Implementing BPR in ICICI Bank

INDEX

Introduction: ........................................................................................................................................... 2 Company Profile: ..................................................................................................................................... 3 Reasons for BPR Initiative: ....................................................................................................................... 4 Scope and Time Frame: ........................................................................................................................... 5 Team Involved: ........................................................................................................................................ 7 Project Design: ........................................................................................................................................ 8 Supporting Tools and Techniques: ......................................................................................................... 13 Impact of the project “as is: and "to be": ............................ .................................................... .......................... ......................................... ............... 14 Conclusion and Recommendations: ....................................................................................................... 15 Bibliography: ......................................................................................................................................... 16

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Introduction: BPR (Business Process Reengineering) is all about reinventing, rethinking, redesigning, redirecting and rebuilding. It touches five segments strategy, processes, organization, technology and culture. 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 flow and productivi pro ductivity. ty. A well- executed business process redesign equips an organization to meet inevitable market challenges. Despite the fact that BPR is a business stream, IT can be a facilitating agent to it. As IT gets more closely aligned with core business units, IT-enabled BPR initiatives is a sure-fire way of achieving results. IT has the inherent capacity to innovate. If IT doesn't get involved in it, the transition will be a mess because IT knows where the data is. It has the brain power. Once IT realizes what's going wrong, it can find solutions and address the critical concerns. IT has to become an integral part of BPR initiatives to ensure a high level of organizational commitment. If IT does not get closely involved in BPR, business will remain oblivious of the challenges heading its way. When IT takes charge of PR initiatives it enhances the department's value within the organization and brings it closer to business. BPR was implemented in ICICI Bank 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 available nationwide. The T he solution was to centralize its applications.







Company Profile: 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 July 2007). 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 o n the New York Stock Exchange (NYSE). The Bank is expanding in overseas markets and has the largest international balance sheet among Indian banks. ICICI Bank now has wholly-owned subsidiaries, branches and representatives offices in 19 countries, including an offshore unit in Mumbai. This includes wholly owned subsidiaries in Canada, Russia and the UK (the subsidiary through which the HiSAVE savings brand is operated), offshore banking units in Bahrain and Singapore, an advisory branch in Dubai, branches in Belgium, Hong Kong and Sri Lanka, and representative offices in Bangladesh, China, Malaysia, Indonesia, South Africa, Thailand, the United Arab Emirates and USA. Overseas, the Bank is targeting the NRI (Non-Resident Indian) population in particular. ICICI reported a 1.15% rise in net profit to Rs. 1,014.21 crore on a 1.29% increase in total income to Rs. 9,712.31 crore in Q2 September 2008 over Q2 September 2007. The bank's CASA ratio increased increased to 30% in 2008 from 25% in 2007. 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: 

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In year 2000 and later when anytime, anywhere banking came to our o ur 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. 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 catering only o nly to the city branch. The banking transactions were thus limited 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. repository.







