, 600
products, and 8,000 accounts.
“Before PeopleSoft EPM, we didn’t have the
ability to consolidate individual accounts
effectively across the whole organization,”
Kragh notes. “Now we have quality data that is
consistent in all directions and dimensions,
enabling analysts to drill down into account
details at the instrument level to identify
problems or opportunities.” And that’s a
considerable benefit, given that Harris Bank
handles three million customer instruments
each month.
Consistent Business Processes and Best
Practices
Using PeopleSoft’s world-class best practices
for the financial services industry has enabled
Harris Bank to apply standard and consistent
methodologies for PeopleSoft Funds Transfer
Pricing and PeopleSoft Activity-Based
Management across the entire organization.
 Oracle Customer Study
By automatically assigning funding charges
and credits to assets and liabilities, PeopleSoft
Funds Transfer Pricing gives Harris managers
a risk-adjusted view of profitability at the
instrument, product, and business unit levels.
Those same managers can analyze cost
information by cost center, activity, and driver
using PeopleSoft Activity-Based Management
to automatically allocate direct expenses to
instruments. As a result, managers across all
lines of business are now freed up to focus on
market financial strategies like product pricing
and customer profitability.
“Implementing PeopleSoft EPM has
challenged a lot of the product managers in
their pricing assumptions,” explains Adam
Schabes, vice president, Financial Information,
Harris Bank. “In the area of mortgages, for
example, many products are priced off the
competition. Using PeopleSoft, our managers
can now see how that strategy impacts our
funds transfer pricing. So if the competition
throws out a loss leader, we can decide
whether it is worthwhile to pursue that product
based on its potential profitability.”
Maximizing ROI with Basel II, Value-Based
Management
For some banks, just implementing a new,
enterprise-wide management reporting system
would be enough of a challenge. Not Harris
Bank. The Chicago institution is now focused
on maximizing the value of its strategic
investment in PeopleSoft EPM to support
compliance with the emerging standards under
the New Basel Capital Accord (Basel II) as well
as to implement a value-based management
approach to profitability. PeopleSoft Risk-
Weighted Capital will play an integral role in
helping Harris Bank adhere to some of the
sophisticated risk measurement
methodologies foreseen under Basel II to help
banks optimize their capital and profit
potential.
“By delivering a single source of data for credit
risk and FTP methodologies, our PeopleSoft
EPM solutions are helping us prepare for
Basel II compliance,” concludes Kragh. “The
integration between our PeopleSoft Enterprise
Warehouse and the Funds Transfer Pricing
and Risk-Weighted Capital modules means
that we can quickly and easily consolidate data
from any source, helping ensure that the
Copyright © 2004, 2005 Oracle. All rights reserved. Printed in the U.S.A.
information we disclose to regulators is
accurate and timely. Plus, the insights we are
gaining into profitability at the instrument,
product, and business unit levels are helping
Harris drive new value-based strategies and
preparing to improve our competitiveness
under the New Basel Capital Accord.”
Basel II: Transforming Risk Into Value
The New Basel Capital Accord (Basel II) was
developed by the Basel Committee on Banking
Supervision for banks to reflect risk more
accurately in their capital allocations and to
enhance internal controls, external review, and
market disclosures. Basel II is expected to
reshape the financial services industry by
creating new classes of competitors based on
the sophistication of their risk and value
measurement technology. Banks that do not
embrace a risk-oriented culture may be at a
competitive disadvantage.
The New Basel Capital Accord focuses on
three main pillars:
Minimum capital requirements. Evaluates
the soundness of a bank’s internal risk and
capital assessment processes.
Supervisory review. Focuses on a bank’s
internal control and management processes.
Market discipline. Enhances reporting and
disclosure requirements on capital structure,
risk measurement and management practices,
risk profile, and capital adequacy.
The new Basel II guidelines are scheduled to
go into effect on December 31, 2006. For
compliance, banks must have at least two
years of historical loss data that is back tested
and validated, meaning that their internal
systems must be up and running by the end of
2004 to meet the 2006 deadline. Is your bank
prepared?