Download - 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