TCS transformers - July 2011

An IDG Custom SOLUTIONS initiative IN ASSOCIATION WITH

Transforming Business Through Judicious Application of IT

PLUS Globally, ‘brick and mortar’ banking exists as a key channel to increase business per employee and enrich customers’ experience. SBI branch banking transformation is about changing branches from just servicing customers to enhancing their branch banking experience.

INTERVIEW Ujjwal Mathur, Head (Sales) - TCS, India talks about what it takes for an IT project to succeed.

TRANSFORMERS CASE STUDY

Company State Bank of India Industry Banking Offering Next Generation Branch Transformation

Globally, ‘brick and mortar’ banking exists as a key channel to increase business per employee and enrich customers’ experience. SBI branch banking transformation is about changing branches from just servicing customers to enhancing their branch banking experience.

Custom Solutions Group TATA CONSULTANCY SERVICES

BI, the ‘banker to every Indian’, has long believed that the branch is the only place where customer relationships can be built and nurtured. Taking this belief forward, SBI built an extensive branch network across India. This has made SBI the second-largest bank in the world in terms of number of branches — at more than 19,500 branches and 25,000 ATMs for the State Bank Group as on June 2011.

To meet changing customer demands and increasing competition from the private-sector players, SBI began the largest implementation of a centralized Core Banking System (CBS) ever undertaken in the banking industry, in 2002. With CBS Implementation and connecting all the branches and ATMs on a single large network, SBI transformed itself from ‘BranchBased Banking’ to ‘Bank-Based Banking’. However, implementing CBS was only the beginning of the journey and the bank’s senior management realized that business process re-engineering was essential to reap the benefits of such a move. So, SBI decided to utilize one of its biggest assets – its branch network across the country — to lead the business process reengineering initiative.

“We realized that by repositioning the branch network, we can use this asset more effectively. It is now about embarking on a paradigm shift in digitizing the branch with a layer of intelligence to epitomize the new era of banking. SBI branch transformation is about changing branches from just servicing customers to enhancing their branch banking experience,” says C Narasimhan, Deputy Managing Director - Corporate Strategy and New Businesses at SBI.

Challenges With the number of customers visiting the branch increasing everyday, SBI had an opportunity to provide greater value to its customers and enhance their banking experience and help increase revenue per employee. This could only be achieved by addressing the dual challenge of transforming

SBI had to take into consideration that many of its customers were not tech-savvy and still preferred the human touch.

The objective is to popularize self service banking so that we can decongest the counters at our branches.”

Pratip Chaudhuri, Chairman, SBI

the branch and transforming the mindset of the customers and tellers.

SBI had to take into consideration that many of its customers were not comfortable with technology and still preferred the human touch that the teller provided at the branch. On the other hand, the teller mindset had to be changed from transactionoriented banking to relationship-based banking.

“The idea is to help familiarize customers with technology and help eliminate the fear of not having human support for every transaction. Since most of our customers are not very tech-savvy, this is being done by re-engineering processes in such a way that technology is subtly embedded while the presence of human touch is ensured,” says Narasimhan.

The GenNext Branch Banking is all about innovation and making each system in the branch intelligent. By seamlessly integrating different systems and processes such as transaction processing system, information and customer management, operations, analytics system etc, SBI will be able to intelligently capture customers’ needs and behavior to design tailor-made offerings and services. “However, for this to be completely successful, we are working on improving the tellers’ efficiency. Most importantly, we want to enrich our customers’ branch banking experience by making the teller a seller and an advisor” he adds.

T h e o t h e r c h a l le n g e i s t h e b r a n c h transformation. This has to be unique to each branch, as one solution does not fit all. The uniqueness of the branch would be determined based on the customer’s profile, geographical location of the branch and the business focus of that particular branch. It shall be achieved by optimizing processes, changing the ambience,

TRANSFORMERS CASE STUDY

SBI embarks on a paradigm shift in digitizing the branch with a layer of intelligence to epitomize the new era of banking.”

C Narasimhan Deputy Managing Director - Corporate Strategy and New Businesses, SBI

bringing in new, innovative technologies and empowering employees. Hence, the challenge is to design a customized solution of global standards to be implemented locally.

SBI’s corporate strategy team had been constantly thinking out of the box. It had to move away from traditional banking systems and procedures to provide an innovative solution focused on technology, processes, people and operations.

