科尔尼－中国银行3rddiscussiondocumentv2

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1、108319_MacrosMay 11, 2005Establish World-Class Trade Finance Operating Model and CapabilitiesBOC International Settlement & Trade Finance Centralized Processing System Discussion Document Copyright 2005 by A.T. KearneyThis document was prepared by A.T. Kearney for use by a joint Client and A.T. Kear

2、ney team and may not be used for other purposes, or disclosed to other parties without the written permission of A.T. Kearney1108319_MacrosFrom last meeting on April 25, BOC asked us to present and discuss the following topics Business Workstream: 1.Benchmarking methodology and templates2.Trade Fina

3、nce organization structure with roles and responsibilities3.Operational performance metrics and illustrative templates for benchmarking4.Demonstration of Core business processes designTechnology Workstream:1.Sample RFP document for TF vendor selection Other Relevant Considerations: 1.Operational ris

4、k control aspects of TF operations2.Trade finance product pricing decision mechanism 2108319_MacrosBusiness Workstream 3108319_Macros1. Benchmarking Methodology and Template 1.During the project, we will conduct benchmarking on relevant aspects to identify existing gaps on BOC TF business and operat

5、ions 2.We will employ proved benchmarking methodology and leverage our accumulated experience and knowledge of the market3.During this exercise, we will update our existing ICs and research data to ensure we provide latest information to BOC4.Usually benchmarking exercise has the following key steps

6、:Identify relevant key dimensions for benchmarking exercise Identify relevant banks as benchmarking targets for identified key dimensions Collect / update data using a combination of desktop research, interviews, site visits, etc. Compare benchmarking results with BOC “as-is” data Identify gaps and

7、define future “to-be” model or set future targets 4108319_MacrosWe will focus our benchmarking efforts mainly on three categories TF Organization Model Operational Network Configuration Operational Performance Metrics Separated sales / servicing model Integrated model Wholesale banking model Others

8、Network design principles / rationaleNumber of processing centers Number of service outletsNumber of staff Transaction volume allocation Others Turnaround time perTransaction volume per day Processing cost Processing time Analysis per process, product, staffOthers Preliminary5108319_MacrosSample ben

9、chmarking templates the banks we benchmark against will be determined later Benchmarking Category HSBCStandard Charted ABN Amro Other BanksTF Organization Model Sales / servicing Integrated Wholesale bankingOperational Network Configuration Network design principles / rationale Number of processing

10、centers Number of service outlets Number of staff Transaction volume allocation Operational Performance Metrics Turnaround time per Transaction volume per day Processing cost Processing time To be completed during project6108319_MacrosAreaABN AmroHSBCStandard CharteredStrategyWholesale bankFocus on

11、large, local corporate and state-owned companiesLeverage on global network and competitive pricing in foreign exchange (easier to raise lower cost of fund overseas)Focusing on MME and SME customers who need liquidity and get better marginMNC is around 20-25% of HSBC portfolio80% of business are trad

12、e businessWholesale and consumer bankingFocus on multinational companies and very selective large local corporationReduce number of customers while trying to deepen relationship with current customers70% of business coming from tradeSale and distributionRelationship banker being primary contact with

13、 clientSpecialist in trade will go along with the relationship banker for potential trade clientDedicated team to acquire customers getting 50 new account per month with some new state enterprises as wellRelationship manager going to meet customers with trade finance specialistAllocated 50,000 withi

14、n front line authority OperationsCentralize operations in Chennai, India (24 hour operations, since 2001) already upgraded speed and cut-off time processing to ensure efficient communication Cut-off time 1 pm for customers and 4 pm for transactions sent to IndiaOperation team divided into Import (is

15、suance, checker, settlement) and Export (advising, checking, payment)Middle office provide technical issues and doing a marketing and customer service functions, servicing both corporate and commercial40 staff processing 200 million/monthCut-off time at noonMulti-skills staff 27 people with each pro

16、cessing 12-14 transaction per day Operation org structure Large corporate, multinational, and local product team (each can do export, import, payment, clearing)Cut-off time 4pm for platinum customer attitude trying to do it for customers as much as they canSystemMaxtrack online systemOwn system Used

