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RBS INDIA

Submitted By:
Saurabh Singh
DoMS IIT Roorkee
13810069

Increase the efficiency/accuracy and turnaround time
in operations Department at (RBS India) Business
centres across India using Financial Supply Chain
Management Solution.
(A Business Case)


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Table of Contents

1. Introduction.......................................................................................................3
1.1 Project Name...................................................................................................3
1.2 Project Team...................................................................................................3
1.3 Project Description.........................................................................................3

2. Background.......................................................................................................4
2.1 The Industry....................................................................................................4
2.2 SCM in Banking Industry.5
2.3 The Current Scenario......................................................................................5
2.4 Problem Definition ........................................................................................6
2.5 Process workout findings..7
2.6 Why SCM concepts in Refer Centre Process.................................................7

3. Measurable Organisational Values (MOV)..............................................8
3.1 Quantifying MOVs.........................................................................................9
4. Cost Benefit Analysis ....................................................................................10
5. Evaluation of Alternatives .............................................................................11
6. Recommendations ........................................................................................14



















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Introduction

Project Name

Increase the efficiency/accuracy and turnaround time in operations Department at (RBS
India) Business centres across India using Financial Supply Chain Management Solution.


Project Team

The team consists of:-
1) Steering committee: The members of this particular committee include Product
Managers, the SCM consulting manager and the project manager.
2) Technical members like Team Leads, Team members.
3) Operations team which include people like inventory manager.
4) Financial Consultant.



Project Description:

The Project is about implementation Supply Chain Management (SCM) process in Refer
Centre process which is being used in Business centre of RBS India. These Business centres
are located at Gurgaon, Bangalore, Chennai, Hyderabad and Kolkata.

Refer Centre is one of the operation process which work on end-to-end decision of
customer applications on 3 products as Saving accounts, Loans and MTAs.
Refer Centre process which is being used in 5 branches above when implemented initially
was all manual in use, it is time consuming , slow process and low efficiency process which
takes a lot of time to work upon. Using Refer centre process as such leads to wastage of
resources along with man-hours on daily basis and low in efficiency leads to loss of revenue
for the RBS India.






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Background

The Industry

India is considered among the top economies in the world, with tremendous potential for its
banking sector to flourish. The last decade witnessed a significant upsurge in transactions
through ATMs, as well as internet and mobile banking.
The country's banking industry looks set for greater transformation. With the Indian
Parliament passing the Banking Laws (Amendment) Bill in 2012, the landscape of the sector
has duly changed. The bill allows the Reserve Bank of India (RBI) to make final guidelines on
issuing new licenses, which could lead to a greater number of banks in the country. The style
of operation is also slowly evolving with the integration of modern technology into the
banking industry.






Market size

The size of banking assets in Indiatotalled US$ 1.8 trillion in FY 13 and is expected to touch
US$ 28.5 trillion in FY 25.Bank deposits have grown at a compound annual growth rate
(CAGR) of 21.2 per cent over FY 06-13. In FY 13, total deposits were US$ 1,274.3 billion.
The revenue of Indian banks increased from US$ 11.8 billion to US$ 46.9 billion over the
period 2001-2010. Profit after tax also reached US$ 12 billion from US$ 1.4 billion in the
period.











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SCM in Banking Sector

Banking Industry extensively uses Supply Chain Management concepts in almost all of its
process and procedures like ERP, CRM. Supply Chain Management play equally important
role in Banking & Finance sector as in any other industry. Few of SCM concepts used in
Banking Industry are as follows
Enterprise Resource Planning (ERP)
Customer Relationship Management (CRM) Teradata
Supplier Relationship Management (SRM)
Credit Scorecards - SAS, SPSS
Demand and Supply Forecasting Models.
Paperless Transactions/ processes.

Current Scenario:

The RBS Group is a large international banking and financial services company. From its
headquarters in Edinburgh, the group serves over 30 million customers in the United
Kingdom, Europe, the Middle East, the Americas and Asia. Our brands operate around the
globe to provide banking services for individuals, businesses and institutions.

The group provides a comprehensive range of financial services to retail, corporate, and
financial institutions. Markets and International Banking, the Investment Banking arm of the
group, offers a broad range of services enabling major corporations and institutions to
achieve their global financing, transactions services and risk management objectives.
RBS Group had a market capitalisation of approximately 20.4 billion as of 4 March 2014,
making it the 26th largest company on London Stock Exchange.
The Royal Bank of Scotland Group is growing to be one of the largest financial services
groups in the world. In the year 2007, the Group increased its presence across the globe
while purchasing several parts of the Dutch bank and the ABN AMRO businesses in India.
The Group serves to large enterprises, multi-national corporations (MNCs) and financial
institutions by offering them consumer and business banking services.
In 2008, ABN AMRO Bank N.V. in India was renamed as The Royal Bank of Scotland N.V. RBS
India offers unmatched client services in India. They offer a wide range of facilities like,
transaction banking, foreign exchange products and services, personal loans, savings
accounts, credit cards, financial planning, insurance services, Personal Banking, etc.
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Problem Definition

