IT Strategy formulation for ICICI Bank

GCS I Group A9
Akash Srivastava | Ankit Saxena | Jatin Magu | Kunal Gupta | Karan Madaan | Prabhat Prasoon

Phase 1

Home Work

Business Strategy, CSFs, Drivers, Trends, Business Structure

Indian Banking : Overview

Phase 1

Industry size - Rs 64 trillion Credit to Deposit ratio - 70% Growth rate Profit margins - 12% Avg IT spends - 4% of total expenditure Total IT Spend in 2011 253 billion rupees

Indian Banking Industry: Structure

Phase 1

SBI and associates 7 Nationalized banks

SCBs 83

20 Private banks 22 Foreign banks 34

Nationalized banks have 85% of all branches

Major Services Offered

Phase 1

Payment services Financial Intermediaries Financial Services

Products/ Services offered

Credit Cards/Debit Cards ATM E-Cheques EFT (Electronic Funds Transfer) DeMAT Accounts Mobile Banking Telephone Banking Internet Banking EDI (Electronic Data Interchange)

Phase 1

Performance indicators

Phase 1

Net Interest Margin Non Performing Assets RoA RoE Loan Loss Reserve Ratios (LLR) CAMELS rating

Key industry drivers

Phase 1

Critical Success Factors

Phase 1

Technology Practised

Phase 1

Industry Challenges

Phase 1

Industry SWOT

Phase 1

Major concerns of a Bank

Phase 1

Liquidity Management Asset Management

Managing Credit risk Managing Interest rate risk

Liability Management Managing Capital Adequacy

Risk Management at a Bank

Credit Risk Liquidity Risk Market Risk Interest Rate Risk Operational Risk Capital Risk Reputation Risk Legal Risk

Phase 1

ICICI Bank: Financials

Phase 1

2nd Largest bank with total assets Rs. 4,736.47 billion Profit after tax Rs. 64.65 billion Network of 2,777 branches and 10,021 ATMs in India Presence in 19 countries, including India

ICICI Bank: Financials

Growth rate Profit margins 16% Average IT spends 4.8% of total expenditure NPA Non Performing Assets RoA RoE Interest spread 3.5 IT Spend in 2011 253 billion rupees

Phase 1

ICICI Bank: Organization Structure

Phase 1

ICICI Bank: Current IT Solutions

Phase 1

ICICI Bank: New Initiatives

Phase 1

ICICI Bank: Challenges

Phase 1

ICICI Bank: Competitors

Phase 1

ICICI Bank: SWOT

Phase 1

 AKAsh..

LENS 2: CHARACTER OF THE COMPANY

Precision to Response

Novelty

Cost

Quality

24

CHARACTER OF THE COMPANY

Mass Customization

Innovation

Mass Production

Continuous Improvement

25

Business Strategy
Domestic Retail Banking Global Corporate and Investment Banking

Phase 2

Enhance share of retail deposits and sustain leadership position in credit franchise

Leverage corporate relationships, structuring expertise, balance sheet and global syndication capability

International Retail Banking

Rural Banking Insurance, Asset Mgmt & Broking

Leverage NRI opportunity and technology capabilities

Invest for future growth

Enhance and leverage market leadership position

Key Strategy Drivers

Phase 2

CASA

Credit

4Cs
Cost

Capital

*CASA Current Account Savings Account

Justification of Character of the company

Quality Continuous Improvement

ICICI Bank has a business strategy of value driven business. The value addition is planned by improving the customer service delivery.

As an outcome of 2009 Financial Crisis, the bank strategy has special mention for maintaining the high asset quality by focusing on improving the internal quality and risk management processes.
ICICI Bank plans to capture a bigger pie of customer segments by expanding and introducing new communication channels. For this, the bank will rely heavily on Technology/ IT. Bank expects its growth driven by technology. E.g. - ICICI Facebook Banking Page. Bank also plans to optimize its current processes by leveraging IT capabilities and through technological innovations. E.g. Account Opening Process leveraged using 28 Tablets.

 Candidate project by Ankit

BUSINESS TRANSFORMATION NEEDS

Process Current Quadrant CI New Quadrant Business Capability MP Core Banking + BC + External Mobile solution for no frill accounts Banking Over Cloud IT Capability

Phase 3

Candidate Project

Financial Inclusion Rural Banking

Integration Yes with external partners including govt., BCs, Telecom Partners Cloud Yes Computing and Integration

Corporate Banking and Retail Banking

CI

MC

Insurance, CI Asset Management and Brokerage

MC

Business Risk Management and BASEL Compliance

IT enabled platform to measure and mitigate risks in SIVs, OBSI, custom SPs.

