Business Process Reengineering Essay Sample
- Word count: 2455
- Category: bank
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Business Process Reengineering Essay Sample
Before delivering into the topic I would like to explain what is BPR. BPR (Business Process Reengineering) is all about reinventing, rethinking, redesigning, redirecting and rebuilding. It touches five segments strategy, processes, organization, technology and culture. In other words “Reengineering is the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service and speed’’. BPR is an ongoing process critical to a company’s success. Faced with a constantly changing business environment, companies are scurrying to grasp the potency of this trend -propelled by competition, globalization and need for speed. The most important reason for companies to launch BPR projects is to gain efficiency and productivity. Once this is achieved, they can boost organizational efficiency and streamline business and production processes. BPR helps companies optimize work flow and productivity
ICICI BANK :TECHNOLOGY – LED TRANSFORMATION
Established in 1994, ICICI Bank is today the second largest bank in India and among the top 150 in the world. In less than a decade, the bank has become a universal bank offering a well diversified portfolio of financial services. It currently has assets of over US$ 79 billion and a market capitalization of US$ 9 billion and services over 14 million customers through a network of about 950 branches, 3300 ATM’s and a 3200 seat call center. The hallmark of this exponential growth is ICICI Bank’s unwavering focus on technology. ICICI Bank (formerly Industrial Credit and Investment Corporation of India) is a major banking and financial services organization in India. It is the 4th largest bank in India and the largest private sector bank in India by market capitalization. The bank also has a network of 1,700+ branches (as on 31 March 2010) and about 4,721 ATMs in India and presence in 19 countries, as well as some 24 million customers (at the end of July2007).
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and specialization subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture capital and asset management. (These data are dynamic.) ICICI Bank is also the largest issuer of credit cards in India. ICICI Bank’s shares are listed on the stock exchanges at Kolkata and Vadodara, Mumbai and the National Stock Exchange of India Limited; its ADRs trade on the New York Stock Exchange (NYSE). The Bank is expanding in overseas markets and has the largest international balance sheet amongIndian banks. ICICI Bank now has wholly-owned subsidiaries, branches and representativesoffices in 19 countries, including an offshore unit in Mumbai.
ICICI Bank is one of the Big Four Banks of India, along with State Bank of India, Axis Bank and HDFC Bank — its main competitors.
REASONS FOR BPR INITIATIVE:
In year 2000 and later when anytime, anywhere banking came to our country, ICICI Bank had to move away from the branch-centric model and make its services available nationwide. The solution was to centralize its applications. another reason is to offer Internet banking and established itself as a leader in the Internet and e Commerce space. The bank followed it up with offering several e-Commerce services like Bill Payments, Funds Transfers and Corporate Banking over the net. The internet is a critical element of ICICI Bank’s award winning multi-channel strategy that is one of the main engines of growth for the bank
Legacy systems: The traditional systems at ICICI Bank were very centric to the branch. For example a server at New Delhi was specific to the branch in that city, the ATMs were standalone catering only to the city branch. The banking transactions were thus limited to the respective branch offices as customer data was not available in other branches. This made banking a limited service and very branch specific. ICICI realized the importance of offering nationwide banking but this would be possible only by having a centralized data repository.
Change has always been the case, but although in the past it was predictable, incremental and evolutionary, today it is unpredictable, rapid and revolutionary. The rapid deployment of new technologies, the globalization of business operations and the continuously changing customer expectations are the main forces behind this transformation. Icici in order to successfully face these difficult operation conditions, should redefine their key strategies aiming at minimizing the cost of services and products as well as improving customer satisfaction, service quality and job satisfaction.
