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Technology as a Backbone for Successfor Success
ICICI Bank’s Strategy for technology-enabled innovation
November, 2009
An Introduction
2
ICICI Bank today
• India’s second largest bank
• Investment grade international rating
• Global presence - in 18 countries
• Market leader in retail finance
3
• Market leader in retail finance
• Technology leadership in chosen markets
• Strong human capital
• Strong corporate relationships
Our franchise
Life Insurance*
General Insurance*
Asset Management*
Second largest bank in India
4
Private Equity
Investment Banking & Broking
Strong diversified financial services franchise in India
* JV with Prudential and Lombard
Our international franchise
Canada
UAE
Singapore
ChinaUSA
UK
India OBUBahrain
Russia
BangladeshHong Kong
Sri Lanka
Antwerp 1
Indonesia
MalaysiaThailand
5
Branch
Subsidiary
Representative Office
South Africa
� Total assets USD 19 billion; international operatio ns account for 20% of consolidated banking assets
1. Branch of ICICI Bank UK
Indonesia
Increase in no of customers
- 100 200 300 400
FY04
FY06
FY08
Customers (M n)
Exceeding expectations
6
**Only financial transactions*2.2 bn transactions annuallyincluding non financial
And transactions*
-50 100 250 400 550 700 850 1000 1150
FY05
FY07
FY09
Annual transaction volume(mn)
The network
No of ATMS
1,5002,0002,5003,0003,5004,0004,5005,000
Number of branches
0
500
1000
1500
7
5001,000
FY06 FY07 FY08 FY09
0
FY06 FY07 FY08 FY09
Customer touch points have doubled since FY 06
The talent pool
05-06
06-07
07-08
33754
40840
25628
08-09
36335
8
03-04
04-05
13786
18280
25628
The Journey
9
� High quality talent pool
The ICICI story: Looking back 15 years
Strengths
What we were
� Risk of NPLs as industry came under stress� Relatively small size and capital base
� Single product project finance company� Nascent technology
Threats
10
� High quality talent poolStrengths
� Untapped retail credit market� Mobilising funds from the retail segment
Opportunities
…we identified retail banking as the key growth opportunity
The Beginnings…………
11
The Beginnings…………
The building blocks of success
� Spot the opportunity early
� Create the platform to capitalise on it� Capital� People and organisation� Brand� Technology
12
� Technology� Speed of execution
� Identify your strengths and leverage them
� Define your weaknesses and fill the gap
The building blocks of success� Plan for scale
� Opportunity should drive capability-building; capabilities should not limit ambitions
� Be a relevant player in your business� Use scale for competitive advantage� Control your business environment
� Continually innovate
13
� Continually innovate� No steady state� Shorter business cycles – three years to
obsolescence� Successful organizations don’t respond to change
– they make it happen
The
tran
sfor
mat
iona
l driv
ers
Speed capital
� Strategic agility� Anticipate next business horizon, ahead of
competition� Ability to make calls with insufficient
information� Grab half chances and convert them into
business propositions
14
The
tran
sfor
mat
iona
l driv
ers
business propositions
� Institutionalize speed of response� The ‘90 day rule’
� All projects including technology projects with90-day cut off for implementation
� Develop innovative products and services inshrinking time frames
Internal business drivers
Increased competition and compressedBusiness cycles
Increased competition and compressedBusiness cycles
Customer expectationsCustomer expectations Cost challengesCost challenges
The
tran
sfor
mat
iona
l driv
ers
15
Need to serve existing customers efficiently
Need to serve existing customers efficiently
Need to acquire new customers at low costNeed to acquire new customers at low cost
…need for a new paradigm
Increased applicationavailability
Increased applicationavailability
Use information as an advantage point
Use information as an advantage pointT
he tr
ansf
orm
atio
nal d
river
s
ICICI’ s innovation network modelTr
ansf
orm
atio
nal d
river
s
16
Tran
sfor
mat
iona
l driv
ers
Our core belief: Tech and business are deeply intertwined
17
….And a facilitative org structure
� Designed for change , interoperability and agility
� Technology teams are embedded into business
� Co-creator of business opportunities
18
opportunities
� Allow for flexibility and growth in infrastructure
� Allows opportunistic changes in applications
Technology enabling changeExternal drivers compel organizations to leverage the developments in IT and continuously innovate
Regulatory change & consolidation
Competitive
External Drivers Agent Outcome
Product & Service Innovation
Tran
sfor
mat
iona
l driv
ers
19
Competitive forces
Changing Consumer
Technological developments
Technology led
Innovation
Service Innovation
Organizational & process Innovation
Tran
sfor
mat
iona
l driv
ers
Innovations to meet cost challenges� One of the largest ATM networks
in India - conceptualized way ahead of competitors
� Improved operational scale while retaining cost efficiencies
� Novel idea to manage risk, scale
20
Low-Cost ATM: Mass replication of successful ATM channel across unbanked geographies Low-Cost ATM: Mass replication of successful ATM channel across unbanked geographies
� Novel idea to manage risk, scale and cost of change
� “maximum return” philosophy has made the low cost ATMs ideally suited to our environments
Serving customers efficiently
Mov
ing
tow
ards
sel
f ser
vice
The
ele
ctro
nic
lobb
y
21
Mov
ing
tow
ards
sel
f ser
vice
Automating transactions
The
ele
ctro
nic
lobb
y
Game changers – Cheque deposit machine
22
• Self-serviced cheque deposit• Acknowledgement to customer with scanned cheque image
• Automated MIS of cheques to processing centre for upload into core solution
The game changers – Deposit ATM
23
• Real-time online cash deposit• Credit card cash payments• Cheque deposit• Account related queries
Channel innovation – Information Kiosk
24
• Information on product offerings
• Service Requests for :•Fund transfer•Investments •Insurance•…
• Lead capturing
The game changers: Dynamic Queue The game changers: Dynamic Queue Manager (DQM)Manager (DQM)
Man
age
cust
omer
que
ue a
t bra
nch.
