Presentation is loading. Please wait.

Presentation is loading. Please wait.

Process Innovation in the Indian Banking Industry January 2009 ValueNotes Arun Jethmalani, Managing Director, ValueNotes

Similar presentations


Presentation on theme: "Process Innovation in the Indian Banking Industry January 2009 ValueNotes Arun Jethmalani, Managing Director, ValueNotes"— Presentation transcript:

1 Process Innovation in the Indian Banking Industry January 2009 ValueNotes Arun Jethmalani, Managing Director, ValueNotes

2 Process Innovation in the Banking Industry © ValueNotes About ValueNotes Outsourcing Practice Dedicated practice within ValueNotes - Focused on researching the outsourcing industry Focused Reports/ Info- products: In-depth information & analysis on outsourcing in different verticals /service lines Custom Research: Opportunity assessment, vendor benchmarking /selection, investment appraisal, location and cost-analysis Significant domain expertise Large & evolving knowledge base Global clientele and relationships Growing brand awareness in the industry Thought Leadership… in the offshoring industry

3 Process Innovation in the Banking Industry © ValueNotes ValueNotes Publications Industry/ Vertical Reports Banking and Financial Services Insurance Engineering Design Pharmaceutical Healthcare Banking and Financial Services Insurance Engineering Design Pharmaceutical Healthcare Reports on Niche Segments Legal Services Publishing Bio-informatics Tax Returns Preparation Market Research Patent Services Legal Services Publishing Bio-informatics Tax Returns Preparation Market Research Patent Services Databases / Profiles DealTracker: (Contract, M&A, VC/PE deals) In-depth Company Profiles DealTracker: (Contract, M&A, VC/PE deals) In-depth Company Profiles Upcoming Reports KPO Country Reports Company Profiles Business and Financial Research KPO Country Reports Company Profiles Business and Financial Research

4 Process Innovation in the Banking Industry © ValueNotes ValueNotes Publications Clients Opportunity Assessment Study of specific segments in BPO / KPO Comparative analysis Competitive assessment Opportunity Assessment Study of specific segments in BPO / KPO Comparative analysis Competitive assessment Market Intelligence Vendor Evaluation & Benchmarking Partner Selection, Due Diligence Vendor Evaluation & Benchmarking Partner Selection, Due Diligence Target Intelligence Analysis of potential markets Cost analysis and comparison Investment Opportunities in KPO Analysis of potential markets Cost analysis and comparison Investment Opportunities in KPO Location/Cost Analysis Customized Publications Newsletters Magazines Articles Sponsored reports End Users (Buyers) Investors, VC & PE firms Consultants Industry (BPO, KPO, IT)

5 Process Innovation in the Banking Industry © ValueNotes Ever-expanding customer base, now > 500 Consulting Cos. Corporations Clients KPMG Axyva PWC Booz Allen Hamilton BCG TPI Deloitte KPMG Axyva PWC Booz Allen Hamilton BCG TPI Deloitte Thomson Corp P&G Microsoft Aviva GSK West Corp GM Thomson Corp P&G Microsoft Aviva GSK West Corp GM BPOs Cognizant Integreon Perot Systems Wipro Infosys WNS Satyam IBM Cognizant Integreon Perot Systems Wipro Infosys WNS Satyam IBM PE / VC Warburg Seqouia Warburg Seqouia

6 Process Innovation in the Banking Industry © ValueNotes Executive Briefing – An outline  Process Innovation in the Indian Banking Industry: Overview  Drivers & Constraints  Services Outsourced by Indian Banks  Market Size & Opportunity  Service Provider Landscape  Key Success Factors

7 Process Innovation in the Banking Industry © ValueNotes International Banks – Early Adopters Globally, BFS sector accounts for nearly 60% of the global offshoring market. In contrast, the Indian banking sector has been slower to outsource. But Indian Banks Lag Behind… Source: ValueNotes’ report on Outsourcing in the Indian Banking Industry

8 Process Innovation in the Banking Industry © ValueNotes Executive Briefing – An outline  Process innovation in the Indian Banking Industry: Overview  Drivers & Constraints  Services Outsourced by Indian Banks  Market Size & Opportunity  Service Provider Landscape  Key Success Factors

9 Process Innovation in the Banking Industry © ValueNotes Source: ValueNotes’ report on Outsourcing in the Indian Banking Industry Outsourcing of processes is largely constrained by the RBI regulations Drivers & Constraints Unlike the offshore BPO market, labor arbitrage is not a key driver for growth in the domestic BPO market.  Aggressive adoption of IT and centralization of operations has served as a key enabler to outsourcing of business processes in the banking industry.  Growth in the banking industry, deregulation, increasing competition, consolidation and improving benchmarks in the industry are driving the outsourcing of business processes.