In order to overcome these issues, SBI sought to redefine its strategies and differentiate itself in not only the way it serves its customers but also in the way its customers bank with it.

“Traditionally, branches have defined the role of banks in a society and were associated with the trust and security that individuals invested in their bank. But, with the rise of new delivery channels and the drive towards reducing the cost per transaction, questions were raised about the future of the branch,” says Narasimhan.

branches. A GCC allows customers to withdraw and transfer funds up to Rs 40,000 by just swiping their ATM card without filling any forms. The operation is simple. One just walks into a branch and handles a Transaction Processing Device (TPD), which is similar to Point of Sales (PoS) machine. The machines are kept in exclusive green channel counters within the branch. The channel facilitated digitization of information at its inception, resulting in straightforward processing and elimination of errors. The popularity of the channel resulted in 1.6 million transactions in less than a year, resulting in saving more than 6,61,091 A4 size sheets of paper - equivalent to about five trees. SBI believes that, with the GCC at all major branches, they should be able save many more trees.

This year, on State Bank Day, SBI launched another offering for its customers - the Self Service Kiosk (SSK), which combines the strengths of all banking channels. The solution, designed on the principle of simplified banking, gives rise to ‘Do It Yourself Banking’, where customers use the SSK the way they use the ATM. With the help of their debit cards, they can perform most of the transactions on the kiosk, which are available on other channels such as the internet, ATM and the branch. SBI was looking for a solution which would enable customers to perform routine transactions on their own and reduce the burden on the tellers so that they could serve customers better. This new channel would not only enable customers to print

Key Initiatives Though branches are here to stay, it is evident that the customer experience in a branch needs to undergo radical transformation. While transformation efforts in banks have primarily focused on transactional processing capabilities, the need of the hour is to become customer-centric.

This would enable a bank to foster longstanding profitable customer relationships.

The Green Channel Counter (GCC) is an example of an initiative aimed at changing the customers’ mindset and innovatively designing a process to change the way they bank in a branch. According to SBI’s Chairman Pratip Chaudhuri, the bank has started 11,500 such counters across 5000

Self Banking

Self Service Kiosks are extremely popular as customers can perform various banking functions quickly and easily.

Custom Solutions Group TATA CONSULTANCY SERVICES

passbooks, open fixed deposit accounts, manage funds transfer requests within and outside the bank, but also facilitate bill payment at their ease and convenience. Such fee-based transactions will help SBI generate additional income. In future, railway bookings , SBI Life payments and a few other things will be added to self-service kiosks. “In fact, we have identified more than seventy high frequency transactions in the branch which can be provided on the SSK, thus helping customers to bank with ease.

SBI branch transformation is about empowering customers to fulfill routine transactions themselves and use the interaction with bank personnel for value addition,” he adds.

Another initiative towards branch transformation included addressing cash-oriented transactions.

SBI installed cash depositing machines which empowered customers to deposit cash in a selfservice mode and update their CBS account real-time. SBI has successfully deployed these machines across various branches and they are used by customers frequently, thereby reducing the time spent at the branch. “We aim to help our customers become comfortable with the concept of swiping their cards for performing a transaction, and these initiatives are already paying off handsomely,’’ says Narasimhan.

SBI launched the “State Bank Freedom’, a mobile banking service which is rapidly gaining popularity among the customers. At present, 1.5 million customers conduct more than 70,000 average transactions per day on this platform. “What would differentiate SBI from other banks is our goal to integrate each channel intelligently with the branch as part of our branch transformation initiative,” says Narasimhan. For example, a customer will be able to request a demand draft from his mobile banking application and collect it at a particular time, from a particular branch.

These are just some of the initiatives which SBI has taken to enrich its customers’ experience.

What Next SBI is considering introducing an Integrated Payment Hub (IPH) - a single, centralized and reusable application for end-to-end management of all electronic (non-cash) payments across the enterprise. The benefits of an IPH include elimination of point-to-point interfaces, real-time monitoring and reconciliation, cross-channel view of payments transactions, reduction of operational risk, reduction of time to market new products, reduced customization of CBS for payment related functionalities and facilitating a single customer view for payments transactions. This single view of a customer would help tellers in the

Easy Banking A customer making a transaction at the Green Channel Counter with a swipe of his SBI debit card

branch to know the customer better and provide personalized offerings based on their financial and banking needs.

