Dash Board Analytics - CEO's Concerns

1. Retail Banking
1) Competition from non-banks. With increased competition from brokerages, insurers, non-banks and
global players, banks are focused on finding ways to attract and retain profitable customers. This may
include new marketing efforts, branding changes, modification to existing products and/or pricing structures,
improving customer service, expanding product reach, partnering where appropriate to offer value-added
services, etc.
Efforts may also include identifying profitable segments of customers, specifically high net worth individuals,
in order to provide higher levels of service to ensure that they retain and expand these relationships. More
drastic steps may also be taken in the form of, for example, acquiring other banks to increase market share
or create economies of scale.
2) Integrated channel delivery. Banks typically have a confusing array of delivery platforms to service
customers at the branch, teller platform, ATM/kiosk, Web site, call center, telephone bank, etc. There are
inevitably numerous databases and systems in place to support these activities. Banks are investing in
consolidating their delivery platforms to create a more cohesive solution that better serves customers and
makes maintenance easier from an internal perspective.
3) Product silo integration. Historically, banks have multiple silos that operate essentially independently,
with little knowledge of what other silos are working on. Frequently, banks cannot identify what
products/services their customers own/use at an aggregate level. Banks are working furiously to develop
systems that allow them to see customers' entire relationship in order to service them better and target
them with complementary products/services.
4) Improving automation. Banks have the opportunity to reduce costs and improve the bottom line
through changes to underlying technology and workflow enhancement. These improvements may be
either internal or external. Internally, banks may streamline numerous tasks, including procurement,
expense reporting, data sharing, etc. Externally, banks are putting self-service solutions into place that may
automate many processes. For example, online applications that feed data directly into back-office systems
can streamline the process, obviating the need for re-keying of information.
5) Creating a sales-oriented culture. Often banks pass up excellent opportunities to expand customer
relationships and sign on new customers. Each of the delivery channels can be used to take better
advantage of these opportunities. For example, customer service representatives should be attempting to
cross-sell products and services on incoming calls, not only outgoing ones. Banks that have a full view of
their customers' wallets should use this information to target customers online with complementary
products. Leads coming in from the Internet, or other channels, must also be effectively distributed to the
appropriate group within the bank. Even branch and teller personnel would benefit from having better
customer information, by being able to sell more effectively. In addition to the contact management and
analysis systems needed for this enterprise-wide sales approach, these changes will require altering the
existing culture and providing training.
6) Global influence. With increasing globalization, banks are faced with more threats from outside
competition, but also have additional opportunities. They must seek to enter new markets, creating
localized products and services in each. Banks may also consider the benefits/drawbacks of co-competition.
Through joint ventures and partnerships, banks may look to third parties to provide additional distribution
avenues and reduce costs on the technical side through shared resources.
7) E-commerce strategy. Closely tied to integrating product silos and channel delivery, banks continue to
evaluate their e-commerce strategies. Understanding the potential of the Internet and harnessing it to
create positive ROI streams are two very different things. Banks must develop new strategies and continue
to develop ways to use the Internet and wireless channels either to reduce costs, to increase revenues, to
improve productivity or provide some other value proposition.
Author: Partho H. Chakraborty

2. 8) Economic impact on credit portfolios. Banks worry about the impact any economic downturn will have
on their bottom line. Within retail banking, this includes managing their outstanding credit portfolios. Clearly,
banks will have to deal with increasing defaults by customers. They may consider tightening existing
lending policies.
Under this issue also falls strategies to attract and retain customers, especially mass affluent customers, as
described above.
9) Contingency plans. Contingency plans have always been an important aspect for banks. However,
they are now re-examining existing policies, procedures, and systems that they have in place. Banks will
invest in new disaster recovery and back-up systems as necessary and redefine procedures to ensure they
are adequately positioned in case of new types of emergencies. This is one form of managing risk.
10) Security and privacy. Banks are eager to strengthen their position of trust with their customers
through educating them about new privacy policies, but more importantly through offering improved
security. Banks are likely to improve security measures for those transactions initiated via the Internet and
wireless devices. This effort extends not only to positively identifying the end user, but also ensuring that all
bank systems, both Internet-related and not, is invulnerable to attack.
Wholesale Banking
1) Globalization. Competition within a domestic market is no longer enough for most aspiring banks.
European banks have been the most aggressive on this front, especially lately, with a wave of acquisitions
in the US market. Expansion of products and services into foreign markets has become unavoidable as
advancements in communication technology have eliminated numerous barriers to international
competition in the wholesale banking business.
2) Risk Management. Somewhat related to the first issue, as a bank expands its territorial reach and
provides an ever-increasing number of products and services worldwide, to ensure healthy growth it must
always be vigilant regarding its risk levels. Risk management must occur across product lines and
departments, and not be isolated to independently operating silos.
3) Straight-Through Processing. Similar to the securities market, there is a growing emphasis on straight-
through processing of payment and other wholesale banking transactions. Achieving STP will eliminate the
need for manual processing and re-entry of transactions, which in turn will reduce potential for errors and
credit risk.
4) Integrated services. As leading banks become increasingly global in their scope, providing corporate
customers with an integrated suite of electronic banking services that combine cash management, foreign
exchange and potentially trading and custody services into one seamless offering will become a major
competitive differentiator.
5) Small business banking. By utilizing new media (e.g., Internet, wireless, etc.) for distribution and
communication, banks can go beyond their traditional large corporate clients and provide a comprehensive
line of products and services specifically designed for small businesses. Historically, the small business
segment has been largely ignored by large banks and typically treated as retail clients. This fairly lucrative
segment can now be reached and serviced far more easily.
Author: Partho H. Chakraborty