Yes

ICICI Value Chain Analysis

Phase 9

ICICI Value Chain Analysis

Phase 9

External Factors
Funding/Capital Structure Regulatory Agencies Federal Reserve Clearing Partners

Operations
Deposit Services

Delivery Channels
Branch

Marketing & Sales

Branding New Account acquisiton Cross Sales

Revenue Streams
Banking Insurance Investment Treasury

Loan Administration Treasury Operations Payment Processing

ATM / Internet Mobile Banking Bank by Mail/Call Center

Fee Revenue Generation Public Relations

Wealth Management

ICICI Value Chain Analysis

Strengthening communication channels: - Minimize any information arbitrage and utilize any opportunities -Integration and standardization of data and processes

Phase 9

Financial Inclusion: Setting up an integrated system to include business correspondents and telecom providers within the eco system. The system can be developed to incorporate the following - Micro Credit - Deposit - Payment Services - Facilitating Micro ATM Service - Integration with Government Initiatives Enhancing Social media Channelization to acquire new customers, providing added customer services. The emphasis can be on creating one stop shop for all the underlying companies under ICICI Umbrella for the customer to enable cross selling. - Adding more resources in social media analytics to capture customer demands. - Real time sentimental analysis to reduce the customer churn rate and improve QoS.

Phase 2

Candidate Project Identification

Analysis Using the 10-Lens Approach

1 Analyzing global trends

Phase 2

Continuing the move toward Enterprise 2.0: Weve

become a digitally collaborative society. Enterprise 2.0 means that global businesses will be expected to integrate collaborative technologies into their daily routines. By relying on email, teleconferencing, videoconferencing, and instant messaging, companies are essentially doing away with the borders that once separated regions.

BYOD Financial Inclusion

1 Analyzing global trends

Phase 2

Leading emerging markets will continue to drive global growth

Estimates show that 70% of world growth over the next few years will come from emerging markets, with China and India accounting for 40% of that growth. Adjusted for variations in purchasing power parity, the ascent of emerging markets is even more impressive: the International Monetary Fund (IMF) forecasts that the total GDP of emerging markets could overtake that of the developed economies as early as 2014. The forecasts suggest that investors will continue to invest in emerging markets for some time to come. The emerging markets already attract almost 50% of foreign direct investment (FDI) global inflows and account for 25% of FDI outflows. The brightest spots for FDI continue to be Africa, the Middle East, and Brazil, Russia, India and China (the BRICs), with Asian markets of particular interest at the moment. By 2020, the BRICs are expected to account for nearly 50% of all global GDP growth. Securing a strong base in these countries will be critical for investors seeking growth beyond them

1 Analyzing global trends

Phase 2

Cleantech becomes a competitive advantage: Ernst & Young's 2010

global survey of corporations with more than US$1b in revenue, showed that cleantech is an organization-wide or business-unit-level initiative for 89% of respondents; 33% spend 3% or more of total revenues on cleantech and 75% expect cleantech spending to increase over the next five years. BASEL III Talent Management

Big Data

1 Analyzing global trends

Phase 2

Cloud Computing: By 2016, Gartner, a consultancy, expects all Forbes Global 2000 companies to use public cloud services, transforming much of the current IT hardware, software and database markets into infinitely flexible utilities. When cloud computing becomes widespread, it will transform businesses and business models, potentially reducing both initial and recurring costs for IT buyers, increasing their flexibility and lowering their risks. Whats not to like about an infinitely scalable, pay-as-you-go business model? Despite concerns related to data security, privacy and business continuity, its value proposition makes the success of cloud computing inevitable. Over time, cloud-based services will grow increasingly sophisticated and evolve into full-scale business processes as a service.

2 Character of the company

Phase 2

2 Character of the company

Phase 2

3 Business transformation needs

Process Current Quadrant New Quadrant CI Business Capability IT Capability

Phase 2

Candidate Project Yes

Prospecting for MC ore bodies & Analyzing profit potential of new ore bodies

Reduce Gemcom exploration and Whittle procurement costs

Sustainable Development Policy

Reduce Lost time injuries

MP

CI

Strive for zero environmental harm

Better disaster preparedness

Sustainable energy solutions

Yes

MP

CI

Hazard Yes Awareness and Identificatio n

6 Idea Scan

Phase 2

References
http://www.mbaknol.com/management-case-studies/customer-relationship-managementcrm-in-banking-a-case-study-of-icici-bank/ http://enterpriseblueprints.com/icici_casestudy_1.html?keepThis=true&TB_iframe=true&heig ht=494&width=787 http://www.inntron.com/core_banking.html