Presentation on core banking solutions


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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:

Major drivers for Banking Sector, world wide

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Proposition:The Challenges of building a Financial Brand CONTENT CHALLENGE BUSINESS CHALLENGE EXECUTIVE CHALLENGE Any Other?? Financial Brand Products Profiles Skill sets Relationships Speed of response Value Network Channel Conflict Exception Handling Out-tasking E-process Edge

Imperative: New Business Initiatives:

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 Relationship Management Infrastructure Support 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 as a Ecosystem

IT & Business Dynamics:

IT & Business Dynamics Profits Margins Sales In-Traffic Conversion Overheads Marketing ROI Technology at the heart of it all !!

Technology- leads the Winning Combination:

Key Banking Technology 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 :

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 challenges:

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. 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 data The application forms must be completely and accurately filled for me to generate an accurate scoring report.

Initiatives Taken as Winning Strategies:

Initiatives Taken as Winning Strategies Optimal HR deployment Slashing Expenses Total Quality Management Product Structuring Initiating continuous improvement Attempting Culture Change

A Process Risk Check Framework:

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 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? Illustrative Illustrative

Process Example – New Sales Process:

Process Example – New Sales Process New Sales Process

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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

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Customer Management KNOWLEDGE MANAGEMENT INFORMATION MANAGEMENT SERVICING PRODUCT MANAGEMENT OPERATIONS 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 Branche s Post Third party Service Customers Market & Sell Originate Credit Excess Management Internet Finance HR Treasury IT Recover Assets Manage Property Money Transmission Monitor Credit Marketing CUSTOMER Core Banking Administration The Winning Model – technology driven customer focus

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 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

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. Towards A Balanced Approach Business Strategy Data Warehouse Program Application Development Program Data Resource Management Program Technology Architecture Program Network/ Communications Program People/ Process Users Subject Areas Geographical Areas Departments Business Units Data Warehousing Strategy Strategy Definition Validation Access Hardware Software Communications Integration Sponsorship Profiles Manage change Value added Tools & Technology People & Process DATA Tools & Technology People & Process BI Data / Analytics

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Thank You Contact: Robin Roy 022 56691561 098202 98237

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