17、 to use Eximbills but has change to another system, IMAX from Canada as the Eximbills although user friendly but not good at MIS, limited access, no workflow embeddedOthersnMore export transaction than importn60-70% of customers are using Internet channelnRecently shut down trade operations due to b

18、eing non economicalnProviding customer training on TF processingnTeaching operation staff about one hour every morning nGiving trade finance test to both RMs and operation staffnMore export transaction than importBenchmarking analysis example 7108319_MacrosBenchmarking analysis example profiles of g

19、lobal banks AreaCustomer Focus Small & Medium Enterprises CorporateSales and Marketing Centralized in single location Partially centralized in a few locations Decentralized in branches Focused industry targeting Marketing responsibility only Credit and Risk Management Proactivity and flexibility in

20、customer requirements “Product programs” to standardize credit approval Leverage of large local databaseDocument Collection and Processing Collect and process at branches Collect at branches and process at centralized location(s) Collect and process in bills processing center locations only Courier

21、collection serviceE-Commerce Capabilities Web-based marketing capability Transaction capability through electronic banking Extended financial services through internet (e.g. regional trading platform)Deut-cshe44444444ABN4444444444CITI44444444444SCB44444444444HSBC44444444444Source: Various press rele

22、ases, annual reports, interviews; A.T. Kearney proprietary insight and analysisImplications 1. Opportunity to be dominant in the small and medium enterprise segment2. To aggressively expand TF business, Bank needs to develop focused targeting programs3. Need to match foreign banks standard in levera

23、ging credit analysis capability to generate qualified sales4. Can take advantage of large customer database for better credit analysis5. Bank needs to develop optimal model to balance efficiency and customer services6. Bank should consider developing electronic channel capabilities8108319_Macros2. T

24、rade Finance Organization Structure with R&RsIssues to address this section:Issues to address regarding TF organization structure design: What are global trends? What is the TF model likely to be suitable for BoC?Issues to address regarding TF processing center design: What is the organization struc

25、ture of TF processing center? What is relationship between TF processing center, HQ and branches? What are R&Rs of organization units within processing center?Therefore, we provide the following materials for discussion: Examples of TF organization models of global banks Client example of TF organiz

26、ationClient example of TF processing centers with descriptions on roles and responsibilities 9108319_MacrosThere are 3 basic organization models, depending on size, global nature of bank and emphasis on trade financeLending-Focused Banks with Distributed ApproachTF-Focused Banks With Semi-Integrated

27、 Trade Finance ApproachInternational Banks Driving Trade Finance As A Standalone Business RMs responsible for selling and servicing trade finance Bills processing integrated with other branch processing HO TF function primarily one of product development and part of Corporate Banking Example: Bank M

28、andiri RMs as primary sales force Trade Finance specialists in HO to support RMs Bills processing integrated with centralized back office branch processing Customer support mix of RMs, processing people and TF specialists Example: Maybank, UOB, OCBC, Hong Long Bank RMs as “coordinators” Trade Financ

29、e accountable for all trade finance business Trade Finance sales specialists: Responsible for acquiring new TF clients Support RMs with current customers Bills processing center under Trade Finance Department Client servicing by TF service specialists, located in the field, reporting to Trade Financ

30、e Department Example: ANZ Bank, ABN AMROOrganizational Structure Models10108319_MacrosTF Organization ModelsA number of factors need to be considered to select the appropriate organization model for Bank of China Enable a more aggressive approach to drive TF sales and new customer acquisitionEnable

31、more effective cross selling of all banking productsEmphasis on TFS as a Core ProductEmphasis on Integration of Banking ProductsKey Considerations Different organization models can be adopted depending on Level of aggression required to push TF Operational efficiency requirements Level of emphasis o

32、n cross-selling The structure of the organization will also depend on several factors such as Scale of operations Complexity of products Client interfacing requirements Organization should also align with overall bank objectives (e.g. certain banks are positioning itself as Transaction Banking)Stand

33、alone BusinessDistributed ApproachTF DivisionProduct & MarketingTF SalesTF ServicingTF ProcessingPresidentBusiness LineRMsTF ProductTF OperationOperation LineTF ServicingTF ProcessingHybrid Models11108319_MacrosBank Mandiri has a distributed model, with Corporate/Commercial banking responsible for T