Map
se
rvic
es to
ski
ll to
enh
ance
ser
vice
effi
cien
cy
25
Man
age
cust
omer
que
ue a
t bra
nch.
Map
se
rvic
es to
ski
ll to
enh
ance
ser
vice
effi
cien
cy
� Queue Manager with mapped services
� Central monitoring tool for live branch footfall da ta
� Segmentation for priority to privilege customers
�Innovation
Deposits
Loans
Credit cards
Channels Product Suite
ATMs
Physicaloutlets
Integrated offerings across multiple channels-A one stop shop
Mee
ting
Cus
tom
er E
xpec
tatio
ns
26
Life insurance
Private banking
Bill payments
Agents
CallCenters
InternetBanking
Share trading & demat
m-Banking
Customer-CentricApproach
Mee
ting
Cus
tom
er E
xpec
tatio
ns
Tapping the market opportunity - the first mover advantage
� ICICI Bank’s client application for its banking customers
� Enables secure mobile banking transactions on SMS and GPRS
•Lowest cost channel
•Fastest service delivery time
Channel migration onto a low-cost
alternative
27
SMS and GPRS� Entire suite of net
banking functionality is available on the handset
delivery time•Adds to customer convenience
•Funds transfer•Bill Payments• Information•Mobile Recharge•Promo/Offers•Lead Generation
ICICI Bank’s mobile offering (contd.)List of Services
1) Banking�Balance Enquiry�Last 5 transactions
�Funds transfer�Cheque Book Request
2) Credit Card
� SMS n Cash
� Remittance product that allows a beneficiary not banking with ICICI Bank to receive cash.
� Leverages the SMS channel to convey a unique code to the
28
2) Credit Card3) Demat Account4) Loan Account5) Bill Pay6) SMS n Cash7) I Services
�Apply Now�ATM Locator
unique code to the beneficiary's mobile that is used at the ATM to withdraw the remitted funds
� Available in all online channels
� Aims to increase the Bank's remittance coverage & generate substantial fee income
Using Information as an Advantage Point Data
ManagementData
Stewardship
MIS & Business DashboardsProcess
Consulting
Portfolio Management
Prospect Management
BI @
ICIC
I Ban
k
29
Portfolio Management
Alternate Channels
Risk Tracking & Reporting
Channel Innovation
Decision Management
Credit ScoringCross-Sell
& Up-sell
BI @
ICIC
I Ban
k
Common Data Warehouse: Unlock cross-sell & up-sell potential across Group companiesCommon Data Warehouse: Unlock cross-sell & up-sell potential across Group companies
A 360-degree view – the Holy GrailV
iew
cus
tom
er r
elat
ions
hips
, res
olve
qu
erie
s &
mak
e in
telli
gent
sal
es p
itche
s
Cal
l cen
tres
can
tap
into
cro
ss-s
ell
oppo
rtun
ities
dur
ing
a ca
ll.
30
Vie
w c
usto
mer
rel
atio
nshi
ps, r
esol
ve
quer
ies
& m
ake
inte
llige
nt s
ales
pitc
hes
Cal
l cen
tres
can
tap
into
cro
ssop
port
uniti
es d
urin
g a
call
.
