Description
implementation of a ERP system in a banking scenario right from requirements gathering to vendor selection to implementation.
1
Implementation of Information Systems in Non Traditional Banking Activities.
2
Agenda
Overview
Case Study 3
ICICI Bank
Case Study 1
Case Study 2
3
Overview of Banking Sector in India
• RBI is the central banking authority • Different ways of classifying Banks: ? Public and Private Sector Banks ? Scheduled and Non-Scheduled Banks ? Commercial and Co-operative Banks • Business Models followed: ? Retail Banking ? Wholesale Banking
Public Sector Banks – Commercial and Scheduled Public Sector BanksCooperative and Non- Scheduled
Private Sector BanksCommercial and scheduled
Private Sector BanksCooperative and Scheduled/NonScheduled
• There are currently 88 scheduled commercial banks • Total Value of assets controlled by all the banks put together is
? Public Sector Banks hold over 75%, with private and foreign banks holding 18.5% and 6.5% respectively
4
Introduction to Non Traditional Banking Activities
• Activities which are not primary to the banking sector like lending or borrowing are encompassed in the non core banking activities. • Some of the non core banking activities include Issuance of Credit Cards, Sale of Investment Products (Mutual Funds, Insurance, Gold Coins), Payment of Utility Bills.
5
Importance of Information Systems in Banking Sector
• Competition • Geographically Dispersed • Multiple Services • Need of Real Time Data
7
Case Study 1
Management of Information Systems for Credit Cards
8
Credit Cards at ICICI Bank
• ICICI Bank is India’s second-largest bank • ICICI Bank is in the credit card business since 2002. • In 2004 it became the largest issuer of credit cards in India beating CitiBank, the then market leader. • Since then the bank has maintained its market leadership in the credit card business.
9
Business Problem
• Existing system unable to handle volumes generated • Multiple systems leading to duplication in data as well • A lot of system downtime and maintenance issues being reported. • Increasing customer & merchant complaints • Management decided to review technology used
Need for a Single Scalable System to handle the expanding Cards Business
10
Legacy System
Legacy system: • The system created in-house when business started in 2002 • Initially it offered only Visa and MasterCard. • Consisted of independent systems
? ? ? ? ? Pre-issuance system Post issuance system Card issuance system Reward points Merchant managing system
• It took an aggressive marketing strategy to push forward the sales of its cards. Soon it was 3rd largest credit card issuer in the country with among the largest spends in the country.
11
Requirement Analysis
• Brainstorming by the business team understand the requirements • Dilemma: build upon the existing software or completely new software. • Software handle the problem statement & provide reports as required • Main criteria: integrated solution for credit card business • Selected system to have a low total cost of ownership • Preferred open-platform IT infrastructure. • Conclusion: old system could not meet requirements
12
Vendor Selection
• Started search for solution in 2003. • Criteria for software vendor:
? Existing solution available ? Solution meets the requirements set ? Done similar migration work before
• Card Tech Limited’s (CTL later known as TSYS Card Tech) PRIME shortlisted
13
Reason for selection
Factors tilting balance in favour PRIME: • The solution covers every aspect of the card cycle • Flexible and parameterized system • Multiple card types and gateways supported • Oracle9i : scalable, flexible and dependable • Bank attracted to the system’s flexible architecture • Complimentary solutions ONLINE, FRAUDGUARD, DISPUTE MANAGER, PRIME Instalments and PRIME Rewards available
15
Challenges
• Credit card portfolio of over 4 million cards and 60,000 merchants, • Multiple diverse interfaces used for migration • Porting of the bank’s existing interface with Fair Isaac’s TRIAD for analytics • Open-system and a cost-effective user service required • Bank employees and call centre operations • Visa, MasterCard and AMEX needed to be supported • Real-time interfaces to ICICI Bank’s other systems
16
Implementation
Phase planning: • Migration planned in three independent phases • Starting with the merchant management system. • Process was centrally monitored and processed • Next phase pre-issuance and then post issuance • Each project phase was divided into the following:
? ? ? ? System development UAT testing and debugging and UAT clearance Pilot run with small data size Implementation
17
Implementation
• Merchants business migration second half of 2004 completed by early 2005. • Development cycle done within the expected 5 months. • Simultaneously, the pre-processing module was developed. • Main challenge in this was migration of the prior items from the legacy system to PRIME. • The implementation completed ahead of scheduled 4 months. • Last phase: Post issuance module.
