BPR IMPLEMENTATION IN ICICI BANK

INDEX

Introduction: ........................................................................................................................................... 2

Company Profile: ..................................................................................................................................... 5

Reasons for BPR Initiative: ....................................................................................................................... 6

Scope and Time Frame: ........................................................................................................................... 7

Team Involved: ........................................................................................................................................ 9

Project Design: ...................................................................................................................................... 10

Supporting Tools and Techniques: ......................................................................................................... 16

Impact of the project “as is: and "to be": ............................................................................................... 17

Conclusion and Recommendations: ....................................................................................................... 20

Bibliography: ......................................................................................................................................... 21

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Introduction: Today, organisations have to consider their structure and behaviour in order to

support their evolution and adaptation in a dynamic and rapidly changing environment.

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 globalisation of business operations and the

continuously changing customer expectations are the main forces behind this

transformation. Modern organisations in order to successfully face these difficult

operation conditions, should redefine their key strategies aiming at minimising the cost

of services and products as well as improving customer satisfaction, service quality and

job satisfaction.

Consequently, there has been an evolution from function-oriented organisations to

process-centred ones. Function-oriented organisations are organised around functions

(e.g. sales, production, procurement or product development), while process-oriented

organisations are organised around processes (e.g. process a client’s application for a

loan). Davenport and Short define business processes as a set of logically related

tasks performed to achieve a defined business outcome. Processes have customers

who are the recipients of process’ outcome, and are cross-functional meaning that they

occur between organisational functions. Thinking in process terms, business process

reengineering is becoming of increasing importance as a means to improve their

performance and enhance their competitiveness.

There are many approaches to BPR (e.g. Hammer, Davenport and Short), but

independently of the one that is followed, a BPR initiative is a risky undertaking and

several factors have to be considered for a successful effort. A very important success

factor is the top management sponsorship. A BPR Project usually requires many

resources, money and leadership, which can be assured only by a strong and

consistent top management sponsorship. Another important success factor is the

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alignment of the transformation effort with the organisation’s strategic direction

demonstrated from the perspective of financial performance, customer service,

associate employee value, and the vision of the organisation.

Additionally to the above, the selection of the right methodology that meets the

needs of the project and is understood and supported by the project team is very

important. A BPR methodology sets the framework for the undertaking of a BPR effort.

It is used to support related activities to reengineering such as: the definition of the

project boundaries, the selection of the right people to empower the BPR team, the

definition of a project manager, the selection, definition and analysis of the business

processes that are candidates for reengineering and so on. There exist a large number

of BPR methodologies, none of which is a panacea. The challenge in structuring a BPR

project is to select the approach that is best suited to the situation in hand, taking into

account organisation objectives, capabilities and economic or competitive requirements.

Furthermore, the right selection of the type of model and the computer assisted

tool that will support the modelling, analysis and redesign of the processes are crucial

factors for the success of a BPR project. During reengineering, a model is used as a

means of communication and understanding between the members of the working team

and it describes the “as-is” business process under study and the “to-be” redesign

process. Thus, it may be used to analyse current processes, to highlight weakpoints

and problems and to identify redesigning opportunities. Therefore, the selection of an

appropriate modelling notation is another important success factor. However, the

overwhelming number of available business process modeling notations in the market

and in the literature make the selection of the appropriate model a difficult task.

The role of a computer assisted tool in the success of a BPR effort should not be

underestimated. There are a lot of tools available in the market and their functionality

varies from simple drawing tools to more complex ones that provide simulation analysis

and integration with workflow management systems. In order to make a choice

between them one should consider several issues such as the applicability of the tool to

the given situation, its cost-effectiveness and its potential reuse. It has to be noted here

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that, the model supported by the tools and the capabilities of a tool are interrelated as

the latter depend heavily on the first.

This chapter recognises the importance of a successful combination between a

methodology, a modeling notation and a tool in a business transformation effort. It

identifies a requirements set on BPR methodologies and provides a comparative

presentation of representative methodologies.

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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 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 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.

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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.

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.

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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 etc. 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

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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, ICICI also received permission from the government of

Qatar to open a branch in Doha. Also, ICICI Bank Eurasia opened a second branch, this

time in St. Petersburg. In 2008, The US Federal Reserve permitted ICICI to convert its

representative office in New York into a branch. ICICI also established a branch in

Frankfurt. In 2009, ICICI made huge changes in its organisation like elimination of loss

making department and restreching outsourced staff or renegotiate their charges in

consequent to the recession. In addition to this, 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 for 2008-09.

Acquisition of Bank of Rajashthan

On 23 May, 2010 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%.

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Team Involved:

SAS

Bill Desk for online payments

Infosys is one of technology partner for ICICI Bank which game the assistance to

implement Finacle for handling all the banking activities

SYBASE

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Project Design:

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 of designs, not radically different from each

other.

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 locations and

the next best available solution had to be included.

The advantage in a hub and 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.

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.

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This also resulted in duplication of backend services and procedures, as the systems

were not centralized for the core banking 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 services across the country.

Centralizing the operations was not the solution, but centralization of data was. ICICI

Bank had already centralized some of the operations but still had some branch

applications running independently which were not centralized and had ATMs which

were stand-alones. Two major criteria considered before designing were not only the

network, but also the infrastructure available in our country

In the past, the infrastructure here was such that a company could not rely on leased

lines completely. So ICICI needed backups on ISDN and VSATs, along with the 64

Kbps leased lines. The leased lines were too expensive then, now the lines are better,

more stable and offer good connectivity. The cost has also come down by around 15

percent.

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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 new design of the hub and spoke architecture.

Methodology

The most important aspect to setting up a network is to have a good relation between

the technology consultant (network integrator), the vendor and the client.

The vendors in the market are more or less capable of giving the same results, like the

same amount of redundancy or strength of the network. What really matters is the

relation between the three. If there is harmony amongst the three, then better results will

be achieved.

The client plays the most important role as he has very low time to market, and delivery

is required at the earliest.

A series of products are available in the market. As the time to market is so short, ICICI

Infotech selects the products available in the market and integrates them. This takes

care of 98 percent of the solution requirement and then ICICI Infotech build the other

two to three 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.

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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 offices.

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 convert this data into WAN-related traffic before it is sent on the leased

line to the other data center. The high-speed leased lines make it possible to

synchronize data in real-time between the two centers.

Hardware at both these sites varies from low-end NT servers to the high-end SUN E

10K along with 12 terabytes of data storage at each end connected through a SAN. The

group's facilities management team manages over 9,500 desktops, 500 servers and

works around the clock. CA Unicenter is used for managing the helpdesk, desktops and

servers, asset management, software delivery and remote control.

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. Over 200 databases are supported with

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24x7 processing. The state-of-the-art technology architecture adopted by ICICI Bank

needed robust security, and this was 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 vulnerabilities on Unix, NT and MS-Exchange. The

system security is audited by KPMG.

Solution by Infosys

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

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.

Over the years, the strategic partnership between ICICI Bank and Infosys that started in

1994 has grown stronger and the close collaboration has resulted in many innovations.

For instance, in 1997, it was the first bank in India to offer Internet banking with

Finacle’s e-banking solution 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

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a critical element of ICICI Bank’s award winning multi-channel 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 delivery channels, thus 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.

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Supporting Tools and Techniques:

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.

Finacle – a core banking and universal banking solution from Infosys

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.

17

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

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19

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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 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 acitivities.

Certain recommendations are as follows:

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.

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

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Bibliography: http://www.icicibank.com/

Business Process Reengineering: Text And Cases By Radhakrishnan,

Radhakrishnan/balasubramanian

http://www.infosys.com