One of the biggest challenges for Finacle was ensuring straight through processing(STP) of most of the financial transactions. With the ICICI group having several companies under its umbrella, Finacle needed to seamlessly integrate with multiple applications such as credit cards, mutual funds, brokerage, call center and data ware housing systems. Another key challenge was managing transaction volumes. ICICI Bank underwent a phase of organic and inorganic growth, first by acquiring Bank of Madura followed by a reverse merger of the bank with its parent organization, ICICI Ltd, resultant increase in transaction levels from 400,000transactions a day in 2000 to nearly 2.1 million by 2005 with an associated growth in peak volumes by 5.5 times. With Finacle, the bank currently has the ability to process0.27 million cheques per day and manage 7000 concurrent users
RESTRUCTURING PROCESS SUCCESS
Earlier, the traditional systems at ICICI Bank were very centric to the branch. For example a server at New Delhi was specific to the branch in that city; the ATMs were standalone catering only to the city branch. The banking transactions were thus limited to the respective branch offices as customer data was not available in other branches. This made banking a limited service and very branch specific. ICICI realized the importance of offering nationwide banking but this would be possible only by having a centralized data repository. But, later using the support of companies like Infosys, Oracle, SYBASE, SAS it implemented such a system which centralized applications for ‘anywhere’ banking • 1- the bank has been able to successfully move over 70 percent of routine banking transactions from the branch to the other delivery channels, thus increasing overall efficiency. Currently, only 25 percent of all transactions take place through branches and 75 percent through other delivery channels. •2- This reduction in routine transactions through the branch has enabled ICICI Bank to aggressively use its branch network as customer acquisition units. On an average ICICI Bank adds 300,000 customers a month, which is among the highest in the world. •3- Increase in transaction levels from 400,000transactions a day in 2000 to nearly 2.1 million by 2005 with an associated growth in peak volumes by 5.5 times. •critical success factors
For instance, it was the first bank in India to offer Internet banking with Finacle’s e-banking solution. 1.Enabled Finacle to successfully manage the resultant increase in transaction levels from 400,000 transactions a day in 2000 to nearly2.1 million by 2005 with an associated growth in peak volumes by 5.5 times. 2.The bank followed it up with offering several e-Commerce services like Bill Payments, Funds Transfers and Corporate Banking over it 3.Currently, only 25 percent of all transactions take place through branches and 75 percent through other delivery channels. This reduction in routine transactions through the branch has enabled ICICI Bank to aggressively use its branch network as customer acquisition units. 4.On an average, ICICI Bank adds 300,000customers a month, which is among the highest in the world.The cost has also come down by around 15percent
It is fundamental to take a holistic approach and integrate the impact on strategy, people, processes and the enabling technologies. This allows for anticipating risks and hazards during the process, not as an afterthought, and ensuring that the change is effective. FACILITATIVE APPROACH
When organizations feel like victims of change rather than initiators of it, resistance can build. By using a methodology that includes a facilitative approach to implement the new business process, resistance can be reduced. CONSULTANCY
Using the support of companies like Infosys, Oracle, SYBASE, SAS it implemented such a system which provides centralized applications for ‘anywhere’ banking. •Infosys is one of technology partner for ICICI Bank which assistance to implement Finacle for handling all the banking activities. •Bill Desk for online payments
•SYBASE (Deliver mobile software to manage, analyze and mobilize information)Sybase Helped ICICI Prudential Life Insurance To Lower Reporting Total cost by 50 Percent
•SAS (Statistical Analysis System) Business analytical software
SUPPORTING TOOLS AND TECHNIQUES:
1-The network follows a hub and spoke architecture—a mix of VSATs (Very small aperture terminal) , leased lines, ISDN and radio links. It has around 800 leased lines, about 600 VSATs, approximately 800 ISDN lines and multiple 34 Mbps lines.
2-Finacle – a core banking and universal banking solution from Infosys
3- UNIX is the preferred OS for most of the hardware while most of the databasesuse Oracle with a few on Sybase and MS SQL
SWOT ANALYSIS: ICICI BANK
1) Online Services: ICICI Bank provides online services of all its banking facilities. It also provides D-Mart account facilities on-line, so a person can access his account from anywhere he is. [D-Mart is a dematerialized account opened by a salaried person for purchase & sale of shares of different companies.] 2) Advanced Infrastructure: Branches of ICICI Bank are well equipped with advanced technology to provide the customers with taster banking services. All the computerized machines are located in suitable manner & are very useful to the customers & staff of the bank. 3) Friendly Staff: The staffs of ICICI Bank in all branches are very friendly & help the customers in all cases. They provide faster services along with bonding & personal relationship with the customers.
