Unlocking the Business Valueof Information

Banking and Financial Markets

IBM INFORMATION ON DEMAND COMES TO YOU

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Banking industry direction and challenges are dynamic

Trend Challenge

Market Disruptions

Manage cost without losing

competitiveness

Differentiate Product

Commoditization

Risk and Compliance

Optimize risk and compliance

processes

Empowered Customer

Offer right mix of products and

services

Consolidation & Globalization

Achieve value and synergies from mergers

2

Application Agenda

Faster Processing, Reduced Costs

Competitive Advantage

Financial Management

Loan Processing

Call Center Operations

Information Agenda

Financial Risk Insight

Lending Profitability

Customer Profitability

New Investments Increasingly Focus on OptimizationShift from Application Agenda to Information Agenda

Spending on Business Optimization Growing 2X Faster than Automation

3

Dramatic Shifts in the Industry Landscape are Compelling Bankers to Innovate

Macro• Changing economic

conditions

• Globalization

• Risk Management

Consumer• Empowerment

• Changing

Preferences

Emerging Technology• Technology Innovation

• Pervasive Connectivity

Competitive• Consolidation

• New Business Models

3

Improve Customer Care and Insight

Manage Governance, Risk and Compliance

Increase Operational Efficiency

4

Effective use of information is key for bankers to compete

Improve Customer Care and Insight

Manage Governance, Risk and Compliance

Increase Operational Efficiency

4

Key Drivers of Growth & Profitability are dependent upon effective use of trusted information

Business Value Derived

• Revenue Growth

• Deeper Relationships

• Customer Retention

• Profitability

• Proactive risk mitigation

• Risk adjusted decisions

• Enterprise assessment

• Reporting accuracy

• Ease of Information Access

• Minimal data handling

• Analytics to lower volumes

• Fact based performance metrics

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The Untapped Potential of Banking Information

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Moving from Current State . . . …to Next Generation

• Branch Operations

• Lending

• ERP & Financials

• Marketing Campaigns

• Branch Profitability – Manage profitability

throughout the branch network down to

customer and product level

• Straight Through, Risk-Based Processing –

Improved profitability through process

optimization with risk-adjusted decision making

• Financial Risk Insight – Improved financial risk

insight through better business visibility

• Personalized Multi-Channel Event Driven

Campaigns – Deliver real time customer insight

across channels and business units based on

customer activity

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33

44

Automation Optimization

Making existing information valuable

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Key Challenge is Unlocking the Business Value of Information

1AIIM 2008 Survey2Accenture 2007 Managers Survey

52% of users

don’t have confidence

in their information1

42% of managers

use wrong information

at least once a week2

59% of managers

missinformation

they should have used2

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“…Information is growing like crazy,

we need to get control of it…”

• Reduce cost of deployment andC management• Ensure information accessibility, retention and compliance

Are you effectively managing information over its lifetime?

Supporting Capabilities Needed

� Storage Management Solutions

� Systems Management & Security

Information Management Technologies Needed

� Database Management

� Integrated Data Management & Archiving

Banking Trends / Drivers� Increasing Regulatory Requirements

� Consumer demanding more history

� M & A duplication without rationalization

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“…We need a better way to incorporate content into our business processes and maintain it for compliance purposes…”

• Transform paper-based processes• Retain information to address compliance requirements

Are you using content effectively to optimize your operational and compliance processes?

Information Management Technologies Needed� Enterprise Content Management� Content Driven Process Optimization� Records Management & Compliance� Content Classification & Search

Supporting Capabilities Needed� SOA Infrastructure� Transaction Processing� Portals & Collaboration Tools� Application Development Tools

Banking Trends / Drivers� Offer management decisions

� Credit and Fraud risk

� Customer Experience

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“…Information about our clients and products is fragmented and inconsistent across

channels and applications…”

• Integrate, reconcile and transform data and content, regardless of type or complexity

• Deliver trusted information in context

Can you establish, govern and deliver accurate, trusted information?

Information Management Technologies Needed� Information Integration� Data Warehousing� Master Data Management

Supporting Capabilities Needed

� SOA Infrastructure

� Storage Management Solutions

� Industry Specific Data and Process Models

Banking Trends / Drivers� Performance Reporting and Compliance� Credit and Fraud risk� Customer Experience and profitability

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“…How am I supposed to get ahead of the competition? I don’t have a good understanding of

where I am, or what I should do differently…”

• Know how you are doing• Understand why• Determine what you should be doing next

Can you effectively plan, understand and optimize business performance?