10 Process Innovation in the Banking Industry © ValueNotes Executive Briefing – An outline  Process innovation in the Indian Banking Industry: Overview  Drivers & Constraints  Services Outsourced by Indian Banks  Market Size & Opportunity  Service Provider Landscape  Key Success Factors

11 Process Innovation in the Banking Industry © ValueNotes Services Outsourced by Indian Banks The outsourceability of processes is determined by two factors: their classification as core service and the strategic value of the process.  Core Processes: Classified by RBI or categorized under KYC norms  Strategic Value Processes: Activities / Processes with strategic importance to banks Source: ValueNotes’ report on Outsourcing in the Indian Banking Industry “We will look at outsourcing activities like tech-enabled customer service delivery that are not core to our business.” - Head CBS, Leading Bank in Maharashtra Large banks currently outsource non-core, non-strategic value processes

12 Process Innovation in the Banking Industry © ValueNotes Source: ValueNotes’ report on Outsourcing in the Indian Banking Industry Banks typically outsource IT systems and process implementation Services Outsourced by Indian Banks Current Level of Outsourcing Other Services Regulatory Compliance Treasury Transaction Processing Sales and Marketing Product Development Product Strategy and Policy AdvertisingPayment Processing ReconciliationKYC NormsAlliances New Product Development and Planning Loyalty Programs Corporate Communications New Account Opening Credit Collateral Evaluation Collections, Accounts Closure Check and Loan Processing Reconciliation Lease Management Asset Management Funds Management Transfer Pricing Risk Management Anti-Money Laundering Account- Transaction Monitoring Document and Reporting Forex Management International Banking Value Added Services Data Entry Core Processes Non-Core Processes LowHigh HR IT Services Majority of the banks typically outsource some of their non-core activities with strategic value like IT systems and process implementation to third party service providers.

13 Process Innovation in the Banking Industry © ValueNotes Executive Briefing – An outline  Process innovation in the Indian Banking Industry: Overview  Drivers & Constraints  Services Outsourced by Indian Banks  Market Size & Opportunity  Service Provider Landscape  Key Success Factors

14 Process Innovation in the Banking Industry © ValueNotes The total opportunity for outsourcing in the banking sector is estimated at Rs b for FY08. Our research suggests that little over one-third of this opportunity (Rs b) is currently being met. Outsourcing estimated to grow at a CAGR of 47% over the next 4 years Source: ValueNotes’ report on Outsourcing in the Indian Banking Industry Market Size & Opportunity Majority of the revenues are earned from voice-based services in sales and marketing. Apart from sales and marketing related services, the Rs. 4 b market is spread across processes like payroll outsourcing, recruitment outsourcing and research and analytical support. “Completion of Core Banking System projects by large banks will exponentially increase the outsourcing potential in domestic Banking sector.” - Head CBS, Large PSB in India

15 Process Innovation in the Banking Industry © ValueNotes In case of rapid deregulation, the market has the potential to triple by Source: ValueNotes’ report on Outsourcing in the Indian Banking Industry  We believe that there are two key determinants to outsourcing in the banking Industry - regulatory framework and the ability of banks to refine their strategy while adapting to changing business conditions.  The growth post 2010 will primarily depend on the government elected at the center and its success in pushing reforms in the banking industry. Future Opportunities: 3 Scenarios “De-regulation especially in KYC norms can trigger the next wave of outsourcing by domestic Banking Sector” - Pralhad Tembhe, DGM Central Bank of India