18
Implementation
• ICICI Bank installed FRAUDGUARD, near realtime, rule-based fraud management solution. • Later in the year it also implemented DISPUTE MANAGER, for credit card chargeback debited, PRIME Instalments for • EMI based payments and PRIME Rewards for reward-points management. • PRIME’s technology, benchmarked for volumes of up to 10 million cards
19
Current Scene
• Customer base up to 5 million within 6 months of going live • PRIME now used by over 2000 personnel at ICICI Bank. • ICICI Bank was able to offer 96 card products in comparison to its initial portfolio of 55 • Significant reduction in the crucial service time in call centres • In 2006, ICICI Bank introduced credit cards in UK with PRIME as the system.
20
Case Study 2
Mutual Funds Sales Tracker for assimilating 3rd Party Sales
Disclaimer – This system is still under testing and implementation Hence any facts and figures cannot be revealed.
21
Mutual Funds at ICICI Bank
• Since 2003, the bank is engaged in distribution 3rd party products. • Products include:
? ? ? ? Insurance Gold Coins Government Franking Mutual Funds
• Major revenue contributors to fee income
22
Business Problem
• Not built to integrate data from the registrars of mutual fund companies. • Initial Reporting data captured by sales persons. Verification with registrars done on weekends. Inaccurate data captured. • The existing system was also not able to track client queries with regards to their portfolio of investments. • Existing system could not handle the data generated. • The loss due to downtime and time involved in system restore was a major deterrent. Have a system which gave accurate performance, in terms of total business, sales personnel performance, target v/s achievement.
23
Legacy System
• Initial system built in-house • Allowed the sales personnel to enter the number of transactions & the value of business done. • Fields entered by salesmen:
? ? ? ? ? Personnel Name Branch Zone No of Applications Total Amount
• System reports generated gave individual sales personnel performance, total applications procured, total value, total performance of the branch& total performance of the zone.
24
Vendor Selection
• Then the vendors were narrowed down based on the following parameters:
? ? ? ? Existing vendor for a similar line of business Size of the Organization Sole Proprietor/Partnership/Public Ltd Total time into the business
• Gap analysis between their system & the existing requirements was identified. • The final requirements were given to the vendors for their views. • The vendors got back giving their commitments, cost sheets along with references of corporate using their systems. • The commitments, cost estimates & references were analyzed & finally the vendor with the best combination was selected.
25
Implementation
Phase planning: • The entire project was planned in 3 phases. • The phases were decided in order of the priority & requirements. • The man-day estimates in each phase & deliverable were discussed with the vendor with minimum & maximum timelines. • A CPM analysis was done & activities were even planned out on parallel levels & extra manpower was allocated to activities which required more technicians. • A final blue print was deliberated with the vendor of finishing the project (all 3 phases) in 180-200 days was worked out. • On the confirmation from the vendor, the agreement was signed & the entire project was to be completed in a matter of 204 days.
26
Implementation
• Certain areas of phase planning were changed post deliberation which affected the initial timelines. • User acceptance testing (UAT) issues not rectified in time since the programmers were more involved in delivery of all modules by the timelines given to them. • Contingency planning not done • Mutual Fund industry related changes which had to be integrated in this system. This lead to certain changes in the requirements and resulted in rework in the existing system being built.
27
Post Implementation and Go- Live:
• First go-live date, the system crashed as it had not correctly anticipated number of concurrent users in the system. • Further delay in the go-live date by almost 30 days since the issue had to be fixed. • Once all testing was completed the system went live. • The project was a big success thus giving near accurate MIS on the same day & accurate MIS on a T+1 basis.
28
Case Study 3
Management of Information Systems using Business Intelligence Tools
29
Technical Efficiency Enterprise Agility Information Effectiveness Innovation
Gartner
Manage Information rather than Information technology
Business Intelligence : A(s)set of methodologies, processes, architectures, and technologies that transform raw data into meaningful and useful information used to enable more effective strategic, tactical, and operational insights and decision-making
30
Enterprise Business Intelligence Providers
31
ICICI
artnering with SAS
• Business Concern • Existing System • Requirement Analysis
? ? ? ? Manageability Interoperability Scalability Usability
• Vendor Selection • Change Management
32
BI at ICICI
Campaign Scoring Project
Ad-hoc Querying
Reporting and Dashboard
33
Business Intelligence at work
• Business Problem: A steep decline in the retail finance loan offtake 63.99% in 2005-06 to 39.15% in 2006-2007
COMMERCIAL VEHICLES TWO WHEELER USED CAR LOW TICKET CONSTRUCTION PERSONAL EQUIPMENT LOANS Others
PERSONAL LOANS
AUTOMOBILES
HOME
34
Business Intelligence at work (contd…)
• Ad-hoc Query: A query was executed for detailed analysis of the bank’s total loan asset portfolio. Delinquency Deliquency
Linear (Deliquency)
Jan-08
Feb-08
Mar-08
Apr-08
May-08
Jun-08
Jul-08
35
Business Intelligence at work (contd…)
Quadrant Analysis
Project already implemented Monitoring required Business process Reengineering
Benchmark Level
Best case scenario Need to be looked into
Decreasing Trend
Increasing Trend
36
Business Intelligence at work(contd…)
Project taken up by the Business Intelligent Unit of the bank to look into and identify various variables that could have led to the rise in delinquency or characteristics that explain the trend.