Information Management Technologies Needed

� Scorecards & Dashboards

� Reporting & Analytics

� Planning, Budgeting & Forecasting

Supporting Capabilities Needed

� Portals & Collaboration Tools

� Business Process Management

Banking Trends / Drivers� Performance Reporting and Profitability� Risk scorecards and Portfolio Management� Customer Relationships

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Manage information over

its lifetime

Information On DemandUnlocking the Business Value of Information forCompetitive Advantage

Better Business

Outcomes

Customer & Product

Profitability

Workforce

OptimizationDynamic

Supply Chain Multi-Channel

Marketing

Financial

Risk Insight

Business Optimization

Establish, govern, and deliver

trusted information

Plan, understand and optimize

business performance

End-to-EndCapabilities

Optimize content-based

operational & compliance

processesOther

InformationSources

Flexible Architecture for Leveraging Existing Investments

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3

4

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Common Landscape in Banking EnvironmentsCreates an Information Gap with Strategic Challenges

Business Units

Wealth Management

Core Systems

Channels

Relationship Managers/

Agents

ATMs

Call Centers

Internet

Branches

DB App

DB

App

Core Systems

DW

DBCRM

App

Retail Banking

Corporate Banking

DB

CRM

App

AppDB

DW

Core SystemsCRM DB App

Capital Markets

Insurance

CIF

PartnersDB

CRM AppDB

App DW

DBCore

Systems

Data Systems

Core Systems

ERP

Customer

� Inconsistent View of Customer

� Silos of Information

� Information Locked in Repositories

� Inconsistent Data

� No Single Version of the Truth

� Poor Channel Communication

DB App

DB

DB

AppCRM

ODS

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Maturity ofInformation Use

Bridging the Gap is a Necessity Driving Value with Information a Strategic Asset

Information to Manage the

Business

Basic Information Interaction

BusinessValue

Data to Run the Business

Focus on DataAnd Reporting

Adaptive Business

PerformanceInformation as a

Competitive DifferentiatorReal-time Single

View of the Truth

Information to Enable

InnovationInformation in Context

Flexible Information Architecture

Desired StateFlexibility & Speed

Current StateInformation Intensive

Projects

33%still here*

59%currently focused here*

* Based on Gartner 2007 Survey

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“…How do I deliver on an information strategy that aligns with my business needs with a roadmap that

provides returns along the way?”

Have you made information a strategic asset?

• Establish a business based information strategy

• Get started quickly, minimize risk and ensure long term success

• Leverage and extend existing IT investments

Information Management Software & Accelerators� Foundational Tools� Information Accelerators� Competency Centers� Information Agenda Guides and Workshops

Supporting Capabilities� Strategy� Roadmap� Information Infrastructure� Information Governance

Banking Trends / Drivers

� New Business model – LOB’s, contraction, Specialization

� Significant cost pressure

� Regulatory changes

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Sustained

competitive

advantage

Desired StateFlexibility& Speed

Current StateInformation

Intensive Projects

Highly

justified

projects

Information Based Enterprise

…transform information into a trusted

strategic asset that can be rapidly

leveraged across applications,

processes and decisions for

sustained competitive advantage…

…transform information into a trusted

strategic asset that can be rapidly

leveraged across applications,

processes and decisions for

sustained competitive advantage…

…an enterprise with an

Information agenda

So, What’s Next?Creating an Information Agenda

The transformation starts with existing opportunities in the context of strategic assets and capabilities

The transformation starts with existing opportunities in the context of strategic assets and capabilities

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Information AgendaGuides & Workshops

Industry tailored sessions to guide future state design,

identification of key information requirements and gap analysis

InformationAccelerators

Industry specific assetsto speed deployment

FoundationalTools

Software to help you convertyour information into

a trusted strategic asset

Information On DemandCompetency Centers

Services to help you build information centers

of excellence

It Takes More Than Just Technology

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Creating a vision to guide decisions & help

the organization determine how to best

support business goals

Strategy

Identifying the technology

components & capabilities to

establish a common information framework

Information Infrastructure

Establishing a plan for executing discrete

projects to realize short and

long-term returns on investment

Roadmap

Implementing policies & practices for managing,

using, improving & protecting

organizational information

Information Governance

Best practice “how-to” for unlocking the business value of information

An information agenda-the path to success

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Strategy: The Vision and Link toBusiness Strategy

Collaboration between the CIO and line-of-business managers is a critical success factor for any organization's information agenda.