Scope and Time Frame: In 1955, The Industrial Credit and Investment Corporation of India Limited (ICICI) was incorporated at the initiative of World Bank, the Government of India and representatives of Indian industry, with the objective of creating a development financial institution for providing medium-term and long-term project financing to Indian businesses. In 1994, ICICI established Banking Corporation as a banking subsidiary. Formerly known as Industrial Credit and Investment Corporation of India, ICICI Banking Corporation was later renamed as 'ICICI Bank Limited'. ICICI founded a separate legal entity, ICICI Bank, to undertake normal banking operations - taking deposits, credit cards, car loans et c. In 2001, ICICI acquired Bank of Madura (est. 1943). Bank of Madura was a Chettiar bank, and had acquired Chettinad Mercantile Bank (est. 1933) and Illanji Bank (established 1904) in the 1960s. In 2002, The Boards of Directors of ICICI and ICICI Bank approved the reverse merger of ICICI, ICICI Personal Financial Services Limited and ICICI Capital Services Limited, into ICICI Bank. After receiving all necessary regulatory approvals, ICICI integrated the group's financing and banking operations, both wholesale and retail, into a single entity. At the same time, ICICI started its international expansion by opening representative offices in New York and London. In India, ICICI Bank bought the Shimla and Darjeeling branches that Standard Chartered Bank had inherited when it acquired Grindlays Bank. In 2003, ICICI opened subsidiaries in Canada and the United Kingdom (UK), and in the UK it established an alliance with Lloyds TSB. It also opened an Offshore Banking Unit (OBU) in Singapore and representative offices in Dubai and Shanghai. In 2004, ICICI opened a representative office in Bangladesh to tap the extensive trade between that country, India and South Africa. In 2005, ICICI acquired Investitsionno-Kreditny Bank (IKB), a Russia bank with about US$4mn in assets, head office in Balabanovo in the Kaluga region, and with a branch in Moscow. ICICI renamed the bank ICICI Bank Eurasia. Also, ICICI established a branch in Dubai International Financial Centre and in Hong Kong. In 2006, ICICI Bank UK opened a branch in Antwerp, in Belgium. ICICI opened representative offices in Bangkok, Jakarta, and Kuala Lumpur. In 2007, ICICI amalgamated Sangli Bank, which was headquartered in Sangli, in Maharashtra State, and which had 158 branches in Maharashtra and another 31 in Karnataka State. Sangli Bank had been founded in 1916 and was particularly strong in rural areas. With respect to the international sphere, sphere, ICICI also received received permission from the t he government of Qatar to open a branch in Doha. Also, ICICI Bank Eurasia opened a second branch, this time in St.







ICICI adopted a massive approach aims for cost control and cost cutting. In consequent of it, compesation to staff was not increased and no bonus declared declared for 2008-09.

Acquisition of Bank of Rajashthan

On 23 May, 2010 ICICI Bank announced merger with Bank of Rajasthan with it through shareswap 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%.









Team Involved: 

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Infosys is one of technology partner for ICICI Bank which game the assistance to implement Finacle for handling all t he banking activities Bill Desk for onli o nline ne payments SYBASE SAS







Project Design: The shift

The basic network was set up for providing the e-mail facility, but none of the applications were linked to the network. The network comprised of a mix of servers running different applications at various branches of the bank. With growing business and rapidly increasing accounts, the company found it extremely difficult to administer and manage the system. This also resulted in duplication of backend services and procedures, as the systems were not centralized centralized for the core banking applications. applications. There was a lot of additional cost being incurred due to the duplication of the backend procedures at the branch offices. The centralization procedure started around late 1999. ICICI Infotech (a company promoted by ICICI) made the first network design for the group in 1999—it was a hub and spoke architecture. Utmost care was taken to design a network with a strong backbone. According to Manoj, the key strength of a network is its back-bone. The group's various centers are connected by 2 Mbps or 4 Mbps leased lines. Manoj said the design considerations not only included high bandwidth availability but also the fact that a single point of failure should not result in lines going down.

The group realized that it had to enter into the retail space, have local regional presence, and provide alternate channels to the customer. They needed a solution whereby they could offer







It was really important was to have a world class data center and centralize everything in one place, as that's where the network can be used at the maximum. To ensure 24x7 service access and connectivity to customers one needs to have reliable backups and a robust network in place. From a business perspective, the main reason to go in for a network was centralization of data, provide all channels of communication and at the same time provide anytime, anywhere banking. The problem ICICI Bank faced with our legacy systems was that they were stand-alone systems and the data from one branch was not available with another branch. These problems led us to the t he new design of the hub and spoke architecture. The big solution