Some of the factors that could be identified include: ? Product type ? Customer profiling ? Mode of repayment ? Type of sourcing
37
Findings
I : The two wheeler loan segment significantly contributing to the high delinquency rates
2 Wheeler Sourcing
Priority LOW TICKET PERSONAL LOANS THREE WHEELERS USED CAR TWO WHEELER PERSONAL LOANS COMMERCIAL VEHICLES Bounce by Count Bounce By Value Cross Sell Branch Dealer End Cross Sell Branch Dealer End
II: A very high co-relation between delinquency and type of customer sourcing.
38
Change in Strategy Strategic Decision Making:
• High levels of deviation
•
Increase in defaults and collection issues, thereby increasing operating costs.
•
RBI guidelines in 2007 preventing banks from forcibly seizing vehicles by employing recovery agents.
• Decision to discontinue offering 2 wheeler loans at the dealer’s end with effect from August 15, 2008.
• Better quality of credit, reduce operating costs, and leverage the branch structure better.
• Reduction in operating costs by 30 per cent to 40 per cent.
39
Learning
• Information System helped ICICI Bank move from legacy and error prone systems which included manual intervention to more and more automated and customer centric systems. • BI at ICICI Bank has helped it in understanding its business problems and taking appropriate measures to correct the same. • Information Systems have initiated a sea change of transformation from being a support system to a core business operation at ICICI Bank.
40
Learning
• Availability of Information Systems is important as long as it is utilized correctly to solve business problems. • Data Mining and BI Tools help in understanding and utilizing data available from the operational Systems for making future business decisions.
41
Thank you
doc_581450398.pdf
implementation of a ERP system in a banking scenario right from requirements gathering to vendor selection to implementation.
1
Implementation of Information Systems in Non Traditional Banking Activities.
2
Agenda
Overview
Case Study 3
ICICI Bank
Case Study 1
Case Study 2
3
Overview of Banking Sector in India
• RBI is the central banking authority • Different ways of classifying Banks: ? Public and Private Sector Banks ? Scheduled and Non-Scheduled Banks ? Commercial and Co-operative Banks • Business Models followed: ? Retail Banking ? Wholesale Banking
Public Sector Banks – Commercial and Scheduled Public Sector BanksCooperative and Non- Scheduled
Private Sector BanksCommercial and scheduled
Private Sector BanksCooperative and Scheduled/NonScheduled
• There are currently 88 scheduled commercial banks • Total Value of assets controlled by all the banks put together is
? Public Sector Banks hold over 75%, with private and foreign banks holding 18.5% and 6.5% respectively
4
Introduction to Non Traditional Banking Activities
• Activities which are not primary to the banking sector like lending or borrowing are encompassed in the non core banking activities. • Some of the non core banking activities include Issuance of Credit Cards, Sale of Investment Products (Mutual Funds, Insurance, Gold Coins), Payment of Utility Bills.
5
Importance of Information Systems in Banking Sector
• Competition • Geographically Dispersed • Multiple Services • Need of Real Time Data
7
Case Study 1
Management of Information Systems for Credit Cards
8
Credit Cards at ICICI Bank
• ICICI Bank is India’s second-largest bank • ICICI Bank is in the credit card business since 2002. • In 2004 it became the largest issuer of credit cards in India beating CitiBank, the then market leader. • Since then the bank has maintained its market leadership in the credit card business.
9
Business Problem
• Existing system unable to handle volumes generated • Multiple systems leading to duplication in data as well • A lot of system downtime and maintenance issues being reported. • Increasing customer & merchant complaints • Management decided to review technology used
Need for a Single Scalable System to handle the expanding Cards Business
10
Legacy System
Legacy system: • The system created in-house when business started in 2002 • Initially it offered only Visa and MasterCard. • Consisted of independent systems
? ? ? ? ? Pre-issuance system Post issuance system Card issuance system Reward points Merchant managing system
• It took an aggressive marketing strategy to push forward the sales of its cards. Soon it was 3rd largest credit card issuer in the country with among the largest spends in the country.