16 Process Innovation in the Banking Industry © ValueNotes  The complexity of operations will substantially increase – new opportunities for banks/BPOs: Will provide a boost to low value activities such as data entry & validation, CRM services like telesales, SMS based support, chat, Internet support, etc.  With increased use of new delivery channels (Internet, mobile, ATM), multi-product delivery and cross-selling will enhance scope of BPO services.  Enhanced penetration and usage of IT will propel greater usage of BPO, as banks seek to leverage IT investments to improve RoI  Expansion of IT into non-core areas will increase demand for related BPO  Captives will continue to grow, especially for PSBs Key Trends & Insights

17 Process Innovation in the Banking Industry © ValueNotes Executive Briefing – An outline  Process innovation in the Indian Banking Industry: Overview  Drivers & Constraints  Services Outsourced by Indian Banks  Market Size & Opportunity  Service Provider Landscape  Key Success Factors

18 Process Innovation in the Banking Industry © ValueNotes With increased automation of back office services, scope for outsourcing will widen… The Banking industry was one of the first to outsource business processes to third party service providers in the Indian market. Banking is also one of the largest segments in terms of total outsourcing opportunity the domestic BPO industry. Source: ValueNotes’ report on Outsourcing in the Indian Banking Industry Service Provider Evolution

19 Process Innovation in the Banking Industry © ValueNotes Source: ValueNotes’ report on Outsourcing in the Indian Banking Industry We have categorized the service providers into the following four groups: Service Provider Landscape Majority of the large service providers in the domestic market have a substantial focus on the banking industry Out of the 60 large Global leaders (total 10,000+ employees) serving the international Banking and Financial Services vertical, <10 BPOs actively cater to Indian banks Shell Transource

20 Process Innovation in the Banking Industry © ValueNotes Service Provider Landscape

21 Process Innovation in the Banking Industry © ValueNotes Frontrunners Source: ValueNotes’ report on Outsourcing in the Indian Banking Industry Disclaimer - Findings are based on secondary research combined with detailed discussions with service providers. Quality of information depended on the cooperation of respondents from the management of the companies. Where information was not disclosed by service providers, secondary data, internal analysis and other suitable criteria were used.

22 Process Innovation in the Banking Industry © ValueNotes Executive Briefing – An outline  Process innovation in the Indian Banking Industry: Overview  Drivers & Constraints  Services Outsourced by Indian Banks  Market Size & Opportunity  Service Provider Landscape  Key Success Factors

23 Process Innovation in the Banking Industry © ValueNotes Large scale, multiple city operations  Most of the mid-sized and large Indian banks have centers and market presence across cities and towns in India.  Most of the banks prefer to have distributed outsourcing delivery centers in each region close to their head quarter.  Ability to quickly ramp up operations will be critical for growth  Local language capabilities are required to serve the end clients (especially in non-metro towns). Key Success Factors

24 Process Innovation in the Banking Industry © ValueNotes  The complexity of operations will substantially increase as service providers add new clients, manpower and new delivery centers over the next 2 years.  Integrating international operations with domestic operations will be a key challenge.  Developing and implementing new operations and solutions delivery mechanisms to improve quality of services while further reducing costs will become essential to acquire the leadership position.  Partnerships with other entities in IT-BPO supply chain (like IT services providers, hardware service providers) will provide greater value to the client. Key Success Factors

25 Process Innovation in the Banking Industry © ValueNotes Advisory capabilities to move up the value chain  Most of the Indian banks have relatively low (technology) maturity in their processes and are new to outsourcing. These banks are currently experimenting with outsourcing by outsourcing small volumes of low value work. With further de-regulation in the banking Industry, the scope for outsourcing will widen.  With increased complexity and scale, further outsourcing will require guidance in terms of process migration, best practices, benchmarking, etc. Key Success Factors

26 Process Innovation in the Banking Industry © ValueNotes THANK YOU ! ValueNotes Database Private Limited 1, Bhuvaneshwar Society, Abhimanshree Road, Pashan, Pune Tel: / 65 URL:


Download ppt "Process Innovation in the Indian Banking Industry January 2009 ValueNotes Arun Jethmalani, Managing Director, ValueNotes"

Similar presentations


Ads by Google