RBS India Business centre uses Project Refer Centre as one of the process in Operation
Department at 5 locations in India.
Project Refer Centre is one of the operation processes, which Covers end-to-end decision of
customer applications from receiving of application to final decision making
(Approve/Decline) for 3 products of bank namely saving accounts, Loans and MTAs.
At the time of launch it was very manual, time consuming and low efficiency process where
bank executives utilise lot of time and energy in daily processing.

Traditional Process




Step 1
Customer
Application
( 3 Products, 3
forms)
Step 2
Customer
Documents
(Hardcopies/Pa
pers)
Step 3
data entry to
Softwares ( 3
Products, 3 forms)
Step 4
Extracting &
Combining
Data
Step 5
Allocating Files
(3 Products,3
TLs,15 Teams,20
members)
Step 6
Maintaining
Daily Files
and Quality
Step 7
Application
wise
processing (
Manual Copy-
paste excel to
system)
Step 8
Checking
Applicant
Documents (Hard
copies/Paper)
Step 9
Updating
Final Decision
into Excels
Step 10
Combining
Final Files
Step 11
Uploading Final
Decision into
softwares
Step 12
Preparing Executive
Level Summary
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Process Workout Findings

Process Workout Findings:-
Data entry of customer details is made in 3 different software as per products
applied for and then combining data of all software is very time consuming and
costly process.
Maintaining and checking all hard copies/papers of customers is tedious and affect
TAT (Turn around Time) of application.
Maintaining and combining separate excel files of applicants on daily basis increase
TAT and inefficiency in process (15 team, 20 members each teams and 3 products)
raises the need of data warehouse.
Preparing of conversion rate, executive summary and reason for declines was very
time consuming and inefficient process, done on monthly basis is wastage of Man-
hours on yearly basis.
High chances of errors due to lot of manual touch points.

Why SCM concepts in Refer Centre Process?

Methods Applied
Just-In-Time: Its a strategy which helps in increasing business efficiency and
productivity by reducing in process inventory and carrying cost.
Lean Applied concept of Lean by eliminating the in-process step through
innovation or automation.
Paperless Work: Applied the concept of paperless work by using Image and workflow
techniques and software help in getting real time actionable data speed up SCM
process and to reduce Paper cost and time consumed in process.
CRM Customer relationship management got implemented by combining data of
all three products for which customer applied for by storing customer details at one
data warehouse location using Teradata.



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Measurable Organizational Value (MOV)

By implementing SCM in refer centre process will be updated and new Process after
Applying SCM concepts will look like below:


The Reduction of no of steps in the process from 12 to 6 provides both Financial and
Operational Benefits to RBS India business centres. The financial Supply chain management
system implemented is Cloud based/Saas based.

Financial and Strategic Benefits:
Increased Capability of process.
Long term Benefits.
Updating decision live into systems.
Saving in Man-hour cost.
Cost saving due to less usage of resources.
Operational Benefits:
Less paper work.
No data extraction in Excel files.
No Manual Allocation of Cases - No copy paste from excel.
All Scan Documents available which reduce TAT (Turnaround Time).
Enhance employee productivity considerably.
Step 1
Customer Application
( Single forms 3
products)
Step 2
Customer
Documents
(All Scanned)
Step 3
data entry to
Software
(Single Software)
Step 4
Data uploaded to
Teradata (CRM)
Step 5
New Online
Application
Processing
Software
Step 6
Preparing
Executive Level
Summary (
Automation )
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Improved inventory management and also helps in reducing material wastage
Reduction from 3 software each for 3 different products to single software.

Quantifying MOV

In order to calculate whether the project is successful or not it was very essential to find out
a quantified targets which will be achieved with the help of this project.

Turnaround Time (TAT): This means reduction in turnaround time by time of original time
taken when old process was used. The change in Turnaround time leads to saving of $2.5
per application per day.
Banks drastically reduces TAT from 30 days per application to 7 days per application
in decision making.
Introduction of Image and workflow for scanning of documents, CRM, New online
processing software and Automation of excel files for Executive Summary.

Reduction in Cost: By eliminating the waste process and reducing the number of steps in
the process application.
The Cost was reduced from $25 to $6.5 per application end-to-end.

Man-hour cost
Business have been able to save 3 Man hours per employee per day .
On an average Cost of 1 Man-hour cost around $15.
Daily Saving of around $45 man hour/day

Data Warehouse Cost.
Earlier 3 different softwares are used for 3 different product and 3 different forms for each
product available.
Estimated cost per application or for 3 different product category cost around $50,000 per
application per year.