34、F sales and product development, while Distribution Network managing distributed TF processing centers ObservationsnRMs under Corporate and Commercial Banking are responsible for selling all banking products including trade finance productsnTrade Service function is primarily responsible for trade p

35、roduct development with no sales responsibilitiesnBill Processing Centers (BPCs) are distributed across the country, reporting to Distribution Network (together with bank branches)nBPCs are responsible for both servicing to clients and processingTF Organization Structure Distributed ModelCorporate R

36、MsDeputy President Director and COOTreasury & InternationalCommercial BankingDistribution NetworkCorporate BankingFI & OverseasTreasuryCorporate ProductJakarta NetworkRegional NetworkCity OperationsCommercial RMsPresident and CEOTrade ServiceProcessing Center Regional ManagerCity OperationsProcessin

37、g CentersTrade Service12108319_MacrosMaybank is the dominant trade finance player in the Malaysian market TFS functions are managed as a standalone business, except for the processing center, which reports to the servicing lineTF Organization Structure Semi-Integrated ModelObservationsnTrade finance

38、 business is operated as a hub and spoke model: TF sales and service are integrated with product development, reporting to Trade Finance Business unit Operations is centralized in one center, reporting to central operations on the service linenThe roles of sales, services and processing are clearly

39、district with relevant authorizationnRMs are responsible for credit line approvals while TFC operates within the line responsibilitiesnCustomers will only deal with TFC for TF transactions (not at the branches) - the model requires a year to migrate all customers overPresidentDeputy President(Busine

40、ss)Deputy President(Service)Enterprise Financial Services (EVP)CommercialInstitutionalCorporateTrade Finance BusinessBCBCBCBCCentral OperationsTPC(Trade Processing Center)TFCSalesProduct DevelopmentOperations & ServicesSalesSalesTFRETFSETFRETFCTFCTFC(Trade Finance & Relationship Executive)(Trade Fin

41、ance & Relationship Executive)Source: Bank Mandiri Interview Team13108319_MacrosSmall BusinessTF Organization Structure “Standalone” Business ModelHead Of Trade And Transaction Service Head Of International Trade FinanceHead Of Trade Service DeliveryTrade Sales SpecialistsTrade Service Outlets Inter

42、national Trade Finance (ITF) has first-in-line accountability if sales falls below target In some cases where TF with client is substantial, TF sales person can play RM role Once sales is completed and line established, customers interacts on day-to-day basis with Services team Trade Service Deliver

43、y is considered as a part of the business unit, having trade relationship officers proactively interact with customers Servicing officers can approve discrepancies up to credit levelObservationsInstitutional Banking DirectorProcessing CenterHead Of Institutional BankingRelationship ManagersCorporate

44、Banking DirectorRelationship ManagersBusiness BankingCorporate BankingIn ANZ Bank, sales and servicing are considered business partners reporting directly to the same line of businessConsumerBanking DirectorPresident“Huge growth” using this model14108319_MacrosDespite organization model employed, ro

45、les and responsibilities related to Trade Finance and Services typically consist of 7 key functions Trade Finance Line of Business Product Development & Marketing Structured Trade FinanceTradeServiceDeliverySalesProcessing Performance Monitoring & Support Develop TFS products Determine pricing polic

46、y Formulate Marketing Strategy Provide complex trade finance and servicing deal structures Drive business development for TF Provide technical support for complex TF Provide servicing support to TF customers Liaise between customers and processing Handle documents Operate Bill Processing Centers Tra

47、nsact based on images Prepare performance report and analysis Provide overall administrative supportTrade Financing Match fund for trade financing Participate in global trade financingTFS Organization Structure Roles And ResponsibilitiesWe have detailed roles and responsibilities for each function15

48、108319_MacrosInternational banks also employ a split Processing Center and Service Outlets model, which significantly enhance customer servicingDistinction Between Servicing And Processing1SpokeRelationship OfficerHubProcessingOfficersSpokeRelationship Officers Receive applications Check credit line

49、 Assign priority Scan and transfer electronic files to hub121 Relationship focused for major customers Customers know who to call Supported by a self-service, web-based trade services for customers to submit online applications and check transaction statusHub-Trade ProcessingTrade ServicingX No Inte

