1. Retail Banking Group Mobilization A&D
Financial Services Company
Value Chain Analysis
Retail Banking Group Mobilization A&D
Value Chain Analysis 7/21/92

2. OBJECTIVE To identify and depict value-added functions
To determine high-level allocation of resources
To determine high cost areas
To identify benefit areas

3. ASSUMPTIONS (HEADCOUNT)
1. All headcount figures are derived from RBG organizational charts
2. Both Relationship Managers (RMs) and Non-office Staff perform relationship management services and are counted in the "Customer/Relationship Management" link
3. There are 921 RMs located throughout the branches
80% (or 737) are dedicated to Consumer Banking relationships
20% (or 184) are dedicated to Commercial and Professional Banking relationships
4. There are 4,737 Non-office staff members located throughout the branches
50% (or 2,369) perform services that support relationship management (i.e. tellers, customer service reps)
Of this 50%:
80% (or 1,895) support Consumer Banking relationships
20% (or 474) support Commercial and Professional Banking relationships

4. ASSUMPTIONS (HEADCOUNT) (cont'd.)
5. Investment and Insurance services are handled by third parties. Thus, headcount is zero for most links in the chain for these services
6. Credit Services:
For Consumer Banking, services are handled outside of the RBG by the National Consumer Asset Group. Thus, RBG headcount is zero.
For Commercial and Professional Banking, figures are derived from the total staff headed by Credit Management.
7. Distribution and Treasury services are performed outside of RBG; thus, headcount is zero
8. Credit Controls figures are derived from total headcount inxxx's group
9. Staff Support figures are derived from the following groups:
• Human Resources
• Information Systems
• Finance
• Marketing
• Product Mgt
• Legal

5. ASSUMPTIONS - FINANCIAL SCALE
1. Non-interest expenses in the value chain analysis are Salaries, Benefits, Occupancy, Equipment and Other, and Overhead Allocations
2. 80% of Total Salaries and Benefits are allocated to Consumer Banking;
20% are allocated to Commercial and Professional Banking
Consumer Banking:
3. Salaries and Benefits are allocated as follows:
Customer Acquisitions 15%
Account Opening 15%
Customer Relationship Mgt 35%
Service 35%
4. Occupancy, Equipment and Other costs are allocated as follows:
Customer Acquisitions 20%
Customer/Relationship Mgt 20%
Savings Services 20%
Payment Services 15%
Credit Services 15%
Info/Advisory Services 10%

6. ASSUMPTIONS - FINANCIAL SCALE (cont'd)
5. Overhead expense is allocated as follows:
Payment Services 36%
Credit Services 30%
Savings Products 34%
Commercial and Professional Banking:
6. Total Commercial and Professional Banking salaries and benefits plus 20% of Consumer Banking salaries and benefits are allocated nearly equally across all areas
7. Occupancy expense is allocated as follows:
Customer/Relationship Mgt 67%
Credit Services 33%
8. Overhead is allocated nearly equally across all areas

7. RETAIL BANKING VALUE CHAIN - OWNERSHIP STRUCTURE
NY Consumer
Banking
Customer/Relationship Management:
Payment Services:
Account Opening
Transaction Processing
Service
Savings Services:
Account Opening
Service
Investment Services:
Account Opening
Investment Management
Service
Insurance Services:
Account Opening
Underwritings
Service
Credit Services:
Credit
Approvals
Screening
Pre-
Qualifying
Dis-
Bursement
Service
Collections
Info & Advisory Services:
Account Opening
Investment Management
Service
Commercial &
Professional
Banking
Customer/Relationship Management:
Payment Services:
Account Opening
Transaction Processing
Service
Savings Services:
Account Opening
Service
Investment Services:
Account Opening
Investment Management
Service
Insurance Services:
Account Opening
Underwritings
Service
Credit Services:
Credit
Approvals
Screening
Pre-
Qualifying
Dis-
Bursement
Service
Collections
Info & Advisory Services:
Account Opening
Service
Delivery Channels: Distribution, etc.
Consumer Banking
Commercial Banking
Treasury/Balance Sheet Management
Tech and Ops Group
Outside Vendors
Credit Controls: Audits, Non-Credit Controls
Geoserve
National Consumer
Asset Group
Staff Support: HR, IS, Finance, Marketing, Legal, Product Management

