Global Back Office & Operational Efficiency Summit

Frankfurt, 17th November

Gert HebenstreitCFO & COO

Developing an Agile Organization Increasing Delivery and Process Performance

Countries

Hungary

1987 — Raiffeisen Bank Rt.

Slovakia

1991 — Tatra banka, a.s.

Czech Republic

1993 — Raiffeisenbank a.s.

Bulgaria

1994 —Raiffeisenbank (Bulgaria) E.A.D

Albania

2004 — Raiffeisen Bank Sh.a.

Ukraine

2005 — JSPP Aval

Poland

1991 — Raiffeisen Bank Polska S. A.2012 — Polbank EFG S.A

Kosovo2002 — Raiffeisen Bank Kosovo J. S.C.

Belarus

2003 — Priorbank, JSC

Russia1996 — AO «Raiffeisenbank»

Romania

1998 — Raiffeisen Bank S. A.

Serbia and Montenegro 2001 —Raiffeisenbank a.d.

Bosnia and Herzegowina2000 — Raiffeisen Bank d.d. Bosnai Hercegovina

Croatia

1995 —Raiffeisen-bank Austria d.d.

RBI is an important player in 15 of Central and Eastern Europe

Austria

2005 — RBI listed

2

Raiffeisenbank International Footprint

01.COMPANY BACKGROUND

Clients

HighlightsBusiness units Employees

~ 14 mio ~ 2 850 ~ 54 000

Austria

3

A leading universal bank in Central and Eastern Europe

01.COMPANY BACKGROUND

4

Raiffeisenbank Russia - Key Facts

01.COMPANY BACKGROUND

Key Data:

Branches: 179

Customers: 1.6 Million

Employees: 7600 FTE

Cities: 44

Russia

Austria

Ukraine

Belarus

Poland

Romania

10.000km

600km

5.600km

6m Results

NPAT: 200 MEUR

CIR: 35.8 %

ROE: >31.0 %

ROA: 1st

Operational and Delivery

Excellence

5

Achieving Operational and Delivery Excellence

OVERVIEW OPERATIONAL EXCELLENCE

Key areas of attention

Lean BPMSRob-

otics

Agile

Org.Scrum Other

Toolset

6

Achieving Operational and Delivery Excellence – Toolset

OVERVIEW OPERATIONAL EXCELLENCE

02. LEAN MANAGEMENT

Lean Management

ONYX

(security

check)

SME

Application Cash Mgt

review

ONYX

(security

check)

Fraud

prevention

check

SSC

Merchant

registration

POS

install

FO

Sales

request

FO

Sales

request

FO

Sales

SSC

request

SME

Application Call center

Consult +

lead to SSC

SSC

Checklist & Match check

+

Merchant registration

POS

install

FO

Sales

SSC

request

TO BE

AS IS

(for standart customer)

4. Changes and SLA and IT

configuration to reduce

process waiting times

6. Create an antifraud checklist based on scoring model and

move Match check to SSC. ‘Grey’ decision zone will trigger

Antifraud check

7. Reduce tariff and fee variations for SME clients and move

them to single platform

1. Standard process for client enrollment

through website, call-center and Elbrus

2. Merge client application and offer

acceptance into one document

1 2 3 3 34 5

1

2

3 4

5

Process

Waiting time

Process Time

to Yes77h

Examples of key changes

22h 80h 24h

8

Acquiring E2E origination for SME - Results snapshot

02. LEAN MANAGEMENT

Other Bank Raiffeisenbank

9

Lean Cash SettelmentLayout and money flow generate additional work in the process

02. LEAN MANAGEMENT

30 min observation

Printer

Printer

Vacuum Machines

Principal Teller

Senior Teller

Teller Teller Teller Teller

Teller Teller

With average human speed 5 km/h it is equal to 4 kilometers 10

Current layout generates a lot of motion waste in the process

02. LEAN MANAGEMENT

10

Current layout generates a lot of motion waste in the process

02. LEAN MANAGEMENT

Process redesign conception:

Built an “assembly line” and establish team

responsibility instead of individual

accountability

02. LEAN MANAGEMENT

11

The wish to explore and improve

02. LEAN MANAGEMENT

Improve efficiency by 20+%

Results

Implement Process Transparency and

Measurement

Improve employee satisfaction

Enhance customer value proposition

Improve customer satisfaction

11

The wish to explore and improve

Lean BPMSRob-

otics

Agile

Org.Scrum Other

Toolset

12

Achieving Operational and Delivery Excellence

Data collection Dashboard design Manage process

variation

Process review

meetings

WH

Y D

O W

E

NE

ED

IT

?

Agreement on

regular data extract

in defined format

Set of data

collected

WH

AT

IS

TH

E

OU

TP

UT

?

Standard charts

Charts organized in

dashboards

Describe and

display variation:

data for Period of

Time, Over Time

Launch process

management

discussions between

process leader and

P&L owner –

business review

Agenda, schedule

meeting

Business review

meetings

Establish real

process

performance review

culture - Live

process reviews

Agenda, schedule

meeting

To create strong and transparency process leadership and improve key processes we need to review, control and manage

them. The Process review is a platform for process performance discussion between process leader and main process

stakeholders.

COUNTRY Level 1 Level 2 - E2E process DATE

PLANNED ACTIVITIES ISSUE LOG ESCALATION OVERALL KPI's

Detail KPI's - go to dashboard

PERFORMANCE REVIEW MEETINGE2E PROCESS LEADER

SUBPROCESSES PROCESS KPI's

TIME TO YES [TTY]

UNIT/COST

Customer complaints

TASK COMPLETED

TIME TO CASH [TTC]

Loan application and data entry

Verification and underwriting

DocumentationContract signing

Disbursment

13

Manage process performance as part of BPMS

03. BPMS

Who is the P&L owner

and the Process leader?