3. 6) Countering the threat of disintermediation. The development of electronic commerce is bringing not
only new opportunities, but also new competitive threats to banking institutions. As commercial transactions
move to the Internet in increasing volume, banks will have to be vigilant against threats to their traditional
central role in the corporate transaction chain. For example, new non-bank companies are emerging to
provide payment clearance services for electronic marketplaces and exchanges. In the area of international
trade, Internet-based trade finance services are being developed that will compete with banks at every
stage of the trade finance process, from the extension of credit, to documentary services, to secondary
trading of assets. Similar e-commerce initiatives will emerge in corporate finance, debt finance, loan
syndication and similar high-stakes corporate banking fields. Banks will be challenged to develop
innovative strategies of their own to counter these emerging competitive threats.
7) Employee portals. As organizations become increasingly global, the need for efficient internal
communication becomes more vital. The establishment of employee portals enables employees to share
common corporate information regardless of where they are, strengthening corporate identity. Employee
portals are composed of knowledge management systems, content management, business intelligence,
and collaborative workspaces, which can be used to drastically improve productivity within an organization.
In addition, employee portals extend outside the organization, allowing collaboration between employees
and business partners. For example, this is particularly important in a mergers & acquisitions deal, when
document sharing becomes a vital part of the process.
8) Security and privacy. Banks are eager to strengthen their position of trust with their customers through
educating them about new privacy policies, but more importantly through offering improved security. Banks
are likely to improve security measures for those transactions initiated via the Internet and wireless devices.
This is especially necessary for the high-value transactions that pass through corporate banking systems.
This effort extends not only to positively identifying the end user, but also ensuring that all bank systems,
both Internet-related and not, is invulnerable to attack.
9) Improving automation. Banks have the opportunity to reduce costs and improve the bottom line
through changes to underlying technology and workflow enhancement. These improvements may be
either internal or external. Internally, banks may streamline numerous tasks, including procurement,
expense reporting, data sharing, etc. Externally, banks are putting self-service solutions into place that may
automate many processes. For example, online applications that feed data directly into back-office systems
streamline the process, obviating the need for re-keying of information.
10) Creation of an e-commerce strategy group. The days of secretive in-house technology innovations
are long gone. It simply does not make sense for banks to commit the capital and man-power to keep up
with the rapid commercialization of cutting-edge technology. Instead, most firms have resorted to creating a
separate group responsible for creating and supporting company-wide e-commerce related initiatives
throughout the organization. Product-specific or department-specific technology development does not
make economic sense for large wholesale banks. Instead, all product lines and departments must work
together so that a newly developed technology solution in one area can be fully leveraged to support the
services of other areas. These e-commerce groups will also cooperate with other firms, even competitors,
to identify and nurture certain products and services produced by third party software/hardware vendors so
that the cost of developing cutting-edge technology can be spread across the industry evenly.
Author: Partho H. Chakraborty

4. Note: Names if any, are Suggestive only and without any relation to any real entity
whatsoever. It is only to give a feel and touch of how transactions can be
structured and names are indicative
This article is meant for education purposes only and it is not be
reproduced for any commercial purpose by print or electronic medium
whatsoever
This case study is written by:
Partho H. Chakraborty
A - 305, DSR Spring Beauty Apts., 124/1, ITPL Main Road, Brookefields, Kundalahalli, Bangalore - 560
037, India
Tel: +91 80 420 50293, Cell: +91 99863 22504
email: parthohc@airtelmail.in; parthohc@rediffmail.com
Skype: parthohc01
Author: Partho H. Chakraborty