PwC BANKS EDUCATIONIST CONFERENCE HYDERABAD 281105.

BANKS EDUCATIONIST CONFERENCE

HYDERABAD

281105

Indian banks are facing substantial competitive pressures as banking landscape gets redefined

BANKS

Deregulation

Increasing financial disclosure requirements and credit rating requirements for banks

Basel-II requirements, income recognition and provisioning standards

Greater managerial autonomy to banks

Consolidation / Increasing M & A activity

Privatisation / corporatisation / IPO’s

Increasing availability of risk management products like derivatives Managing asset quality, NPA

Improving productivity

E-Business

Forces shaping banking sector

Major drivers for Banking Sector, world wide

Proposition:The Challenges of building a Financial Brand

CONTENTCHALLENGE

BUSINESSCHALLENGE

EXECUTIVECHALLENGE

AnyOther??

FinancialBrand

Products

Profiles

Skill sets

Relationships

Speed ofresponse

ValueNetwork

ChannelConflict

ExceptionHandling

Out-tasking

E-processEdge

Imperative: New Business Initiatives

The new business initiatives coupled with changing customer profiles are being partly addressed by technology enabled support infrastructure in banks. To successfully implement its business strategy, banks will need to conduct an organization restructuring initiative to ensure seamless conduct of multiple business processes for every business unit

Customer RelationshipManagement

InfrastructureSupport

Product / Service

Development

• Changing customer profiles

• Increasing demands by customers for varied services

• Higher expectations of service quality especially for ‘anytime, anywhere’ banking

• Increased focus on retail banking

• Tie-ups with financial institutions to market third party products

• Foray into merchant banking

• Technology upgradation triggering the need for redesigned processes

• Increase effectiveness of the HR function

IT as a Ecosystem

IT & Business Dynamics

Profits Margins

Sal

es

In-Traffic

Conversion

Overheads

Marketing

RO

I

Technologyat the heart ofit all !!

Key Banking Key Banking Technology AspectsTechnology Aspects

Cost• Cutting Cost through Integration• Better Information Management

Risk Management Complexities•Easier Risk Identification•Easier to Assess Risks

Customer• Reaching Customers Faster• Managing Diverse Needs

Competition• Competitive Edge in

its Strategic Group

“The winners will be those institutions that tie their technology to their strategies in order to meet their challenges.”

Performance & Evaluation• Better Metrics to Benchmark

Against• Objective Evaluation Process

Technology- leads the Winning Combination

Importance of core Banking solution

Benefits of CBS

Faster Response to Customer Demands

Allows Faster New Product Developments

CBS Architecture Allows for Existing Products to be Quickly Customized

Online Validation of Data – at the Time of Entry

Independent from the Organization Structure and Supports the four Primary Entities – Customer, Account, Product and Business Organization

Runs in Real Time Update Mode

Technology creates new potential as well as new challengesNew information technology impacts jobs in the organization in the following areas. E.g. By evaluating the impact of technology in operational areas, we can estimate the corresponding changes in the workforce profile.

Shifts in Workloads:Changes in the tasks, roles and responsibilities for usersDoes more empowerment mean more work?

Multiskilling:What new skills are required: systems, functional, data analysis, management.I can check account balances and credit line immediately.

Accountability: Decision Making Capabilities/Processes:

The way decisions are made and/or who makes the decisions. Given the information I have in the computer, we’re not able to take decisions on providing services to this customer

Integration and Timing:

How and when groups within the organization interact to perform certain activities and achieve set performance measures. In order to disburse the loan I must receive the sanction letter two weeks beforehand.

How we Communicate:The way the departments and individuals communicate.That information is now on-line for you to view.

CENTRALIZED BANKING

APPLICATION

What responsibilities individuals have in terms of entering accurate and reliable data, as well as analyzing dataThe application forms must be completely and accurately filled for me to generate an accurate scoring report.

Initiatives Taken as Winning Strategies

Optimal HR deploymentOptimal HR deployment

Slashing ExpensesSlashing Expenses

Total QualityManagementTotal QualityManagement

Product StructuringProduct Structuring

Initiating continuous improvement

Initiating continuous improvementAttempting Culture

ChangeAttempting Culture

Change

A Process Risk Check FrameworkAll the types of risks are verified through checklists when designing processes and risks are classified with the action plan detailed for controlling the same. Every process is run through a set of detailed checklists for each type of risk.

Strategic Risk

What are the inherent risks in the critical strategies adopted by the organization

How will the organization identify, quantify and manage these risks?

What is the risk appetite of the organization?

What risks emanate from e-business developments?

Operational Risk

• What are the risks inherent in the processes which the organization has chosen to implement?

• How does the organization identify, quantify and manage the same?

• How does the organization adapt its activities as strategies and process changes

Financial Risk

• Have operating processes put financial resources at undue risk?

