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BANKS EDUCATIONIST CONFERENCE

HYDERABAD 281105

PwC

Forces shaping banking sector


Indian banks are facing substantial competitive pressures as banking landscape gets redefined Increasing availability of risk management products like derivatives Managing asset quality, NPA Improving productivity Increasing financial disclosure requirements and credit rating requirements for banks E-Business Deregulation Privatisation / corporatisation / IPOs BANKS Consolidation / Increasing M & A activity

Greater managerial autonomy to banks


Basel-II requirements, income recognition and provisioning standards

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Major drivers for Banking Sector, world wide

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Proposition:The Challenges of building a Financial Brand

Products Profiles Skill sets Relationships Speed of response Value Network BUSINESS CHALLENGE CONTENT CHALLENGE

Exception Handling

EXECUTIVE CHALLENGE

Out-tasking E-process Edge

Financial Brand Any Other??

Channel Conflict

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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

Changing customer profiles Increasing demands by customers for varied services Higher expectations of service quality especially for anytime, anywhere banking

Customer Relationship Management

Infrastructure Support

Technology upgradation triggering the need for redesigned processes Increase effectiveness of the HR function

Product / Service Development Increased focus on retail banking

Tie-ups with financial institutions to market third party products Foray into merchant banking

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IT as a Ecosystem

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IT & Business Dynamics

Overheads

Technology at the heart of it all !!

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Technology- leads the Winning Combination


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

Cost
Customer

Cutting Cost through Integration Better Information Management

Reaching Customers Faster Managing Diverse Needs

Competition

Key Banking Technology Aspects

Competitive Edge its Strategic Group

in

Performance & Evaluation


Better Metrics to Benchmark Against Objective Evaluation Process

Risk Management Complexities

Easier Risk Identification Easier to Assess Risks

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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

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Technology creates new potential as well as new challenges


New 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 users Does 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.

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

Integration and Timing:

CENTRALIZED BANKING APPLICATION

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.

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

Decision Making Capabilities/Processes:


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

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Initiatives Taken as Winning Strategies


Optimal HR deployment

Slashing Expenses

Product Structuring

Total Quality Management

Attempting Culture Change

Initiating continuous improvement

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A Process Risk Check Framework


All 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 organization? risk appetite of the 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 What risks emanate from e-business activities as strategies and process developments? changes Information Risk 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? Is our data / information / knowledge reliable, relevant, and timely?

Are our information systems reliable and secure?


Do our security systems reflect out ebusiness strategy?

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Process Example New Sales Process


New Sales Process
Start Start to to relevant relevant process process

Establish initial customer Establish initial customer details (if existing details (if existing customer, access customer, access records) name address records) name address contact number unique contact number unique ID ID

Existing Existing customer customer service service essential details essential details fact find fact find no New yes New product product application application

Determine Determine relevant solutions relevant solutions

Go to Go to application application

Establish Establish enquirers needs enquirers needs and wants. and wants. Gather any Gather any preliminary preliminary information information relevant to relevant to enquiry enquiry

Information Information only only

no

Have a solution no

yes

Product Product selection and selection and comparisons comparisons

Still Still interested interested

yes Determine Determine relevant solutions relevant solutions and provide and provide information information

yes Third party Third party

Record Record reason why reason why not accepted. not accepted.

no Collate data Collate data inform inform marketing marketing

Further Further requirements requirements no

yes

Notify no Notify no solution solution

End

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Possible Approach & Methodology


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

Zero base Does the work need to be performed at all? Can the activity be performed differently? Eliminate Which are the NVAs (Non Value Adding Activities) in the process? Is the customer willing to pay for it? Do v/s Outsource Can the work be outsourced? What are the costs & potential benefits? Re-design Are the core processes customer-centric? Would the re-engineered processes help eliminate organizational silos? Information Technology Can existing IT systems be leveraged to enable radical process redesign? How to improve ROI on the IT investment?

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The Winning Model technology driven customer focus


CUSTOMER
DELIVERY Manage Delivery Channels:
Post Internet iTV Tele-Marketing Branches Third party ATMs / POS Sales Force Call Center(s) Desktop Banking

Customer Management

SERVICING
INFORMATION MANAGEMENT KNOWLEDGE MANAGEMENT Market & Sell Originate Credit Service Customers Excess Management

Core Banking

Manage Customer Relationships OPERATIONS Process & Maintain Accounts Money Transmission Manage Products Monitor Credit

PRODUCT MANAGEMENT Develop Products Marketing

SUPPORT FUNCTIONS
Recover Assets HR Manage Property IT Finance Treasury

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Imperatives: Impact on the HR function


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

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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

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Towards A Balanced Approach


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.
DATA
Strategy Definition Validation Access

Tools & Technology Hardware Software Communications Integration

People & Process Sponsorship Profiles Manage change Value added


Business Strategy

Tools & Technology

People & Process

BI
Data / Analytics

Data Warehousing Strategy Data Resource Management Program

Data Warehouse Program

Application Development Program

Technology Architecture Program

Network/ Communicati ons Program

People/ Process Users

Subject Areas

Geographical Areas Business Units

Departments

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Thank You
Contact: Robin Roy robin.roy@in.pwc.com 022 56691561 098202 98237 PwC

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