14

Establish process leadership

03. BPMS

15

Who is the process leader and who is P&L owner

03. BPMS

“End-to-End” Process leader

P&L Owner (by product, segment, etc)

Two important roles that should not be combined

but leveraged

Volumes RevenuesCostsCosts Risk Profit

Work-in-Process Finished GoodsRaw materials

16

Process leader is different from P&L owner

03. BPMS

May'2015

PI Lending Origination Process Dashboard

VO

LU

ME

S

Personal Loans Credit Cards

NE

W P

OR

TF

OL

IO

QU

AL

ITY

Highlights

DIS

BU

RS

EM

EN

T

/US

AG

E R

AT

E

RE

TU

RN

RA

TE

TIM

E T

O

CA

SH

AP

PR

OV

AL

RA

TE

TIM

E T

O

YE

S

ER

RO

R R

AT

E

CH

AN

NE

LS

FU

LL

LO

AD

ED

CO

ST

S

UN

IT C

OS

T

2.00%

90%80%90%80%

90%80%90%80%

7100.0%

of the applicationsare approved

of the loans are disbursed within 2 days

45.3%

10,551

11776

581,492,900 RUB

of the decisions are made within 1day

3,973

39.5%of the applicationsare approved

13

3

116.0%budget fulfillment

3,445,856,000 RUB

347,926 RUBaverage loan

97,938 RUB average loan55.8%

budget fulfillment

9863

93.5%of the approvedloans are disbursed

54.1% used out of issued

2798

9

b

0.8%

2-42.3%19.57%

7

5.5% -5.3% -

1.5%

of the decisions are made within 1day

of the loans are disbursed within 2 days

0.8% -

1.3% -

97.1% 96.1%

90.5%

190% 100% 90% 100

48%95%

20% 27%16% 23%

18,054,576,198 RUB outstanding balance

0% 10%

0.80%

93,778,474,367 RUB outstanding balance

0% 5% 0 5

o

0.41%30@3MOB

247.4%0.97%90@6MOB

31.6% 2.90%30@3MOB

82.4%

100.7%4.28%

60@6MOB

1. Budget fulfillment in CC has been decreasedsignificantly in May in comparison with April .2. Return rate in CC has negative dynamic since July' 14 - main reasons: changes in legislation in July and outdated client info in APS for existing clients.3. New process KPI has been added - Return rate combined UW and SC returns3. SLA fulfillment has negative dynamic for CC due to RR for branches and DSAs

1195

24.0% of the applications processed with rework

-0.1%

40

-12.7%

36.1% of the applications processedwith rework

-5.9% 7

94.4%of target 2965 RUB

110.6%

7

0.

of target 3292 RUB-5.1% -

3640

45 40 45

23,279 10065

10549 21758

4972

92.5% 100.0%100.0%100.0%

Channels Call Center

SCHUW

SERVICE LEVEL PL

CapstonePL

99.0%

CRE

98.8%

FPS

99.0%99.0%

Capstone CC

System UP Time

73.0% 100.0%100.0%

Channels SCHUW

SERVICE LEVEL CC

0% 30% 0% 40%

N/A

35%

3464

-11.1%104.7%of target 3308 RUB

131.9%of target 6197 RUB

1.9%

8176

20%16%

852

17.1% of the applications processed with errors

4972

1.6%

20%16%

20.1% of the applications processedwith errors

157 782

-2.0%

0% 30% 0% 30%

SLAs

KPIs

Monthly reporting

Daily control

Link to incentive system

17

Manage process performance – Process review Meeting

03. BPMS

Error Rate

18

Manage process performance – Procurement

03. BPMS

19

You always need a vision how the future can look like

03. BPMS

Lean BPMSRob-

otics

Agile

Org.Scrum Other

Toolset

20

Achieving Operational and Delivery Excellence

21

Reference Model

04. AGILE ORGANIZATION

22

Applying Agile brings four key benefits to the organization

04. AGILE ORGANIZATION

Speed up

delivery

Iterative rapid

change cycle

Cross

Functional

working

Full

accountability

Key Benefits

Reduced time to

market

Increase product

flexibility

Improve team

motivation

Improve

response time

to ops. issues

Plan Analyze Design Build Validate

Everything is an experiment

there is the willingness to fail

and learn

Everything depends on

everyone across silos

Highly collaborative and

transparent

Mix business and technical

knowledge in one team.

Easier to track and trace issues

Tim

e B

ox

ing

SME daily

banking

Accounts, deposits,

cards

TBD

PI Daily banking

CA & SA, Payments, SO

& utility, FX, sms,

Payroll, Captive

TBD

Cards

DC & CC (except

underwriting)

TBD

Lending

CC underwriting, E2E

Unsecured & Mortgage

TBD

Savings,

insurance &

investments

TD, UIF, OPI, insurance

TBD

23

Retail Products tribes & tribe leads – initial proposals

04. AGILE ORGANIZATION

Currently six squads and one tribe are proposed to be subject for pilot in 2 phases

SO & auto-paymentsMortgage lending

Cards

Future Lending tribe Future PI Daily banking tribe

PHASE 1 (09/2016) PHASE 2 (11/2016)

Tribe LeaderCards

Until 08/2017 (Full)

Internet (.ru)Future tribe to be defined

SMSFuture tribe to be defined

BARSFuture tribe to be defined

Payroll origination & maintenanceFuture PI Daily banking tribe

24

Pilot

04. AGILE ORGANIZATION

25

Thank you for your attention