SBI’s GenNext branch will also seamlessly integrate all the branch technology devices and processes with other channels to provide a single view of the bank to customers. This integration will also help SBI reduce transaction cost, increase business per employee, increase branch officials’ efficiency, optimally utilize branch resources, enhance customer experience and contribute to the environment and society “SBI has also set up its first ever innovation lab at its corporate office. The whole idea is to replicate the future of banking and how the customers would experience banking,” says Narasimhan. The innovation lab would design solutions and processes which would address not only the existing business problems, but also those of the next generation banking customer.

“Innovation has become a practice and a culture, and it would play a crucial role for SBI to redefine banking,” he adds. The next step is to have a one-stop shop for all the customers’ banking and financial needs – virtual tellers and remote experts for advisory services. “SBI has the best technology in the world and with our GenNext Branch Banking, we would be the preferred bank for every Indian” Narasimhan says.

TRANSFORMERS INTERVIEW

IT + Business =

business

sense As long as a project is seen not just as an IT project, but as a business-IT project, it will succeed. That’s the credo Ujjwal Mathur, Head (Sales) - TCS, India, believes in.

Ujjwal Mathur Head of Sales Tata Consultancy Services, India

Custom Solutions Group TATA CONSULTANCY SERVICES

How can CIOs achieve better IT-business alignment? How do they set their priorities right?

It is no longer possible for IT departments to work in silos or for CIOs to take decisions without business involvement. The CIO is now an essential part of the team that forms the business strategy. He must participate in business planning and have an IT strategy that blends well with the organization’s plans.

CIOs must prioritize projects, keeping in mind the priorities of business. More and more businesses are trying to involve the IT department to ensure they have a strategy that leverages IT very well. Unless the goals of the IT organization are aligned with those of the business, the results of the IT projects will leave much to be desired.

Do you think running IT like business helps?

What can be done to help increase the success rate of projects?

It is imperative to link the goals of any unit within the structure with the final goals of the overall organization. Running IT as a business will definitely help .If IT can help achieve the business goals, it will be a winwin situation for the overall organization.

As long as it is seen not just as an IT project, but as a business-IT project, the project has a stronger possibility of success. At every stage of the project, the business benefits need to be reviewed keeping in mind the market changes and competition. The balanced score card of the IT organization has to be linked to that of the business.

All the stakeholders in the project have to be involved and must play an active role in the execution of the project. Entrusting the project only to IT or business will not be productive.

How do you get an organization to change its outlook with regard to IT? In today’s world, IT plays a very important role in the success of the company. IT has to be construed as a mainline function and not a support function. This has to be ingrained in the organization and must become a part of the organization’s DNA. How can business use IT to gain a competitive edge and increase revenue?

Today, most businesses use IT for gaining an edge over competition. IT has helped business extend its market reach, decrease time-to-market, get better insights into customer data using analytics, focus better on marketing, and use social networking to its advantage. Chief executives of companies now have the latest data on their finger tips and this helps them take

quick decisions to change business strategy to remain competitive. The organization should have a mindset for continuous technology enablement. New technologies like cloud, mobile, etc need to be seriously considered for this enablement.

Business roles are ever-changing. Do you see the CIO’s role evolving too?

Today, CIOs are no longer pure technology players.

Most of them are business technologists. They monitor the business trends in the market and ensure that the changes are incorporated in the IT strategy of the organization. There are several instances where CIOs are people from business who understand technology. Understanding the business need and translating it into technology has become one of the key functions of the CIO. What is the scope for innovation in businesses?

Can an organization succeed without innovation?

It is difficult for any business to grow without constant innovation. History has shown that organizations which do not innovate or adapt to changes in environment eventually do not succeed. Innovation also needs to be in the DNA of the organization. Ideas not only need to be generated but also implemented so as to acquire a competitive edge. Most organizations have units focusing on Quality, HR and so on; similarly, they should also have a unit focusing on innovation. This unit needs to explore new ideas from within the organization as well as from without. Innovation cannot be a one-off instance and should be institutionalized.

What, according to you, are the parameters to measure success of IT projects?

An IT project will have succeeded if the businessstated ROIs are met or if the project seems to be heading towards meeting them. There may be projects that are delivered on time, but if they don’t bring the required business benefits, they aren’t deemed successful.

Transformers is brought to you by IDG Custom Solutions Group in association with