50、raction Check document Generate Swift messages Interact with correspondent banks Credit/Debit customer accounts Receive processing results Send original documents & send to appropriate recipients Handle communications with customers2SpokeSpokeSpokeSpokeCustomer ACustomer BCustomer CCustomer D1610831

51、9_MacrosFunctions within processing centers are usually organized around products and processes; however, there is a trend towards developing multi-skilled staff Administrative ManagementExport Document CheckingExport AdvisingTF Processing CenterImport Document CheckingImport IssuanceImport Settleme

52、nt Receive applications Check credit line Issue L/Cs Send L/Cs to advising banks Check completeness and accuracy of inward documents Prepare and authorize payment Authorize financing (if required) Advise receipts L/C to customers Check completeness and accuracy of export documentsIllustrativeProcess

53、ing Center Organization StructureExport Settlement Receive payment from issuing banks Initiate settlement and payment Processing Center focuses on transaction processing, having the Trade Servicing function undertaking all customer liaison Leading international banks with high transaction volume typ

54、ically configure around client groups first then followed by products Global trend is moving towards developing multi-skilled staff across products and processes to balance transaction fluctuationsObservations17108319_MacrosConsiderations for BOC Trade Finance Business As the bank traditionally with

55、 the largest Trade Finance business in China, (assuming that this is something that BoC wants to continue to excel at), will require a shift from being processing-driven to being business-driven. There will first need to be a full review carried out as to the full importance of Trade Finance to the

56、Bank. The creation of a new LOB for Trade Finance mainly involves developing a Strategy and supporting Business Plan, and having that accepted by Top Management of the Bank. BoC needs to be able to counter threats from its competitors both domestic and foreign, and while leveraging its strengths it

57、must be flexible enough to understand and to respond to the needs of its many customers There will need to be changes to:Operating model requiring specialist skills and focused effort Financial arrangements - to track costs and revenue by product and channelKPIs and SLAs - to correctly set expectati

58、onsPerformance Management systems - to measure effectiveness and efficiency There has been a fundamental shift away from TF being processing-driven to being business-driven. This is an evolution that has taken place within leading banks around the world, as they moved to replace diminishing earnings

59、 from traditional Trade Finance business. In leading banks like Bank of China, Trade Finance would normally be a separate LOB: this is because the business is a specialised product set although it requires extensive input from many other functions.Trade Finance is to Corporate and Commercial banking

60、, as Credit Cards is to Retail banking. The twin revenue threats a TF LOB faces are from new competitors (as they increasingly target the market share of other less nimble banks) and from customers, who seek to improve on turnaround times and lower their Trade Finance costs through dealing directly

61、with their trading counterparties via open account. Processing costs in TF are a major business issue for banks, due to the labour-intensive nature of these transactions most banks are trying to handle this business faster and cheaperGlobal TrendsImplications for Bank of China18108319_MacrosTo deter

62、mine the optimum organization model and specific roles and responsibilities for BOC, a number of issues will be addressed by the teamnDistributed, integrated or stand-alone business?nSeparation or integration of marketing, processing and risk management?nReporting to line directors or independent di

63、rector?nLevel of integration with cash management, payment, etc.?nFor each functional unit, what are: Detailed roles and responsibilities SLAs Reporting lines KPIsOrganization Structure Issues To Be AddressedThese are the issues we will address in the project 19108319_Macros3. Operational performanc

64、e metrics and illustrative templates for benchmarkingObjective of this exercise is to:Identify relevant operations KPIs Conduct benchmarking exercise to set performance target for BOC future operations Detailed global benchmarking data would not be very much meaningful without understanding of BOC c

65、urrent TF operations and availability of detailed operational data Derive implications on TF process design and vendor selections 20108319_MacrosKey Performance Indicators - ExamplesMonitoring of relevant key performance indicators for business and operations will enable Bank of China to drive achie

66、vement of TF objectivesBusiness growth - new customer businessCross Sell - new business from existing customersTrade Finance Business ObjectivesRetain current customersEnhance Process EfficiencyImprove ProductivityEnhance QualityIncrease Cost Effectiveness Transaction volume by product and type of transactions Average productivity per worker Overtime Percentage of turnaround time meeting standard time SLA performance Costs by products Variance of actual costs to standard costsSelected Key Perfor