4) 12 hrs. Banking services: Compared to other bank ICICI bank provides long hrs. of services i.e. 8-8 services to the customers. This service is one of it’s kind & is very helpful for the customers who are in urgent need of money. 5) Other Facilities to the Customers & Employees: ICICI Bank also provides other facilities like drinking water facilities, proper sitting arrangements to the customers. And there are also proper Ventilation& sanitary facilities for the employees of the bank. 6) Late night ATM services: ICICI bank provides late night ATM services to the customers. The ATM centres of ICICI bank works even after 11:00pm. at night in certain branches 7) Solid technical leadership by Infosys (technology partner) who has successfully completed a similar project A sound methodology
1) High Bank Service Charges: ICICI bank charges highly to customers for the services provided by them when compared to other bank & that are why it is only in the reach of higher class of society. 2) Less Credit Period: ICICI bank provides credit facilities but only upto limited period. Even when the credit period is not over it sends reminder letters to the customers which may annoy them
1) Bank –Insurance services: The bank should also provide insurance services. That means the bank can have a tie-up with a insurance company. The bank will advertise & promote the different policies introduced by the insurance company & convince their customers to buy insurance policies. 2) Increase in percentage of Returns on increase: The bank shouldprovide higher returns on deposits in comparison of the present situation. These will also upto large extent help the bank earn profits & popularity. 3) Recruit professionally guided students: Bank & Insurance is a special non-aid course where the students specialize in the functioning & services of the bank & also are knowledge about various tax policies. The bank can recruit these students through tie-ups with colleges. Such students will surely prove as an asset to the bank. 4) Associate with social cause: The bank can also associate itself with social causes like providing relief aid patients, funding towards natural calamities. But this falls in the 4th quadrant so the bank should neglect it. 5) Credit disbursement to priority sector (agriculture and small skill industry) THREAT
1) Competition: ICICI Bank is facing tight competition locally as well as internationally. Bank like CITI Bank, HSBC, ABM, Standard Chartered, HDFC also provide equivalent facilities like ICICI do and also ICICI do not have consistency in its international operation. 2) Net Services: ICICI Bank provides all kind of services on-line. There can be easy access to the e-mail ids of the customers through wrong people. The confidential information of the customers can be leaked easily through the e-mail ids. 3) Decentralized Management: Each branch manager is given the authority of taking decisions in their respective branches. The decisions made by different managers are diverse and any one wrong decision can laid to heavy losses to the bank. 4) No Proper Facilities To Uneducated customers: ICICI Bank provides all services through electronic computerized machines. This creates problems to the less educated people. But this threat falls in the 4th quadrant so it’s negligible. The company can avoid this threat
CONCLUSION AND RECOMMENDATIONS:
A powerful, scalable and flexible technology platform is essential for banks to manage growth and compete successfully Finacle provided just the right platform to ICICI Bank, thus fuelling its growth.ICICI Bank has grown immensely over a period of time. First time in history a private bank has merged a public sector bank i.e. ICICI Bank announced merger with Bank of Rajasthan. On 23May ICICI Bank announced merger with Bank of Rajasthan with it through share-swap in a non-cash deal that values the Bank of Rajasthan at about Rs 3,000 crore. Each 118 shares of Bank of Rajasthan will be converted into 25 shares of ICICI. It is said that this merger will also expand ICICI Bank’s branch network by 25%. ICICI Bank is also carrying out its activities in Rural Areas by helping SHGs (Self Help Groups) and in other microfinance activities. Certain recommendations are as follows:
1-The ICICI VSAT network is large, with almost a thousand nodes. Keeping it going turned out to be an even bigger challenge for the group. The entire network is monitored from one center. Any error in the network at any point is rectified in a short span of time and the system is up and running with minimum downtime. ICICI must have a proper control and look over this issue
2-ICICI Bank’s name comes in various controversies than any other bank mainly the method of recovery. This may hinder the BPR process further in future if the bank gets into any type of legal case. To avoid this ICICI Bank must follow the rules and regulations