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The document provides a summary from Damianos Charalampidis, the Group COO of National Bank of Greece, on the bank's transformation efforts during the Greek financial crisis. It discusses how the bank underwent a radical reorganization of IT services, improved customer service through process redesign, and substantially reduced costs. It also describes how the bank seamlessly integrated two other banks. The document then outlines the challenges of managing capital controls imposed in Greece, including a forced digitization of customers and adjusting processes in real-time. Finally, it discusses opportunities for the bank moving forward in the post-capital controls era.
NBG Group_COO_Navigating the Crisis_September_2015 v public
- 1. Navigating the Crisis: A COO perspective on (digital) transformation and the road ahead Athens, September 2015 Damianos Charalampidis, Group COO National Bank of Greece
- 2. 1D. Charalampidis, Group COO, National Bank of Greece A. A Bank transformation while in crisis Radical reorganization and enhancing of IT services Customer service improvement through process redesign Substantial cost reduction Seamless integration of 2 banks A new regulatory framework B. Managing Capital Controls: Facing a new reality Forced digitization of the customer base Absorbing extraordinary workloads Adjusting processes on the fly C. The opportunity ahead in the post capital controls era Can capital controls also lead to a positive long-term effect on NBGs operations? Insights from the telco world: Where banking needs to go A COO perspective on (digital) transformation during the crisis
- 3. 2D. Charalampidis, Group COO, National Bank of Greece Core of the Ops transformation has been a radical reorganization and redesign of IT services A Organizational redesign to resolve chronic issues Establishment of a Group IT Governance Division Establishment of Business Analysis Division Establishment of CISO role Integration of Ethnodata in the IT organizational structure Creation of a Project Management Office (PMO) Setting up a PMO to align IT with business targets Priorities setting Approval of new projects Monitoring of progress IT Units Project Managment Office (PMO) Units of the Bank New requests Implementation Request document- tation Priorities suggestions Progress reports Project sizing Project approval committee Executive Committee Decision making Monitoring of strategic projectsThe reality coming in ~1.000 requests per semester, unorganized, with no prioritization Endless project implementation times
- 4. 3D. Charalampidis, Group COO, National Bank of Greece Visible and sustained results: (Over-)doubling of IT productivity since 2013 with >75% of requests fulfilled Double IT productivity vs. 2013 (despite VRS-based reduction of personnel by ~20%) 2013 Total Projects* 2015 () 2014 + 104% + 7% representing ~75% of total request submitted (Summary of submitted requests, Jan 2013 - Dec 2014) Total requests submitted Requests fulfilled Requests in process Requests under investigation/ stand by The implementation of minor projects is done without further approvals (FIFO logic) 2.776 341 3.601 484 A * IT projects over 10 mandays, potentially bundling multiple requests
- 5. 4D. Charalampidis, Group COO, National Bank of Greece A major process redesign journey was also embarked: Increasing efficiency while improving customer service Key challenges identified (and indicative processing times) 31% 24% 24% 9% 5% 7% Average time: 10 days 0-3 days 4-7 days 8-14 days 15-21 days 22-28 days >28 days Focus on 12 basic roles and14 key processes (teller transactions, lending, restructuring) A larger number of standardized and repetitive tasks , control checks and back-office functions that are carried out by the branches Partial process automation and need to access multiple systems for task processing Identified complicated procedures and fragmentation of roles and responsibilities between headquarters and branches resulting to time-consuming costumer service Housing loans restructuring (end-to-end): average time 28 days Consumer loans restructuring (end-to-end): average time 17 days The time required for the control check is more than the 3 day set threshold in 70% of the cases Indicative customer service: Required completion time distribution for technical and legal checks for mortgages A 59 proposals for improve- ment Quick Wins 里 Require Systemic Change Pure process redesign Centralization Number Time estimate Impact estimate Of which 6 months 12 months Summary status 18 Completed 55 18 implemented 23 in process 14 under investigation 6 2 implemented 2 in progress 2 in design 4 Small Medium Large Small 1 completed 3 in process Summary of defined process improvement initiatives
- 6. 5D. Charalampidis, Group COO, National Bank of Greece SG& A costs (Total G&A, IFRS, Bank, Greece) Key actions to cut costs Renegotiation of procurement contracts (IT maintenance, Buildings maintenance and cleaning) Rents renegotiation Demand needs optimization and process redesign (post & telecom, cash management, cash-in-transit) Cost cutting (advertising, sponsorships, subscriptions, 3rd party services) Further cuts in telecom costs Cut in postage expenses MPS implementation in branches (1st phase) Spatial redesign and consolidation of centralized services in own buildings Rationalization of energy consumption Redesign of mass printing and card personalization Expansion of MPS to more branches 20112010 2014E -15% 2012 2013 A In parallel substantial cost reduction has already been achieved with the effort further continuing Extra costs from absorption of FBB and Probank In addition significant effort put in increasing energy efficiency via targeted Capex investments with long term effect, also reducing the Banks energy footprint