What ICICI was looking for was a robust network, which would enable it to offer services at the retail level throughout the country. The in-house ICICI Infotech was the obvious choice for consultation. The ICICI Infotech team designed the initial network topology in 1999. The team had put forward a series series of designs, not no t radically different different from each other. ot her. Eventually, a design with a mix of VSATs, leased-lines, radio-links and ISDN was selected. A mixed design was selected because of the disparate locations of the group across the country. There were different technical problems in different different locations and the t he next best available solution had to be included. The advantage in a hub and a nd spoke architecture is that multiple nodes (spokes) are connected with a hub location through a ring of single-mode fiber. Each hub-node connection can consist of single or multiple wavelengths (lambdas), each carrying a full Gigabit Ethernet channel. Protection from fiber cuts in the ring is achieved by connecting the hub and nodes through both directions of the optical ring. Service provider Gigabit Ethernet metro access rings are the main applications for this architecture. And another advantage is that nodes can be added to the network more easily. Methodology







the solution requirement and then ICICI Infotech build t he other two to three t hree percent around it nd deliver the perfect solution to the client. The Network

The network follows a hub and spoke architecture—a mix of VSATs, leased lines, ISDN and radio links. It has around 800 leased lines, about 600 VSATs, approximately 800 ISDN lines and multiple 34 Mbps lines. The network supports the ICICI group offices, banks, branches, and over 1000 ATMs. There is a primary site from where spokes go out to the regional branches and the other offices. The secondary site has the disaster recovery system. There are around eight hub locations, which have 3, 4 or 8 Mbps lines as per the requirements for connecting to the branch and regional office o ffices. s. High-end Cisco routers and switches have been deployed for connectivity. The network is monitored using HP OpenView and CiscoWorks. Over 30 portals are operating using a highly secure state-of-the-art security architecture, which consist of firewalls, intrusion detection systems, virus protection and various other tools. The main production site is at Mahalaxmi, Mumbai (the primary site), and has been built to international standards. The disaster recovery site (the secondary site) is located at ICICI towers in Bandra-Kurla complex, Mumbai and is used for replication of data. A distance of 25-30 kms separates the two centers and they are linked with two 34 Mbps leased lines. To ensure reliability and 24x7 availability, the leased lines pass through separate exchanges.

Before the data moves on to the leased lines, it passes through two CNT storage directors that







designed by qualified experts from its Systems Security Cell. This security design includes preparation, implementation and maintenance of the Systems Security policies and procedures across all systems, ensuring general user awareness about these policies and enforcing the policies through systems audits. The security cell has developed several tools, which are the first of its kind to address several several vulnerabilities on Unix, NT and MS-Exchange. MS-E xchange. The system security security is audited by KPMG. Solution by Infosys

One of the biggest challenges challenges for Finacle Finacle was ensuring straight through processing processing (STP) of most of the financial transactions. With the ICICI group having several companies co mpanies under its umbrella, Finacle needed to seamlessly integrate with multiple applications such as credit cards, mutual funds, brokerage, call center and data warehousing 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 Limited. The scalable and open systems based architecture, enabled Finacle to successfully manage the resultant increase in transaction levels from 400,000 transactions 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 process 0.27 million cheques per day and manage 7000 concurrent users.









and established itself as a leader in the Internet and eCommerce 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 multichannel strategy that is one of the main engines of growth for the bank. Between 2000 and 2004, the bank has been able to successfully move over 70 percent of routine banking transactions from the branch to the other ot her delivery channels, channels, thus increasing increasing overall efficiency. 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. On an average, ICICI Bank adds 300,000 customers a month, which is among the highest in the world.







Supporting Tools and Techniques:  

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Finacle – a core banking and universal banking solution from Infosys 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. UNIX is the preferred OS for most of the hardware while most of the databases use Oracle with a few on Sybase and MS SQL.







Impact of the project “as is: and "to be": 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







Conclusion and Recommendations: 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 23 May ICICI Bank announced merger with Bank o f Rajasthan with with it through share-swap in a noncash 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 acitivities. Certain recommendations are as follows: 

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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 o ver this issue ICICI Bank’s name comes in various controversies than any other bank mainly the







Bibliography:

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Business Process Reengineering: Text And Radhakrishnan/balasubramanian Business Process Reengineering By Markus Slamanig S lamanig

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http://www.icicibank.com/

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http://www.infosys.com

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http://www.google.co.in/

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Cases

By

Radhakrishnan,

Implementing BPR in ICICI Bank

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