Leading the Czech market for digital banking services through large-scale core transformation
Prague, Czech Republic
At a Glance
• Supports ambitious plans to reach more than two million clients in the coming years
• Provides a robust core platform with 24/7/365 availability to enable always-on digital banking
• 60% reduction in time to market for innovative new retail and corporate products and services
One in five adults in the Czech Republic holds an account with Komerční banka. Formed in 1990, the bank is one of the top three financial institutions in the country and one of the largest in Central and Eastern Europe, with assets under management of CZK 1244 billion (USD 56 billion). Part of the Société Générale group, the bank provides retail, corporate, and investment banking services to 1.6 million clients.
To continue its impressive growth, Komerční banka recently unveiled a multi-year strategic growth plan: KB2025. The initiative aims to reinforce the bank’s leadership in digital banking in the Czech Republic, and to ensure it competes effectively against new market entrants such as fintechs and neobanks. In the coming years, Komerční banka is targeting a client base of more than two million.
“One component in the strategy is launching a new era of banking, with a frictionless and fully omni-channel customer experience. We also want to offer more innovative products to meet the evolving needs of clients. It’s an ambitious program to safeguard our long-term growth.”David Svejda, Digital Transformation Lead at Komerční banka
Overcoming the limitations of legacy systems
Turning this vision into reality created challenges for Komerční banka. For many years, the bank supported its operations with a complex mix of legacy systems. These included a core banking application running on a mainframe server, along with many custom-built satellite applications. The limited functionality of this aging environment stifled innovation and would hinder the progress of the strategic growth plan.
Frantisek Kubala, Head of Core Banking continues: “Our old core platform was not online 24/7, so payments made outside of online hours had to be processed through a custom enhancement of the core system, while sales and some servicing activities were not available overnight.” To support the new digital bank and enhance its retail and corporate banking services, Komerční banka planned an overhaul of its core systems.
“More advanced capabilities were essential. For example, we wanted round-the-clock availability to allow clients to transact or perform sales and servicing operations online anytime, anywhere. And to stay competitive, it was important to cut time to market for new products”Frantisek Kubala, Head of Core Banking at Komerční banka
Selecting a more advanced core platform
After proof of concept exercises with several vendors, Komerční banka chose Temenos to support the KB2025 program. The bank will use Temenos Core Banking running in a private cloud environment based on Kubernetes containers. In addition, Komerční banka is harnessing Temenos Data Hub, a data streaming tool integrated with Temenos Transact that enables in-depth reporting.
“Temenos stood out because of its impressive client base of leading financial institutions. Temenos Core Banking met our key functional and technological requirements, and includes excellent capabilities for managing lending and deposits, and general ledger administration that we plan to roll out gradually. We also liked the option to run the system in the cloud or in containers, and certified partners focusing exclusively to Temenos Core Banking available to guide the implementation.”Frantisek Kubala, Head of Core Banking at Komerční banka
Minimizing risk during a complex rollout
From the outset, Komerční banka knew the deployment of Temenos Core Banking and the cutover from the old core system would be challenging. Following the installation and setup of the platform, the bank would have to migrate millions of existing client accounts. To manage the process, Komerční banka enlisted support from Temenos business partner Syncordis and Temenos Consulting Services.
The implementation will involve 20 phases over five years and is progressing well. Komerční banka is now testing new retail banking services built on Temenos Core Banking, and plans to migrate 300,000 accounts between April and December 2023—with a target completion date for retail accounts of late 2025. For corporate banking, Komerční banka aims to launch new services in 2026, and to migrate clients over by the end of 2027.
David Svejda comments: “This is a complex project, with many components—but everything is going well. Syncordis have been very helpful and working with Temenos Consulting Services has been excellent. Our decision to follow a phased approach was a great call, helping us to minimize project risk and giving us breathing space to test and validate each component before going live.”
Delivering a more compelling digital experience
With Temenos, Komerční banka is taking huge strides toward its growth objectives. The bank now has the robust core platform needed to support the new digital bank, with 24/7/365 availability and more efficient transaction processing. A pilot scheme in October 2021 giving 500 bank employees access to enhanced digital services proved successful, and it has since been extended to nearly 4,000 employees, with the planned launch to the public, and retail customers, in April 2023.
The Temenos platform also makes it much easier to develop and launch innovative new services. For example, Komerční banka is working closely with Temenos and Syncordis to create multi-currency accounts, featuring a main account in Czech korunas and sub-accounts in euros, dollars, sterling, and more with possibility to offer overdraft etc. This will facilitate international payments for clients, and represent a valuable differentiator for the bank.
“Product development is now so much quicker and simpler. “We can use the prebuilt components in Temenos Core Banking to configure streamlined workflows for client onboarding, and enhanced offerings such as current and savings accounts, overdrafts, and investment options. With Temenos, we have cut time to market by at least 50 percent.”David Svejda, Digital Transformation Lead at Komerční banka
Higher agility, lower operational costs
Moving to the Temenos platform is also enabling Komerční banka to simplify its banking environment. The comprehensive functionality of Temenos Transact means the bank no longer relies on a complex mix of point solutions. Switching from a mainframe-based solution to one in an agile private cloud environment will also significantly reduce hardware costs.
Frantisek Kubala concludes: “Together with Temenos, we have been on a journey to building a streamlined core banking environment. We’ve both learned a lot of lessons along the way, and we’re excited to work towards developing the innovative banking solutions that will keep us competitive and cement our status as a leader in the Czech market.”