Continued focus on business availability
ACHIEVE
� Continuous availability monitoring
� Systems and processes in place for assessing the business impact of application downtime
� Proactive prevention of
31
VEMENTS
� Proactive prevention of outage
� Achieved 99.67 % uptime against the base lined 99.5%
� 67% improvement in uptime (no of hrs)
Tracking KPIsOLTP , OLAP
Text files
Spreadsheets
Automated
Processing
SeniorRefresh of Data as per agreed frequency like
Operational,Tactical information pertaining to Sales, Operations, Credit
and Risk management
A Control system A Control system designed to monitor designed to monitor various functions in various functions in organizationorganization
Provides status Provides status snapshots using snapshots using dashboards & dashboards & highlights highlights exceptions/deviationexceptions/deviation
��A Control system A Control system designed to monitor designed to monitor various functions in various functions in organizationorganization
��Provides status Provides status snapshots using snapshots using dashboards & dashboards & highlights highlights exceptions/deviationexceptions/deviation
BRIDGE RoomBRIDGE Room
Senior
Mgmt
Key Performance Indicators
Back end processingBack end processing
agreed frequency like Daily,monthly
Multiple Data sources
exceptions/deviationexceptions/deviationss
Helps in identifying Helps in identifying the exact problems the exact problems and take corrective and take corrective measuresmeasures
exceptions/deviationexceptions/deviationss
��Helps in identifying Helps in identifying the exact problems the exact problems and take corrective and take corrective measuresmeasures
Creativity + Discipline + transparent metrics = Val ue creation
Innovations along the way
33
Innovations along the way
Some strategic Initiatives
Centralization of transaction banking Centralization of transaction banking
Virtualization: Infrastructure optimization driven by reduced server sprawl, real estate, power & cooling
Virtualization: Infrastructure optimization driven by reduced server sprawl, real estate, power & cooling
Massive Consolidation : servers, storage, appsMassive Consolidation : servers, storage, apps
34
Centralization of transaction banking processes to generate efficienciesCentralization of transaction banking processes to generate efficiencies
Dramatic savings realized by implementing Open Office productivity suiteDramatic savings realized by implementing Open Office productivity suite
Initiation of six sigma across delivery channelsInitiation of six sigma across delivery channels
Defining moments
Centralization of IT Systems (and associated retail banking operations, processes & call centres)
Buy vs Build : shorten time to market: 90 day rule
Set industry benchmarks on cost efficiency of IT
Enterprise Application Integration investments
35
Set up research and test lab for new technologies
Avoidance of technology backwaters by investing in systems that can pay for themselves
Maintain the fine balance between homogeneity and multiple technology islands
The strategy today
�Build an open, robust, scaleable architecture
�Align with Business objectives
Design Excellence
�Maximise uptimes and availability�Ensure business continuity
Service Fulfillment
�Ensure compliance with security standards�Cope with increasing regulatory pressures
Focus on Compliance
36
�Cope with increasing regulatory pressures
�Explore cutting edge technologies�Enhance group-level synergies
Future Thinking
ITLowering the Cost base
Delivering on Internal SLAs
Maintaining the Tech-edge
On defined design precepts� Protects technology investments� Payback is in enhanced flexibility and
increased interoperability
Open Standards
� Look beyond the obvious silos� Architect for less dissonance
EnterpriseWide
37
� Architect for less dissonance� Get long-lasting bang for buck
Wide
� Architect for scale� Crystal gazing is necessary to stay ahead
of the obsolescence curve
FutureFocus
Technologies for tomorrowMobile Payments: Low-cost, secure alternative to drive merchant acquisition and card issuanceEnterprise Mobility: Process efficiency multiplier and enabler for doorstep deliveryState of the Art Infrastructure affording high availability and lowest cost per unit – Clouds?Forms Automation: Eliminate physical
38
Forms Automation: Eliminate physical handoffs and data entry through Imaging solutions & ICRConsolidation: Server, networking equipment, services & storage subsystemsGreening of IT: Reduce waste, save on power & space and cut expense
Innovation- Risks
Concentration risks from centralization of business operations & processes
Additional risks associated with novelty
High level of complexity
Compliance, availability, security and data
39
Compliance, availability, security and data integrity risks
Biases in implementation and research
Unrecognized dilemmas
International recognition
ICICI Bank won the Best Transaction Banking award d ue to its� Strong Corporate Franchisees� Ability to take large exposures� A strong technology platform� Ability to customize on a per client basis� Large international presence helps close deals end to end� Customers benefit from streamlined processes based on a sound
technological backbone designed to provide ‘best in class’ service.
40
technological backbone designed to provide ‘best in class’ service. � Effective & customized product delivery via a dedic ated transaction
banking sales and products team� Other Awards won
� Best Trade Finance Bank in India � Best Cash Management Bank in India� Best Domestic Custodian in India
Some accolades
� Asian Banker IT Awards 2009 � IBA- TFCI Banking Technology Awards 2008 � IDRBT Technology Awards 2008 � PC Quest IT Implementation Awards 2009
41
� Indian Express Security Strategist Awards 2009 � CIO Ingenious 100 awards 2009� RSA Special Award for Security 2009� Information Week – Global CIO 50 2009
Thank you
42
Thank you