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Estimated cost of 3 application software for 3 different product cost up to $1, 50,000 per
year excluding maintenances cost. Single software which is being developed will now cost
around $76,000 per year as installation cost including maintenance cost well.
This alone leads to total saving of $74,000.
Teradata ,a CRM software put in place cost around $66,000 per year, total costing around
$1, 40, 000 per year. Thus total saving stands at $10,000 per year for eliminating the no of
steps and warehouse complexity.

4. Cost Benefit Analysis

Cost Benefit analysis done for next 3 years.
Business have been able to save 3 Man hours per employee per day which give us
Yearly Man Hour Savings to $3.24 Million.
Calculating Total Man hour saving : 3x240(day)x15(teams)x20(Members per team) =
216000 Man
Cost of 1 Man hour = $ 15, Therefore Total Man Hour Saving in $ = $15x216000=
3.24 Million $.
Year Year 1 Year 2 Year 3
Hardware Cost 66,000 75900 87285
Software Cost 1,86,000 213900 245985
Cost Saving per Man-
hour per employee
32400 34020 35721
Increased Revenue 40,00,000 46,00,000 52,90,000
*All figure in dollars.
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Total man hour cost per application per day= $15
Total working days=240
Total Man-hour saved per employee=3
Total man-hour saving per application per year=32400
Assuming the cost in man-hour is increasing at 5 % per annum per employee
In the above analysis, we have assumed that the initial cost of hardware installation
including warehouse cost of using teradata is $66,000 and the maintenance cost is $0.1
million in year 1 and increasing at rate of 15% per annum for 3 years.


Similarly, The software developed on its own by third party vendor .Cost for software
installation along with maintenance cost is $1,86,000 and maintenance cost is 10% of
software cost also increasing at the rate of 15 % per annum.
The revenue generated is from Reduction in cost Turnaround time application (TAT) for 3
application over an year, by elimination of waste process and steps, using teradata for CRM
and data uploading, using image and workflow technique and is estimated to be $40 million
over the year 1 and increasing at the rate of 15 % per annum.

5. Evaluation of Alternatives

There are different vendors who can provide financial supply chain management modules:

Option 1: SAP Financial Supply Chain Management (FIN-FSCM)
SAP ERP 6.0
SAP enhancement Package 4 for SAP ERP 6.0
SAP NetWeaver Business Intelligence (SAP NetWeaver BI)
Software Component- FINBASIS 602 and SEM_BW 602
SAP NetWeaver Business Intelligence
Financial package starting at $149 per user per month
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CRM package starting at $89 per user per month.
No of Users=300
Per month cost-Per month cost for financial package-300*238=$71400
Per year cost-$856800

Option 2. Microsoft Dynamics CRM Solution
Supported by Microsoft Windows Server
In order to work properly it needs Microsoft Exchange Server or access to a POP3-
compliant email server and SharePoint Server required for document management.
Claims-based security token service (required for Internet-facing deployments).
Microsoft SQL Server 2008 or Microsoft SQL Server 2012.
Minimum system requirement for server is either Quad-core x64 architecture 2 GHz
CPU or higher such as AMD Opteron or Intel Xeon systems or a Multi-core or
multiple 1.8-GHz CPU or higher processor for server.

$125 per user per month for Enterprise Edition
Expected user for company-15*20=300 users
Expected cost for 300 users per month=300*125=$37500
Expected cost for 300 user per year=$37500*12=$450000
Above mentioned cost does not include cost of server and other software estimated to be
around $1,40,000.
Expected per year cost: $5,90,000


Option 3. IFS application 8.0
On Premise Deployment /Cloud Based (Saas) and Oracle available
Window/Linux Server
Windows server 2003/08
Provides account level security along with financial analytics integrated within its ERP
module and onsite training for employees at bulk cost.
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It is supported by Window platform only.
Estimated price for $700000 + Maintenance cost(@10%)+ Installation
Cost(@20%)=$9,00,000

Option 4. Customized FSCM solution.

Developing its own financial supply chain management solution without ERP
implementation on existing system configuration.
Cost of Developing FSCM solution through third party vendor, customized to fulfil the
requirements.
Using Teradata for CRM solution will cost $66,000 per site.
Total estimated cost per year=$4, 50,000(including cost at 4 sites).
















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6. Recommendations:

The company has option to go for SAP Solution which is renowned in world for its quality
solution , However since RBS india Business centres have very specific requirement in
operation process, which is used internally by employees of RBS India and to particular
operation process only.Since the no of users using the Refer centre process may increase
over time .Instead of purchasing the completer ERP solution and paying the license fees
they can go for customized Financial supply chain management solution through Third Party
vendor and pay only for the CRM solution of Teradata.