IT Strategy formulation for ICICI Bank

GCS I – Group A9Akash Srivastava | Ankit Saxena | Jatin Magu | Kunal Gupta | Karan Madaan | Prabhat Prasoon

Phase 1

Business Strategy, CSFs, Drivers, Trends, Business Structure

Home Work

Indian Banking : Overview Phase 1

•Industry size - Rs 64 trillion•Credit to Deposit ratio - 70%•Growth rate•Profit margins - 12%•Avg IT spends - 4% of total expenditure•Total IT Spend in 2011 – 253 billion rupees

Indian Banking Industry: Structure

•Nationalized banks have 85% of all branches

Phase 1

SCBs 83SBI and associates 7

Nationalized banks 20

Private banks 22

Foreign banks 34

Major Services Offered Phase 1

•Payment services•Financial Intermediaries•Financial Services

Products/ Services offered Phase 1

•Credit Cards/Debit Cards•ATM•E-Cheques•EFT (Electronic Funds Transfer)•DeMAT Accounts•Mobile Banking•Telephone Banking•Internet Banking•EDI (Electronic Data Interchange)

Performance indicators Phase 1

•Net Interest Margin•Non Performing Assets•RoA•RoE•Loan Loss Reserve Ratios (LLR)•CAMELS rating

Key industry drivers Phase 1

Critical Success Factors Phase 1

Technology Practised Phase 1

Industry Challenges Phase 1

Industry SWOT Phase 1

Major concerns of a Bank Phase 1

•Liquidity Management•Asset Management•Managing Credit risk•Managing Interest rate risk•Liability Management•Managing Capital Adequacy

Risk Management at a Bank Phase 1

•Credit Risk•Liquidity Risk•Market Risk•Interest Rate Risk•Operational Risk•Capital Risk•Reputation Risk•Legal Risk

ICICI Bank: Financials Phase 1

•2nd Largest bank with total assets Rs. 4,736.47 billion•Profit after tax Rs. 64.65 billion•Network of 2,777 branches and 10,021 ATMs in India•Presence in 19 countries, including India

ICICI Bank: Financials Phase 1

•Growth rate•Profit margins 16%•Average IT spends 4.8% of total expenditure•NPA•Non Performing Assets•RoA•RoE•Interest spread 3.5•IT Spend in 2011 – 253 billion rupees

ICICI Bank: Organization Structure Phase 1

ICICI Bank: Current IT Solutions Phase 1

ICICI Bank: New Initiatives Phase 1

ICICI Bank: Challenges Phase 1

ICICI Bank: Competitors Phase 1

ICICI Bank: SWOT Phase 1

• AKAsh……………………..

24

LENS 2: CHARACTER OF THE COMPANY

Precision to

ResponseNovelty

Cost Quality

25

CHARACTER OF THE COMPANY

Mass Customizatio

nInnovation

Mass Production

Continuous Improvement

Business Strategy Phase 2

•Enhance share of retail deposits and sustain leadership position in credit franchise

Domestic Retail Banking

•Leverage corporate relationships, structuring expertise, balance sheet and global syndication capability

Global Corporate and Investment Banking

•Leverage NRI opportunity and technology capabilities

International Retail Banking

•Invest for future growthRural Banking

•Enhance and leverage market leadership positionInsurance, Asset Mgmt & Broking

Key Strategy Drivers Phase 2

4Cs

*CASA – Current Account Savings Account

28

Justification of Character of the company

QualityContinuous Improvement

ICICI Bank has a business strategy of value driven business. The value addition is planned by improving the customer service delivery.

As an outcome of 2009 Financial Crisis, the bank strategy has special mention for maintaining the high asset quality by focusing on improving the internal quality and risk management processes.

ICICI Bank plans to capture a bigger pie of customer segments by expanding and introducing new communication channels. For this, the bank will rely heavily on Technology/ IT. Bank expects its growth driven by technology. E.g. - ICICI Facebook Banking Page.

Bank also plans to optimize its current processes by leveraging IT capabilities and through technological innovations. E.g. – Account Opening Process leveraged using Tablets.

• Candidate project by Ankit

BUSINESS TRANSFORMATION NEEDS Phase 3

Process Current Quadrant

New Quadrant Business Capability

IT Capability Candidate Project

Financial Inclusion – Rural Banking

CI MP Core Banking + BC + External Mobile solution for no frill accounts

Integration with external partners including govt., BCs, Telecom Partners

Yes

Corporate Banking and Retail Banking

CI MC Banking Over Cloud

Cloud Computing and Integration

Yes

Insurance, Asset Management and Brokerage

CI MC Business Risk Management and BASEL Compliance

IT enabled platform to measure and mitigate risks in SIVs, OBSI, custom SPs.

Yes

ICICI Value Chain Analysis Phase 9

ICICI Value Chain Analysis Phase 9

External Factors• Funding/

Capital Structure

• Regulatory Agencies

• Federal Reserve

• Clearing Partners

Operations• Deposit

Services • Loan

Administration

• Treasury Operations

• Payment Processing

Delivery Channels • Branch• ATM /

Internet• Mobile

Banking• Bank by

Mail/Call Center

Marketing & Sales• Branding• New

Account acquisiton

• Cross Sales• Fee

Revenue Generation

• Public Relations

Revenue Streams• Banking• Insurance• Investmen

t• Treasury• Wealth

Management

ICICI Value Chain Analysis Phase 9

Strengthening communication channels:- Minimize any information arbitrage and utilize any opportunities

- Integration and standardization of data and processes

Financial Inclusion: Setting up an integrated system to include business correspondents and telecom providers within the eco system. The system can be developed to incorporate the following –

- Micro Credit- Deposit- Payment Services- Facilitating Micro ATM Service- Integration with Government Initiatives

Enhancing Social media Channelization to acquire new customers, providing added customer services. The emphasis can be on creating one stop shop for all the underlying companies under ICICI Umbrella for the customer to enable cross selling.

- Adding more resources in social media analytics to capture customer demands.- Real time sentimental analysis to reduce the customer churn rate and improve QoS.

Phase 2

Analysis Using the 10-Lens Approach

Candidate Project Identification

1 Analyzing global trends Phase 2

Continuing the move toward Enterprise 2.0: We’ve become a digitally collaborative society. Enterprise 2.0 means that global businesses will be expected to integrate collaborative technologies into their daily routines. By relying on email, teleconferencing, videoconferencing, and instant messaging, companies are essentially doing away with the borders that once separated regions.

BYOD

Financial Inclusion

1 Analyzing global trends Phase 2

Leading emerging markets will continue to drive global growthEstimates show that 70% of world growth over the next few years will come from emerging markets, with China and India accounting for 40% of that growth.Adjusted for variations in purchasing power parity, the ascent of emerging markets is even more impressive: the International Monetary Fund (IMF) forecasts that the total GDP of emerging markets could overtake that of the developed economies as early as 2014.The forecasts suggest that investors will continue to invest in emerging markets for some time to come. The emerging markets already attract almost 50% of foreign direct investment (FDI) global inflows and account for 25% of FDI outflows.The brightest spots for FDI continue to be Africa, the Middle East, and Brazil, Russia, India and China (the BRICs), with Asian markets of particular interest at the moment.By 2020, the BRICs are expected to account for nearly 50% of all global GDP growth. Securing a strong base in these countries will be critical for investors seeking growth beyond them

1 Analyzing global trends Phase 2

Cleantech becomes a competitive advantage: Ernst & Young's 2010 global survey of corporations with more than US$1b in revenue, showed that cleantech is an organization-wide or business-unit-level initiative for 89% of respondents; 33% spend 3% or more of total revenues on cleantech and 75% expect cleantech spending to increase over the next five years.

BASEL III

Talent Management

Big Data

1 Analyzing global trends Phase 2

Cloud Computing: By 2016, Gartner, a consultancy, expects all Forbes’ Global 2000 companies to use public cloud services, transforming much of the current IT hardware, software and database markets into infinitely flexible utilities. When cloud computing becomes widespread, it will transform businesses and business models, potentially reducing both initial and recurring costs for IT buyers, increasing their flexibility and lowering their risks. What’s not to like about an infinitely scalable, pay-as-you-go business model?Despite concerns related to data security, privacy and business continuity, its value proposition makes the success of cloud computing inevitable. Over time, cloud-based services will grow increasingly sophisticated and evolve into full-scale business processes as a service.

2 Character of the company Phase 2

2 Character of the company Phase 2

3 Business transformation needs Phase 2

Process Current Quadrant

New Quadrant

Business Capability

IT Capability Candidate Project

Prospecting for ore bodies & Analyzing profit potential of new ore bodies

MC CI Reduce exploration and procurement costs

Gemcom Whittle

Yes

Sustainable Development Policy

MP CI Strive for zero environmental harm

Sustainable energy solutions

Yes

Reduce Lost time injuries

MP CI Better disaster preparedness

Hazard Awareness and Identification

Yes

6 Idea Scan Phase 2

Referenceshttp://www.mbaknol.com/management-case-studies/customer-relationship-management-crm-in-banking-a-case-study-of-icici-bank/http://enterpriseblueprints.com/icici_casestudy_1.html?keepThis=true&TB_iframe=true&height=494&width=787http://www.inntron.com/core_banking.html