11
Requirement Analysis
• Brainstorming by the business team understand the requirements • Dilemma: build upon the existing software or completely new software. • Software handle the problem statement & provide reports as required • Main criteria: integrated solution for credit card business • Selected system to have a low total cost of ownership • Preferred open-platform IT infrastructure. • Conclusion: old system could not meet requirements
12
Vendor Selection
• Started search for solution in 2003. • Criteria for software vendor:
? Existing solution available ? Solution meets the requirements set ? Done similar migration work before
• Card Tech Limited’s (CTL later known as TSYS Card Tech) PRIME shortlisted
13
Reason for selection
Factors tilting balance in favour PRIME: • The solution covers every aspect of the card cycle • Flexible and parameterized system • Multiple card types and gateways supported • Oracle9i : scalable, flexible and dependable • Bank attracted to the system’s flexible architecture • Complimentary solutions ONLINE, FRAUDGUARD, DISPUTE MANAGER, PRIME Instalments and PRIME Rewards available
15
Challenges
• Credit card portfolio of over 4 million cards and 60,000 merchants, • Multiple diverse interfaces used for migration • Porting of the bank’s existing interface with Fair Isaac’s TRIAD for analytics • Open-system and a cost-effective user service required • Bank employees and call centre operations • Visa, MasterCard and AMEX needed to be supported • Real-time interfaces to ICICI Bank’s other systems
16
Implementation
Phase planning: • Migration planned in three independent phases • Starting with the merchant management system. • Process was centrally monitored and processed • Next phase pre-issuance and then post issuance • Each project phase was divided into the following:
? ? ? ? System development UAT testing and debugging and UAT clearance Pilot run with small data size Implementation
17
Implementation
• Merchants business migration second half of 2004 completed by early 2005. • Development cycle done within the expected 5 months. • Simultaneously, the pre-processing module was developed. • Main challenge in this was migration of the prior items from the legacy system to PRIME. • The implementation completed ahead of scheduled 4 months. • Last phase: Post issuance module.
18
Implementation
• ICICI Bank installed FRAUDGUARD, near realtime, rule-based fraud management solution. • Later in the year it also implemented DISPUTE MANAGER, for credit card chargeback debited, PRIME Instalments for • EMI based payments and PRIME Rewards for reward-points management. • PRIME’s technology, benchmarked for volumes of up to 10 million cards
19
Current Scene
• Customer base up to 5 million within 6 months of going live • PRIME now used by over 2000 personnel at ICICI Bank. • ICICI Bank was able to offer 96 card products in comparison to its initial portfolio of 55 • Significant reduction in the crucial service time in call centres • In 2006, ICICI Bank introduced credit cards in UK with PRIME as the system.
20
Case Study 2
Mutual Funds Sales Tracker for assimilating 3rd Party Sales
Disclaimer – This system is still under testing and implementation Hence any facts and figures cannot be revealed.
21
Mutual Funds at ICICI Bank
• Since 2003, the bank is engaged in distribution 3rd party products. • Products include:
? ? ? ? Insurance Gold Coins Government Franking Mutual Funds
• Major revenue contributors to fee income
22
Business Problem
• Not built to integrate data from the registrars of mutual fund companies. • Initial Reporting data captured by sales persons. Verification with registrars done on weekends. Inaccurate data captured. • The existing system was also not able to track client queries with regards to their portfolio of investments. • Existing system could not handle the data generated. • The loss due to downtime and time involved in system restore was a major deterrent. Have a system which gave accurate performance, in terms of total business, sales personnel performance, target v/s achievement.
23
Legacy System
• Initial system built in-house • Allowed the sales personnel to enter the number of transactions & the value of business done. • Fields entered by salesmen:
? ? ? ? ? Personnel Name Branch Zone No of Applications Total Amount
• System reports generated gave individual sales personnel performance, total applications procured, total value, total performance of the branch& total performance of the zone.
24
Vendor Selection
• Then the vendors were narrowed down based on the following parameters:
? ? ? ? Existing vendor for a similar line of business Size of the Organization Sole Proprietor/Partnership/Public Ltd Total time into the business
• Gap analysis between their system & the existing requirements was identified. • The final requirements were given to the vendors for their views. • The vendors got back giving their commitments, cost sheets along with references of corporate using their systems. • The commitments, cost estimates & references were analyzed & finally the vendor with the best combination was selected.