IODArchitecture, Roadmap & ValueCase

Business Capabilities

Vision and Value

� Establishes guiding principles

� Provides an end-to-end vision for all components

� Aligns information needs with business strategy and operating framework

� Is created by stakeholders from across the organization

� Determines where to focus for optimal performance impact

Strategy

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Strategic Imperatives

The key focus areas for

a specific industry that

are critical to improving

overall business

performance

Core Management Processes

The underlying processes that

are prevalent across all areas of

the company in every industry

and must be managed for

improved business performance

Business Objectives

The processes and

activities that can be

optimized through

more effective use of

information in support

of the strategic

imperatives

Led By The Banking Business Optimization Map

Information Agenda Guide for Banking

Identifying Business Objectives & IT Projects to Support Strategic Imperatives

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The Banking Optimization Map Drives the Information Agenda

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Identify industry specific initiatives and information centric objectives.

Establish Information Management technology requirements.

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Card Business Function “Heat Map”

Plan/Direct

Execute

Control

Financial

Management

Business

& Resource

Admin

Business

Portfolio

Management

Customer Sales

& Servicing

New

Business

Development

Product

Delivery

Distribution

Services

Operational

Services

Treasury

AccountingGeneralLedger

FinancialsConsolidation

FacilitiesOperation &Maintenance

SystemsDevelopment &Operations

ProductionAssurance(Help Desk)

FixedAsset Register

BusinessUnit

Administration

PersonnelManagement

ConsolidatedBook/PositionMaintenance

Securitization/Syndication

Inter-bankAccount

Management

Sales /Cross Sell

TransactionCaptureServices

Service Dialogue& Routing

ProductDevelopment

MarketResearch

CampaignExecution

ProductDirectory

Marketing and Advertising

Deposits -SpecificProcessing

Card-specificProcessing

Lending specific Processing

Contact/EventHistory

CollateralHandling

CustomerProfile

RelationshipManagement

Customer Decisioning

RewardsAdministration

InventoryManagement

CashInventory

MarketInformation Correspondence

DocumentManagement& Archive

PaymentManagement & Processing

CustomerAccount

Maintenance

Collections& Recovery

FinancePolicies

Business Unitand ResourcePlanning

BusinessPolicies &Procedures

Asset &Liability Policy& Planning

CustomerSales & Servicing

Planning

SegmentAnalysis &Planning

Market Analysis

ProductOperationsPlanning

CustomerPortfolio &Analysis

CreditPolicy & Planning

ProductServicesPlanning

AccountServicesPlanning

Reconciliations

FinancialControl

Business & SystemsArchitecture

BusinessUnit Tracking

Risk/PortfolioManagement

Case &ExceptionHandling

Sales/Service

Administration

CampaignManagement

ProductPortfolio

Management

ProductOperationsOversight

CustomerBehaviorModeling

Application & Pricing

RelationshipOversight

ProductServicesOversight

Fraud/Abuse

Monitoring

AccountServicesOversight

CampaignPlanning

Product DesignOversight

Product PortfolioPlanning

Commissions

ChannelOperations

Product Deployment Oversight

ML

M

LExternalRelations

M

MAudit & LegalCompliance

M

M

M

H

HL

M

H

H

H

H

H

M

L

M

H

M

M

M

L

M

M

H

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M

L

M

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M

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M

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MM

M

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M

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ML

Customer

Management

Heat Map: Hot business functions are those which will have the greatest impact on the Strategic plan results

Attribution Key

H- HighM- Medium

L-LowSystem DependencyBusiness Strategy Alignment

“ Hot ” Business Function

“Warm” Business Function

“ Luke Warm” Business Function

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Innovating with Information in Banking