- 7. 6D. Charalampidis, Group COO, National Bank of Greece Creation of model document digitization center in the same facilities in order to: Stop physical distribution of files Servicing of all document recall needs via the digitization and electronic distribution process while improving operations through digital doc management and creation of physical archiving/digitization infrastructure State of the art archiving system with special shelves/decks, very narrow corridors and semi- automatic collection machines Cooperation of the It and archiving infrastructure at all stages leveraging RF technology Minimization of archiving and recovering time Realization of practically zero error service level A Collection of the physical archive in the facilities Loan files Teller transactions documentation Customer identification documents Central services archive (e.g., Legal, HR) Other archive
- 8. 7D. Charalampidis, Group COO, National Bank of Greece 2 Banks were seamlessly integrated (in less than 4 months for both cases) FBB (May-June 2013) Probank (August- December 2013) 70.000 23.000 new customers 47.000 common with NBG Customers 510.000 140.000 new customers 370.000 common with NBG Loans 0,6 bln. 3,5k loan accounts 2,4 bln. 33k loan accounts Deposits 1,1 bln. 70k deposit accounts 2,4 bln. 430k deposit accounts Branches 19 112 Personnel 220 employees 1.100 employees 裡竜 虜 凌竜 Operational integration implementation Integration design 26/07 Imme- diate actions Mapping of current status Overview of integrated banks Timeline of Probank integration A Transi- tion (7- 8/12) SpecsDetailed activity plan 2nd test (30/11- 01/12) 1st test (23- 24/11) Business decisions Key mile- stones
- 9. 8D. Charalampidis, Group COO, National Bank of Greece New regulatory framework posing unique challenges through the period Key highlights A EU Digicomp commitments leading to the need of the creation of new policies and respective process, IT infrastructure and reporting 5 year Restructuring Plan with quarterly monitoring, non-adherence to which could result in the NBG losing its private character 2 Asset Quality Reviews (AQR) with heavy reporting requirements SSM in place as of November 2014 effectively, among others, formalizing AQR reporting and leading to annual repeat
- 10. 9D. Charalampidis, Group COO, National Bank of Greece Pre- and post-capital controls: A radical change of the Banks everyday reality within a month Extraordinary increase of transactions across all channels and a rapid forced digitization of all customer base Branch Network + 14% ATM/PoS + 62% Internet Banking Logons Internet Banking + 52% + 36% B Issuance of 500k debit cards (out of 3 million) in 2 months Doubled acquiring revenue from 7.5 to 15 million/day PoS: 100 applications/day vs. 10 per day in a business as usual day
- 11. 10D. Charalampidis, Group COO, National Bank of Greece Important process and functionality changes were required immediately, while we had to firefight extraordinary loads with intuitive (and not so much) adjustments on the fly Abnormal loads leading to adjustments on the fly July-August Before capital controlsCall center facts B Key immediate requirements Implementation of capital controls Central management of withdrawal thresholds for cash and plastic money Monitoring of fund transfers Transaction management per Branch type (standard vs. special purpose branches) Management of new/free funds/capital Infrastructure optimization to tackle increased transaction volumes PoS ATM Internet Banking Contact Center Call center supported via leveraging ~230 FTEs from Collections New application for debit card PINs to be sent via SMS PIN activation calls rerouted to external call center Rerouting of specific transactions (e.g., internet banking activations) back to branches ~5,500 ~21,000 ~4,100 ~12,000 ~3 min ~20-25 min 50% of total 1100 daily import/export transactions previously not recorded (executed online manually) doubling the load at central services/branches with much heavier process (due to approval need) ATM refills min twice to three times per day Average wait Answered calls/day Incoming calls/day Revert of Trade Finance centralization New application for requests & approvals of transactions process Created ~150 new reconciliation cashier transactions
- 12. 11D. Charalampidis, Group COO, National Bank of Greece The Road Ahead: From a short-term strain to a mid/long-term opportunity Short-term impact Potential Mid/long-term impact Operational disruption from rapid customer shift to alternative channels Financial sector Strain on Banks liquidity from deposit leakage and ELA limitation Collapse of trust/customer confidence in Banking system Rise of NPLs in all segments Positive effect Negative effect Potential reduction of operating cost and increase in transaction fees in case of sustained shift to alternative channels Imminent need for further re-capitalization (3rd in three years) C Business activity Barriers on trade flows (esp. imports) Potential increase of transparency and consequent state contributions from business activity (incl. payroll, transactions, turnover) Consumer behavioral Potential increase of transparency and consequent tax evasion prevention via alternative channels Radical drop in consumption (especially cash based transactions) mainly towards small businesses Shift to direct transaction channels (including web-banking, plastic money, ATM)
- 13. 12D. Charalampidis, Group COO, National Bank of Greece Banking vs. Telecoms: The similarities Service based businesses Heavy on Retail Heavy on Regulation, posing similar challenges and obstacles Both requiring excellence in Ops to win over the customer journey C Lessons (to be) learned from the telecoms world: Heading towards a digital era Banking vs. Telecoms: and the differences Telecoms (esp. mobile) a much fresher business (e.g., Vodafone Group with 24 years or operations vs. NBGs 174 years since founded) Telecoms industry assimilating and spearheading technology and innovation much faster Banking carrying much more legacy (e.g, in terms of systems) while telecoms having higher flexibility and executing easier transformations (e.g. first On-line system in Greece by NBG fully tailor made) Regulatory constraints higher for Banking The bet ahead for Banking: Follow telecoms example of moving very fast to CRM Enabling full and detailed view of the customer journeys across channels Understanding the customer base and its behavior Having a seamless experience and interface across channels