8. OWNERSHIP STRUCTURE IMPLICATIONS
1. Consumer and Commercial Boundaries are not clearly defined
2. Simple business functions span multiple areas of ownership
Excessive interface issues exist
3. There is no single point of contact for the customer
Customers are passed:
Function to function
Executive to executive

9. RETAIL BANKING VALUE CHAIN
$ %
NY Consumer
Banking
Customer/Relationship Management:
Payment Services:
Account Opening
$23 3%
Transaction Processing
$72 9%
Service
$ %
Savings Services:
Account Opening
$64 8%
Service
$ %
Investment Services:
$78
10%
Account Opening
Investment Management
Service
Insurance Services:
Account Opening
Underwritings
Service
Credit Services:
Credit
Approvals
$10 1%
Screening
$10 1%
Pre-
Qualifying
$10 1%
Dis-
Bursement
$20 3%
Service
$35 4%
Collections
$20 3%
Info & Advisory Services:
Account Opening
$11 1%
Investment Management
$7 1%
Service
$22 3%
$35 4%
Commercial &
Professional
Banking
Customer/Relationship Management:
Payment Services:
Account Opening
$11 1%
Transaction Processing
$11 1%
Service
$12 2%
Savings Services:
Account Opening
$17 2%
Service
$17 2%
Investment Services:
Account Opening
Investment Management
$34 4%
Service
Insurance Services:
Account Opening
Underwritings
Service
Credit Services:
Credit
Approvals $5 1% $5 1%
Pre-
Qualifying $5 1%
Screening
Dis-
Bursement $6 1% $6 1% $8 1%
Service
Collections
Info & Advisory Services:
Account Opening
$14 2%
Service
$14 2%
Delivery Channels: Distribution, etc.
Treasury/Balance Sheet Management
Expenses ($million):
1. Salaries
2. Benefits
3. Occupancy
4. Equipment & Other
5. Overhead Allocations
Credit Controls: Audits, Non-Credit Controls
Staff Support: HR, IS, Finance, Marketing, Legal, Product Management

10. FINANCIAL SCALE IMPLICATIONS
1. There is substantial cost savings opportunity in the Consumer Bank
The Consumer Bank is expected to lose approximately $100 million (1992)
75% of core RBG non-interest expense is associated with Consumer Banking
2. There is substantial cost savings opportunity in the customer acquisition and relationship management processes
Approximately 33% of non-interest expense is dedicated to customer acquisition and relationship management processes
3. Streamlining transaction processing and back office operations constitutes a significant opportunity
Transactions processing accounts for 12% of total costs in the consumer banking area

11. RETAIL BANKING VALUE CHAIN - HEADCOUNT ALLOCATION
NY Consumer
Banking
Customer/Relationship Management:
2,632
Payment Services:
Account Opening
737
Transaction Processing ?
Service
2,632
Savings Services:
Account Opening
737
Service
2,632
Investment Services:
Account Opening
Investment Management
Service
Insurance Services:
Account Opening
Underwritings
Service
Credit Services:
Credit
Approvals
Screening
Pre-
Qualifying
Dis-
Bursement ?
Service
2,632
Collections ?
Info & Advisory Services:
Account Opening
737
Investment Management
Service
2,632
719
Commercial &
Professional
Banking
Customer/Relationship Management:
Payment Services:
Account Opening
184
Transaction Processing ?
Service
719
Savings Services:
Account Opening
184
Service
719
Investment Services:
Account Opening
Investment Management
Service
Insurance Services:
Account Opening
Underwritings
Service
Credit Services:
Credit
Approvals
107
Screening
107
Pre-
Qualifying
107
Dis-
Bursement ?
Service ?
Collections ?
Info & Advisory Services:
Account Opening
184
Service
719
Delivery Channels: Distribution, etc.
Treasury/Balance Sheet Management
Credit Controls: Audits, Non-Credit Controls 50
Staff Support: HR (92), IS (1,016), Finance (60), Marketing (49), Legal (0), Product Management (27)

12. HEADCOUNT IMPLICATIONS
Large headcount in Consumer Banking provides the opportunity to explore the effectiveness of people deployment
The customer/relationship management function represents the area of greatest opportunity

13. VALUE CHAIN DEVELOPMENT
Constructed by:
Reviewed by: