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Nbg group coo navigating the crisis_september_2015 v public
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Transcript of Nbg group coo navigating the crisis_september_2015 v public
Navigating the Crisis:A COO perspective on (digital) transformation and the road ahead
Athens, September 2015
Damianos Charalampidis, Group COONational Bank of Greece
2D. Charalampidis, Group COO, National Bank of Greece
A. A Bank transformation while in crisis
Radical reorganization and enhancing of IT services
Customer service improvement through process redesign
Substantial cost reduction
Seamless integration of 2 banks
A new regulatory framework
B. Managing Capital Controls: Facing a new reality
“Forced digitization” of the customer base
Absorbing extraordinary workloads
Adjusting processes “on the fly”
C. The opportunity ahead in the post capital controls era
Can capital controls also lead to a positive long-term effect on NBG’s operations?
Insights from the telco world: Where banking needs to go
A COO perspective on (digital) transformation during the crisis
3D. Charalampidis, Group COO, National Bank of Greece
Core of the Ops transformation has been a radical reorganization and redesign of IT services
A
Organizational redesign to resolve chronic issues
• Establishment of a Group IT Governance Division
• Establishment of Business Analysis Division
• Establishment of CISO role
• Integration of “Ethnodata” in the IT organizational structure
• Creation of a Project Management Office (PMO)
Setting up a PMO to align IT with business targets
• Priorities setting• Approval of new
projects• Monitoring of progress
IT UnitsProject
Managment Office (PMO)
Units of the Bank
New requests Implementation
Request document-
tation
• Priorities suggestions• Progress reports
Projectsizing
Project approval
committee
Executive Committee
• Decision making• Monitoring of
strategic projectsThe reality coming in
• ~1.000 requests per semester, unorganized, with no prioritization
• Endless project implementation times
4D. Charalampidis, Group COO, National Bank of Greece
Visible and sustained results: (Over-)doubling of IT productivity since 2013 with >75% of requests fulfilled
Double IT productivity vs. 2013 (despite VRS-based reduction of personnel by ~20%)…
2013 Total Projects*
2015 (Ε)
2014
+ 104%
+ 7%
…representing ~75% of total request submitted(Summary of submitted requests, Jan 2013 - Dec 2014)
Total requests submitted
Requests fulfilled
Requests in process
Requests under
investigation/ stand by
The implementation of minor projects is done without further approvals (FIFO logic)
2.776
341
3.601
484
A
* IT projects over 10 mandays, potentially bundling multiple requests
5D. Charalampidis, Group COO, National Bank of Greece
A major process redesign journey was also embarked: Increasing efficiency while improving customer service
Key challenges identified (and indicative processing times)
31%24% 24%
9%5% 7%
Average time: 10 days
0-3 days
4-7 days
8-14 days
15-21 days
22-28 days
>28 days
• Focus on 12 basic roles and14 key processes (teller transactions, lending, restructuring)
• A larger number of standardized and repetitive tasks , control checks and back-office functions that are carried out by the branches
• Partial process automation and need to access multiple systems for task processing
• Identified complicated procedures and fragmentation of roles and responsibilities between headquarters and branches resulting to time-consuming costumer service
• Housing loans restructuring (end-to-end): average time 28 days
• Consumer loans restructuring (end-to-end): average time 17 days
The time required for the control check is more than the 3 day set threshold in 70% of
the cases
Indicative customer service: Required completion time distribution for technical and legal checks for mortgages
A
59 proposals
for improve-
ment
Quick Wins ΙΤ
Require Systemic Change
Pure process redesign
Centralization
NumberTime estimate
Impact estimate
Of which
6 months 12 months
Summary status
18 • Completed
55• 18 implemented• 23 in process• 14 under investigation
6 • 2 implemented • 2 in progress• 2 in design
4
Small
Medium
Large
Small• 1 completed• 3 in process
Summary of defined process improvement initiatives
6D. Charalampidis, Group COO, National Bank of Greece
SG& A costs (Total G&A, IFRS, Bank, Greece)
Key actions to cut costs
• Renegotiation of procurement contracts (IT maintenance, Buildings’ maintenance and cleaning)
• Rents’ renegotiation• Demand needs optimization and process redesign (post &
telecom, cash management, cash-in-transit)• Cost cutting (advertising, sponsorships, subscriptions, 3rd party
services)
• Further cuts in telecom costs
• Cut in postage expenses
• MPS implementation in branches (1st phase)
• Spatial redesign and consolidation of centralized services in own buildings
• Rationalization of energy consumption
• Redesign of mass printing and card personalization
• Expansion of MPS to more branches
20112010 2014E
-15%
2012 2013
A In parallel substantial cost reduction has already been achieved with the effort further continuing…
Extra costs from absorption of FBB and Probank
In addition significant effort put in increasing energy efficiency via targeted Capex investments with long term effect, also reducing the Bank’s energy footprint
7D. Charalampidis, Group COO, National Bank of Greece
Creation of model document digitization center in the same facilities in order to:
• Stop physical distribution of files
• Servicing of all document recall needs via the digitization and electronic distribution process
…while improving operations through digital doc management and creation of physical archiving/digitization infrastructure
• State of the art archiving system with special shelves/decks, very narrow corridors and semi-automatic collection machines
• Cooperation of the It and archiving infrastructure at all stages leveraging RF technology
• Minimization of archiving and recovering time
