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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
Establish initial customer details (if existing customer, access
records) name address contact number unique
ID
StartStart
Establish enquirers needs
and wants. Gather any preliminary information relevant to
enquiry
Establish enquirers needs
and wants. Gather any preliminary information relevant to
enquiry
Existing customer service
Existing customer service
to relevantprocess
to relevantprocess
Determine relevant solutions
Determine relevant solutions
no
Newproduct
application
Newproduct
application
Go toapplication
Go toapplication
no
Informationonly
Informationonly
Furtherrequirements
Furtherrequirements
Determine relevant solutions
and provide information
Determine relevant solutions
and provide information
yes
yes
no
yes
Stillinterested
Stillinterested
Have a solution
Product selection and comparisons
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
essential details fact find
Establish initial customer details (if existing customer, access
records) name address contact number unique
ID
Establish initial customer details (if existing customer, access
records) name address contact number unique
ID
StartStart
Establish enquirers needs
and wants. Gather any preliminary information relevant to
enquiry
Establish enquirers needs
and wants. Gather any preliminary information relevant to
enquiry
Existing customer service
Existing customer service
to relevantprocess
to relevantprocess
Determine relevant solutions
Determine relevant solutions
no
Newproduct
application
Newproduct
application
Go toapplication
Go toapplication
no
Informationonly
Informationonly
Furtherrequirements
Furtherrequirements
Determine relevant solutions
and provide information
Determine relevant solutions
and provide information
yes
yes
no
yes
Stillinterested
Stillinterested
Have a solution
Product selection and comparisons
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
essential details fact find
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