Customer

Security

Storage

AnalysisData

Quality

Access

Governance

Master Data Management

Integration

InformationCapabilities

CapabilitiesBPM

Customer

Analytics

Sales & Channel

Management

Service

Product

Management

Campaign

Management

Marketing

AnalyticsSelf

Service

Core

Analyze Demographics, Channel Usage, Profitability, and Buying Patterns

Perform risk analysis and business performance reporting with accurate trustworthy information

Create Personalized Products and Services with Dynamic Pricing

Perform Segmentation, Personalization, Channel Effectiveness and Propensity to Buy Analysis

Manage multistage, multi-channel campaigns with accurate and timely customer information

Use CC&I to optimize sales and distribution

Leverage real time view of customer relationship and channel integration to provide exceptional service

CustomerLifecycle

Deliver multi-channel, real time client information to self service channels

Improve Data Governance

Business Performance Optimization

Optimize Content

Centric Business Processes

Threat and Fraud

Intelligence

Manage Risk and

Compliance

Customer Care and

Insight

Optimize Back Office

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• Identify the key business areas for focus

• Determine what can be optimized by better leveraging information

• Establish the technology requirements

• Identify the project stepping stones

• Suggest an industry specific implementation roadmap

• Connect to the IOD reference architecture

• Harness our experience from thousands of customers

Information Agenda Industry Guides & WorkshopsSpecific Content for Banking and Financial Markets

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Workshops & GuidesWorkshops & Guides……• Workbook and Roadmap Templates• Information Governance Best Practices• Led by Subject Matter Experts across IBM

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Provides portfolio aggregation views to counter-parties to exceed risk and reporting guidelines. and provide accurate visibility to senior Risk Managers.

Provides enterprise access to customer information in 20 million enterprise documents, with cost savings of $2.3 million in 2 years.

Delivers enterprise view of customers across lines of business and channels empowering front office personnel.

Top 10 Global Investment Bank

Strategic Imperatives

Core

Management

Processes

Business Objectives

Key focus areas for a specific industry that are critical to business performance

Processes and activities that can be optimized through effective use of information

Processes that are core to all industries and must be managed for improved business performance

Identifies Strategic Imperatives & Business Objectives

Top 10 USRetail Bank

Top 10 USRetail Bank

Business Optimization Map for Banking

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Industry Guide for BankingCommon Infrastructure for Enterprise-Wide Business

Optimization

A unified enterprise information infrastructure…

…to unlock the

business value of

information

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Industry Guide and Roadmap for BankingIdentifies Roadmap and Accelerators for Strategic

Imperatives

� Banking Industry

Models (InfoSphere)

� Risk Adjusted

Profitability (Cognos)

� Banking Data

Integration (GBS)

IBM Accelerators for

Customer Care & Insight

Roadmap for

Customer Care & Insight

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A unified information management strategy is key

…to manage data over its lifetime

1. Data management layer…

…to optimize content,

process and compliance

management

2. Enterprise content management layer…

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3. An information integration layer…

…to establish, govern and deliver trusted

information

Each ‘layer’ builds value in information

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…to optimize business

performance

…to optimize business

performance

4. Business intelligence and management layer…

4. Business intelligence and management layer…

Enabling the agility and flexibility necessary

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…to unlock the

business value of

information

A unified enterprise information infrastructure…

The foundation of each information agenda…

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…delivers significant business value…

Cross-channel customer, credit risk, and bank staff performance management from 7 weeks to 7 seconds 80% decrease in

mortgage & commercial credit management processes; fewer write-offs & lower frequency of loan audits

Boosted profitability via $1mm annual savings and 63% reduction in cycle time of correspondent loan processing

Watch-list checks reduced from 12 hours to under 15 minutesenabling use of 40,000 names instead of 2,500. New business revenue stream established in offering transaction monitoring services to other financial institutions

Best practice Basel II information led to bank’s credit rating increase, and reduction in capital adequacy ratio redirecting capital toward profit-generating activities

Information Agenda for Banking

Information Agenda for Banking

Strategic Imperatives

The key focus areas for

a specific industry that

are critical to improving

overall business

performance

Core Management Processes

The underlying processes

that are prevalent across

all areas of the company in

every industry and must be

managed for improved

business performance

Business Objectives

The processes and

activities that can be

optimized through more

effective use of

information in support

of the strategic

imperatives