• Realization of practically zero error service level
A
Collection of the physical archive in the ΠΑΕΓΑΕ facilities
• Loan files
• Teller transactions’ documentation
• Customer identification documents
• Central services archive (e.g., Legal, HR)
• Other archive
8D. Charalampidis, Group COO, National Bank of Greece
2 Banks were seamlessly integrated (in less than 4 months for both cases)
FBB (May-June 2013)
Probank (August-December 2013)
• 70.000– 23.000 new
customers– 47.000 common
with NBG
Customers• 510.000
– 140.000 new customers
– 370.000 common with NBG
Loans• € 0,6 bln.• 3,5k loan
accounts
• € 2,4 bln.• 33k loan accounts
Deposits• € 1,1 bln. • 70k deposit
accounts
• € 2,4 bln.• 430k deposit
accounts
Branches• 19 • 112
Personnel• 220 employees • 1.100 employees
Σεπ Οκτ Νοε
Operational integration implementation
Integration design
26/07
Imme-diate actions
Mapping of current status
Overview of integrated banks Timeline of Probank integration
A
Transi-tion
(7-
8/12)
SpecsDetailed activity plan
2nd test(30/11-01/12)
1st test(23-
24/11)
Business decisions
Key mile-stones
9D. Charalampidis, Group COO, National Bank of Greece
New regulatory framework posing unique challenges through the period
Key highlights
A
• EU Digicomp “commitments” leading to the need of the creation of new policies and respective process, IT infrastructure and reporting
• 5 year Restructuring Plan with quarterly monitoring, non-adherence to which could result in the NBG losing its private character
• 2 Asset Quality Reviews (AQR) with heavy reporting requirements
• SSM in place as of November 2014 effectively, among others, formalizing AQR reporting and leading to annual repeat
10D. Charalampidis, Group COO, National Bank of Greece
Pre- and post-capital controls: A radical change of the Bank’s everyday reality within a month
Extraordinary increase of transactions across all channels… … and a rapid “forced digitization” of all customer base
Branch Network
+ 14%
ATM/PoS
+ 62%
Internet Banking Logons
Internet Banking
+ 52%
+ 36%
B
• Issuance of 500k debit cards (out of 3 million) in 2 months
• Doubled acquiring revenue from 7.5 to 15 € million/day
• PoS: 100 applications/day vs. 10 per day in a ‘business as usual day’
11D. Charalampidis, Group COO, National Bank of Greece
Important process and functionality changes were required immediately, while we had to firefight extraordinary loads with intuitive (and not so much) adjustments “on the fly”
Abnormal loads…
…leading to adjustments “on the fly”
July-AugustBefore capital controlsCall center facts
B
Key immediate requirements
Implementation of capital controls• Central management of withdrawal
thresholds for cash and ‘plastic’ money
• Monitoring of fund transfers• Transaction management per
Branch type (standard vs. special purpose branches)
• Management of new/free funds/capital
Infrastructure optimization to tackle increased transaction volumes• PoS• ATM• Internet Banking• Contact Center
• Call center supported via leveraging ~230 FTEs from Collections• New application for debit card PINs to be sent via SMS• PIN activation calls rerouted to external call center• Rerouting of specific transactions (e.g., internet banking activations) back
to branches
~5,500 ~21,000~4,100 ~12,000~3 min ~20-25 min
• 50% of total 1100 daily import/export transactions previously not recorded (executed online “manually”) doubling the load at central services/branches with much heavier process (due to approval need)
• ATM refills min twice to three times per day
• Average wait
• Answered calls/day
• Incoming calls/day
• Revert of Trade Finance centralization• New application for requests & approvals of transactions process
• Created ~150 new reconciliation cashier transactions
12D. Charalampidis, Group COO, National Bank of Greece
The Road Ahead: From a short-term strain to a mid/long-term opportunity
Short-term impact Potential Mid/long-term impact
▪ Operational disruption from rapid customer shift to alternative channels
Financial sector
▪ Strain on Banks’ liquidity from deposit leakage and ELA limitation
▪ Collapse of trust/customer confidence in Banking system
▪ Rise of NPLs in all segments
Positive effect
Negative effect
▪ Potential reduction of operating cost and increase in transaction fees in case of sustained shift to alternative channels
▪ Imminent need for further re-capitalization (3rd in three years)
C
Business activity
▪ Barriers on trade flows (esp. imports) ▪ Potential increase of transparency and consequent state contributions from business activity (incl. payroll, transactions, turnover)
Consumer behavioral
▪ Potential increase of transparency and consequent tax evasion prevention via alternative channels
▪ Radical drop in consumption (especially cash based transactions) mainly towards small businesses
▪ Shift to direct transaction channels (including web-banking, plastic money, ATM)
13D. Charalampidis, Group COO, National Bank of Greece
Banking vs. Telecoms: The similarities…
• Service based businesses
• Heavy on Retail
• Heavy on Regulation, posing similar challenges and obstacles
• Both requiring excellence in Ops to win over the customer journey
C Lessons (to be) learned from the telecoms world: Heading towards a digital era
Banking vs. Telecoms: …and the differences
• Telecoms (esp. mobile) a much “fresher” business (e.g., Vodafone Group with 24 years or operations vs. NBG’s 174 years since founded)
• Telecoms industry assimilating and spearheading technology and innovation much faster
• Banking carrying much more legacy (e.g, in terms of systems) while telecoms having higher flexibility and executing easier transformations (e.g. first On-line system in Greece by NBG fully tailor made)
• Regulatory constraints higher for Banking
The bet ahead for Banking:
Follow telecom’s example of moving very fast to CRM
• Enabling full and detailed view of the customer journey’s across channels
• Understanding the customer base and its behavior
• Having a seamless experience and interface across channels