25
Implementation
Phase planning: • The entire project was planned in 3 phases. • The phases were decided in order of the priority & requirements. • The man-day estimates in each phase & deliverable were discussed with the vendor with minimum & maximum timelines. • A CPM analysis was done & activities were even planned out on parallel levels & extra manpower was allocated to activities which required more technicians. • A final blue print was deliberated with the vendor of finishing the project (all 3 phases) in 180-200 days was worked out. • On the confirmation from the vendor, the agreement was signed & the entire project was to be completed in a matter of 204 days.
26
Implementation
• Certain areas of phase planning were changed post deliberation which affected the initial timelines. • User acceptance testing (UAT) issues not rectified in time since the programmers were more involved in delivery of all modules by the timelines given to them. • Contingency planning not done • Mutual Fund industry related changes which had to be integrated in this system. This lead to certain changes in the requirements and resulted in rework in the existing system being built.
27
Post Implementation and Go- Live:
• First go-live date, the system crashed as it had not correctly anticipated number of concurrent users in the system. • Further delay in the go-live date by almost 30 days since the issue had to be fixed. • Once all testing was completed the system went live. • The project was a big success thus giving near accurate MIS on the same day & accurate MIS on a T+1 basis.
28
Case Study 3
Management of Information Systems using Business Intelligence Tools
29
Technical Efficiency Enterprise Agility Information Effectiveness Innovation
Gartner
Manage Information rather than Information technology
Business Intelligence : A(s)set of methodologies, processes, architectures, and technologies that transform raw data into meaningful and useful information used to enable more effective strategic, tactical, and operational insights and decision-making
30
Enterprise Business Intelligence Providers
31
ICICI
artnering with SAS• Business Concern • Existing System • Requirement Analysis
? ? ? ? Manageability Interoperability Scalability Usability
• Vendor Selection • Change Management
32
BI at ICICI
Campaign Scoring Project
Ad-hoc Querying
Reporting and Dashboard
33
Business Intelligence at work
• Business Problem: A steep decline in the retail finance loan offtake 63.99% in 2005-06 to 39.15% in 2006-2007
COMMERCIAL VEHICLES TWO WHEELER USED CAR LOW TICKET CONSTRUCTION PERSONAL EQUIPMENT LOANS Others
PERSONAL LOANS
AUTOMOBILES
HOME
34
Business Intelligence at work (contd…)
• Ad-hoc Query: A query was executed for detailed analysis of the bank’s total loan asset portfolio. Delinquency Deliquency
Linear (Deliquency)
Jan-08
Feb-08
Mar-08
Apr-08
May-08
Jun-08
Jul-08
35
Business Intelligence at work (contd…)
Quadrant Analysis
Project already implemented Monitoring required Business process Reengineering
Benchmark Level
Best case scenario Need to be looked into
Decreasing Trend
Increasing Trend
36
Business Intelligence at work(contd…)
Project taken up by the Business Intelligent Unit of the bank to look into and identify various variables that could have led to the rise in delinquency or characteristics that explain the trend.
Some of the factors that could be identified include: ? Product type ? Customer profiling ? Mode of repayment ? Type of sourcing
37
Findings
I : The two wheeler loan segment significantly contributing to the high delinquency rates
2 Wheeler Sourcing
Priority LOW TICKET PERSONAL LOANS THREE WHEELERS USED CAR TWO WHEELER PERSONAL LOANS COMMERCIAL VEHICLES Bounce by Count Bounce By Value Cross Sell Branch Dealer End Cross Sell Branch Dealer End
II: A very high co-relation between delinquency and type of customer sourcing.
38
Change in Strategy Strategic Decision Making:
• High levels of deviation
•
Increase in defaults and collection issues, thereby increasing operating costs.
•
RBI guidelines in 2007 preventing banks from forcibly seizing vehicles by employing recovery agents.
• Decision to discontinue offering 2 wheeler loans at the dealer’s end with effect from August 15, 2008.
• Better quality of credit, reduce operating costs, and leverage the branch structure better.
• Reduction in operating costs by 30 per cent to 40 per cent.
39
Learning
• Information System helped ICICI Bank move from legacy and error prone systems which included manual intervention to more and more automated and customer centric systems. • BI at ICICI Bank has helped it in understanding its business problems and taking appropriate measures to correct the same. • Information Systems have initiated a sea change of transformation from being a support system to a core business operation at ICICI Bank.
40
Learning
• Availability of Information Systems is important as long as it is utilized correctly to solve business problems. • Data Mining and BI Tools help in understanding and utilizing data available from the operational Systems for making future business decisions.
41
Thank you
doc_581450398.pdf