Lecture 09 - Banking Technology

8/12/2019 Lecture 09 - Banking Technology

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Indian banks are facing substantial competitive pressures as banking

landscape gets redefined

BANKS

Deregulation

Increasing financialdisclosure

requirements and

credit rating

requirements for

banks

Basel-IIrequirements,

income recognition

and provisioning

standards

Greater managerial

autonomy to banks

Consolidation /Increasing M & A

activity

Privatisation /

corporatisation / IPOs

Increasing availability

of risk management

products like

derivatives

Managing assetquality, NPA

Improving

productivity

E-Business

Forces shaping banking sector

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Major drivers for Banking Sector, world wide

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Proposition:The Challenges of building a

Financial Brand

CONTENT

CHALLENGE

BUSINESSCHALLENGE

EXECUTIVE

CHALLENGE

AnyOther??

FinancialBrand

Products

Profiles

Skill sets

Relationships

Speed ofresponse

ValueNetwork

ChannelConflict

ExceptionHandling

Out-tasking

E-processEdge

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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

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CustomerRelationship

Management

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 upgradationtriggering the need for

redesigned processes

Increase effectiveness of

the HR function


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IT as a

Ecosystem

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IT & Business Dynamics

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Overheads

Technologyat the heart of

it all !!


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Key BankingTechnology Aspects

Cost Cutting Cost through Integration Better Information Management

Risk ManagementComplexitiesEasier Risk IdentificationEasier 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

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Importance of core Banking solution

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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 thefour Primary Entities Customer, Account, Product andBusiness Organization

Runs in Real Time Update Mode


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Technology creates new potential as well as new

challenges

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New information technolo gy imp acts jobs in the organization in the fol lowing areas. E.g. By evaluating

the impact of techn ology in operational areas, we can estimate the correspond ing ch anges in the

work force profi le.

Shif ts in Workloads:

Changes in the tasks, roles and

responsibilities for users

Does more empowerment mean

more work?

Mult iski l l ing:

What new skills are required: systems,

functional, data analysis, management.

I can check account balances and credit

line immediately.

Accountabi l i ty:Decision Making

Capabil i t ies/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

In tegrat ion and Timin g:

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 Communica te:

The way the departments and

individuals communicate.

That information is now on-line

for you to view.

CENTRALIZEDBANKING

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.


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Initiatives Taken as Winning Strategies

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Optimal HRdeployment

Slashing Expenses

Total QualityManagement

Product Structuring

Initiating continuousimprovement

Attempting CultureChange


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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 aset of detailed checklists for each type of risk.

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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 putfinancial 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?


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Processes would be redesigned using the Zero Baseapproach through a series of workshops to ensure buy-inand 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

K

NOWLEDGEMANAGEMEN

T

INFORMATIONMANAGEME

NT

SERVICING

PRODUCT MANAGEMENTOPERATIONS

DELIVERY

DevelopProducts

ManageProducts

Process & MaintainAccounts

Manage Customer Relationships

SUPPORT FUNCTIONS

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

Manage Delivery Channels:

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 Modeltechnology driven customer focus

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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 thechanging 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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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

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BusinessStrategy

DataWarehouse

Program

ApplicationDevelopment

Program

DataResource

ManagementProgram

TechnologyArchitecture

Program

Network/Communications Program

People/ProcessUsers

Subject Areas Geographical Areas DepartmentsBusiness Units

Data Warehousing Strategy

Strategy

Def in i t ion

ValidationAccess

Hardware

Software

Communica t ions

Integrat ion

Sponsorsh ip

Prof i les

Manage chang e

Value add ed

Tools &Technology

People &Process

DATA Tools &Technology

People &Process

BI

Data /

Analytics

Documents

Lecture 09 - Banking Technology