• Has the organization incurred unreasonable liabilities to support operating processes?

• Has the organization succeeded in meeting measurable business objectives?

Information Risk

• Is our data / information / knowledge reliable, relevant, and timely?

• Are our information systems reliable and secure?

• Do our security systems reflect out e-business strategy?

Process Example – New Sales Process

Establish initial customer details (if existing customer, access

records) name address contact number unique

ID



ID

StartStart

Establish enquirers needs

and wants. Gather any preliminary information relevant to

enquiry



enquiry

Existing customer service


to relevantprocess

to relevantprocess

Determine relevant solutions


no

Newproduct

application

Newproduct

application

Go toapplication

Go toapplication

no

Informationonly

Informationonly

Furtherrequirements

Furtherrequirements


and provide information



yes

yes

no

yes

Stillinterested

Stillinterested

Have a solution

Product selection and comparisons


Third partyThird party

Notify no solution

Notify no solution

Collate data inform

marketing

Collate data inform

marketing

Record reason why

not accepted.

Record reason why

not accepted.

End

no

no

yes

yes

essential details fact find




ID



ID

StartStart



enquiry



enquiry



to relevantprocess

to relevantprocess



no

Newproduct

application

Newproduct

application

Go toapplication

Go toapplication

no

Informationonly

Informationonly

Furtherrequirements

Furtherrequirements





yes

yes

no

yes

Stillinterested

Stillinterested

Have a solution



Third partyThird party

Notify no solution

Notify no solution

Collate data inform

marketing

Collate data inform

marketing

Record reason why

not accepted.

Record reason why

not accepted.

End

no

no

yes

yes



New Sales Process

Processes would be redesigned using the Zero Base approach through a series of workshops to ensure buy-in and ownership

Possible Approach & Methodology

• Does the work need to be performed at all?• Can the activity be performed differently?

Zero base

• Which are the NVAs (Non Value Adding Activities) in the process?

• Is the customer willing to pay for it?

Eliminate

• Can the work be outsourced?• What are the costs & potential benefits?

Do v/s Outsource

• Are the core processes customer-centric?• Would the re-engineered processes help eliminate organizational

silos?

Re-design

• Can existing IT systems be leveraged to enable radical process redesign?

• How to improve ROI on the IT investment?

Information Technology

Customer Management

KN

OW

LE

DG

E M

AN

AG

EM

EN

T

INF

OR

MA

TIO

N M

AN

AG

EM

EN

T

SERVICING

PRODUCT MANAGEMENTOPERATIONS

DELIVERY

Develop Products

Manage Products

Process & Maintain Accounts

Manage Customer Relationships

SUPPORT FUNCTIONS

Sales Force Call Center(s)ATMs / POS Desktop Banking

Manage Delivery Channels:

iTV Tele-Marketing BranchesPost Third party

ServiceCustomers

Market & Sell

OriginateCredit

ExcessManagement

Internet

FinanceHR TreasuryITRecoverAssets

ManageProperty

Money Transmission

Monitor Credit

Marketing

CUSTOMER

Core Banking

Administration

The Winning Model – technology driven customer focus

• Redesign the HR Infrastructure to exploit the opportunities provided by the environment:

– Redesign HR systems and policies in the areas of:

• Workforce planning and deployment

• Rewards & Incentives

• Workforce performance management

• Training & Development

• Career & Succession planning

• Talent sourcing

Imperatives: Impact on the HR function

Cont…..

• Ensure that the HR function is geared to address the changing business environment

– Capability to handle workforce issues like deployment and reskilling arising out of emerging opportunities

– Capability to address the workforce requirements of the new business initiatives

– Capability to handle the workforce issues arising out of the growth plans of banks specifically through the acquisition route

The core performance management system should integrate the collection, aggregation, management, distribution and analysis of a balanced set of

information to positively affect stakeholders’ decisions.

Towards A Balanced Approach

Business Strategy

Business Strategy

Data Warehouse

Program

Data Warehouse

Program

Application Development

Program

Application Development

Program

Data Resource

Management Program

Data Resource

Management Program

Technology Architecture

Program

Technology Architecture

Program

Network/ Communications Program

Network/ Communications Program

People/ Process

Users

People/ Process

Users

Subject Areas Geographical Areas Departments Business Units

Subject Areas Geographical Areas Departments Business Units

Data Warehousing StrategyData Warehousing Strategy

Strategy Definition Validation Access

Hardware Software Communications Integration

Sponsorship Profiles Manage change Value added

Tools & Technology

People &Process

DATADATA Tools & Technology

People & Process

BIData /

Analytics

•Thank You

Contact: Robin [email protected] 56691561098202 98237

PwC BANKS EDUCATIONIST CONFERENCE HYDERABAD 281105.

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